Thursday, September 29, 2005

No More EVAT

Collection seen hitting only P5B
Finance dept loses hope on VAT implementation this year
Daxim L. Lucas
Inquirer News Service

TAX collections under the expanded value-added tax (VAT) law for this year will be "negligible" even if the Supreme Court allows it to take effect next week, an official of the Department of Finance said.

Because of this, the government has abandoned the VAT law as the cornerstone of its fiscal policy for the remainder of the year, Finance Undersecretary Emmanuel Bonoan said in a telephone interview.

"It's so delayed that we're no longer counting on it to help us this year," he said.

VAT collection this year may reach only P5 billion even if the Supreme Court affirms the law's provisions next week, Bonoan said.

"We could have earned up to P60 billion if this [the law] was implemented on July 1," he said.

The Supreme Court has given the law's backers another five days to respond to comments made by those opposing it before ruling on the legality of its controversial provisions, including the so-called "no pass-on provision" and the input VAT cap for oil companies.

The government earlier downgraded its expected VAT collections this year to P28 billion from P60 billion because of the delays, but Bonoan said tax authorities would likely miss this figure and that, at best, VAT collections might reach only P5 billion.

Despite the loss of proceeds, he said the national government's budget deficit would fall within its P180-billion target ceiling at the end of the year and possibly be as low as P161 billion.

President Gloria Macapagal-Arroyo has affirmed her support for the VAT law after giving hints of her willingness to see its implementation postponed, Inquirer sources in Congress said.

The President recently met key leaders of the House of Representatives and the Senate to express her support for the VAT law, the sources said.

They said Arroyo assured lawmakers at the meeting that she would not support a proposal of Rep. Jose Salceda to delay the implementation of the controversial law.

They said she made the assurance to clarify the Palace's stand on the issue and to reassure investors that the country was serious in its efforts to put its fiscal house in order. With

Wednesday, September 28, 2005

Cheating In 2004

As I See It : How cheating was done in 2004 polls

Neal H. Cruz
Inquirer News Service

BELIEVE it or not: The answer to the present political crisis is in the hands of the Presidential Electoral Tribunal (PET) and in the electoral protest of opposition vice presidential candidate Loren Legarda against Vice President Noli de Castro. President Gloria Macapagal-Arroyo's problems emanated from a question of legitimacy. Is she the legitimately elected President? Or is she a fake President? The people's faith in her as the duly elected President was rudely shaken by the discovery of the "Hello Garci" tapes where she was caught in conversations with Election Commissioner Virgilio Garcillano, plotting to cheat in the last elections.

Fernando Poe Jr. died before his poll protest, alleging fraud and cheating in the last elections, could be heard, and the petition of his wife Susan Roces to substitute for him was dismissed by the PET. The question of who really won, Ms Arroyo or Poe, was left unresolved. Former Senator Legarda, claiming her rival, VP De Castro, also cheated in the polls, filed an election protest. The protest of Legarda has started to move -- after lying dormant in the PET for more than a year -- and she is optimistic that the recount of the votes in six pilot provinces would be finished in six months.

How does that affect the question of Ms Arroyo's legitimacy? Also on the same election returns where the votes for the vice presidential candidates are recorded are the votes for Ms Arroyo and Poe. It would take no more than several seconds to look at the votes cast for the presidential candidates after tallying the votes for Noli and Loren. Thus, the questions of who won in both the presidential and vice presidential races could be resolved at the same time. For the cheating was a "Cheat One, Cheat Two" operation.

While it is true that there is no valid poll protest in the presidential contest, the PET can exercise judicial statesmanship in recounting the presidential votes at the same time it does with the votes for VP in order to resolve the crisis that is ripping the nation apart. The opposition can petition for the reopening of the Poe poll protest, and Ms Arroyo -- if she really won "fair and square," as she claims -- should welcome it. as that would finally prove her legitimacy. If she opposed it, that could mean only one thing: A recount would reveal the cheating.

In a PowerPoint presentation, Legarda and her principal witness, Segundo Tabayoyong, showed the Kapihan sa Manila forum last Monday how the cheating was done. It was simplicity itself and very easy to do. It was a new way of cheating, used for the first time in the elections of 2004. (Tabayoyong was a Questioned Document Examiner and former chief of the Questioned Documents Division of the National Bureau of Investigation. He has retired.)

Instead of changing the ballots at the precincts -- as was done in the past, which is difficult and labor-intensive -- the cheating was done on the election return (ER), the summary of the votes in the precincts. Election returns of a city or municipality are totaled in the Statement of Votes (SOV) which are, in turn, summarized in the Certificate of Canvass (COC) for the province. It is the COCs that are added by Congress to determine the presidential and vice presidential winners.

What the cheaters did -- Legarda and Tabayoyong explained -- was simply fill up new election returns, disregarding the ballots. These spurious ERs were prepared in advance, by a special force of about 200 persons in two places in Metro Manila (one in a hotel near the Edsa highway) and then sent to the provinces. Thus, the votes were already counted and the "winners" known even before the voting started. It didn't matter for whom the people voted. It was the special force that decided the winners.

The Commission on Elections has admitted that it overprinted 32,000 sets of these ERs before the elections. It has not explained fully what happened to these excess ERs. It is believed that these were the same fake ERs used by the cheating team. It was a systematic, well-financed, well-managed and well-supervised operation by professional cheaters, Legarda and Tabayoyong said.

The cheaters, however, made mistakes. And that gave them away. ERs supposedly coming from areas thousands of kilometers apart were filled in by the same hands, said Tabayoyong. The vertical tally bars ("taras") used to mark the votes on the ERs were written very neatly and not in the uneven manner when written in the precincts because of stress and haste. There are columns where there are totals of votes but no bars. There are totals that do not tally with the bars. Thumb marks used to close the columns -- so no new bars could be added afterwards-were small, purposely smudged to make identification impossible. Required signatures were missing. Some had only initials instead of signatures.

Of the approximately 5,000 ERs analyzed, 3,000 were found to be spurious.

The analysis also showed that the team gave De Castro an average of a 70-vote margin over Legarda, and Ms Arroyo, a 100-vote margin over Poe. Therefore, the 32,000 sets of overprinted ERs could translate to a vote-margin rate of approximately 2.1 million votes in the Legarda-De Castro contest and around 3 million votes in the Poe-Arroyo race. Thus, De Castro and Ms Arroyo had something like 2 million votes and 3 million votes, respectively, for "insurance." Even if their rivals won in other areas, the insurance votes made sure Ms Arroyo and De Castro won in the totals.

* * *

TODAY'S JOKE: Terrorists kidnapped Ms Arroyo and demanded ransom money.

"Pay us P500 million or we will set her on fire," demanded the ransom note.

The bankrupt government asked the people for donations. So far, the donations totaled 2,000 liters of gasoline.

PS: A group of businessmen offered to donate another 2,000 liters if Fidel Ramos and Jose de Venecia were included.

Friday, September 23, 2005

Bush's Favorite Book

Pinoy Kasi : Noli and George

Michael Tan
Inquirer News Service

I WAS chuckling as I read about the US Federal Bureau of Investigation's report on Vice President Noli de Castro, with dire warnings about more economic and political "uncertainties" if he succeeded Gloria Macapagal-Arroyo.

One passage in the five-page report, dated July 15, was particularly striking: "There is no indication De Castro has much knowledge or interest in foreign policy issues."

It was that part that got me thinking, "Well, I beg your pardon guys, but how much does your president, George W. Bush, know about foreign policy issues ... or, for that matter, about anything at all in the United States or in the world?"

Searching for words

The US report, apparently based on several meetings and visits with De Castro, claimed that our Vice President was unable to answer many of their questions. Asked about his legislative priorities, the report said they had to "wait patiently as he searched for words."

I guess they're not used to having to wait with Bush, who is quick to answer questions. So eloquent is Bush that there are several Internet sites that specialize in collecting quotable quotes from him. I'm going to share some of these "Bushisms," mainly gathered from the online magazine Slate, as we figure out how he compares with our own Tito Noli.

Before Bush was elected president, he was asked how he was with foreign policy. This was his reply: "The fundamental question is, 'Will I be a successful president when it comes to foreign policy?' I will be, but until I'm the president, it's going to be hard for me to verify that I think I'll be more effective."

He did make it into the White House and has been a source of endless gaffes and laughs. He's called the Greeks "Grecians" and thought "Mexican" was the language spoken in Mexico.

Mere slips of the tongue? Maybe. Bad grammar and syntax? Maybe, as we see in this wonderful Bushism: "Too many good docs are getting out of the business. Too many OB/GYN's aren't able to practice their love with women all across the country."

And what about the time when he asked the visiting Brazilian President Fernando Cardoso: "Do you have blacks, too?"

Some of the Bushisms suggest this man knows little, and the little he knows, he can't think through. We see this, certainly, in his views about the world, simplistically defined in terms of good and evil as we see in this gem of a quote in the Washington Post, May 31, 2000:

"This is a world that is much more uncertain than the past. In the past we were certain, we were certain it was us versus the Russians in the past. We were certain, and therefore we had huge nuclear arsenals aimed at each other to keep the peace. That's what we were certain of. ... You see, even though it's an uncertain world, we're certain of some things. We're certain that even though the 'evil empire' may have passed, evil still remains. We're certain there are people that can't stand what America stands for.... We're certain there are madmen in this world, and there's terror, and there's missiles and I'm certain of this, too: I'm certain to maintain the peace, we better have a military of high morale, and I'm certain that under this administration, morale in the military is dangerously low."

Bush certainly isn't a man of few words. That Bushism was made even before 9/11, which helps us understand why eventually he dragged the United States, and a whole "coalition of the willing," including the Philippines' Ms Arroyo, into a wild goose chase for weapons of mass destruction in Iraq.


