Reashot Xigwin
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pr1v4t33r
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Philippines to build strategic sea vessels
On a buying binge for big-ticket items to modernize the military, the Department of National Defense (DND) struck a deal for the transfer of technology fitted on two brand-new Strategic Sealift Vessels (SSVs) it has purchased from Indonesia.
Defense Assistant Secretary for personnel Efren Fernandez said the technology transfer by Indonesia’s PT PAL (Persero) Surabaya is highly significant, as this would allow a local shipbuilder based in Cebu to manufacture the same type of vessel.
Fernandez, former head of the Bids and Awards Committee of the defense department, recently visited PT PAL Surabaya shipyard in Indonesia, bringing along with him the shipbuilder from Cebu as an observer.
“During our inspection of the PT PAL Surabaya shipyard, the Indonesian shipbuilder agreed for technology transfer and hopefully we can locally build our own Navy ships in the near future,” Fernandez said.
Persero has bagged the contract for the delivery of two brand-new SSVs worth more than P3 billion for the Philippine Navy under the Armed Forces modernization program.
The Indonesian firm has cut the steel for the second SSV at its plant in Surabaya, thus formally setting off the assembly of the ship, which the contractor has until May next year to deliver to the Philippine Navy.
The first SSV, which is expected to be delivered either late this year or early next year, is 80 percent complete following the steel cutting in January this year.
The Philippines, despite being the fourth biggest shipbuilder around the globe – next only to China, South Korea and Japan – was only able to locally build the BRP Tagbanua, a Navy cargo ship. This was because of the lack of military technology in building modern warships.
Other than the two SSVs, the Philippine Navy is also getting two Landing Craft Heavy (LCH) that the Australian government has decommissioned and donated to the Philippines.
The newly commissioned ships are on their way from Cairns, Australia and are expected to arrive in the country next week to join the Navy’s five utility ships.
Philippines to build strategic sea vessels | Headlines, News, The Philippine Star | philstar.com
On a buying binge for big-ticket items to modernize the military, the Department of National Defense (DND) struck a deal for the transfer of technology fitted on two brand-new Strategic Sealift Vessels (SSVs) it has purchased from Indonesia.
Defense Assistant Secretary for personnel Efren Fernandez said the technology transfer by Indonesia’s PT PAL (Persero) Surabaya is highly significant, as this would allow a local shipbuilder based in Cebu to manufacture the same type of vessel.
Fernandez, former head of the Bids and Awards Committee of the defense department, recently visited PT PAL Surabaya shipyard in Indonesia, bringing along with him the shipbuilder from Cebu as an observer.
“During our inspection of the PT PAL Surabaya shipyard, the Indonesian shipbuilder agreed for technology transfer and hopefully we can locally build our own Navy ships in the near future,” Fernandez said.
Persero has bagged the contract for the delivery of two brand-new SSVs worth more than P3 billion for the Philippine Navy under the Armed Forces modernization program.
The Indonesian firm has cut the steel for the second SSV at its plant in Surabaya, thus formally setting off the assembly of the ship, which the contractor has until May next year to deliver to the Philippine Navy.
The first SSV, which is expected to be delivered either late this year or early next year, is 80 percent complete following the steel cutting in January this year.
The Philippines, despite being the fourth biggest shipbuilder around the globe – next only to China, South Korea and Japan – was only able to locally build the BRP Tagbanua, a Navy cargo ship. This was because of the lack of military technology in building modern warships.
Other than the two SSVs, the Philippine Navy is also getting two Landing Craft Heavy (LCH) that the Australian government has decommissioned and donated to the Philippines.
The newly commissioned ships are on their way from Cairns, Australia and are expected to arrive in the country next week to join the Navy’s five utility ships.
Philippines to build strategic sea vessels | Headlines, News, The Philippine Star | philstar.com
Cossack25A1
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Philippines to buy submarines and advanced missile systems for the first time
Published: 17:35 August 1, 2015
By Barbara Mae Dacanay, Correspondent
This will ensure strength in the South China Sea
Manila: For the first time, the Philippines will buy electric and diesel-run submarines, including advanced missile systems, as listed in its $22.11 billion (998 billion pesos or Dh83.166 billion) modernisation plan that was approved in July, to ensure its strength against China, Taiwan, Vietnam, Brunei, and Malaysia which have overlapping claims in the South China Sea, sources said.
“The Philippine Navy will buy several submarines and missile systems in the next five years from private manufacturing firms either from South Korea or Japan,” a military source who requested anonymity told Gulf News.
“The ambitious purchase was scheduled after the Philippine economy grew, received good ratings from rating agencies, and allowed borrowing for expensive war materials, but the Philippines could not yet match China’s 26 submarines,” said the same source.
In 2013, the Philippine Navy bought two 1.400 tonne Incheon-class frigates (also called Future Frigate experimental or FFX), manufactured by South Korea’s Hyundai Heavy Industries and STX Offshore and Shipbuilding for $400 million (18 billion pesos or Dh1.5 billion); two strategic sealift vessels or floating command centres which can transport three helicopters per vessel, soldiers, and supplies at sea, from Indonesia’s PT PAL (Persero) for $85.7 million (3.86 billion pesos or Dh321.6 million). The new frigates and sealift vessels will arrive in the Philippines at the end of 2015 or early 2016, President Benigno Aquino announced recently.
It is widely reported that the Philippine Navy is manned by three US-made refurbished frigates: BRP Tagbanua; BRP Gregorio del Pilar and BRP Ramon Alcaraz, but Japan’s defence ministry said the Philippine Navy has 80 warships; China, 892; Malaysia, 208; and Vietnam, 94.
The Philippine Coast Guard also bought 10 40-metre-long multi-purpose response vessels (MRRV) from Japan in late 2013 for $184 million (8.09 billion pesos or Dh674.6 million), in a loan forged with Japan International Cooperation Agency (JICA) in 2014. They will augment the Coast Guard’s 19 rescue vessels, when they arrive in the Philippines at the end of 2015, sources said.
The Coast Guard secured a $20 million (900 million pesos or Dh75 million) loan from the United States’ Defence Threat Reduction Agency (it has a maritime security project with the US’ Weapons for Mass Destruction Proliferation Prevention Programme) for three aerial surveillance radars, two surface sensors and three surveillance planes for the Philippine Coast Guard National Coast Watch Centre in northern Luzon and southwest Philippines.
Recently, the Philippine Air Force bought 12 new FA-50 fighter-trainers made by Korea Aerospace Industries. six Close Air Support Aircraft; seven of 13 AW-109 helicopters; and six of eight Bell-412 combat utility helicopters made by Korea Aerospace Industries. The two fighters will arrive in December 2015 or early 2016, and the rest in 2017.
Japan’s defence ministry said the Philippines has a total of 26 combat aircraft, compared with China’s 2,582 combat aircraft.
The Philippine government also allotted $22 million (1 billion pesos or Dh83.33 million) for the development of three new naval bases that will protect its 36,000 kilometre coastline facing the South China Sea.
In 1995, Congress approved an $8.08 billion (364 billion pesos or Dh30.3 billion) military modernisation plan for 15 years. But only 10 per cent of the approved budget was secured by a loan 15 years later, in 2010, the budget department said.
China, Taiwan, and Vietnam claim the whole of the South China Sea and several parts of the oil-rich Spratly Archipelago. Brunei, Malaysia, and the Philippines claim their respective exclusive economic zones in the South China Sea and parts of the Spratly Archipelago.
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Philippines to buy submarines and advanced missile systems for the first time | GulfNews.com
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Philippines to buy submarines and advanced missile systems for the first time
Published: 17:35 August 1, 2015
By Barbara Mae Dacanay, Correspondent
This will ensure strength in the South China Sea
Manila: For the first time, the Philippines will buy electric and diesel-run submarines, including advanced missile systems, as listed in its $22.11 billion (998 billion pesos or Dh83.166 billion) modernisation plan that was approved in July, to ensure its strength against China, Taiwan, Vietnam, Brunei, and Malaysia which have overlapping claims in the South China Sea, sources said.
“The Philippine Navy will buy several submarines and missile systems in the next five years from private manufacturing firms either from South Korea or Japan,” a military source who requested anonymity told Gulf News.
“The ambitious purchase was scheduled after the Philippine economy grew, received good ratings from rating agencies, and allowed borrowing for expensive war materials, but the Philippines could not yet match China’s 26 submarines,” said the same source.
In 2013, the Philippine Navy bought two 1.400 tonne Incheon-class frigates (also called Future Frigate experimental or FFX), manufactured by South Korea’s Hyundai Heavy Industries and STX Offshore and Shipbuilding for $400 million (18 billion pesos or Dh1.5 billion); two strategic sealift vessels or floating command centres which can transport three helicopters per vessel, soldiers, and supplies at sea, from Indonesia’s PT PAL (Persero) for $85.7 million (3.86 billion pesos or Dh321.6 million). The new frigates and sealift vessels will arrive in the Philippines at the end of 2015 or early 2016, President Benigno Aquino announced recently.
It is widely reported that the Philippine Navy is manned by three US-made refurbished frigates: BRP Tagbanua; BRP Gregorio del Pilar and BRP Ramon Alcaraz, but Japan’s defence ministry said the Philippine Navy has 80 warships; China, 892; Malaysia, 208; and Vietnam, 94.
The Philippine Coast Guard also bought 10 40-metre-long multi-purpose response vessels (MRRV) from Japan in late 2013 for $184 million (8.09 billion pesos or Dh674.6 million), in a loan forged with Japan International Cooperation Agency (JICA) in 2014. They will augment the Coast Guard’s 19 rescue vessels, when they arrive in the Philippines at the end of 2015, sources said.
The Coast Guard secured a $20 million (900 million pesos or Dh75 million) loan from the United States’ Defence Threat Reduction Agency (it has a maritime security project with the US’ Weapons for Mass Destruction Proliferation Prevention Programme) for three aerial surveillance radars, two surface sensors and three surveillance planes for the Philippine Coast Guard National Coast Watch Centre in northern Luzon and southwest Philippines.
Recently, the Philippine Air Force bought 12 new FA-50 fighter-trainers made by Korea Aerospace Industries. six Close Air Support Aircraft; seven of 13 AW-109 helicopters; and six of eight Bell-412 combat utility helicopters made by Korea Aerospace Industries. The two fighters will arrive in December 2015 or early 2016, and the rest in 2017.
Japan’s defence ministry said the Philippines has a total of 26 combat aircraft, compared with China’s 2,582 combat aircraft.
The Philippine government also allotted $22 million (1 billion pesos or Dh83.33 million) for the development of three new naval bases that will protect its 36,000 kilometre coastline facing the South China Sea.
In 1995, Congress approved an $8.08 billion (364 billion pesos or Dh30.3 billion) military modernisation plan for 15 years. But only 10 per cent of the approved budget was secured by a loan 15 years later, in 2010, the budget department said.
China, Taiwan, and Vietnam claim the whole of the South China Sea and several parts of the oil-rich Spratly Archipelago. Brunei, Malaysia, and the Philippines claim their respective exclusive economic zones in the South China Sea and parts of the Spratly Archipelago.
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Philippines to buy submarines and advanced missile systems for the first time | GulfNews.com
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Cossack25A1
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DND junks P6.5-million missile project for territorial defense with Israel
By: Jaime Sinapit, InterAksyon.com
August 4, 2015 7:14 AM
MANILA - The Department of National Defense (DND) has junked the Army’s P6.5-billion Shore-Based Missile System (SBMS), a government-to-government negotiated deal with Israel, and realigned this territorial external defense capability to purchase ballistic vests, helmets, and rifles, among others.