The US report recounts a visit to Noli de Castro: "We inquired about the biography of [former New York Mayor] Rudy Giuliani sitting atop a small stack of books on De Castro's desk and he said that it was a gift and he hadn't read it."

The insinuation here is that this was a man who won't be able to govern because he doesn't read. But we could ask, too, about George Bush, not just whether he reads, but whether he knows how to read. Watch him deliver his speeches and you'll find he stumbles all the time even with the teleprompter.

In fairness to him, there have been reports that George Bush is dyslexic, which is a reading disorder where you get letters mixed up. But again, one has to ask, dyslexic or not, does this president really care to learn about anything?

Let's get it straight: He does seem to read. In New Hampshire back in 1999, reporters asked him about his reading habits and he replied, "I read the newspaper."

Evan Thomas, writing in a recent issue of Newsweek, offers this bit of information: "It is not clear what President Bush does read or watch, aside from the occasional biography or an hour or two of ESPN here and there."

So there, maybe if De Castro had read Giuliani's biography, he would have made a better impression on his American visitors.

No doubt, there's more to the acquisition of knowledge than reading, but I have very real fears that the world's fate lies in the hands of a man who has been diplomatically described in Salon, another online magazine, as "incurious."

Because he has such fixed views of the world, it is unlikely he cares to read anyone or to listen to people other than those who share his views.

The result? Massive incompetence, displayed time and time again in his military adventures and in his bungling on domestic issues, the most dramatic being the disastrous disaster management around Hurricane Katrina. In many other countries, citizens would have demanded his resignation. But Americans seem to be a tolerant and forgiving lot.

Which takes me back to De Castro. We seem ready to live with Ms Arroyo till 2010 because we're so afraid of getting him as president. Maybe there are good reasons for that fear but really now, if someone like Bush could get elected, and reelected, president of the United States, it pretty much shows that nations will get by, in spite of fools pretending to govern.

But, you might argue: Bush has good advisers. And I could retort, "Noli could get good advisers." But really now, I can't even agree that Bush has competent men and women around him. What he has is a bunch of chicken hawks who evaded military service but now sends off America's young men and women to be slaughtered in Iraq and Afghanistan.

Americans deserve better, and we deserve better. The problem is we seem to have decided "better" means the certain uncertainties of incumbent incompetents.

Something light

This has nothing to do with politics. Tomorrow Dr. Margy Holmes is launching a revised edition of her controversial book "A Different Love" at Powerbooks, SM Megamall. I've been ever so gently persuaded to go and give my thoughts about the book and what's happened in the last 10 years since it was published. That's tomorrow at 3 p.m. Yes, the public's invited. And we can check if Powerbooks has a copy of "The Very Hungry Caterpillar," which is said to be Bush's favorite children's book. Well, maybe favorite isn't the right term. It's the only book he reads to children whenever he visits schools.

Thursday, September 22, 2005

RP's Economy's Not Tops

Philippines 2006 still behind neighboring economies -- IMF
Inquirer News Service

THE Philippines next year will continue to lag behind its Southeast Asian neighbors in terms of economic performance, the International Monetary Fund said in a report released Wednesday.

Hounded by huge public debts and political uncertainties, the Philippines is expected to post the slowest growth of 4.8 percent in gross domestic product and the highest inflation rate of 7.5 percent among four mid-level peer economies on the Association of Southeast Asian Countries (ASEAN-4) in 2006, the IMF said in its latest report on economic prospects.

Grouped as ASEAN-4 are the Philippines, Indonesia, Thailand and Malaysia. "Looking forward, the key macroeconomic priorities remain continued fiscal consolidation -- particularly in the Philippines, where large external financing requirements and high public debt remain significant vulnerabilities," the IMF said.

The government has a newly revised target of 5.7-6.3 percent for 2006.

The IMF report puts the projected 2006 average growth of ASEAN-4 economies at 5.4 percent, and that of other emerging economies on the regional bloc at 6.9 percent.

It forecasts Indonesia's growth at 5.8 percent, Thailand's at 5.0 percent and Malaysia's at 6.0 percent.

The IMF forecasts Philippine inflation in 2006 at 7.5 percent, compared with the ASEAN-4 average of 5.1 percent: Indonesia with 6.5 percent, Thailand with 2.7 percent, and Malaysia with 2.5 percent.

For this year, the IMF forecasts Philippine GDP growth at 4.7 percent, compared with Thailand's 3.5 percent, Indonesia's 5.8 percent and Malaysia's 5.5 percent.

It expects inflation this year to average 8.2 percent in the Philippines, 8.2 percent in Indonesia, 4.2 percent in Thailand and 3.0 percent in Malaysia.

Overall, the IMF said persistently high oil prices would adversely affect the region's economies.

"In the Philippines, where, after several months of improving fundamentals, the recent political turmoil has raised concerns about the prospects for economic reforms and led to downward revisions to the ratings outlook," it said, citing country-specific risks.

The IMF added that the very low level of private investment was the greater concern, underscoring a need to complete the unfinished reform agenda in financial and corporate sector restructuring, including improvements in governance.

The IMF expects the Philippines to perform well, second only to Malaysia, in terms of surpluses in the current account.

It forecasts the Philippine current account surplus at 2.1 percent of GDP this year and 1.9 percent next year, as against a deficit in Indonesia at 0.4 percent of GDP this year and a surplus of 0.7 percent of GDP next year. Doris Dumlao, with

The Sleeping Giant

Commentary : The rise of Chinese 'sea power'

Hideaki Kaneda
Inquirer News Service

IN AN age of missiles and terrorist threats, many people think that "sea power" is a word and concept from the past. Not in China. Indeed, China is increasingly emphasizing its naval and maritime interests: economic development, territorial management, energy and food security as well as trade. A navy sufficient to promote such activities is being rapidly developed and purchased from abroad (mostly from Russia and, when possible, from the European Union).

Many of China's neighbors are alarmed. The United States Defense Department views China's goal as being to build a series of military and diplomatic strategic bases -- a so-called "string of pearls" -- along the major sea lanes, from the South China Sea to the oil-rich Middle East.

China seeks not only to secure its energy supplies but also to achieve broader security goals. For example, the Gwadar military port, which China is constructing in southwest Pakistan, is strategically placed to guard the throat of the Persian Gulf, with electronic eavesdropping posts to monitor ships-including war ships-moving through the Strait of Hormuz and the Arabian Sea.

Similarly, China is building container port facilities at Chittagong in Bangladesh for its naval and merchant fleets; as well as more naval bases and electronic intelligence gathering facilities on islands owned by Myanmar in the Gulf of Bengal. Indeed, China's ties with Myanmar's military dictators look set to turn into a de facto military alliance. In nearby Thailand, China has invested $20 billion in a plan to build a canal across the Kra Isthmus to connect the Indian Ocean and the Gulf of Siam, thereby providing an alternate oil import route that avoids the Strait of Malacca.

In the South China Sea, China is developing systems to allow large-scale deployment of naval and air force units by fortifying bases on Hai Nan Island and the southern Chinese coastal area. On the Spratly and Paracel islands -- seized from Vietnam and the Philippines, respectively -- China is building port facilities to moor large surface ships and runways large enough to handle long-range bombers. In effect, China is in the process of building a group of literally unsinkable aircraft carriers in the middle of the South China Sea.

Why is China, usually considered a "continental power," engaging in this maritime expansion? China dominated Asia in terms of "sea power" until the 17th century. Indeed, during the Ming Dynasty (1368-1644), Admiral Zheng He's "Great Navy" was the world's most powerful. But for the last three centuries, China has had no global maritime strategy; neither has it possessed -- or sought to possess-naval forces capable of supporting such a strategy.

Ironically, China's current maritime strategy has its roots in the United States, the nation that China appears to perceive as its key strategic rival, namely in the "sea power" theory developed by Admiral Alfred Thayer Mahan at the end of the 19th century. In "The Influence of Sea Power upon History," published in 1890, Mahan argued that maritime power and economic development were deeply intertwined. Only the ability to protect trade and project power by sea could assure the vitality of this nexus.

Mahan identified the conditions that determine "sea power": (1) geographical position and environment; (2) territorial capacity, specifically coastline; (3) population; (4) character of people attuned to maritime expeditions; and (5) character of government eager to embrace "sea power."

These conditions applied to the United States of Mahan's time, and they surely apply to China today. China is already the world's third largest trading nation and rapidly developing its port capacities to manage an ever-increasing volume of trade. Its ship tonnage (excluding fleets that sail under flags of convenience) is the fourth largest in the world. Rapid expansion of ship tonnage is part of China's current five-year program, and by 2010 its shipbuilding capabilities will likely rival those of Japan and Korea.

However, unlike the United States and Britain in the past, China today must turn to overseas bases rather than to colonization to enhance its "sea power" -- hence its "string of pearls." Still, China is transforming its coastal navy into an ocean-going navy at a pace far quicker than most experts reckoned possible. By 2010, China is expected to have 70 of the most modern surface vessels, several modern strategic nuclear submarines, and several tens of modernized attack submarines, exceeding the modern forces of both Taiwan's navy and even Japan's Maritime Self-Defense Force, at least in quantitative terms.

Moreover, China plans to improve and expand its capabilities for assault landing and joint logistical support, both of which used to be weak points. This will provide China with necessary capabilities to invade, should China's rulers wish, Japan's most remote islands, including the disputed Senkaku Islands, as well as Taiwan. If China's naval growth continues at its current pace, it may have the world's largest naval force by 2020.

All of Asia must wake up to the arrival of Chinese-style aggressive "sea power." Japan, in particular, must reformulate its national maritime strategy with this in mind. Japan, America and other traditional maritime countries must also once again treat "sea power" in Asia as a key component of their ability to defend their own national interests. Project Syndicate

Hideaki Kaneda, retired vice admiral of Japan's Self-Defense Forces, is currently director of the Okazaki Institute.