“The SBMS acquisition project will be replaced by higher priority projects that aim to provide support and protection for soldiers in the field due to the rising security situation in the WPS (West Philippine Sea) and the continuing terrorist acts by the enemies of the government of the Philippines,” according to a two-page letter from Patrick Velez, Assistant Secretary for Acquisition, Installation, and Logistics (ASAIL), to Mr. Avi Felder, president of the Israel Military Industries (IMI).
In a letter dated 22 July 2015, a copy of which was obtained by InterAksyon.com, Velez clarified that the SBMS project is not shelved, its implementation only deferred from the 1st Horizon Project (2013-2017) to the 2nd Horizon Project (2018-2023).
But Malacanang has not yet confirmed if President Benigno Aquino has approved the DND decision.
Velez said the decision to use the P6.5 billion for personal protection of soldiers was a result of the 69th Senior Leaders Round-Table Discussion (SLRTD) on the Defense Acquisition System (DAS) on 10 June 2015.
Implications to foreign relations
Expectedly, the Israel Military Industries was shocked over the action of the DND and has been considering the filing of a diplomatic protest.
Aquino and Defense Secretary Voltaire Gazmin earlier promised that the Armed Forces of the Philippines (AFP) would achieve minimum credible external defense capability before their term ends in 2016.
On 18 December 2014, the DND’s Special Bids and Awards Committee 1 (SBAC1) declared the IMI as the Singled Calculated Responsive Bidder (SCRB) for the project.
The IMI had just been waiting for the issuance of the Notice of Award (NOA) when in May then Army chief and now Armed Forces chief of staff Gen. Hernando Irriberi sought the realignment of the project.
This after the local representative of IMI filed criminal and administrative charges against him before the Office of the Ombudsman for alleged undue delay of the implementation of at least three ammunition projects worth P97.8 million.
Sources from the Ombudsman said the cases are due for resolution in connection with the supplier’s prayer for a six-month preventive suspension against Irriberi.
According to former National Security Adviser (NSA) and now Paranaque City Representative Roilo Golez, the SBMS project would have been a good move to jump-start Aquino’s promise of minimum credible external defense capability against the aggression of China in the WPS where it was reclaiming coral reefs into artificial islands as part of its expansionist policy in the region.
He slammed Irriberi for recommending in haste the realignment of the SBMS and urged the Commission on Appointments (CA) not to confirm him.
Implementation of the SBMS project, if not realigned, would have started this October and completed during the first half of 2016.
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http://www.interaksyon.com/article/...e-project-for-territorial-defense-with-israel
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DND junks P6.5-million missile project for territorial defense with Israel
By: Jaime Sinapit, InterAksyon.com
August 4, 2015 7:14 AM
MANILA - The Department of National Defense (DND) has junked the Army’s P6.5-billion Shore-Based Missile System (SBMS), a government-to-government negotiated deal with Israel, and realigned this territorial external defense capability to purchase ballistic vests, helmets, and rifles, among others.
“The SBMS acquisition project will be replaced by higher priority projects that aim to provide support and protection for soldiers in the field due to the rising security situation in the WPS (West Philippine Sea) and the continuing terrorist acts by the enemies of the government of the Philippines,” according to a two-page letter from Patrick Velez, Assistant Secretary for Acquisition, Installation, and Logistics (ASAIL), to Mr. Avi Felder, president of the Israel Military Industries (IMI).
In a letter dated 22 July 2015, a copy of which was obtained by InterAksyon.com, Velez clarified that the SBMS project is not shelved, its implementation only deferred from the 1st Horizon Project (2013-2017) to the 2nd Horizon Project (2018-2023).
But Malacanang has not yet confirmed if President Benigno Aquino has approved the DND decision.
Velez said the decision to use the P6.5 billion for personal protection of soldiers was a result of the 69th Senior Leaders Round-Table Discussion (SLRTD) on the Defense Acquisition System (DAS) on 10 June 2015.
Implications to foreign relations
Expectedly, the Israel Military Industries was shocked over the action of the DND and has been considering the filing of a diplomatic protest.
Aquino and Defense Secretary Voltaire Gazmin earlier promised that the Armed Forces of the Philippines (AFP) would achieve minimum credible external defense capability before their term ends in 2016.
On 18 December 2014, the DND’s Special Bids and Awards Committee 1 (SBAC1) declared the IMI as the Singled Calculated Responsive Bidder (SCRB) for the project.
The IMI had just been waiting for the issuance of the Notice of Award (NOA) when in May then Army chief and now Armed Forces chief of staff Gen. Hernando Irriberi sought the realignment of the project.
This after the local representative of IMI filed criminal and administrative charges against him before the Office of the Ombudsman for alleged undue delay of the implementation of at least three ammunition projects worth P97.8 million.
Sources from the Ombudsman said the cases are due for resolution in connection with the supplier’s prayer for a six-month preventive suspension against Irriberi.
According to former National Security Adviser (NSA) and now Paranaque City Representative Roilo Golez, the SBMS project would have been a good move to jump-start Aquino’s promise of minimum credible external defense capability against the aggression of China in the WPS where it was reclaiming coral reefs into artificial islands as part of its expansionist policy in the region.
He slammed Irriberi for recommending in haste the realignment of the SBMS and urged the Commission on Appointments (CA) not to confirm him.
Implementation of the SBMS project, if not realigned, would have started this October and completed during the first half of 2016.
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http://www.interaksyon.com/article/...e-project-for-territorial-defense-with-israel
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Japan’s New South China Sea Gift to the Philippines?
Japan may give the Philippines planes to use for patrols in the South China Sea, media sources reported August 6.
According to Reuters, sources have revealed that Japan may be looking to offer three Beechcraft TC-90 King Air Planes to Manila.
The reports will come as little surprise to those following the Japan-Philippine relationship closely. As I have written before, Japan has been a strategic partner of the Philippines since 2011, and the two countries have boosted the defense side of their relationship significantly over the past few years amid growing concerns about China’s assertiveness in the East China Sea and the South China Sea (“Japan, Philippines Boost Defense Ties”).
Defense ties are set to grow even stronger in the future as the two sides have vowed to conclude an agreement on the transfer of defense equipment and technology, expand bilateral and multilateral trainings and exercises, and even conclude a Visiting Forces Agreement (VFA) to allow Japan access to Philippine military bases (See: “Japan, Philippines Strengthen Strategic Partnership”).
The TC-90s would be a boost for the Philippines’ capabilities. Manila currently does not have enough aircraft to conduct regular patrols in the South China Sea, and the planes could be fitted with basic surface and air surveillance radar for surveillance as Manila responds to China’s threat to Philippine claims there (See: “The Truth About Philippine Military Modernization and ‘The China Threat’”).
That being said, discussions are reportedly still quite preliminary and there are a number of uncertainties that remain.
First, it is unclear how this fits in with previous understandings of Japanese support for the Philippines. In particular, Manila has previously expressed interest in the more sophisticated Lockheed Martin P3-C aircraft. The P-3C would be a vast improvement over the Philippine Navy’s patrol aircraft Islander as it has more sophisticated and extensive radar and longer flight endurance (See: “What’s Next for Japan-Philippines Defense Ties?”).
One interpretation, which the article seems to support, is that the TC-90s would be provided instead of the P3-Cs, which are more sophisticated but harder to operate and maintain. Some in Japan reportedly worry that Manila’s lack of experience in maritime surveillance means it would struggle to operate the equipment and quickly analyze the data collected. Given this, the TC-90s may be a way to familiarize the Philippine navy with the operation of sophisticated aircraft such as the P3-Cs.
Second, such a deal would require legal changes on Japan’s part in order to occur. As of now, the three TC-90s would be donated by Japan to the cash-strapped Philippines as used military equipment. Since that would constitute the first donation of used government-owned military equipment to another nation, sources indicate that Japan would have to amend financial regulations that require such equipment to be sold at fair market value.
Thus, while we have seen significant progress in Japan-Philippine defense ties over the past few years, it may take a while longer before some of the future initiatives now being mulled — like the TC-90 deal — can actually be realized.
Reference: The Diplomat
Japan may give the Philippines planes to use for patrols in the South China Sea, media sources reported August 6.
According to Reuters, sources have revealed that Japan may be looking to offer three Beechcraft TC-90 King Air Planes to Manila.
The reports will come as little surprise to those following the Japan-Philippine relationship closely. As I have written before, Japan has been a strategic partner of the Philippines since 2011, and the two countries have boosted the defense side of their relationship significantly over the past few years amid growing concerns about China’s assertiveness in the East China Sea and the South China Sea (“Japan, Philippines Boost Defense Ties”).
Defense ties are set to grow even stronger in the future as the two sides have vowed to conclude an agreement on the transfer of defense equipment and technology, expand bilateral and multilateral trainings and exercises, and even conclude a Visiting Forces Agreement (VFA) to allow Japan access to Philippine military bases (See: “Japan, Philippines Strengthen Strategic Partnership”).
The TC-90s would be a boost for the Philippines’ capabilities. Manila currently does not have enough aircraft to conduct regular patrols in the South China Sea, and the planes could be fitted with basic surface and air surveillance radar for surveillance as Manila responds to China’s threat to Philippine claims there (See: “The Truth About Philippine Military Modernization and ‘The China Threat’”).
That being said, discussions are reportedly still quite preliminary and there are a number of uncertainties that remain.
First, it is unclear how this fits in with previous understandings of Japanese support for the Philippines. In particular, Manila has previously expressed interest in the more sophisticated Lockheed Martin P3-C aircraft. The P-3C would be a vast improvement over the Philippine Navy’s patrol aircraft Islander as it has more sophisticated and extensive radar and longer flight endurance (See: “What’s Next for Japan-Philippines Defense Ties?”).
One interpretation, which the article seems to support, is that the TC-90s would be provided instead of the P3-Cs, which are more sophisticated but harder to operate and maintain. Some in Japan reportedly worry that Manila’s lack of experience in maritime surveillance means it would struggle to operate the equipment and quickly analyze the data collected. Given this, the TC-90s may be a way to familiarize the Philippine navy with the operation of sophisticated aircraft such as the P3-Cs.
Second, such a deal would require legal changes on Japan’s part in order to occur. As of now, the three TC-90s would be donated by Japan to the cash-strapped Philippines as used military equipment. Since that would constitute the first donation of used government-owned military equipment to another nation, sources indicate that Japan would have to amend financial regulations that require such equipment to be sold at fair market value.
Thus, while we have seen significant progress in Japan-Philippine defense ties over the past few years, it may take a while longer before some of the future initiatives now being mulled — like the TC-90 deal — can actually be realized.
Reference: The Diplomat
Cossack25A1
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BSP has room to ease bank reserve requirements
By Lawrence Agcaoili (The Philippine Star)
Updated August 9, 2015 - 12:00am
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has enough room to tweak the reserve requirement ratio for banks to stem the impact of the US Federal Reserve interest rate liftoff, British investment bank Barclays and US financial giant Citigroup said in separate reports.
In its latest Emerging Markets research note, Barclays said the BSP’s Monetary Board could ease the reserve requirement imposed on banks to minimize the impact of the impending interest rate increase by the US central bank.
“We see outside risks of easing in the reserve requirement ratio for banks, if liquidity conditions deteriorate due to capital outflows on the back of potential US rate hikes,” Barclays said.
It added the currency stability and an expected rate hike by the US Fed would keep rates stable for the time being.
Barclays said the BSP’s Monetary Board is likely to keep interest rates unchanged in its upcoming meeting on Aug. 13 as inflation is seen to pick up in the last quarter of the year.
“As such, we continue to think it is unlikely that BSP will join other central banks in easing monetary policy. Inflation below the band, but BSP is unlikely to respond to weaker consumer price index,” it added.
Inflation eased to a record low of 0.8 percent in July from 1.2 percent in June amid slower price adjustments in food, energy, and oil. This brought the year-to-date average inflation to 1.9 percent slightly lower than the BSP inflation target range of two percent to four percent this year.
“Low inflation will not necessarily lead BSP to ease policy conditions. With growth activity levels stable, we think the BSP is comfortable with the policy stance,” Barclays said.
While near-term inflationary pressures appear manageable, the investment bank said the drier-than-normal weather conditions could affect agriculture production that could stoke inflation.
According to Barclays, there are already signs that rice planting in the Philippines has been affected by weather resulting to higher imports.
As such, the investment bank sees the BSP hiking key policy rates in the fourth quarter of the year.
“We forecast the next policy move will be a hike, most likely in the fourth quarter of 2015 after the Fed has begun its expected tightening. Risks to our rate hike view are biased towards the move being pushed out,” the investment bank said.
Citi senior economist Jun Trinidad, meanwhile, has renewed calls for a cut in the bank reserve requirement, noting the existing 20 percent reserve ratio is the highest in the region.
“Against this benign consumer price index backdrop amid stronger offshore headwinds with the China drag as key, we renew our call for a monetary accommodation by way of a bank reserve cut of one percent,” Trinidad said.
He pointed out the move could unleash P67.7 billion into the system spurring infrastructure spending and other spending catalysts to help insulate domestic demand from an export meltdown.
The economist explained that a bank reserve cut would complement the growth catalysts while ensuring a supportive bank credit risk appetite once the US Fed acts to tighten its policy rate.
Weak exchange rates that could uplift remittances’ purchasing power, enhance business process outsourcing sector’s appeal amid big-ticket public private partnership transport projects being rolled out, comprise key growth triggers.
“BSP can afford to provide additional liquidity and help fend off near-term growth challenges. A bank reserve cut, if implemented soon, would be better positioned to ease market concerns and support duration bias,” he added.
The BSP raised the reserve requirement for universal and commercial banks to 20 percent in May last year to mop up excess liquidity in the system, tempering domestic demand and easing price pressures.
BSP has kept key policy rates unchanged since September last year. The overnight borrowing rate is pegged at four percent while the overnight lending rate is at six percent.
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BSP has room to ease bank reserve requirements | Business, News, The Philippine Star | philstar.com
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Philippines insurers prepared for Asean integration, says actuarial firm
By Ted P. Torres (The Philippine Star)
Updated August 9, 2015 - 12:00am
MANILA, Philippines - The country’s insurance industry trails Singapore as the most prepared for integration into the Asean Economic Community (AEC), according to a global actuarial provider.
Milliman, a global provider of actuarial and related products and services, said the Philippines ranked second only to Singapore in its ability to adapt to international standards.
The Milliman Asean Liberalization Index (MALI) measures the openness of life insurance regulatory regimes in the 10 Asean countries, ranking their alignment with international standards.
A score of 100 indicates a perfectly liberal market while low scores indicate more tightly controlled industries, with typically less exposure to foreign participation.
The eight features covered in MALI are: product development, distribution, investment, sophistication of capital regime, policyholder protection, foreign ownership, new licences and talent mobility.
Singapore is ranked highest in the index (with a score of 70), achieving the highest score for several of the underlying features, including product development, investment freedom, sophistication of capital regime, availability of new licenses, and talent.
The Philippines received a score of 58, second best among the 10 Asean nations.
Meanwhile, Myanmar’s 10th-place ranking reflects the fact that it remains a ‘closed’ market, with a very nascent life insurance industry.
The leaders in the sector are mainly subsidiaries of global or regional players such AXA of France, Canada’s Sun Life and Manulife Financial, the FWD Group of Hongkong, Pru Life of the United Kingdom, regional giant AIA, and Assicurazioni Generali Group of Italy.
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Philippines insurers prepared for Asean integration, says actuarial firm | Business, News, The Philippine Star | philstar.com
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BSP has room to ease bank reserve requirements
By Lawrence Agcaoili (The Philippine Star)
Updated August 9, 2015 - 12:00am
MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has enough room to tweak the reserve requirement ratio for banks to stem the impact of the US Federal Reserve interest rate liftoff, British investment bank Barclays and US financial giant Citigroup said in separate reports.
In its latest Emerging Markets research note, Barclays said the BSP’s Monetary Board could ease the reserve requirement imposed on banks to minimize the impact of the impending interest rate increase by the US central bank.
“We see outside risks of easing in the reserve requirement ratio for banks, if liquidity conditions deteriorate due to capital outflows on the back of potential US rate hikes,” Barclays said.
It added the currency stability and an expected rate hike by the US Fed would keep rates stable for the time being.
Barclays said the BSP’s Monetary Board is likely to keep interest rates unchanged in its upcoming meeting on Aug. 13 as inflation is seen to pick up in the last quarter of the year.
“As such, we continue to think it is unlikely that BSP will join other central banks in easing monetary policy. Inflation below the band, but BSP is unlikely to respond to weaker consumer price index,” it added.
Inflation eased to a record low of 0.8 percent in July from 1.2 percent in June amid slower price adjustments in food, energy, and oil. This brought the year-to-date average inflation to 1.9 percent slightly lower than the BSP inflation target range of two percent to four percent this year.
“Low inflation will not necessarily lead BSP to ease policy conditions. With growth activity levels stable, we think the BSP is comfortable with the policy stance,” Barclays said.
While near-term inflationary pressures appear manageable, the investment bank said the drier-than-normal weather conditions could affect agriculture production that could stoke inflation.
According to Barclays, there are already signs that rice planting in the Philippines has been affected by weather resulting to higher imports.
As such, the investment bank sees the BSP hiking key policy rates in the fourth quarter of the year.
“We forecast the next policy move will be a hike, most likely in the fourth quarter of 2015 after the Fed has begun its expected tightening. Risks to our rate hike view are biased towards the move being pushed out,” the investment bank said.
Citi senior economist Jun Trinidad, meanwhile, has renewed calls for a cut in the bank reserve requirement, noting the existing 20 percent reserve ratio is the highest in the region.
“Against this benign consumer price index backdrop amid stronger offshore headwinds with the China drag as key, we renew our call for a monetary accommodation by way of a bank reserve cut of one percent,” Trinidad said.
He pointed out the move could unleash P67.7 billion into the system spurring infrastructure spending and other spending catalysts to help insulate domestic demand from an export meltdown.
The economist explained that a bank reserve cut would complement the growth catalysts while ensuring a supportive bank credit risk appetite once the US Fed acts to tighten its policy rate.
Weak exchange rates that could uplift remittances’ purchasing power, enhance business process outsourcing sector’s appeal amid big-ticket public private partnership transport projects being rolled out, comprise key growth triggers.
“BSP can afford to provide additional liquidity and help fend off near-term growth challenges. A bank reserve cut, if implemented soon, would be better positioned to ease market concerns and support duration bias,” he added.
The BSP raised the reserve requirement for universal and commercial banks to 20 percent in May last year to mop up excess liquidity in the system, tempering domestic demand and easing price pressures.
BSP has kept key policy rates unchanged since September last year. The overnight borrowing rate is pegged at four percent while the overnight lending rate is at six percent.
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BSP has room to ease bank reserve requirements | Business, News, The Philippine Star | philstar.com
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Philippines insurers prepared for Asean integration, says actuarial firm
By Ted P. Torres (The Philippine Star)
Updated August 9, 2015 - 12:00am
MANILA, Philippines - The country’s insurance industry trails Singapore as the most prepared for integration into the Asean Economic Community (AEC), according to a global actuarial provider.
Milliman, a global provider of actuarial and related products and services, said the Philippines ranked second only to Singapore in its ability to adapt to international standards.
The Milliman Asean Liberalization Index (MALI) measures the openness of life insurance regulatory regimes in the 10 Asean countries, ranking their alignment with international standards.
A score of 100 indicates a perfectly liberal market while low scores indicate more tightly controlled industries, with typically less exposure to foreign participation.
The eight features covered in MALI are: product development, distribution, investment, sophistication of capital regime, policyholder protection, foreign ownership, new licences and talent mobility.
Singapore is ranked highest in the index (with a score of 70), achieving the highest score for several of the underlying features, including product development, investment freedom, sophistication of capital regime, availability of new licenses, and talent.
The Philippines received a score of 58, second best among the 10 Asean nations.
Meanwhile, Myanmar’s 10th-place ranking reflects the fact that it remains a ‘closed’ market, with a very nascent life insurance industry.
The leaders in the sector are mainly subsidiaries of global or regional players such AXA of France, Canada’s Sun Life and Manulife Financial, the FWD Group of Hongkong, Pru Life of the United Kingdom, regional giant AIA, and Assicurazioni Generali Group of Italy.
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Philippines insurers prepared for Asean integration, says actuarial firm | Business, News, The Philippine Star | philstar.com
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Cossack25A1
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Business News:
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Exports continue decline in June
By Patricia Lourdes Viray (philstar.com)
Updated August 11, 2015 - 4:54pm
MANILA, Philippines - The country's exports continued to decline for the third consecutive month, the National Economic and Development Authority (NEDA) said on Tuesday.
Data from the Philippine Statistics Authority showed that merchandise exports dropped by 3.3 percent in June from the same period the previous year. Exports in June 2015 decreased from US$5.5 billion last year to $5.3 billion.
“Weak external demand continues to affect the country’s external trade performance, particularly for the merchandise exports sector. Year-to-date outcome, in terms of both value and volume, suggests fragility in the demand, particularly in major trading partners,” NEDA Director-General and Economic Planning Secretary Arsenio Balisacan said.
Balisacan said the decline in exports reflected a fragile global economy. He noted that economies in East and Southeast Asia also recorded a drop in export performance or the same time. Only Vietnam and China registered positive export performance.
Meanwhile, the electronics sector improved as exports of electronic products rose by 9.5 percent in June. This contributed to the country's higher sales of manufactured goods.
“The country’s relatively strong semiconductor exports emulated the progress in the global semiconductors market as worldwide sales continued to expand at its 26th consecutive month, as reported by Semiconductors Industry Association,” Balisacan added.
On the other hand, agricultural exports continued to drop in June, making this the fifth consecutive month of double-digit decline this year. Outward shipments of agro-based products declined by 24.9 percent.
Lower earnings of copper metal and other mineral products resulted to the drop of exports of mineral products by 26.2 percent in June.
“In addition to the frail demand from major economies, the country’s recent external trade performance is also partly due to an abundant supply of industrial commodities, thus revenues from mineral and agro-based exports are seen to continue to decline in the short-term due to falling prices,” the NEDA official said.
Balisacan remains hopeful that positive economic developments in the United States would add to the growth of exports, particularly in consumer goods.
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Exports continue decline in June | Business, News, The Philippine Star | philstar.com
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Foreign direct investments inflows fall 42% in 5 months
By Lawrence Agcaoili (The Philippine Star)
Updated August 11, 2015 - 12:00am
MANILA, Philippines - External shocks from the Greece debt crisis, the stock market collapse in China, and the impending interest rate hike in the US continued to take their toll on the inflow of foreign direct investments (FDIs) into the country in the first five months of the year.
In a report, the Bangko Sentral ng Pilipinas (BSP) said net FDI inflow fell 41.9 percent to $1.64 billion from January to May this year compared to $2.82 billion in the same period last year.
Net equity capital investments rose 31.2 percent to $440 million in the first five months from $639 million in the same period last year.
Equity placements declined 47.5 percent to $550 million from $1.05 billion while withdrawals plunged 73.1 percent to $110 million from $409 million.
The BSP said equity capital placements came mainly from the US, Germany, Japan, Singapore, and the United Kingdom.These were channeled primarily to financial and insurance, manufacturing, real estate, electricity and wholesale and retail trade activities.