Wednesday, September 21, 2005

Bitter Pill

For pre-need plan holders, a bitter pill to swallow
Daxim L. Lucas and Elizabeth L. Sanchez
Inquirer News Service

THE SNOWBALLING troubles of the pre-need industry have plan holders worried about their hard-earned investments.

Many are concerned if the cure being prescribed for the ailing 30-year-old industry can still save it. More importantly, they worry if they can still get their money back.

This year alone, three major pre-need firms have taken the route towards regulator-assisted rehabilitation -- Pacific Plans Inc., Platinum Plans Philippines, and recently, College Assurance Plans Philippines Inc. (CAP).

Pacific Plans asked the Regional Trial Court in Makati City to allow it to suspend payment and go through rehabilitation after running out of cash to service future claims. Platinum also asked the court to be allowed to keep its business running since it has plans to branch out into related fields like marketing.

Both firms face stiff opposition from plan holders who believe that company officials are trying to dodge their commitments to clients -- a charge the companies deny.

For the pre-need firms, survival comes at a high price and it is becoming even doubly difficult to convince the Securities and Exchange Commission (SEC) about the viability of their plans to stay afloat.

Clutching at straws

What will make a rehabilitation plan work?

SEC commission secretary Gerard Lukban said the biggest consideration is the infusion of new capital into a pre-need company.

"When a company goes to court and asks for this relief, the court will have to decide whether this company is entitled to it," Lukban said. "What they will consider is solvency. Is this company worth salvaging?"

Lukban stressed that the SEC was not out to kill the pre-need industry, contrary to claims of the troubled firms that regulators keep shooting down rehabilitation proposals in court.

"The big factor there is the infusion of new capital or they could study venturing into something more profitable," Lukban said. "The SEC also has to be convinced that the money is coming in. Every company in trouble deserves to be rehabilitated but their efforts to seriously implement that rehabilitation is the key."

And convincing skeptical regulators and an increasingly incredulous public about their viability seems to be the biggest liability of some pre-need firms like CAP, at present.

No less than Senator Manuel Roxas II, chairman of the Senate trade and commerce committee, opposes CAP's bid for rehabilitation.

"Obviously, CAP has been engaged in a litany of lies and had been fooling the regulators and the people all along," said the lawmaker, who is spearheading moves to impose tighter regulations on the industry. "SEC was correct in suspending CAP's license to sell. If CAP was allowed to continue selling plans, then more families could have been fooled."

Roxas pointed out that CAP had in the past paraded several names of supposed prospective investors, among them Green Circle Properties & Resources Inc., Green Square Properties Corp., First American Investment LLC, and International Global Capital Holdings AG.

"Up to now, not a single centavo was infused in CAP," Roxas said in a statement. "Their trust fund is down to P4.71 billion from P8.5 billion in 2003."

Bitter pill

No matter what road to recovery the pre-need industry and their clients decide to take, the solution will definitely hurt everyone concerned.

Holders of open-ended educational plans are faced with a dilemma: Should they continue paying their premiums in the hope that the company will honor its commitments, or should they stop paying altogether and stand to recover only a portion of their policy value, or even risk losing everything they've paid through the years?

SEC assistant director Nonilonia Ambat, who oversees the pre-need industry, said that on the average, plan holders can recover 50 percent of what they paid when they choose to terminate their plan benefits -- but only if the policies have been fully paid.

Clients whose policies are only being paid for the first or second year are not entitled to recover any portion of their investments, Ambat said, explaining that terminating the policy at such an early stage will be a desperate move.

More realistically, she said, plan holders must be ready to swallow the bitter pill.

"Pre-need companies should convince plan holders to agree to convert to fixed value benefits," Ambat said. "If they need to beg the plan holder to agree, they should. The public will surely take the hit."

The SEC official's advice assumes that a pre-need company still has enough assets to cover the termination values of policyholders' plans. This may not always be the case as some firms may not only be illiquid, but bankrupt.

For actuaries like Isagani de Castro Sr., however, clients of some troubled pre-need firms are better off cutting their losses and starting from scratch.

"For clients of some firms, I would advise them to just stop paying," he said, adding that paying premium payments to a bankrupt pre-need firm is like throwing good money away.

"For some companies that are not that deep in trouble, like Pacific Plans, there is still hope that clients can recover their principal investment plus a small interest, if they accept the proposed rehabilitation plan," De Castro said. "But they should already forget about receiving the full benefits."

Wanted: Strong regulator

The Philippine Federation of Pre-Need Plan Companies believes, meanwhile, that open-ended plans should have a benefits ceiling.

But more than putting a cap on the amount to be paid to plan holders, the pre-need business model can still work and stay alive under a fixed-value setup, said federation president Juan Miguel Madrigal Vazquez.

"The pre-need industry remains viable because they serve a need," Vazquez said in an e-mailed note to the Inquirer. "The challenge is for the companies to serve those needs properly. People mistake the open-ended plan for the whole industry when it is not."

Vasquez also said that the problems faced by some of the industry's biggest players, like CAP and Pacific Plans, happened before 1994 -- way before the SEC was given resources to regulate the industry, as it has done since the Securities Regulation Code was passed in 2000.

"The law should create a strong regulator, empowered and accountable, with resources to implement this vision prior to, and after, any problem that would arise," he said. "The law should provide proactive protection and post protection or penalties to protect plan holders."

Roxas is hopeful that the pre-need bill pending in Congress will address these concerns, and more.

He explained that the law will specify a uniform accounting system which all players must adhere to, set prudent measures to protect trust funds from abuse and misuse, and require pre-need policies to be insured through a similar system used in the insurance industry.

As such, the pre-need industry will also be transferred under the ambit of the Insurance Commission, which will likely have more success in regulating quasi-insurance products.

Roxas admits, however, that his proposed solution is prospective, rather than retroactive.

While future buyers of pre-need policies will enjoy greater protection, existing clients will likely be left holding the bag, unless they can convince the courts to liquidate the assets of troubled firms in their favor.

On this point, both Roxas and De Castro agree that clients should pool their resources and file a class action suit against erring firms.

"The legal route is the only route," De Castro said, given the state of the industry, where several pre-need firms are on the verge of bankruptcy.

Having been a consultant for several insurance and pre-need firms in the past, De Castro predicts more pain in the coming months and years for all players in the industry—from the clients to the companies, even the regulators.

"It will be very difficult," De Castro warns.

PLDT's Dream

PLDT buying Dream Satellite; price set at $22M
Clarissa S. Batino
Inquirer News Service

PHILIPPINE Long Distance Telephone Co. (PLDT) is buying Philippine Multi-Media System Inc., operator of Dream Satellite TV, from Antonio Cojuangco for $22 million, or about P1.23 billion, Inquirer sources said.

The sources said Cojuangco, former controlling shareholder and president of PLDT, had accepted the PLDT offer because he needs the money to support his other investments, especially television company Associated Broadcasting Corp., which operates Channel 5.

"Both parties have agreed on the valuation," a source said. "It is just a matter of preparing the documents and affixing their signatures."

Another source said Cojuangco's group had agreed to a much lower price than it had originally asked, after PLDT agreed to absorb the debts of Philippine Multi-Media System.

Cojuangco's asking price was $56 million, said an informed source. PLDT offered $25 million, and later $22 million after factoring in the debts, mainly of Dream Satellite, that would be absorbed.

PLDT president Napoleon Nazareno said they were "still in the final stages of negotiations." The deal was not done yet, he said.

Philippine Multi-Media System holds a franchise to operate a direct-to-home programming service.

Acquisition of Dream Satellite would enable a joint venture between PLDT and America's largest direct-TV provider, Echostar Communications Inc., to finally take off.

PLDT and Echostar are planning to invest $85 million in pay TV operations in the Philippines through satellite receivers, not the traditional cable system that is prone to piracy and signal theft.

PLDT and Echostar have an existing venture under ePLDT. Parlance Systems Inc., a subsidiary of ePLDT, has been providing inbound and outbound call center services to subscribers of Echostar in the US since 2002.

Discussions on their investment in a direct broadcast satellite business started as early as 2000 but getting a franchise was one of the issues that impeded the venture.

Cesar Reyes, chairman and chief executive officer of the Philippine Multi-Media System and former PLDT official, said in late August that valuation was stalling the negotiations between PLDT and Philippine Multi-Media System.

The Inquirer tried to reach him Tuesday for comment on the reported developments, but Reyes was not answering his mobile phone.

Philippine Multi-Media System uses PLDT's Mabuhay Satellite to broadcast content to more than 100,000 subscribers nationwide.

Reyes said Dream Satellite was now the second largest pay TV company in the country. The largest is Beyond Cable Holdings Inc.

PLDT owns one-third of Beyond Cable, a joint venture with the Lopez group. It has proposed swapping its Beyond Cable interests for the controlling stake in the Lopez group's phone company Bayan Telecommunications Philippines Inc., or BayanTel.

A source said PLDT chairman Manuel Pangilinan's plan "is to bring down the rate of Dream by offering more programs. He can do that with Echostar, which has more than 200 channels."

Dream Satellite is considered more expensive than the traditional cable providers.

Sources said that if talks with Dream failed, PLDT would open negotiations with other direct-to-home providers such as Pacific Cable Inc. and GV Broadcasting.

Under the plan, the joint venture between PLDT and Echostar will provide clients with home antennas. It will also supply more than 2,000 video and audio channels. With

Glo & Marcos

There's The Rub : Martial law

Conrado de Quiros
Inquirer News Service

TODAY is the anniversary of martial law -- a fact that has taken on exceptional importance notwithstanding that it isn't the 25th or 50th but the 33rd. I know that because I've gotten a number of invitations from schools, media groups and NGOs to compare martial law and Gloria Macapagal-Arroyo's rule. That very formulation suggests people see a basis of comparison between the two. I doubt I was invited to show the contrast between them.