On the other hand, earnings of foreign companies operating in the Philippines and plowed right back into the country retreated by nearly 20 percent to $318 million in the first five months of the year from $396 million in the same period last year.
Likewise, non-residents’ net investments in debt instruments including net intercompany borrowings declined 26.8 percent to $757 million from $1.03 billion.
For May alone, the BSP reported FDIs reached $403 million, 6.8 percent lower compared to $433 million in the same month last year.
BSP Governor Amando Tetangco Jr. said the domestic financial markets continue to be highly reactive to external factors.
“To the extent the moves of the advanced economy central banks create interest rate differentials that entice investors to shift portfolios around away from emerging market economies including the Philippines, we will see near-term domestic financial market volatility,” Tetangco said.
However, the impending tightening in the US and Europe could benefit emerging economies through improved global trade.
“But in the medium term, normalization in the advanced economies should be positive for the domestic economy as this can lead to improvements in global trade,” Tetangco said.
The BSP is set to meet on Thursday but is expected to keep key policy rates unchanged.
Strong macroeconomic fundamentals as well as low inflation that eased to a record low of 0.8 percent in July has allowed monetary authorities to keep interest rates unchanged since September last year.
The BSP chief said inflation is expected to pick up in the last quarter of the year due to the prolonged El Niño weather conditions until the first quarter of next year.
“The declining inflation turnouts in the last few months are seen to be transitory. The path of inflation going forward is seen to return to within target over the policy horizon. Current readings show that it is possible that El Nino could intensify later in this year up to early next year,” he said.
The BSP has set an inflation target of two to four percent this year. Inflation averaged 1.9 percent in the first seven months of the year.
Earlier, BSP Deputy Governor Diwa Guinigundo said the central bank is set to adopt major reforms starting with the establishment of an interest corridor system to further enhance the country’s financial market operations next year.
“By next year the BSP will consider a major reform in the conduct of monetary operations. We are working on establishing an interest rate corridor system that will further align our open market operations with liquidity needs of the market and further strengthen the transmission channels of monetary policy,” he said.
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Foreign direct investments inflows fall 42% in 5 months | Business, News, The Philippine Star | philstar.com
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Index closes flat on lack of significant leads
By Iris C. Gonzales (The Philippine Star)
Updated August 11, 2015 - 12:00am
MANILA, Philippines - The benchmark Philippine Stock Exchange index (PSEi) closed generally flat yesterday due to the absence of significant leads to push share prices higher.
The PSEi edged up 1.83 points, or 0.02 percent, to close at 7,543.35, while the All Shares index gained 11.67 points, or 0.27 percent, to close at 4,332.27.
Analysts said yesterday’s session was a good welcome to the listing of SBS Philippines Corp. in the local bourse.
In its maiden listing, SBS’ stock price closed at P4.12 per share, 50 percent higher from its initial listing price of P2.75.
Luis Limlingan, analyst at Regina Capital said the index was expected to consolidate between 7,660 and 7,467.13 this week, with a slight bullish bias due to improved technical readings and solid higher lower base.
“However, we have to be watchful of possible support breakdowns because failure to hold initial support at 7,467.13 would pull prices back to 7,272.63,” he said.
The holding firms index declined 16.86 points to 6,818.99, while the Services index shed 13.58 points to end at 2,083.57.
Value turnover stood at P5.81 billion. Advancers edged out decliners, 84, 76 while 48 stocks were unchanged.
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Index closes flat on lack of significant leads | Business, News, The Philippine Star | philstar.com
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Politics and National Security News:
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17 senators sign Bangsamoro Bill substitute bill
By Christina Mendez (The Philippine Star)
Updated August 11, 2015 - 12:00am
MANILA, Philippines - Senate committee on local government chairman Ferdinand Marcos Jr. and 16 other senators signed yesterday the 100-page committee report on the substitute Bangsamoro Bill following a caucus.
Their action will now open debates on the bill before the plenary.
A majority of those who signed the report have expressed intent to propose amendments during plenary debates, Marcos said after the caucus.
“If the amendments are really good, then we can adopt them,” he said.
He and Senate President Franklin Drilon had to convince their colleagues to sign the report to enable it to move before the plenary, he added.
About 80 percent of the original Bangsamoro bill was “touched,” but its “original intent” was “very much preserved,” Marcos said.
Headlines ( Article MRec ), pagematch: 1, sectionmatch: 1
“In fulfillment of my promise and in compliance with our agreement during the caucus last week, I filed today the substitute bill which I firmly believe will establish a strong mechanism for peace in Mindanao,” he said.
He is ready to sponsor the bill on Wednesday and other senators have been asked to submit their proposed amendments on his committee report, he added.
Marcos has vowed to answer questions to be raised by his colleagues in the subsequent interpellation period.
Marcos described the bill as all-inclusive since it carried the applicable advocacies, positions and proposals of all concerned.
The Senate committee on local government defined the asymmetric relationship between the national government and the envisioned Bangsamoro regional government to avoid any constitutional question.
“This is a recognition of the Bangsamoro diverse culture, and identity, and their aspiration for self-governance that makes it distinct from other regions and other local governments,” read Section 23 of the Basic Law for the Bangsamoro Autonomous Region (BAR).
The asymmetric relationship is provided under Article X Section 15 of the Constitution, where the autonomous region is granted more powers and with less intervention from the national government as compared to other territorial and political subdivisions.
“Within its territorial geographical area and subject to the provisions of the 1987 Philippine Constitution and national laws, the Bangsamoro regional government in the exercise of its right to self-governance is free to pursue its economic, social and cultural development,” read Article IV Section 12 on the General Principles and Policies of BAR.
Other senators who signed the committee report were Teofisto Guingona III, Aquilino Pimentel III, Antonio Trillanes IV, Pia Cayetano, Paolo Benigno Aquino IV, Manuel Lapid, Loren Legarda, Juan Edgardo Angara, Cynthia Villar, Nancy Binay, Gregorio Honasan, Grace Poe, Joseph Victor Ejercito and Ralph Recto.
They indicated that they will interpellate or amend the committee report.
“I signed to allow this bill to go to plenary. This is not a yes to the BBL,” Poe said in explaining her signature.
Sotto also signed “with reservation and amendments” and expressed agreement to the new title.
Sen. Alan Cayetano said he was against the bill but he also signed the committee report.
“I vote No,” he said.
“Yes to strengthening the autonomous region that will result in a just, inclusive, lasting peace. To BBL in present form. This version has addressed many (majority of objections, provisions). But many more have to addressed/amended.”
Cayetano cited as an example the “block grant” provision, which should not be included because it would give leaders of the envisioned Bangsamoro region a wide latitude to use the funds allocated to them.
“If they want schools, if they want hospitals, then let’s give them that,” he told reporters after yesterday’s plenary session.
“But why are they asking for all the money. What if they end up purchasing guns and other arms?”
Cayetano said the members of the Moro Islamic Liberation Front (MILF) cannot just be designated as leaders of the new region because they must be elected in the spirit of democracy.
As an example, he cited the case of Sen. Cynthia Villar who wrote, “I signed to allow this bill to go to plenary. This is not a yes to the bill.” – With Marvin Sy
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17 senators sign Bangsamoro Bill substitute bill | Headlines, News, The Philippine Star | philstar.com
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Senate concurs ratification of international protocol preventing use of weapons against civilian aircraft
Ruser Mallari -
August 11, 2015
Because no treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the members of the Senate, the Senate voted August 10 to concur in the ratification to the Protocol relating to an amendment to the Convention on International Civil Aviation (Article 3 bis).
“The Protocol inserts an Article 3 bis to the original Convention, which relates to the use of weapons against civil aircraft in flight and interception of aircraft flying above a State’s territory without authority,” says in Senate Resolution 1334.
Senate President Franklin M. Drilon said that the resolution would help the government in its efforts towards prevention of the use of civil aircraft for unlawful purposes, with due recognition to international laws on the matter.
“The Protocol, while recognizing the sovereignty of a State over its airspace, enjoins States from resorting to the use of weapons against civil aircraft so as not to endanger the safety of the aircraft and the lives of persons onboard,” adds in the resolution.
The Protocol Relating to an Amendment to the Convention on International Civil Aviation (Article 3 bis) was adopted by consensus during the 25th Session of the International Civil Aviation Organization (ICAO) on 10 May 1984 in 11 Montreal, Canada. To date, 144 counties have ratified the Protocol.
President Aquino ratified the said Protocol on 5 May 2014 and has submitted it to the Senate for concurrence in its ratification, in accordance with the Constitution.
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Senate concurs ratification of international protocol preventing use of weapons against civilian aircraft | Ang Malaya Net
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Military and Defense News:
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New Philippine Navy chief vows to stay focused on ‘Active Archipelagic Defense Strategy’
Iara Jolo
August 11, 2015
The new Philippine Navy (PN) Flag Officer-in-Command Rear Admiral Caesar Taccad vows to remain focused on “Active Archipelagic Defense Strategy” started by his predecessors. The strategy aims to enhance maritime situational awareness capabilities and operations of the Navy.
“It is worth noting that we have already established the direction of our organization as contained in our Philippine Navy Sail Plan and Active Archipelagic Defense Strategy. This is because of the efforts of my predecessors. I intend to stay focused in this direction and I would like to highlight the advocacies of those who led ahead of me,” Rear Admiral Taccad said.
Rear Admiral Caesar C. Taccad previously held the position of the Vice Commander of the Philippine Navy.
He was assigned as the Commander of the Naval Forces in Northern Luzon from October 2010 to February 2013. He held the title of Chief of Naval Staff from January 2014 to September 2014, Naval Inspector General from January 2013 to January 2014, and Deputy Commander of the Philippine Fleet from February to July 2013.
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New Philippine Navy chief vows to stay focused on ‘Active Archipelagic Defense Strategy’ | Ang Malaya Net
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Exports continue decline in June
By Patricia Lourdes Viray (philstar.com)
Updated August 11, 2015 - 4:54pm
MANILA, Philippines - The country's exports continued to decline for the third consecutive month, the National Economic and Development Authority (NEDA) said on Tuesday.
Data from the Philippine Statistics Authority showed that merchandise exports dropped by 3.3 percent in June from the same period the previous year. Exports in June 2015 decreased from US$5.5 billion last year to $5.3 billion.
“Weak external demand continues to affect the country’s external trade performance, particularly for the merchandise exports sector. Year-to-date outcome, in terms of both value and volume, suggests fragility in the demand, particularly in major trading partners,” NEDA Director-General and Economic Planning Secretary Arsenio Balisacan said.
Balisacan said the decline in exports reflected a fragile global economy. He noted that economies in East and Southeast Asia also recorded a drop in export performance or the same time. Only Vietnam and China registered positive export performance.
Meanwhile, the electronics sector improved as exports of electronic products rose by 9.5 percent in June. This contributed to the country's higher sales of manufactured goods.
“The country’s relatively strong semiconductor exports emulated the progress in the global semiconductors market as worldwide sales continued to expand at its 26th consecutive month, as reported by Semiconductors Industry Association,” Balisacan added.
On the other hand, agricultural exports continued to drop in June, making this the fifth consecutive month of double-digit decline this year. Outward shipments of agro-based products declined by 24.9 percent.
Lower earnings of copper metal and other mineral products resulted to the drop of exports of mineral products by 26.2 percent in June.
“In addition to the frail demand from major economies, the country’s recent external trade performance is also partly due to an abundant supply of industrial commodities, thus revenues from mineral and agro-based exports are seen to continue to decline in the short-term due to falling prices,” the NEDA official said.
Balisacan remains hopeful that positive economic developments in the United States would add to the growth of exports, particularly in consumer goods.
-----
Exports continue decline in June | Business, News, The Philippine Star | philstar.com
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Foreign direct investments inflows fall 42% in 5 months
By Lawrence Agcaoili (The Philippine Star)
Updated August 11, 2015 - 12:00am
MANILA, Philippines - External shocks from the Greece debt crisis, the stock market collapse in China, and the impending interest rate hike in the US continued to take their toll on the inflow of foreign direct investments (FDIs) into the country in the first five months of the year.
In a report, the Bangko Sentral ng Pilipinas (BSP) said net FDI inflow fell 41.9 percent to $1.64 billion from January to May this year compared to $2.82 billion in the same period last year.
Net equity capital investments rose 31.2 percent to $440 million in the first five months from $639 million in the same period last year.
Equity placements declined 47.5 percent to $550 million from $1.05 billion while withdrawals plunged 73.1 percent to $110 million from $409 million.
The BSP said equity capital placements came mainly from the US, Germany, Japan, Singapore, and the United Kingdom.These were channeled primarily to financial and insurance, manufacturing, real estate, electricity and wholesale and retail trade activities.
On the other hand, earnings of foreign companies operating in the Philippines and plowed right back into the country retreated by nearly 20 percent to $318 million in the first five months of the year from $396 million in the same period last year.
Likewise, non-residents’ net investments in debt instruments including net intercompany borrowings declined 26.8 percent to $757 million from $1.03 billion.
For May alone, the BSP reported FDIs reached $403 million, 6.8 percent lower compared to $433 million in the same month last year.
BSP Governor Amando Tetangco Jr. said the domestic financial markets continue to be highly reactive to external factors.
“To the extent the moves of the advanced economy central banks create interest rate differentials that entice investors to shift portfolios around away from emerging market economies including the Philippines, we will see near-term domestic financial market volatility,” Tetangco said.
However, the impending tightening in the US and Europe could benefit emerging economies through improved global trade.
“But in the medium term, normalization in the advanced economies should be positive for the domestic economy as this can lead to improvements in global trade,” Tetangco said.
The BSP is set to meet on Thursday but is expected to keep key policy rates unchanged.
Strong macroeconomic fundamentals as well as low inflation that eased to a record low of 0.8 percent in July has allowed monetary authorities to keep interest rates unchanged since September last year.
The BSP chief said inflation is expected to pick up in the last quarter of the year due to the prolonged El Niño weather conditions until the first quarter of next year.
“The declining inflation turnouts in the last few months are seen to be transitory. The path of inflation going forward is seen to return to within target over the policy horizon. Current readings show that it is possible that El Nino could intensify later in this year up to early next year,” he said.
The BSP has set an inflation target of two to four percent this year. Inflation averaged 1.9 percent in the first seven months of the year.
Earlier, BSP Deputy Governor Diwa Guinigundo said the central bank is set to adopt major reforms starting with the establishment of an interest corridor system to further enhance the country’s financial market operations next year.
“By next year the BSP will consider a major reform in the conduct of monetary operations. We are working on establishing an interest rate corridor system that will further align our open market operations with liquidity needs of the market and further strengthen the transmission channels of monetary policy,” he said.
-----
Foreign direct investments inflows fall 42% in 5 months | Business, News, The Philippine Star | philstar.com
-----
Index closes flat on lack of significant leads
By Iris C. Gonzales (The Philippine Star)
Updated August 11, 2015 - 12:00am
MANILA, Philippines - The benchmark Philippine Stock Exchange index (PSEi) closed generally flat yesterday due to the absence of significant leads to push share prices higher.
The PSEi edged up 1.83 points, or 0.02 percent, to close at 7,543.35, while the All Shares index gained 11.67 points, or 0.27 percent, to close at 4,332.27.
Analysts said yesterday’s session was a good welcome to the listing of SBS Philippines Corp. in the local bourse.
In its maiden listing, SBS’ stock price closed at P4.12 per share, 50 percent higher from its initial listing price of P2.75.
Luis Limlingan, analyst at Regina Capital said the index was expected to consolidate between 7,660 and 7,467.13 this week, with a slight bullish bias due to improved technical readings and solid higher lower base.
“However, we have to be watchful of possible support breakdowns because failure to hold initial support at 7,467.13 would pull prices back to 7,272.63,” he said.
The holding firms index declined 16.86 points to 6,818.99, while the Services index shed 13.58 points to end at 2,083.57.
Value turnover stood at P5.81 billion. Advancers edged out decliners, 84, 76 while 48 stocks were unchanged.
-----
Index closes flat on lack of significant leads | Business, News, The Philippine Star | philstar.com
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Politics and National Security News:
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17 senators sign Bangsamoro Bill substitute bill
By Christina Mendez (The Philippine Star)
Updated August 11, 2015 - 12:00am
MANILA, Philippines - Senate committee on local government chairman Ferdinand Marcos Jr. and 16 other senators signed yesterday the 100-page committee report on the substitute Bangsamoro Bill following a caucus.
Their action will now open debates on the bill before the plenary.
A majority of those who signed the report have expressed intent to propose amendments during plenary debates, Marcos said after the caucus.
“If the amendments are really good, then we can adopt them,” he said.
He and Senate President Franklin Drilon had to convince their colleagues to sign the report to enable it to move before the plenary, he added.
About 80 percent of the original Bangsamoro bill was “touched,” but its “original intent” was “very much preserved,” Marcos said.
Headlines ( Article MRec ), pagematch: 1, sectionmatch: 1
“In fulfillment of my promise and in compliance with our agreement during the caucus last week, I filed today the substitute bill which I firmly believe will establish a strong mechanism for peace in Mindanao,” he said.
He is ready to sponsor the bill on Wednesday and other senators have been asked to submit their proposed amendments on his committee report, he added.
Marcos has vowed to answer questions to be raised by his colleagues in the subsequent interpellation period.
Marcos described the bill as all-inclusive since it carried the applicable advocacies, positions and proposals of all concerned.
The Senate committee on local government defined the asymmetric relationship between the national government and the envisioned Bangsamoro regional government to avoid any constitutional question.
“This is a recognition of the Bangsamoro diverse culture, and identity, and their aspiration for self-governance that makes it distinct from other regions and other local governments,” read Section 23 of the Basic Law for the Bangsamoro Autonomous Region (BAR).
The asymmetric relationship is provided under Article X Section 15 of the Constitution, where the autonomous region is granted more powers and with less intervention from the national government as compared to other territorial and political subdivisions.
“Within its territorial geographical area and subject to the provisions of the 1987 Philippine Constitution and national laws, the Bangsamoro regional government in the exercise of its right to self-governance is free to pursue its economic, social and cultural development,” read Article IV Section 12 on the General Principles and Policies of BAR.
Other senators who signed the committee report were Teofisto Guingona III, Aquilino Pimentel III, Antonio Trillanes IV, Pia Cayetano, Paolo Benigno Aquino IV, Manuel Lapid, Loren Legarda, Juan Edgardo Angara, Cynthia Villar, Nancy Binay, Gregorio Honasan, Grace Poe, Joseph Victor Ejercito and Ralph Recto.
They indicated that they will interpellate or amend the committee report.
“I signed to allow this bill to go to plenary. This is not a yes to the BBL,” Poe said in explaining her signature.
Sotto also signed “with reservation and amendments” and expressed agreement to the new title.
Sen. Alan Cayetano said he was against the bill but he also signed the committee report.
“I vote No,” he said.
“Yes to strengthening the autonomous region that will result in a just, inclusive, lasting peace. To BBL in present form. This version has addressed many (majority of objections, provisions). But many more have to addressed/amended.”
Cayetano cited as an example the “block grant” provision, which should not be included because it would give leaders of the envisioned Bangsamoro region a wide latitude to use the funds allocated to them.
“If they want schools, if they want hospitals, then let’s give them that,” he told reporters after yesterday’s plenary session.
“But why are they asking for all the money. What if they end up purchasing guns and other arms?”
Cayetano said the members of the Moro Islamic Liberation Front (MILF) cannot just be designated as leaders of the new region because they must be elected in the spirit of democracy.
As an example, he cited the case of Sen. Cynthia Villar who wrote, “I signed to allow this bill to go to plenary. This is not a yes to the bill.” – With Marvin Sy
-----
17 senators sign Bangsamoro Bill substitute bill | Headlines, News, The Philippine Star | philstar.com
-----
Senate concurs ratification of international protocol preventing use of weapons against civilian aircraft
Ruser Mallari -
August 11, 2015
Because no treaty or international agreement shall be valid and effective unless concurred in by at least two-thirds of all the members of the Senate, the Senate voted August 10 to concur in the ratification to the Protocol relating to an amendment to the Convention on International Civil Aviation (Article 3 bis).
“The Protocol inserts an Article 3 bis to the original Convention, which relates to the use of weapons against civil aircraft in flight and interception of aircraft flying above a State’s territory without authority,” says in Senate Resolution 1334.
Senate President Franklin M. Drilon said that the resolution would help the government in its efforts towards prevention of the use of civil aircraft for unlawful purposes, with due recognition to international laws on the matter.
“The Protocol, while recognizing the sovereignty of a State over its airspace, enjoins States from resorting to the use of weapons against civil aircraft so as not to endanger the safety of the aircraft and the lives of persons onboard,” adds in the resolution.
The Protocol Relating to an Amendment to the Convention on International Civil Aviation (Article 3 bis) was adopted by consensus during the 25th Session of the International Civil Aviation Organization (ICAO) on 10 May 1984 in 11 Montreal, Canada. To date, 144 counties have ratified the Protocol.
President Aquino ratified the said Protocol on 5 May 2014 and has submitted it to the Senate for concurrence in its ratification, in accordance with the Constitution.
-----
Senate concurs ratification of international protocol preventing use of weapons against civilian aircraft | Ang Malaya Net
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Military and Defense News:
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New Philippine Navy chief vows to stay focused on ‘Active Archipelagic Defense Strategy’
Iara Jolo
August 11, 2015
The new Philippine Navy (PN) Flag Officer-in-Command Rear Admiral Caesar Taccad vows to remain focused on “Active Archipelagic Defense Strategy” started by his predecessors. The strategy aims to enhance maritime situational awareness capabilities and operations of the Navy.
“It is worth noting that we have already established the direction of our organization as contained in our Philippine Navy Sail Plan and Active Archipelagic Defense Strategy. This is because of the efforts of my predecessors. I intend to stay focused in this direction and I would like to highlight the advocacies of those who led ahead of me,” Rear Admiral Taccad said.
Rear Admiral Caesar C. Taccad previously held the position of the Vice Commander of the Philippine Navy.
He was assigned as the Commander of the Naval Forces in Northern Luzon from October 2010 to February 2013. He held the title of Chief of Naval Staff from January 2014 to September 2014, Naval Inspector General from January 2013 to January 2014, and Deputy Commander of the Philippine Fleet from February to July 2013.
-----
New Philippine Navy chief vows to stay focused on ‘Active Archipelagic Defense Strategy’ | Ang Malaya Net
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Cossack25A1
SENIOR MEMBER
- Joined
- Jul 11, 2014
- Messages
- 2,566
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Politics and Diplomacy News:
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LOOK: Did China threaten, ridicule Philippines in newspaper feature?
(philstar.com)
Updated August 12, 2015 - 3:56pm
MANILA, Philippines - Did China poke fun at the Philippines and issue a veiled threat in a newspaper feature?
In its weekly feature entitled "Window to China" published by the STAR on Tuesday, the Asian giant maintained its position in the West Philippine Sea dispute.
But Beijing's paid feature also seemingly threatened and ridiculed Manila.