There is much ground for comparison. At the very least, both rules are based on an outright lie. Ferdinand Marcos lied about everything, including the date when he declared martial law. He did not declare martial law on Sept. 21, 1972, he did so on Sept. 23, 1972. Sept. 21 was a Thursday. Marcos declared martial law on midnight the following day, Friday, technically the 23rd, Saturday. The reason for it being to prevent the activists and the opposition from taking to the streets or organizing anything to oppose it. Things grind to a halt in this country on weekends and Christmases.

Marcos subsequently antedated it to 21 because of one very interesting thing. He believed in the magical properties of 7 and its multiples, or at least that it brought him luck. Well, there is no arguing against history: He ruled for 14 years under martial law. Lucky for him, unlucky for the country.

Ms Arroyo's rule is also based on a lie, or a series of lies. The first is that she deserved to replace Joseph Estrada morally, if not legally. Unlike Cory Aquino who strode in the front lines in the fight against Marcos, Ms Arroyo hid under the bed, to use the late Louie Beltran's famous phrase. The second is that she promised not to run, which needs no further comment. And the third is that she won the elections. "Hello, Garci" proves otherwise. That phrase, which encapsulates a whole constellation of meaning, will not go away; it will hang on Ms Arroyo's head throughout her life, or rule. Which is probably one and the same: She can no longer live without power, a thing she shares with Marcos, or even surpasses him in, which bodes apocalypse for this country.

That, quite incidentally, makes her worse than Marcos. Marcos at least got voted into office twice, the first when he beat her father, Diosdado, and the second when he beat Serge Osmeña's father, Sergio Jr. Marcos was still president when he declared martial law, albeit one whose term was ending at the end of the following year and he was constitutionally barred from running again. The wonder of it, as I've said before, is that we've been brought to this living hell today by someone who was never elected president of this country.

Marcos had no right to rule after 1973. Ms Arroyo had no right to rule -- legally as well as morally -- after May last year. Their rule was/is a lie.

For those who keep asking whether Arroyo can, or will, declare martial law, wonder no more. She has declared martial law, if unofficially, if a thinly veiled version of it. The bottom line there is: Martial law was a palace coup. Arroyo's continued existence is a palace coup.

Both rules were/are overwhelmingly unpopular. Their methods of enforcing their palace coups vary in some parts but are the same in others. Marcos used two things to prop up his rule. The first was naked force, in the form of the military. The second was law, or the kind of law based on its letter and not on its spirit. Indeed, the kind of law where the letter kills the spirit. Marcos himself was a lawyer and relied on legalism to give the most illegal, or illegitimate, act a veneer of justifiability. Marcos had the executive, the legislature, and the judiciary in his pocket. Ms Arroyo has the executive, or what remains of her Cabinet, the House of Representatives if not the entire Congress, and the judiciary in her pocket. Marcos was the law unto himself, Ms Arroyo is the law unto herself.

There is a precedent for the House of Representatives killing the impeachment bill, which is the Constitutional Convention approving Marcos' Constitution. Marcos re-convoked the Con-Con immediately after martial law (the pre-martial one had proven intractable) and its delegates promptly yielded to his wishes. The only difference is that Marcos relied more on the stick than on the carrot to make the Con-Con give him what he wanted. Ms Arroyo relied more on the carrot than on the stick to make the House give her what she wanted. She just bought them all to hell. Or most of them, my thanks go to those who stood their ground, amid the swirl of greed around them.

Marcos' illegitimate rule (after martial law) was essentially mob rule hiding under the mask of legality. He and Imelda pretty much did as they pleased, backed up by a cabal of generals, cronies and petty bureaucrats drunk with power, but with the courts to clean up after them. Ms Arroyo's illegitimate rule (after May 2004) is essentially mob rule hiding under the mask of legality. Arroyo and Jose Pidal pretty much do as they please, backed up by a cabal of generals, cronies and chimpanzees in striped suits, also called congressmen, drunk with power, but with the Firm to clean up after them. You now even have Pidal crowing that the way Pacquiao TKOed Velasquez was the way the House TKOed the impeachment bid. Like I said, drunk with power.

But the biggest similarity of all lies in the character of Marcos and Ms Arroyo themselves. I recall something I wrote last year before the elections in reply to a pro-Arroyo voter who complained bitterly about my comparing Ms Arroyo to Marcos. Surely, she said, I knew in my heart that wasn't true. Surely, I replied, I knew in my heart it was so. Today, surely, I know in every part of my anatomy it is absolutely so. We do not end this now, we will not see the end of Ms Arroyo, not even after 2010.

We will also not see the end of decent Filipinos dying from sheer apoplexy.

Tuesday, September 20, 2005

Will the real GMA please stand up?

‘On VAT, will the real GMA please stand up?’

The Senate “will waste no time” in considering any
House resolution that will seek the deferment of the
imposition of the value added tax on oil and power,
Sen. Ralph Recto made this assurance today.

“Tax bills must originate from the House. Once they
will send it to the Senate, our action will be
prompt,” Recto, chair of the Senate ways and means
committee, said.

Defer till  end 2006 ?  

Recto said the Senate may even propose a longer
deferment period, “not just until June 30 next year as
proposed in a House resolution, but even to end of
2006 or to middle of 2007.”  

“Some of my colleagues are, in fact, asking: ‘Why not
December 2006, instead of June 2006? Some are taking
the position that the nine-month reprieve until June
is short,’” he said.

Recto said nobody can predict that oil prices will go
down in June next year. “What gives those who were not
able to predict that oil prices will rise to this
level now the confidence to say that oil prices will
go down nine months from today?”

Recto admitted that “there’s even a bloc in the Senate
that wants to do away with any VAT increase, a
position that we will have to contend with, and if
such becomes the majority opinion, must be respected.”

Bill , not a resolution

Recto said legal experts in the Senate have expressed
reservations as to whether a simple resolution can
stop the effectivity of components of the new VAT law.

“Others contend that it should be a bill considering
the fact that the new VAT law cuts or scraps the
excise tax on certain types of fuel as well as the
franchise tax on electricity.  If we will just defer
VAT on these products without correspondingly
postponing the cut on the excise tax, the result will
be a revenue loss for the government,” he said.

Make up your mind

This, as Recto urged President Arroyo to make up her
mind whether she wants the imposition of VAT or not,
“following her confusing statements in New York where
she see-sawed between VAT rejection and VAT

“To stop this guessing game, the President should
certify the passage of a law deferring the
implementation of VAT, if that is what she wants,”
Recto said.

“Congress is finding a hard time deciphering
Malacanang’s message on VAT. It seems that it has one
message for the market, which is to stick to VAT, and
one for the masses, which is to junk it,” he said.    

“Will the real GMA please stand up?” he said.        

GMA boys for VAT on power, oil  

This as Recto belied President Arroyo’s statement that
the administration did not push for a VAT on power and

Recto said Senate records would bear the fact all the
presentations of the Cabinet men she sent to the
Senate declared the administration’s preference “for a
higher and a wider VAT, meaning they want all the
exemptions lifted and at the same time increase the

“It’s on record. They were never shy in asking for a
VAT on power and oil, and to raise the current VAT
rate on covered goods and services to 12 percent,
simultaneously.  Under oath, they pleaded for these.
Their direct testimonies on these matters fill seven
pages,” he said.  (see attached Chronology of Events)

“For months we were pestered to pass this measure.
When we tried to temper their proposal we were given
all kinds of warning, including a doomsday scenario
for the country,” he said.

House wanted it, too

Recto likewise disputed reports that applying the VAT
on power and fuel was not in the House bill that was
sent to the Senate.

“Albeit on a lower rate, the House version imposed a
VAT on fuel and power. It is incorrect to say that the
House did not even contemplate on including the two on
the VAT net,” he said.

GMA veto  

Recto said the President could have selectively vetoed
the VAT bill when it was brought to her table for
signature if she was not comfortable with them.

“She had that power. She could have excised provisions
she found objectionable. After all, this was her bill.
This was not passed upon the insistence or the
initiative of the House or the Senate. We passed this
grudgingly,” he said.

Senate as scapegoat  

Recto believes that the Senate is “being set up as a
scapegoat for VAT, when what it only did is  to lessen
its impact on consumers.”

“Taxation is not a higher-is-better game. When it
comes to taxes, we do not outbid the executive. The
role of the legislature is to temper, to limit the
taxing appetite of the executive,” he said.

“A tax measure is always an administration measure,
acted on the behest of the executive which will, after
all, enjoy the collections. The VAT was passed based
on the specs given by the administration,” he said.

“This VAT is the administration’s baby. But now
they’re disowning it, denying it parentage. They’re
giving it up for adoption,” Recto said.

Pre-Need Scams

Pyramid scams thrive in pre-need industry
Daxim L. Lucas and Elizabeth L. Sanchez
Inquirer News Service

(Second of a series)

SENATOR Manuel Roxas II believes that it is almost impossible to distinguish some pre-need firms like College Assurance Plan Philippines Inc. (CAP) from companies engaging in pyramid scams.

Having waged a campaign against pyramiding and "Ponzi" schemes when he was secretary of trade and industry, Roxas knows whence he speaks.

"Some pre-need firms are basically pyramid operations," said the lawmaker, who won public office on a consumer advocacy platform. "The bulk of fees paid by new subscribers are used to pay company obligations that are coming due."

In the case of CAP -- in a scheme mimicked by many industry players -- Roxas said only 10 percent of clients' subscription fees are deposited in trust funds for the first two years of the policy. These funds supposedly are managed by independent trustee banks.

Over the next five years, only 50 percent of clients' payments are deposited with the trustee banks. Everything that is not deposited as trust funds are used for the firm's operating expenses.

"Whatever isn't deposited is used to pay off maturing liabilities of the older policy holders," Roxas said. "This is using OPM [other people's money]. This is really the definition of 'kiting.'"

To remedy this situation, Roxas has filed a bill aimed at better regulating the pre-need industry and defining accounting standards that are all too loosely interpreted by companies to cook their books.

Is accounting really killing the pre-need industry?

CAP seems to think so. It has been the most vocal among pre-need firms about how the new set of rules adopted by the Securities and Exchange Commission (SEC) is hurting its business.

In its petition for rehabilitation filed with the Makati Regional Trial Court, CAP claimed that after operating its business for the past two decades, the industry found itself in a bind after the SEC suddenly changed its regulatory guidelines governing pre-need companies. This was aggravated by a regime of uncontrolled tuition fee increases brought about by government deregulation in the early 1990s.

CAP argued that the tighter accounting policies "came about after serious and manifest attempts" failed to place the pre-need industry under the jurisdiction of the Insurance Commission through legislation.

CAP claimed that what added salt to the wound was the imposition of the Pre-Need Uniform Chart of Accounts (PNUCA) in 2002 as a standard for accounting and reporting of finances and liabilities for pre-need companies.

With the PNUCA in place, pre-need educational and pension plans were no longer treated as investment contracts but as insurance contracts, subject to the Actuarial Reserve Liability (ARL) scheme.

The ARL requires pre-need firms to have reserves as of a present cut-off date to match future liabilities in all existing and lapsed plans.

CAP argued that plans do not mature simultaneously in the immediate future. It added that change of rules -- without proper notice and consultation, it claimed -- in the middle of the game made it nearly impossible for a pre-need firm to meet SEC's requirements.

Worse, CAP's dealer's license and permit to sell were suspended last year due to what it claimed was a "theoretical" trust fund deficiency that was due to the application of the PNUCA.

"It is the insurance companies that largely benefited from the strict impositions of the SEC on pre-need companies like CAP," the company said in its court filing. "Why would a genuine Filipino invention like educational pre-need be allowed to suffer or be extinguished when it has helped fulfill thousands of parents' dreams to send their children to college?"

CAP argued that the SEC should have applied the International Accounting Standards 39, which classifies pre-need education and pension products as investments. PNUCA, it claimed, was patterned after accounting rules for insurance companies.

Much ado over ARL

Much ado has been made over the Actuarial Reserve Liability, a fundamental calculation that takes a snapshot of a pre-need company's liabilities to plan holders at a given point in time.

Some pre-need firms have blamed the ARL for reflecting a supposed weakness in their ability to pay plan holders. CAP, for one, has strongly assailed the calculation, saying it is not a reliable estimate.

The ARL is the present value of projected future liabilities of a pre-need company as determined by an expert called an actuary. The estimate is based on a "discount rate" that must not exceed 80 percent of the interest rate for the longest maturing Philippine government security traded over the previous three months.

The main indicator of a pre-need company's financial health is a comparison of its trust fund versus its ARL. If the ARL is greater than the trust fund assets of a pre-need firm, it means the company does not have enough assets today to answer for the future value of its plan holder liabilities. In theory, the firm is headed toward bankruptcy.

Roberto Manabat, the Securities and Exchange Commission's general accountant, explains that pre-need companies, in their contract with plan holders, promise to pay benefits in the future.

Under present accounting practices, pre-need companies record income as they collect premiums," Manabat said. "For proper matching, the build up of the ARL should be expensed. If no ARL is recognized, the income that may ultimately be issued as dividends to stockholders will be overstated."

While some pre-need firms point out that the ARL is an unreliable estimate, Manabat said, a lot of figures in any company's financial statements are estimates and still provide the best insight to its health.

Philippine Dream

Youngblood : European lessons

Theresa A. O. Esteban
Inquirer News Service

I LEFT Manila in October 2004 to study in Europe for one year. I was excited about the trip since it was the first time I would be living alone, without my mom and dad, my siblings and my dogs.

The day I arrived in Rotterdam, I immediately felt at home. It was so very much like the Makati or Ortigas business districts that I thought I wouldn't feel anything different. But while Rotterdam is one of those busy cities bustling with activity during the day, unlike Manila where the night likewise becomes as busy, it finitely goes to sleep. Although there are clubs, bars and pubs, it is not the same as either Makati or Manila's Malate district at night. Makati, Malate, Timog Avenue and the Libis area come alive at 9 p.m. when the happy hour begins and throb with life until the wee hours of morning.

Studying abroad is a true test of one's character, faith and stamina. I came to Holland wearing rose-colored glasses. Seeing some things for the first time, being thrown into a diverse mix of culture and values, especially in my international course, which has 74 students of 26 different nationalities and 101 extreme personalities, I said to myself this was going to be a great learning experience.

I studied in a school that also had American students. When I went to graduate school, I had German, Nepalese and Italian classmates. My mom trains and teaches foreign students, and I grew up meeting her students in functions and gatherings. As an adult, I have worked with Aussies, Americans, Kiwis, Britons and Germans. The first Dutch friend I had was a guy who worked with my mom in a training seminar for Indian participants. He wore funny Sesame Street socks and he gave me a pair. So, I thought that it would not make any difference if I had so many people of different nationalities for classmates.

I have a strong faith and I am levelheaded, but when St. Augustine said that man is innately good, he had not heard about our class.

My first three months was a roller-coaster ride. I got homesick from time to time, but I amused myself by going out with friends and attending parties whenever I could. Since I have had a sheltered life, I learned to trust other people and believed everyone to be my friend.

But soon the differences started to kick in. At first I thought that their seemingly brusque manner had to do with the language. But after three months, I knew it was more than that. When I started to complain to friend, who happens to be a priest, he told me the honeymoon was over.

Until then I didn't know that like snakes, people molt. I am quite tolerant. For a time, I tried to put to good use my training in psychology in an effort to understand them. The exercise led me to realize where they were coming from, but that still did not justify their actions and attitude toward other people. I became convinced that the problem was not being caused by their inability to carry on a proper discourse but by some basic character defect. We have colleagues who are not really very refined in their language but still they don't sound insolent. And so I said goodbye to tolerance.

I don't regret coming here. I love Holland. It is a beautiful country and the Dutch (or most of them, anyway) are a nice and kind people. I have two great Dutch friends with whom I can discuss almost anything, and I know a Dutch family I can always rely on. I am greatly indebted to the Dutch government for giving me the opportunity to study here.

In the past months, I have learned more about life and people. I have learned that sincerity does not always get repaid, and that the only person you can really count on is yourself.

I have also learned that friends should be carefully chosen. It is hard when you get hurt by so-called friends while you are away from home and you do not have a shoulder to cry on. But if you do find friends, take care of them and love them for they can be surrogate family.

Finally, I have learned to fight back. Asians are said to be submissive. There may be some truth to that, given the many centuries we had been colonized. But sometimes other people mistake our warmth and politeness for submissiveness. It is hard for us to be brutally frank, since we don't want to hurt other people's feelings. But when push comes to shove, we know how to fight back.

Certainly absence has made my heart grow fonder of Manila and the Philippines in general. Understanding my colleagues' behavior and where they are coming from has made me realize how lucky I am to grow up in a happy and peace-loving society. I feel proud when colleagues and professors from different countries refer to our People Power revolution as a true example of an empowered society and a peaceful revolution.

Studying in a different country has made me appreciate more my culture and my upbringing. I don't need to be loud and rude to assert myself. I know what I am capable of achieving. The society where I come from has already given me the opportunity to enrich myself as a person and as a professional. It has already given me security.

Studying in Holland has also made me feel proud of being Asian, seeing how my Asian colleagues can be so good and artistic in their presentations, how fast they can calculate financial and economic stuff, how good they are with computers, and most especially how good they are as friends.

Living in Holland has also made me dream of the time when the Philippines will become another Asian tiger. Holland had humble beginnings, but is now wealthier than many of its bigger neighbors. Maybe the Philippines cannot leap right away to the status of an Asian tiger, but we can be one of Southeast Asia's more progressive countries.

My stay here has given me the opportunity to work on a development project in the Philippines. I have very high hopes that my project will work and that I will finally realize my dream of helping the country that I love.

My experiences so far have left me with a bittersweet taste, but they were still very enriching.

Theresa A. O. Esteban, 28, is a student in urban planning and is enrolled at Erasmus Universiteit Rotterdam, the Netherlands.

Monday, September 19, 2005

CAP's Debacle

CAP: From pre-need's poster boy to whipping boy
Daxim L. Lucas and Elizabeth L. Sanchez
Inquirer News Service

COLLEGE Assurance Plan Philippines Inc. (CAP) is the biggest and most successful pre-need firm in the country's history.

It is also well on its way to becoming one of the country's biggest corporate failures.

In its death throes, CAP threatens to drag down with it a multibillion-peso industry, more than 40 pre-need companies, and the financial fortunes of millions of clients who hinged their futures on the promise of guaranteed returns.

To be sure, the company has performed well in the past, having paid out an estimated P13.9 billion in tuition benefits since its inception in the early 1980s. But it has since fallen on hard times.

Once a symbol of financial security, CAP's flagship product--the "open-ended" educational plan, which guaranteed matriculation benefits regardless of future tuition hikes--has fallen into disrepute. Schools no longer accept company-issued checks as tuition payments. The firm is insolvent, and its top officials have recently been charged by regulators before the courts.

Critics of the pre-need industry--and an increasing number of dissatisfied clients--now believe that early success has transformed successful financial schemes into financial scams.

Early warning
One such critic is banker and financial reform advocate Evangeline Escobillo.

As an officer of the Actuarial Society of the Philippines (ASP), she said that CAP's troubles, along with that of the pre-need industry, were predicted as early as the mid-1990s.

"As actuaries, we could tell even back then that something was very wrong," she said in an interview last week. "We had a hunch."