The full-paid feature contained a short ancient Chinese tale about a mantis and its prey.
"The mantis stalks the cicada, unaware of the oriole waiting in the backdrop," the tale read.
China said the tale "describes those shortsighted people wanting to hurt others, unaware of greater lurking dangers." For some experts, this could be a reference to the Philippines.
In an interview with television reporters, historian and military analyst Jose Custodio said the ancient Chinese tale was China's cryptic message or warning in relation to the sea dispute with the Philippines.
Custodio also took offense to the caricatures of South East Asian nations that were contained in the newspaper feature.
He said it was insulting that among the caricatures, the Filipino was depicted as the smallest.
Reacting to the newspaper feature, Malacañang urged China to be a responsible country.
"Some people may take it as a threat but what is important for us is that we are all responsible members of the family of nations," Presidential Spokesperson Edwin Lacierda said.
"And I think that China, being cognizant of its role in the community of nations, would act accordingly as a responsible nation," he added.
In the same newspaper feature, China said Foreign Affairs Secretary Albert Del Rosario "attacked China on its South China Sea policy" during two recent international events.
China released the response of Foreign Minister Wang Yi who cried foul over "non-constructive words or deeds that attempt to exaggerate the disagreements, hype up confrontation and heat up tensions."
Wang further claimed that China is the victim in the sea dispute since it was other countries which began invading and occupying the disputed islands and reefs in the Spratlys.
Wang said China wants a peaceful resolution of the territorial dispute but it also has the right to stop "illegal moves" against its sovereignty.
Wang concluded by maintaining that China will continue to build facilities on its artificial islands in the disputed waters - Louis Bacani
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LOOK: Did China threaten, ridicule Philippines in newspaper feature? | Headlines, News, The Philippine Star | philstar.com
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-----
LOOK: Did China threaten, ridicule Philippines in newspaper feature?
(philstar.com)
Updated August 12, 2015 - 3:56pm
MANILA, Philippines - Did China poke fun at the Philippines and issue a veiled threat in a newspaper feature?
In its weekly feature entitled "Window to China" published by the STAR on Tuesday, the Asian giant maintained its position in the West Philippine Sea dispute.
But Beijing's paid feature also seemingly threatened and ridiculed Manila.
The full-paid feature contained a short ancient Chinese tale about a mantis and its prey.
"The mantis stalks the cicada, unaware of the oriole waiting in the backdrop," the tale read.
China said the tale "describes those shortsighted people wanting to hurt others, unaware of greater lurking dangers." For some experts, this could be a reference to the Philippines.
In an interview with television reporters, historian and military analyst Jose Custodio said the ancient Chinese tale was China's cryptic message or warning in relation to the sea dispute with the Philippines.
Custodio also took offense to the caricatures of South East Asian nations that were contained in the newspaper feature.
He said it was insulting that among the caricatures, the Filipino was depicted as the smallest.
Reacting to the newspaper feature, Malacañang urged China to be a responsible country.
"Some people may take it as a threat but what is important for us is that we are all responsible members of the family of nations," Presidential Spokesperson Edwin Lacierda said.
"And I think that China, being cognizant of its role in the community of nations, would act accordingly as a responsible nation," he added.
In the same newspaper feature, China said Foreign Affairs Secretary Albert Del Rosario "attacked China on its South China Sea policy" during two recent international events.
China released the response of Foreign Minister Wang Yi who cried foul over "non-constructive words or deeds that attempt to exaggerate the disagreements, hype up confrontation and heat up tensions."
Wang further claimed that China is the victim in the sea dispute since it was other countries which began invading and occupying the disputed islands and reefs in the Spratlys.
Wang said China wants a peaceful resolution of the territorial dispute but it also has the right to stop "illegal moves" against its sovereignty.
Wang concluded by maintaining that China will continue to build facilities on its artificial islands in the disputed waters - Louis Bacani
-----
LOOK: Did China threaten, ridicule Philippines in newspaper feature? | Headlines, News, The Philippine Star | philstar.com
-----
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Revisiting the Government-to-Government Process - The Better Acquisition Alternative for the Armed Forces of the Philippines
MaxDefense
Thursday, August 13, 2015
MaxDefense has been in up online since May 2013, and for the past 2 years, it believes that the Armed Forces of the Philippines (AFP) has been improved a little better now compared to then. A good sign, after a long time of almost no improvements for close to 2 decades. MaxDefense commends the leadership of President Benigno S. Aquino III for bringing such improvements to the armed forces for the past few years.
But all these gains still fail to avoid us from looking at the other side of the coin. As MaxDefense pointed out in its previous blog entry, the Aquino administration took more than 2 years to approve the endorsed wishlist of the AFP for its procurement under the Revised AFP Modernization Program RA 10349. And so far, the AFP has not receive any major equipment that could be used to defend the country's EEZ and interests in the West Philippine Sea other than 2 gun frigates converted from coast guard cutters.
Add to that other disappointing issues. Just within this year alone, the Department of National Defense (DND) has consistently been in the hot seat and named as one of the most corrupt departments of the Aquino administration. Several accusations of graft and corruption, favoritism, bid rigging, and many other issues within its ranks were reported, and although nothing has been proven yet in the courts of law, the mere presence of these reports are disturbing enough. As they say, if there's smoke, there's a fire. And most of these issues were tied to the bidding and procurement under the AFP Modernization Program.
With all these issues, is the current procurement process really the problem that is affecting all the issues mentioned above? Is it still the best way to modernize the AFP? How far did the AFP Modernization Program (AFPMP) really did move from then till now?
The Great Italian Sale - The Maestrale-class Frigate Saga
After a hopeful start with the AFPMP under the leadership of Pres. Aquino, the AFP formulated a list of what it needs to have to properly defend the country from inside and out. And among those being looked upon to boost the AFP's capabilities and equipment acquisition opportunity 4 years ago were the acquisition of cheap, used, readily available, and still capable Excess Defense Articles (EDA) from friendly or allied nations.
For those who can remember these events a few years ago, many were delighted with the plans to acquire from Italy two units of refurbished Maestrale-class frigates, together with several other equipment offered by the said country including the a couple of Soldati-class frigates and Minerva-class corvettes, hundreds of VCC-1 armored personnel carriers, dozens of FH70 155mm howitzers and Centauro tank destroyers and FH70 155mm howitzers, a squadron or two of AMX attack aircraft, and even a few Tranche 1 EF-2000 Eurofighters. Thus called "The Great Italian Sale", or simply "The Italian Package" within those in the DND and AFP circles.
Those where the days when the military was looking forward to acquire a lot from the Italians, with many in the military saying that finally, the Philippines could now catch-up with the rest in the region. It was even among the reasons why MaxDefense started, to discuss to the public what is happening and what these equipment are for to the ordinary Filipino, in anticipation of many questions coming in from the public.
Remember the Maestrale-class frigate saga? This was actually the start and end of the plans to acquire excess defense articles from Italy. 3 years on, the Philippine Navy still has no frigates except for the Hamilton-class cutters from the US.
Aside from Italy, many other countries showed interest to sell their excess defense articles to the Philippines, thanks (or no thanks) to the economic crisis in Europe that time. France, Spain, and even the UK and Germany, were all looking forward for a possible sale, which not only helps them get some earnings while reducing their expenses in maintaining their armed forces, but at the same time was looking at this goodwill gesture to improve relations with the Philippines. Suddenly you can hear news or rumors on the possibility of acquiring Mirage 2000 or Mirage F1 fighter aircraft from France, Leopard 2 main battle tanks from Germany, Santa Maria-class frigates and Descubierta-class corvettes from Spain, and many more as an alternative to what the Italians have to offer.
The French offered excess Mirage 2000 fighters, but nothing was heard after on this offer when the Philippine government decided to go brand-new for its military equipment acquisitions.
The Fall of Plans to Acquire Excess Defense Articles from Europe
Then, it happened. Changes in the military leadership, together with alternatives from other countries, suddenly changed the mindset on the acquisition. The Philippines dropped plans to acquire the Maestrale-class frigates in which almost all the offers made by Italy were tied with. This was because the Philippine government decided to acquire brand-new military equipment by tendering in conjunction with RA 9184 Government Procurement Reform Act. One by one, all the offers from friendly countries died down, and instead the government invited arms manufacturers to join the tenders.
The Italians also offered a hundred of their VCC-1 Camillino armored personnel carriers, an Italian version of the American M113. Eventually, the Philippines decided ask the Americans for M113A2 which was provided by grant. But until now, not even 1 of the 114 M113A2 provided by the Americans are in Philippine Army hands.
The intention was good, as it means the AFP will be getting brand new equipment instead of refurbished old units. But 5 years after, the AFP is still nowhere the original plan that was promised by the Aquino administration, and nowhere from the projected force should the government acquired all those used refurbished European military wares.
Reasons vary depending on who you talk to. The Department of National Defense claims that the ships were too old and expensive for their age, and that buying new would be more beneficial and will not as expensive as earlier thought compared to the offers made by Italy. Some people say otherwise, that the deal fell through because of indecisiveness of the defense leadership.
Other credible sources say that officials within the AFP and DND are against EDA because they won't be earning anything due to the Government-to-Government (G2G) nature of the deals, and other reasons that are only beneficial to the people involved in the procurement system. MaxDefense won't be too specific on these because in the end, it turned out that the AFP will not be as effective as we thought by 2015.
Failures of the Current Acquisition Process of the DND
The introduction of the system as indicated by the RA 9184 has brought transparency to the procurement system, which was unseen for a long time. Theoretically, the system's safeguards and procedures should instill a fair, corrupt-free procurement process to the corruption-hounded DND and AFP, and clean the institutions from the terrible coinage as among the most corrupt in the government.
But it seems that there are still people who were able to manipulate the system, and still enabled them to continue corruption by going around the implementing rules and regulations. This might not just be the case in the DND and AFP, but also in several other government agencies and departments.
Budgetary issues, red tape, favoritism, failed tenders, lack of experience by the DND and AFP planners, graft and corruption issues, delayed product deliveries, failed products, changing policies of military leaders, leadership incompetency, and other reasons have further delayed the acquisition process of the AFPMP.
Among the most painful of all is the corruption concerns because not only is it delaying the process, but also jacks-up the prices of equipment being acquired to the expense of tax payers, and becomes a reason for substandard equipment to be acquired. Among those corruption issues raised only this year against the DND and AFP leadership include the following issues, but not limited to:
The realignment of the Shore-Based Missile System has been among the most highly debated upon by defense experts and law makers, and may even cost the appointment of an AFP Chief of Staff if proven to be irregular.
2015 - Where is the AFP Modernization Program Now?
As discussed in the previous MaxDefense blog entry, our assessment is gloomy on where the modernization program is right now. A little summary of our previous assessment:
Only the CUH acquisition has so far gained fruit of all the acquisition plans under RAFPMP RA 10349, as all 8 units of the Bell 412EP are in the country. But deliveries can't be considered complete until now because the PAF has not yet accepted all 8 units as of this writing.
To be fair to the Aquino administration, he has so far done more than the combined administrations of 3 past presidents before him. But as MaxDefense said in the past, the expectations from the public and the defense community was so high because it was Pres. Aquino himself who pegged the expectations to the public by his public announcements and promises. He raised it up with his promises of good governance, efficient, and corruption-free government.
With this, MaxDefense is offering this recommendation based on two problems encountered in the acquisition process: time or speed of acquisition, and corruption. The current system has so many loopholes to allow corruption to take place.
Speeding-up the AFP Modernization: Government-to-Government (G2G) Deals
With a limited time remaining, MaxDefense believes that the only way to improve the AFP in such a short time is by returning back to the option of acquiring excess defense articles from friendly and allied countries through Government-to-Government (G2G) process.