Having dealt with the mathematical aspects of the insurance industry in the past, Escobillo and some ASP members volunteered to review the finances and accounting practices of the pre-need industry.

A close cousin of the insurance industry, the pre-need industry was then "red hot." The economy was beginning to take off in the 1990s, disposable income was rising, and clients were buying educational plans in droves. More importantly, the real estate industry was booming, and high returns on investment were becoming the norm.

Even during the boom times, Escobillo said a cursory examination of industry practices already revealed shocking weaknesses.

"These companies' business models were counting on annual returns of 18 percent," she said incredulously. "That was very optimistic. It was not sustainable."

More importantly, her group discovered that the entire pre-need industry was using aggressive accounting practices which understated liabilities and tended to present a rosier financial picture than warranted.

Many owners and top officials of pre-need firms were content to mimic CAP's practices, not realizing that they were fooling themselves and their clients, Escobillo explained.

"Everyone else adopted it," she said. "No one bothered to question the system."

Ticking time bombs
The financial troubles that have befallen at least three major pre-need firms since last year merely highlighted in very harsh terms that the old business model of "open-ended" plans was a disaster waiting to happen.

The Federation of Philippine Pre-Need Plan Companies (FPPC), the umbrella association of the country's more than 40 pre-need companies, now admits that their old business model was bound to fail.

An oversight committee formed by the Securities and Exchange Commission (SEC) last year to track the financial health of embattled CAP described the firm's products as ticking time bombs.

These open-ended plans had a hidden flaw: it committed the firm to a financial obligation that had no ceiling (a deregulated tuition environment) amid increasingly limited returns on investments.

How did this scheme evolve?

In 1980, lawyer and pre-need executive Enrique Sobrepe¤a Jr. formed CAP and introduced the education plan after realizing that savings of the average family were often insufficient to send children to school.

His business model capitalized on the dream of every Filipino family to send their children to college.

Packaged as an educational plan, CAP pooled plan holders' premium payments and, with the aid of trustee banks, invested them in high-yield assets and securities. The success of the scheme was contingent on CAP's investments appreciating faster than the cost of college education.

It worked-but only for a while.

By the mid-1990s, the industry's business model was coming under intense pressure as the government deregulated the tuition environment for colleges and universities. The outbreak of the 1997 East Asian financial crisis signaled a sea change for CAP and the rest of the industry.

According to Escobillo, many pre-need companies like CAP tried to cover their ballooning liabilities and benefit payouts by simply selling more educational plans.

"The proceeds from the new sales were used to service maturing obligations," she said. "This is how pyramiding scams operate."

As with fly-by-night pyramid scams, the financial house of cards was bound to collapse, leaving many clients holding the bag.

Dashed hopes
Pietro Azurin, an electrical engineer whose son is a sophomore at a prestigious university in Metro Manila, bought his CAP education plan in the 1980s for roughly P14,000.

Azurin said he latched on to a CAP agent's sales pitch: that the firm will take care of sending his child to a school of his choice. He felt that he was buying more than a contract. He was trying to ensure a good future for his son through education, especially when old age ends his earning capacity.

"Ngayon, sa araw na inaasahan mo, wala na. Kailangan mag-umpisa ulit (Now it's no longer there in your time of need. We need to start over)," Azurin said, admitting that ordinary plan holders like himself did not see the symptoms of the industry's near collapse coming.

Azurin has now borrowed money from loan sharks and friends to pay for his son's enrollment and mid-term exams, as schools clamp down on students who fall behind on tuition payments.

He also pins his hopes on a promissory note from CAP which has pledged to reimburse him and other plan holders by next month for the advances they made for their children's education.

"Sinabi nila sa amin na huwag kami bibitaw, na pahabain ang pasensya. Pero malapit na maubos ang pisi namin (They told us not to let go, to be patient. But we're almost at the end of our rope)," Azurin said.

He complains about being "dribbled" between CAP and the SEC after airing his complaint to both parties. For now, all he can do is wait, after the SEC made him and other plan holders sign a letter to the CAP president seeking an explanation for the firm's woes.

Like millions of other clients of CAP and other pre-need firms, Azurin wants to know what went wrong. He wants to know if regulators were negligent. He wants to know what he can do to recover his hard-earned money and to make the company with sweet-talking salesmen honor its obligations.

Power Rates Hike

As I See It : Napocor petitions for yet another rate hike

Neal H. Cruz
Inquirer News Service

WILL OUR MISERIES NEVER CEASE? AFTER the expanded value added tax-which, upon its implementation beginning this month, will trigger a chain-reaction of increases in the prices of practically everything-we will be hit by another wallop. The power rate will increase-again-as if it is not yet high enough.

While the whole nation's attention was riveted to the political crisis, the National Power Corp. took advantage of the distraction to petition the Energy Regulatory Commission for yet another 71-centavo rate increase. The ERC already granted, just late last year, a provisional authority to Napocor to increase its rates by an average of P.9798 per kWh. In this latest petition, the power firm refused to go into the details as to why it is asking for another increase. It just said the increase would cover the cost of "oil and other operating expenses" of the ailing state-run firm.

On top of the rate increase, Napocor also managed to quietly get another $400-million (more than P2 billion) foreign loan. Of this, $300 million was obtained through the issuance of six-year floating rate notes. The remaining $100 million, secured only last week, completed the financial package. The fresh borrowings are all guaranteed by the government. They will set back the privatization of Napocor as mandated by the Electric Power Industry Reform Act (Epira).

Napocor is already the biggest contributor to the national budget deficit. It is expected to incur another P31 billion in losses this year, in spite of the fact that the Philippines is already running neck and neck with Japan, Asia's richest nation, as the countries with the highest power rates in the region. The Philippine government has already absorbed P200 billion (repeat, billion) of Napocor's debts, pursuant to the Epira. Thus, the taxpayers will have to pay for Napocor's debts, old and new, on top of higher electricity rates.

But while the government is quick to implement the Epira provision absorbing Napocor's debts, it is very slow in implementing the provisions to privatize this biggest of the government's white elephants.

Where does the money go? Here is only one example: A joint congressional panel investigating Napocor found out last year that thousands of Napocor officials and employees were paid a total of about P12 billion in retirement packages in preparation for the firm's auction sale.

Of the amount, P119.4 million was given to 25 executives and senior officers. After getting their generous retirement benefits, these top management executives were then re-hired at similarly fabulous salaries.

How can the government ask the people to pay higher taxes when it is squandering Napocor's dwindling funds to graft and corruption, in bribes to congressmen and mercenary witnesses, and for the expenses of camp followers made to travel abroad just to clap during GMA's speeches?

Why the government is giving priority to Napocor's fresh borrowings rather than to its privatization, as provided by the Epira law, is still a mystery. Privatization will, in fact, help the government raise the funds needed to pay Napocor's debts and reduce government borrowings as well as the tax burden on Filipinos. Privatization is one way to stop the financial hemorrhage brought about by new borrowings and to arrest the government's worsening fiscal condition.

New borrowings, on the other hand, will add to the already unmanageable debt burden. Who in his right mind will buy Napocor with its gargantuan debts?

Adding insult to injury is the jubilation of the Bangko Sentral over the new borrowings, when it should be sorry for them. Why? The latest borrowings, the Bangko Sentral boasted, "boosted the country's gross international reserves to an all-time high of $17.852 billion!" Adding more to our debt burden, that's something to be proud of?

Budget Secretary Romulo Neri, the guy who has started refusing to sign checks because there are no more cash to cover them, was more circumspect when he correctly pointed out that Napocor's debt is taking its toll on the government's fiscal position, with the bulk of government expenditures during the first seven months of this year going to interest payments alone. The bitter truth is, the government has no clear picture of what to do with the ballooning budget deficit and foreign debts. And Napocor is already the biggest single contributor to this deficit.

The Philippine government is already in a debt spiral-borrowing more to fund interest payments alone-not even the principal of maturing loans-thus making our national debt bigger and bigger, with no sign of how and when the spiral will end. This is the straight path down to bankruptcy.

The government's solution is simplicity itself: squeeze more taxes out of the people. But the Filipinos, among the poorest people in the world, have no more to give. They can't even afford their daily bread; where will they get the taxes to pay the government? They will be like the goose that lays the golden egg, which the greedy giant forced to lay more and more golden eggs so that it died.

I think Congress, which has the power of oversight on these borrowings, should look into the picture again and see where the money is going or has gone. It is imperative that Congress look into this mess because the executive branch has shown that it cannot stop the financial hemorrhage but, in fact, contributes to it. Just look at GMA's latest secret deal-the Venable lobby contract that will cost the taxpayers another P4 million a month, another expense they can no longer afford.

Who knows how many of these secret deals are still out there undiscovered?

Sunday, September 18, 2005

PAL Blues

Public Lives : Surviving PAL country

Randy David
Inquirer News Service

OUR COUNTRY IS AN AIRCRAFT, AND ITS NAME is Philippine Airlines. We are its patient passengers. This plane is long-delayed for a host of reasons-a bomb threat from nowhere, a malfunctioning engine that has seen better days, chaotic procedures, and a crew that is too timid and too uncaring to explain the situation to the passengers.

I did not realize how uncannily close this parallelism was until I took PR 812 from Davao to Manila the other day. The flight was supposed to leave Davao at 2:15 p.m. on Sept. 16. It was able to take off only at 8:50 a.m. the following day, Sept. 17. The passengers were mostly teachers, priests and nuns who attended a convention of Catholic schools. I flew into Davao the previous day for a lecture at the University of the Philippines in Mindanao. I thought of squeezing in some birdwatching while there, and so I had myself re-booked for a mid-day flight the following day. It was a mistake.

Twenty minutes after boarding should have begun, a voice in the PA system curtly announced that further security procedures needed to be conducted. The plane was pulled away from the airport terminal. The cargo bins were towed to the tarmac and their contents spread out on the cement floor. From the large glass panes of the waiting lounge of the new airport, we spotted a couple of sniff dogs that were put to work. It meant only one thing-they were looking for bombs. But this caused hardly any alarm, only mild grumbling over a possibly long delay.

One of the dogs appeared to stage its own revolt. As it was led to an endless line of cartons containing the durian fruit, the dog suddenly broke loose from its trainer and circled the whole cargo over and over like a horse gone mad. We all laughed and took vicarious delight in this amazing act of rebellion. Later, passengers with checked-in baggage were asked to go down to the tarmac to identify their baggage and to drag it to the cargo bins. Two small vans shuttled back and forth to ferry the passengers. I was pleasantly surprised by the extraordinary serenity with which my fellow passengers complied with this task.

Finally, at almost 6 p.m., boarding was announced. Before this, no PAL personnel bothered to show up at the waiting lounge; neither was there any explanation offered by anyone for the extended delay. Inside the plane, more bad news awaited us. One of the plane's engines failed to start. At around 7:30 p.m., we were asked to return to the airport lounge to wait for further instructions. No such instructions came. Some passengers decided to withdraw from the flight, and asked that their baggage be off-loaded. It was supper time. This was a nation left to fend for itself.

At 9 p.m., a re-boarding was announced. Patiently, we all made a line for the door. Everyone was either calling or texting someone who was waiting at the Manila terminal. I had run out of battery charge and all I could manage was a short message to Karina, my wife, telling her that I would miss the birthday dinner for our daughter Kara. This wasn't as bad, I said, as missing a connecting flight to San Francisco or to Dubai where some passengers were headed. She was all praise for my seeming patience and coolness. At 10 p.m., the captain announced that the same problem with the engine had recurred.

At that point, more people decided to leave the plane. They saw the engine malfunction as a bad omen. Once more, cargo was off-loaded from the plane. Snack packets containing peanuts and some jello were distributed. This was our dinner. Seeing this meager fare, one passenger opened a large box of pastries and shared the goodies with everyone. Another passenger offered a gallon of rare durian ice cream. It is funny and heart-warming. Abandoned by their leaders, Pinoys take stock of what they have and share it.

At a little before 11 p.m., Captain Rocha announced that the plane was all right and it was safe to fly, but that the baggage of those who were quitting the flight had to be unloaded. This was taking time. We were told that the PAL terminal in Manila would already be closed by the time we landed. There was no choice but to abort the flight. All the baggage had to be off-loaded and collected by the passengers. The same plane would leave at 7:30 the next morning.

That was when I began to lose my cool. I sought out and confronted the PAL manager in Davao, a Mr. Arturo Balaga. Unknown to many of us, he was in his office all this time, but not once did he bother to come out to explain the situation to the passengers. He said that PAL could not offer accommodation because all hotels were fully booked. However, he said PAL would reimburse those who would find a place to stay for the night. It was almost midnight.

Weary from the long wait, children began to fret and the elderly were moving around in a daze, wondering where they might deposit their suitcases and fruit boxes. One of the passengers, the writer Sylvia Marfori, approached passengers to ask if they needed a bed for the night, offering to put them up in her own home. She gathered more than a dozen people, myself included. She called up a friend of hers, Min Ponce-Millan, and asked her to accommodate more people in her apartelle. That's how we survived PAL's deceitful negligence.

The PAL manager had lied to us; some passengers found vacant rooms in various hotels. But many slept with no blankets in the cold iron benches of the waiting lounge. PAL's in-flight crews are its saving grace, but the indifference of management cancels everything they do. I found new friends on this trip, and discovered a trait that makes this nation survive despite its leaders-the instinct for generosity of its people.

Thursday, September 15, 2005

School Droputs

Posted by Yvonne Chua 

HARD times have forced more than half a million high school students and 336,000 post-secondary students to quit school this year, according to Pulse Asia's July 2005 nationwide survey.

In addition, 168,000 elementary students did not enroll this year, the poll showed.

Lack of money for school expenses (40 percent) and tuition (35 percent) were the chief reasons given for leaving school.  Twenty-nine percent cited the student's refusal to study as reason as well.

PCIJ earlier reported that the dropout problem in high school was especially alarming among boys.

Pulse Asia, which polled 1,200 adults, also found that the controversy surrounding educational plans has resulted in the public's mistrust of pre-need firms.

About 70 percent of families that still don't own a plan say they won't buy one even if they had the money. Of this group, 41 percent say pre-need companies can't be depended on to honor the provisions.

Big pre-need companies like the College Assurance Plan and Pacific Plans have failed to pay many planholders, especially those owning traditional plans, their full benefits.

Pulse Asia said only a tenth of households have at least one family member who has or had an education plan.

 Read Pulse Asia's full report.

Marcos Legacy

Viewpoint : Fire sale

Juan Mercado
Inquirer News Service


Ilocos Norte Rep. Imee Marcos tacked that shingle on her tattered crusader's credentials after she skipped to Singapore to avoid the impeachment vote. This "failure of judgment" stemmed from love for mother, she murmured.

Marcos reasonably notes that Imelda backs President Gloria Macapagal-Arroyo. Right, greater love than this no woman has than to mortgage a congressional vote to bury dear old dad in Libingan ng mga Bayani [Heroes' Cemetery].

"Not for Sale" is also her mama's slogan. The former first lady told BBC she'd sue a cash-strapped regime if it auctioned an estimated $10 million (P560 million) worth of jewelry. These were seized from the Marcoses after People Power I sent them scampering to Hawaiian exile. "Some are family heirlooms," she explained to The Independent. "I'm praying for their return."

That may put calluses on Madame's knees. Three batches of precious stones were seized. One batch was recovered in Malacañang. Worth $9 million, the Roumeliotes collection was seized in March 1986 from a fleeing Greek national. US customs officers impounded jewels in "32 to 34 Louis Vuitton cases" when the Marcoses disembarked in Honolulu.

Current plans set an auction in Geneva this November, the peak season for jewelry sales there, or May 2006. But experts from Christie's and Sotheby's auction houses are due to assess the stones stashed in the vaults of the central bank.

The trove includes a Persian-style necklace studded with more than 100 carats of pink and canary diamonds. Another bracelet, crafted by Bulgari, has a 30.7-carat stone embedded in the center. That is appraised at $800,000.

"The government has not shown any proof the funds used to purchase them were ill-gotten," Imelda protested to Reuters. But the Presidential Commission on Good Government scoffs that the Supreme Court has upheld the seizures.

"'Tis plate of rare device and jewels / Of rich and exquisite form, their values great, /And I am something curious, being strange / To have them in sale stowage," Shakespeare notes in "The Comedy of Errors."

As in other Imelda sallies, there'll be varied reactions to this fire sale. That's guaranteed by what former Prime Minister Lee Kwan Yew called, in his memoirs "The Singapore Story," the Marcoses' "penchant for flamboyant frivolity in a country of desperate poverty."

Filipinos have "a soft forgiving culture," he wrote. "Only in the Philippines could a leader like Ferdinand Marcos, who pillaged his country for 20 years, still be considered for a national [hero's] burial."

"Imelda had a penchant for luxury," Lee adds. "When they visited Singapore, they came in two DC-8s, his and hers... Like Hollywood melodrama, these could have happened only in the Philippines."

"Even the devil can participate in the auction," says Presidential Commission on Good Government (PCGG) Commissioner Ricardo Abcede. "She can bid for the jewels in an open market."

The PCGG, in fact, under the late graft-buster Haydee Yorac, won a Supreme Court decision that saw $683 million, squirreled in Marcos shell foundations abroad, returned to the national treasury.

Others will recall Supreme Court decisions that found disparity between the declared income of the Marcos couple and their properties. Some will dust off the old martial law wisecrack: "Imelda is into the mining industry. This is mine. That is mine. All is mine."

This controversy reminds me of the time I drove a United Nations colleague from the Termini in central Rome to Leonardo da Vinci Airport. As International Labor Organization economist Lim Lin Lean buckled herself, she cracked, "I didn't know you Filipinos were that rich!"

Seeing the puzzled look on my face, she explained. In her spare time, she gawked through the jewelry displays at Bulgari. Suddenly, store employees began shooing everybody out.

"It was your first lady, Imelda Marcos, who was shopping. Proletariats like us were locked out," she laughed.

"Well, diamonds are a woman's best friend," I weakly countered.

"Those of us in the cheaper sets are told to clap. The rest rattle their jewelry." But this is farce that sears. The yardstick for man's worth is measured in carats, not in his God-given nature.

"Next to a spirit of discernment, the rarest things in the world, are diamonds and pearls," Jean de la Bruyere once wrote.

Shaped by Ignatian discernment, held by Japanese captors and afflicted by World War II shortages, this Jesuit seminarian wrote about the carat-less wealth. Here are excerpts from the 1943 (?) "Jewels of the Pauper" written by Horacio de la Costa, SJ:

"We are a remarkably poor people ... even in riches of the spirit… No Shakespeare, no Cervantes has yet been born among us to touch, with immortality, that in our landscape, in our customs, which is most vital, most original, most ourselves....

"But this pauper, among the nations of the earth, hides two jewels in her rags. One of them is our music. We are one people when we sing....

"We are again one people when we pray. This is our other treasure: our faith. It gives somehow to our little uneventful days a kind of splendor, as though touched by a King....

"These are the bands that bind us together. These are the soul that makes us one... As long as there remains one mother to sing a lullaby and one priest to offer God to God, this nation may be conquered, trampled upon, enslaved, but it cannot perish. Like the sun that dies every evening, it will rise again from the dead."