So far, several government agencies has already seen that the current system based on the RA 9184 Government Procurement Reform Act is not applicable for defense-related acquisitions. Moves have been made within the AFP and DND to push to Congress reforms that will enable them to bypass the RA 9184, as DND ASec. Patrick Velez confirmed in one report, "RA 9184 seems not to be fully responsive to the needs of the AFP".
Should any legal changes be made to exempt the AFP Modernization Program from strictly following RA 9184, it would then allow the DND and AFP to go for G2G deals with friendly countries.
Being G2G, the Philippine government can minimize or thoroughly avoid corruption and kickbacks by defense and military officials, as the Philippine government, through its defense department, officially deal directly with the defense ministry of the the seller/donor countries including payments and other financial issues. Corruption can probably only happen if the seller/donor country's defense ministry officials are also corrupt.
G2G of Refurbished Excess Defense Articles
Excess Defense Articles are currently abundant in several advanced nations from Europe, Asia, and the US. It may not be immediately available as expected due to the need to refurbish them and meet certain requirements of the AFP, which may take some time but not as long as constructing a new one.
But with the budget for the AFPMP and RAFPMP already allocated for projects, the only way to allow funds to flow to this direction is by either reallocating them from similar projects covered by the current AFPMP/RAFPMP, or by providing a separate budget for projects under this.
As an example, let's look at the current projects of the Revised AFP Modernization Program under RA 10349. The Philippine Air Force (PAF) requires Long Range Patrol Aircraft, while the Philippine Navy (PN) requires Frigates and ASW helicopters.
Currently, the DND and PAF wanted to pursue the acquisition of new aircraft while also discussing with Japan and the US to acquire EDA refurbished P-3C Orion maritime patrol aircraft. If there are no objections from these countries, then the DND should just push through with the procurement of the P-3C through G2G using the budget for the LRPA project. MaxDefense believes that the LRPA budget can acquire more than 2 fully equipped and newly refurbished P-3C Orion.
As for the Navy, acquisition of refurbished frigates from Europe, Korea or the US can be made. After repair and refurbishing, MaxDefense still expects the first ship to be in service earlier than constructing a new one. And with a Php18 billion budget, the PN can definitely acquire more than 2 frigates. The US is also offering refurbished SH-60B/F anti-submarine helicopters, which can be had for a portion of the PN's budget for each new ASW helicopter. Even countries with more financial capability like Spain bought these refurbished helicopters to fill in the requirements.
Instead of waiting for the South Korean government to grant it to the Philippines, the Philippines must offer to acquire EDA ships from South Korea, with the willingness to pay for them. MaxDefense believes than if acquired now, the ships could be in service by next year.
Procurement of New Equipment through G2G
Aside from EDAs, the government can also simultaneously acquire brand new defense equipment for projects meeting the medium to long term needs of the AFP. There's still nothing better than brand new if the need is less immediate. And this can be done also by G2G. Although it may not speed up the construction and delivery of new equipment, it can reduce the time needed during the planning and procurement phase, while also discouraging corruption within the DND and AFP. It is currently an accepted way of fast-tracking acquisitions by the DND as seen by the speed of delivery of the Bell 412EP and FA-50PH aircraft that underwent G2G.
If only most bid-ticket projects under AFPMP and RAFPMP can be shifted to G2G negotiations instead of bidding, MaxDefense believes that most of the projects can be completed and the equipment delivered earlier by at least several months up to a year earlier.
This also avoids being too dependent on the decision to acquire a system because of cost parameters, as G2G ensures that the military can acquire specifically what they need. This procedure will allow the AFP to avoid getting cheap but possibly substandard or not really their top choice, as topnotch defense materiel are not normally cheap especially that the AFP prefer Western-made systems rather than the cheaper Eastern, Russian, of Chinese systems.
An example of where a tender has become disadvantageous over a G2G deal may include the Combat Utility Helicopter for the Philippine Air Force. Based on accounts with officers of the PAF, they actually prefer to acquire the Bell 412 as its next CUH. The specifications used on the tender was based on the Bell 412EP but some specific requirements were loosen up to allow other bidders to join the tender. We all know that AgustaWestland PZL won the project as they were the only one who can provide a similar helicopter at a lower cost than the budget allocated. And we all know what happened afterwards, until the DND decided to go G2G with the Canadian Commercial Corporation to acquire another batch of CUH, but this time acquiring the Bell 412EP.
Projects that have been awarded and are expected to have repeat orders should not undergo bidding as well, but by G2G deal. Among examples are the Harris Falcon II & III radios, the C-295M and NC-212i, and many others. An equivalent to these equipment are expected to be ordered in the next phases of the RAFPMP, and bidding won't help which may also derail standardization should another supplier and product wins next time.
Harris Falcon II and III radios were among those acquired by the AFP through Foreign Military Sales of the US government, which is essentially a G2G deal. Repeat orders were made for the past 7 years, with another major order made just late last year. More are expected to be acquired from Harris on the next phases of the Revised AFP Modernization Program.
# # # # #
With the DND's procurement process already becoming less reliable and less acceptable to the general public and to the stakeholders in the government, the DND, if they still have some good men left, should push hard for reforms that would allow defense procurement to be faster and less prone to corruption.
Also, the legislative and executive branches of the government should act fast to pass a new or revised law to back-up the said changes. It is good to note that there are now some lawmakers who are putting their foot forward to help the AFP attain its goals even if it seems insurmountable due to the large amount of budget is needed to overcome their needs.
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MaxDefense: Revisiting the Government-to-Government Process - The Better Acquisition Alternative for the Armed Forces of the Philippines
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@Nihonjin1051 This article further explain why the "Italian-deal" was later dropped.
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Revisiting the Government-to-Government Process - The Better Acquisition Alternative for the Armed Forces of the Philippines
MaxDefense
Thursday, August 13, 2015
MaxDefense has been in up online since May 2013, and for the past 2 years, it believes that the Armed Forces of the Philippines (AFP) has been improved a little better now compared to then. A good sign, after a long time of almost no improvements for close to 2 decades. MaxDefense commends the leadership of President Benigno S. Aquino III for bringing such improvements to the armed forces for the past few years.
But all these gains still fail to avoid us from looking at the other side of the coin. As MaxDefense pointed out in its previous blog entry, the Aquino administration took more than 2 years to approve the endorsed wishlist of the AFP for its procurement under the Revised AFP Modernization Program RA 10349. And so far, the AFP has not receive any major equipment that could be used to defend the country's EEZ and interests in the West Philippine Sea other than 2 gun frigates converted from coast guard cutters.
Add to that other disappointing issues. Just within this year alone, the Department of National Defense (DND) has consistently been in the hot seat and named as one of the most corrupt departments of the Aquino administration. Several accusations of graft and corruption, favoritism, bid rigging, and many other issues within its ranks were reported, and although nothing has been proven yet in the courts of law, the mere presence of these reports are disturbing enough. As they say, if there's smoke, there's a fire. And most of these issues were tied to the bidding and procurement under the AFP Modernization Program.
With all these issues, is the current procurement process really the problem that is affecting all the issues mentioned above? Is it still the best way to modernize the AFP? How far did the AFP Modernization Program (AFPMP) really did move from then till now?
The Great Italian Sale - The Maestrale-class Frigate Saga
After a hopeful start with the AFPMP under the leadership of Pres. Aquino, the AFP formulated a list of what it needs to have to properly defend the country from inside and out. And among those being looked upon to boost the AFP's capabilities and equipment acquisition opportunity 4 years ago were the acquisition of cheap, used, readily available, and still capable Excess Defense Articles (EDA) from friendly or allied nations.
For those who can remember these events a few years ago, many were delighted with the plans to acquire from Italy two units of refurbished Maestrale-class frigates, together with several other equipment offered by the said country including the a couple of Soldati-class frigates and Minerva-class corvettes, hundreds of VCC-1 armored personnel carriers, dozens of FH70 155mm howitzers and Centauro tank destroyers and FH70 155mm howitzers, a squadron or two of AMX attack aircraft, and even a few Tranche 1 EF-2000 Eurofighters. Thus called "The Great Italian Sale", or simply "The Italian Package" within those in the DND and AFP circles.
Those where the days when the military was looking forward to acquire a lot from the Italians, with many in the military saying that finally, the Philippines could now catch-up with the rest in the region. It was even among the reasons why MaxDefense started, to discuss to the public what is happening and what these equipment are for to the ordinary Filipino, in anticipation of many questions coming in from the public.
Remember the Maestrale-class frigate saga? This was actually the start and end of the plans to acquire excess defense articles from Italy. 3 years on, the Philippine Navy still has no frigates except for the Hamilton-class cutters from the US.
Aside from Italy, many other countries showed interest to sell their excess defense articles to the Philippines, thanks (or no thanks) to the economic crisis in Europe that time. France, Spain, and even the UK and Germany, were all looking forward for a possible sale, which not only helps them get some earnings while reducing their expenses in maintaining their armed forces, but at the same time was looking at this goodwill gesture to improve relations with the Philippines. Suddenly you can hear news or rumors on the possibility of acquiring Mirage 2000 or Mirage F1 fighter aircraft from France, Leopard 2 main battle tanks from Germany, Santa Maria-class frigates and Descubierta-class corvettes from Spain, and many more as an alternative to what the Italians have to offer.
The French offered excess Mirage 2000 fighters, but nothing was heard after on this offer when the Philippine government decided to go brand-new for its military equipment acquisitions.
The Fall of Plans to Acquire Excess Defense Articles from Europe
Then, it happened. Changes in the military leadership, together with alternatives from other countries, suddenly changed the mindset on the acquisition. The Philippines dropped plans to acquire the Maestrale-class frigates in which almost all the offers made by Italy were tied with. This was because the Philippine government decided to acquire brand-new military equipment by tendering in conjunction with RA 9184 Government Procurement Reform Act. One by one, all the offers from friendly countries died down, and instead the government invited arms manufacturers to join the tenders.
The Italians also offered a hundred of their VCC-1 Camillino armored personnel carriers, an Italian version of the American M113. Eventually, the Philippines decided ask the Americans for M113A2 which was provided by grant. But until now, not even 1 of the 114 M113A2 provided by the Americans are in Philippine Army hands.
The intention was good, as it means the AFP will be getting brand new equipment instead of refurbished old units. But 5 years after, the AFP is still nowhere the original plan that was promised by the Aquino administration, and nowhere from the projected force should the government acquired all those used refurbished European military wares.
Reasons vary depending on who you talk to. The Department of National Defense claims that the ships were too old and expensive for their age, and that buying new would be more beneficial and will not as expensive as earlier thought compared to the offers made by Italy. Some people say otherwise, that the deal fell through because of indecisiveness of the defense leadership.
Other credible sources say that officials within the AFP and DND are against EDA because they won't be earning anything due to the Government-to-Government (G2G) nature of the deals, and other reasons that are only beneficial to the people involved in the procurement system. MaxDefense won't be too specific on these because in the end, it turned out that the AFP will not be as effective as we thought by 2015.
Failures of the Current Acquisition Process of the DND
The introduction of the system as indicated by the RA 9184 has brought transparency to the procurement system, which was unseen for a long time. Theoretically, the system's safeguards and procedures should instill a fair, corrupt-free procurement process to the corruption-hounded DND and AFP, and clean the institutions from the terrible coinage as among the most corrupt in the government.
But it seems that there are still people who were able to manipulate the system, and still enabled them to continue corruption by going around the implementing rules and regulations. This might not just be the case in the DND and AFP, but also in several other government agencies and departments.
Budgetary issues, red tape, favoritism, failed tenders, lack of experience by the DND and AFP planners, graft and corruption issues, delayed product deliveries, failed products, changing policies of military leaders, leadership incompetency, and other reasons have further delayed the acquisition process of the AFPMP.