Tuesday, September 13, 2005

Arangkada for September 14, 2005




Si Sen. Panfilo Lacson ang usa sa tulo ka opisyal sa gobyerno sa Pilipinas nga gipasanginlang maoy nakadawat sa sekretong mga dokumento nga nakuha sa giingong pagpangespiya sa duha ka Pinoy nga naposasan ug nakiha na sa Federal Bureau of Investigation. Silang Michael Ray Aquino, 39, batabata ni Lacson, ug FBI analyst Leandro Aragoncillo, 46, naturalized US citizen, giingong nasakpan nga nagpayuhot og classified nga mga dokumento sa FBI labot sa krisis sa politika sa Pilipinas.

Si Aragoncillo nasakpan sa modernong teknolohiya sa paniktik sa FBI nga nipasa sa sekretong mga dokumento ngadto ni Aquino gikan sa Pebrero hangtod sa Agosto ning tuiga, kanus-a nisulbong pag-ayo ang Gloriagate scandal sa Pilipinas, pinaagi sa text messages sa cellphone ug e-mail messages pinaagi sa Hotmail ug Yahoo.


Wa ilha ang tulo ka opisyal sa Pilipinas nga napadad-an sa classified nga mga dokumento. Pero gidudahan nga ang mga dokumento maoy tinubdan sa pagbisto ni Lacson ug sa ubang lider sa oposisyon nga ang US government mas unang nahibawo kay sa atong mga politiko sa giingong panag-istorya sa telepono nilang Presidente Arroyo ug kanhi Comelec Commissioner Virgilio Garcillano.

Samang mga dokumento ang gitoohang tinubdan sa kasayuran sa kaandam sa FBI pag-authenticate sa Garci tapes atubangan sa pagkuwestiyon sa Malakanyang sa katinuod sa recording. Pero sa kapulihay wa na manghilabot ang FBI kay ang oposisyon ug ang Malakanyang niuna pagdangop sa ubang mga eksperto sa Australia, New Jersey ug Texas.

Si Lacson man o dili ang utok sa nabulilyasong operasyon klarong gitumong ni sa paglili sa mga kasayuran nga nahipos sa FBI nga posibleng maka-influencia sa administrasyon ni US Pres. George Bush Jr. pagbakwi sa suporta parang Pres. Arroyo.


Silang Aquino ug Aragoncillo gipriso nga way piyansa. Matod ni US Attorney Christopher J. Christie samtang ang pagpangespiya wa mahilambigit sa terorismo, tinud-on pagukod ang mga dinakpan kay ang ilang krimen nakabuslot sa nasudnong seguridad sa US.

Nasakpan si Aragoncillo sa FBI dihang iyang gikumbinser ang mga opisyal sa imigrasyon paglugway sa visa ni Aquino nga dugay nang napupos. Human gi-alerto sa imigrasyon, gilusad dayon sa FBI ang audit sa computer activities ni Aragoncillo. Nagduda si Christie nga si Aragoncillo klarong nanguwarta ug nisuporta sa pamolitika sa mga nibayad sa iyang serbisyo.


Bisan wa pang mga dokumento sa FBI, naklarong managlahi ang baruganan sa mga opisyal sa US tungod sa pagsaway sa mga opisyal sa US embassy sa Manila batok sa Malakanyang bisan kon ang opisyal nga baruganan sa Washington mao ang pagsuporta ni Presidente Arroyo.

Pero kay wa man kabuylo ang pagpresentar sa mga ebidensiya sa giingong pagtikas sa niaging eleksiyon ginamit ang payola sa jueteng, wa dasiga sa US ang kampanya pagpalagpot ni Arroyo sa palasyo. [30]

Oil Smuggling

Fuel smuggling costing gov't P9.5B a year Michelle V. RemoInquirer News Service
THE Department of Finance and the Bureau of Customs have estimated that the government has been losing about P9.5 billion in revenues a year due to fuel smuggling, Finance Secretary Margarito Teves said.
Of the amount, P7 billion are in the form of lost excise taxes and P2.5 billion in uncollected import duties, Teves said.
"While the Bureau of Customs has apprehended suspected fuel smugglers, the lack of incontrovertible evidence has made it difficult for them to confiscate the products or prosecute the offenders," he said.
Caltex Philippines Inc., at a recent forum on the VAT Reform Law, earlier raised its concern over the growing number of fuel smugglers, which it said were directly competing with their legitimate oil dealers.
The finance department and the customs bureau have come up with a strategy that would help detect whether fuel sold in the market was smuggled, Teves said.
They have signed a memorandum of agreement with the Philippine Institute of Petroleum (PIP), a private sector organization, that will help the government implement a chemical technology in detecting smuggled fuel, he said.
With the chemical technology, authorities will use a certain chemical to mark fuel whose taxes and duties have been paid by the importers.
Under the government's anti-smuggling plan, customs authorities would regularly check the market to monitor sale of fuel. When a fuel does not contain the chemical markings, then they would have reason to suspect that the product was smuggled, the Department of Finance said in the statement.
Aside from addressing fuel smuggling, Customs Commissioner Alexander Arevalo earlier said the bureau had also tapped the assistance of courier service companies FedEx, UPS and DHL to help combat smuggling of other products.
The three companies will serve as third-party informants to help the Bureau of Customs detect smuggled items, Arevalo said. In particular, the couriers, from point of departure, will inform the bureau of the contents of the products they will deliver to the Philippines, he said. With

RPN, IBC For Sale

RPN-9, IBC-13 to be sold jointly Michelle V. RemoInquirer News Service
THE government is studying various options for the privatization of state-owned television stations, with the possibility of jointly selling Radio Philippines Network Inc. (RPN) Channel 9 and Intercontinental Broadcasting Network (IBC) Channel 13, Finance Undersecretary Jay Singson, who is in charge of the government's privatization program, said Monday.
The interagency Privatization Council has decided to offer for re-bidding the financial advisory services for the privatization of RPN-9 so that the service package can include IBC-13, Singson said.
"The financial adviser would suggest whether it would be best to sell the two stations separately or jointly," he told reporters.
The government had declared CLSA Exchange Capital as winning bidder six other advisory firms at the bidding on June 27 for the financial advisory contract for the privatization of RPN-9.
Singson said the bidding process would have to be done again because the government wanted to include IBC-13 in the package, and CLSA had agreed with the decision and had expressed intention to join in a bidding again.
Other bidders at the previous auction were BPI Capital Corp.; Ernst & Young; KPMG, Laya, Mananghaya & Co.; PCI Capital Corp.; PricewaterhouseCoopers; and Punongbayan Araullo.
Singson said the privatization of RPN-9 and IBC-13 would be pushed to next year but the new bidding of the contract would be held before the end of this year.
Reportedly interested in buying RPN-9 are Manuel Pangilinan, chairman of Philippine Long Distance Telephone Co.; Solar Sports of businessman Wilson Tieng; and Mike Velarde, leader of the Catholic charismatic group El Shaddai.

Monday, September 12, 2005

HK's Disney Opens

Disney opens its first theme park in China

Agence France-Presse

HONG KONG -- Disney officially opened its newest theme park in Hong Kong by Chinese Vice President Zeng Qinghong Monday, marking its first step into the lucrative China market.

Some 2,500 dignitaries and guests were on hand, including Hong Kong leader Donald Tsang, Walt Disney Company CEO Michael Eisner and company president Robert Iger.

The ceremony opening the three-billion US dollar park kicked off with a traditional Chinese lion dance in the forecourt of Sleeping Beauty Castle.

The Hong Kong government, which chipped in 1.8 billion Hong Kong dollars of the construction cost and owns a half-share of equity in the project, is hoping the park will spur local tourism and bring in more than 100 billion dollars over the next 40 years.

RP Exports


China gives Philippine exports a lift

By Francisco Alcuaz Jr. Bloomberg News
MANILA Philippine exports grew in July at the fastest pace in six months as overseas sales of electronics revived and shipments to China increased threefold.
Shipments to China climbed to $567.6 million from $188.9 million, the National Statistics Office said Friday in Manila, bringing them into the range of the Philippines' two biggest markets: Japan at $598.1 million and the United States at $567.6 million. Sales to Japan were flat. Shipments to the United States dropped 23 percent.
Overseas sales rose 11.4 percent to $3.46 billion, the Statistics Office said. That compares with 1 percent increases in May and June and was the biggest gain since January's 15.2 percent rise.
Rising exports may help President Gloria Macapagal Arroyo's government improve growth in a country where a third of the population lives on less than 60 U.S. cents a day and where more revenue is needed to curb debt that swallows a third of state spending on interest payments alone. Exports make up two-fifths of the $85 billion Philippine economy.
"This may help put us back on track as far as the economy is concerned," said Emma Pante, an economist at Rizal Commercial Banking in Manila. "We're benefiting from demand China cannot meet."
But the recovery in exports growth may be "shaky" because it is not based on improved competitiveness, Pante said.
Arroyo's government says growth may slow this year to less than its minimum 5.3 percent target, from 6.1 percent in 2004, in part because higher prices of crude oil have raised local energy prices, damping demand for some products and services. The Philippines imports almost all of its fuel. The Asian Development Bank cut its 2005 growth estimate for the Philippines last week to 4.7 percent from 5 percent.
Electronics exports rose 14 percent to $2.29 billion. That followed declines in the previous two months and a 1 percent increase in the first six.
Arthur Young, president of the chip maker PSi Technologies, estimated that Philippine electronic exports will grow 7 percent this year, driven by worldwide demand for mobile phones, flat-screen televisions, iPod-like music devices and new versions of video game consoles. Philippine companies make chips that go into these products.
" I don't see killer applications in the market today, but there are a lot of new products like the new Xbox and PlayStation," Young said. "There are new opportunities for driving growth. The second half will be better than the first."
Young said first-half growth had been dragged down by Toshiba's transfer to China of its local notebook operation, which produced two million computers a year.
Growth may also falter if rising crude oil prices slows world economies, Young said.