Among the most painful of all is the corruption concerns because not only is it delaying the process, but also jacks-up the prices of equipment being acquired to the expense of tax payers, and becomes a reason for substandard equipment to be acquired. Among those corruption issues raised only this year against the DND and AFP leadership include the following issues, but not limited to:
- - the acquisition of Dornier-Bell UH-1D combat utility helicopters from Rice Aviation Services Inc., in which accusations of corruption, bid rigging, and flawed products were thrown against the DND and PAF; - the realignment of the Shore-Based Missile System by the Philippine Army, and supported by the DND leadership, which was accused as a way to get commissions and kickbacks, and as a vendetta against the local agent of Israel Military Industries for filing a graft case against the incumbent Chief of Staff of the AFP.
- - allegations that some officials of the DND asked arms manufacturers for a "joining fee" to enable them to bid for certain projects of the AFPMP, which includes Israel Aircraft Industries-Elta and Raytheon
The realignment of the Shore-Based Missile System has been among the most highly debated upon by defense experts and law makers, and may even cost the appointment of an AFP Chief of Staff if proven to be irregular.
2015 - Where is the AFP Modernization Program Now?
As discussed in the previous MaxDefense blog entry, our assessment is gloomy on where the modernization program is right now. A little summary of our previous assessment:
- - the old AFP Modernization Program under Republic Act 7898 is still incomplete until now, with several more projects still ongoing, or has not even started. As of last check, the DND still has around 15 or more projects ongoing or for implementation as of this writing, with the acquisition of a 3rd Hamilton-class High Endurance Cutter from the US Coast Guard as probably the last to be implemented.
- - the newer Revised AFP Modernization Program under Republic Act 10349 has only 2 of 33 projects awarded as of this writing, although the government announced during the recent State of the Nation Address that it has recently signed 30 projects for implementation and funding by the Department of Budget Management. None of the 30 projects have been awarded so far.
Only the CUH acquisition has so far gained fruit of all the acquisition plans under RAFPMP RA 10349, as all 8 units of the Bell 412EP are in the country. But deliveries can't be considered complete until now because the PAF has not yet accepted all 8 units as of this writing.
To be fair to the Aquino administration, he has so far done more than the combined administrations of 3 past presidents before him. But as MaxDefense said in the past, the expectations from the public and the defense community was so high because it was Pres. Aquino himself who pegged the expectations to the public by his public announcements and promises. He raised it up with his promises of good governance, efficient, and corruption-free government.
With this, MaxDefense is offering this recommendation based on two problems encountered in the acquisition process: time or speed of acquisition, and corruption. The current system has so many loopholes to allow corruption to take place.
Speeding-up the AFP Modernization: Government-to-Government (G2G) Deals
With a limited time remaining, MaxDefense believes that the only way to improve the AFP in such a short time is by returning back to the option of acquiring excess defense articles from friendly and allied countries through Government-to-Government (G2G) process.
So far, several government agencies has already seen that the current system based on the RA 9184 Government Procurement Reform Act is not applicable for defense-related acquisitions. Moves have been made within the AFP and DND to push to Congress reforms that will enable them to bypass the RA 9184, as DND ASec. Patrick Velez confirmed in one report, "RA 9184 seems not to be fully responsive to the needs of the AFP".
Should any legal changes be made to exempt the AFP Modernization Program from strictly following RA 9184, it would then allow the DND and AFP to go for G2G deals with friendly countries.
Being G2G, the Philippine government can minimize or thoroughly avoid corruption and kickbacks by defense and military officials, as the Philippine government, through its defense department, officially deal directly with the defense ministry of the the seller/donor countries including payments and other financial issues. Corruption can probably only happen if the seller/donor country's defense ministry officials are also corrupt.
G2G of Refurbished Excess Defense Articles
Excess Defense Articles are currently abundant in several advanced nations from Europe, Asia, and the US. It may not be immediately available as expected due to the need to refurbish them and meet certain requirements of the AFP, which may take some time but not as long as constructing a new one.
But with the budget for the AFPMP and RAFPMP already allocated for projects, the only way to allow funds to flow to this direction is by either reallocating them from similar projects covered by the current AFPMP/RAFPMP, or by providing a separate budget for projects under this.
As an example, let's look at the current projects of the Revised AFP Modernization Program under RA 10349. The Philippine Air Force (PAF) requires Long Range Patrol Aircraft, while the Philippine Navy (PN) requires Frigates and ASW helicopters.
Currently, the DND and PAF wanted to pursue the acquisition of new aircraft while also discussing with Japan and the US to acquire EDA refurbished P-3C Orion maritime patrol aircraft. If there are no objections from these countries, then the DND should just push through with the procurement of the P-3C through G2G using the budget for the LRPA project. MaxDefense believes that the LRPA budget can acquire more than 2 fully equipped and newly refurbished P-3C Orion.
As for the Navy, acquisition of refurbished frigates from Europe, Korea or the US can be made. After repair and refurbishing, MaxDefense still expects the first ship to be in service earlier than constructing a new one. And with a Php18 billion budget, the PN can definitely acquire more than 2 frigates. The US is also offering refurbished SH-60B/F anti-submarine helicopters, which can be had for a portion of the PN's budget for each new ASW helicopter. Even countries with more financial capability like Spain bought these refurbished helicopters to fill in the requirements.
Instead of waiting for the South Korean government to grant it to the Philippines, the Philippines must offer to acquire EDA ships from South Korea, with the willingness to pay for them. MaxDefense believes than if acquired now, the ships could be in service by next year.
Procurement of New Equipment through G2G
Aside from EDAs, the government can also simultaneously acquire brand new defense equipment for projects meeting the medium to long term needs of the AFP. There's still nothing better than brand new if the need is less immediate. And this can be done also by G2G. Although it may not speed up the construction and delivery of new equipment, it can reduce the time needed during the planning and procurement phase, while also discouraging corruption within the DND and AFP. It is currently an accepted way of fast-tracking acquisitions by the DND as seen by the speed of delivery of the Bell 412EP and FA-50PH aircraft that underwent G2G.
If only most bid-ticket projects under AFPMP and RAFPMP can be shifted to G2G negotiations instead of bidding, MaxDefense believes that most of the projects can be completed and the equipment delivered earlier by at least several months up to a year earlier.
This also avoids being too dependent on the decision to acquire a system because of cost parameters, as G2G ensures that the military can acquire specifically what they need. This procedure will allow the AFP to avoid getting cheap but possibly substandard or not really their top choice, as topnotch defense materiel are not normally cheap especially that the AFP prefer Western-made systems rather than the cheaper Eastern, Russian, of Chinese systems.
An example of where a tender has become disadvantageous over a G2G deal may include the Combat Utility Helicopter for the Philippine Air Force. Based on accounts with officers of the PAF, they actually prefer to acquire the Bell 412 as its next CUH. The specifications used on the tender was based on the Bell 412EP but some specific requirements were loosen up to allow other bidders to join the tender. We all know that AgustaWestland PZL won the project as they were the only one who can provide a similar helicopter at a lower cost than the budget allocated. And we all know what happened afterwards, until the DND decided to go G2G with the Canadian Commercial Corporation to acquire another batch of CUH, but this time acquiring the Bell 412EP.
Projects that have been awarded and are expected to have repeat orders should not undergo bidding as well, but by G2G deal. Among examples are the Harris Falcon II & III radios, the C-295M and NC-212i, and many others. An equivalent to these equipment are expected to be ordered in the next phases of the RAFPMP, and bidding won't help which may also derail standardization should another supplier and product wins next time.
Harris Falcon II and III radios were among those acquired by the AFP through Foreign Military Sales of the US government, which is essentially a G2G deal. Repeat orders were made for the past 7 years, with another major order made just late last year. More are expected to be acquired from Harris on the next phases of the Revised AFP Modernization Program.
# # # # #
With the DND's procurement process already becoming less reliable and less acceptable to the general public and to the stakeholders in the government, the DND, if they still have some good men left, should push hard for reforms that would allow defense procurement to be faster and less prone to corruption.
Also, the legislative and executive branches of the government should act fast to pass a new or revised law to back-up the said changes. It is good to note that there are now some lawmakers who are putting their foot forward to help the AFP attain its goals even if it seems insurmountable due to the large amount of budget is needed to overcome their needs.
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MaxDefense: Revisiting the Government-to-Government Process - The Better Acquisition Alternative for the Armed Forces of the Philippines
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@Nihonjin1051 This article further explain why the "Italian-deal" was later dropped.
Cossack25A1
SENIOR MEMBER
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Military and Defense News:
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Russia, Philippines agree to facilitate defense cooperation
11:16 August 13, 2015
RBTH
Russia and the Philippines decided to facilitate cooperation in defense and trade, the Philippine Department of Foreign Affairs said in a press note.
Russian Foreign Minister Sergey Lavrov met Philippine Foreign Affairs Secretary Albert del Rosario on the sidelines of the ASEAN Regional Meetings in Kuala Lumpur last week.
“At the meeting, Secretary del Rosario and FM Lavrov agreed to facilitate the conclusion of several pending agreements between the Philippines and Russia, including the establishment of an intergovernmental commission on trade, defense and military technical cooperation, and combating transnational crimes,” the Philippine Department of Foreign Affairs said in the press note.
In 2016, Russia and the Philippines will mark the 40th anniversary of the establishment of diplomatic relations. Lavrov proposed the publication of materials, among other things, to highlight the event, according to the press note.
Vladimir Putin will visit the Philippines for the 2015 APEC summit and will also hold standalone talks with Benigno Aquino III.
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Russia, Philippines agree to facilitate defense cooperation | Russia Beyond The Headlines
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Russia, Philippines agree to facilitate defense cooperation
11:16 August 13, 2015
RBTH
Russia and the Philippines decided to facilitate cooperation in defense and trade, the Philippine Department of Foreign Affairs said in a press note.
Russian Foreign Minister Sergey Lavrov met Philippine Foreign Affairs Secretary Albert del Rosario on the sidelines of the ASEAN Regional Meetings in Kuala Lumpur last week.
“At the meeting, Secretary del Rosario and FM Lavrov agreed to facilitate the conclusion of several pending agreements between the Philippines and Russia, including the establishment of an intergovernmental commission on trade, defense and military technical cooperation, and combating transnational crimes,” the Philippine Department of Foreign Affairs said in the press note.
In 2016, Russia and the Philippines will mark the 40th anniversary of the establishment of diplomatic relations. Lavrov proposed the publication of materials, among other things, to highlight the event, according to the press note.
Vladimir Putin will visit the Philippines for the 2015 APEC summit and will also hold standalone talks with Benigno Aquino III.
-----
Russia, Philippines agree to facilitate defense cooperation | Russia Beyond The Headlines
-----
Interesting
Cossack25A1
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- Joined
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- Location
Business News:
-----
BSP rates seen to hold until 2016
By Lawrence Agcaoili (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - Barclays and ANZ Bank see the Bangko Sentral ng Pilipinas (BSP) keeping interest rates steady until the first half of next year amid the benign inflation environment.
Barclays said it expects the BSP to tweak policy rates in the third quarter of next year instead of the fourth quarter of this year after the central bank lowered its inflation forecast to 1.8 percent from 2.1 percent this year.
The BSP has set an inflation target range of two to four percent this year.
Inflation averaged 1.9 percent in the first seven months of the year after easing to a 20-year low of 0.8 percent in July from 1.2 percent in June amid stable food prices and lower utility rates.
“Benign inflation leave a room to keep policy on hold for the time being, especially with the recent weakness in the peso. As such, we are pushing back our forecast of a rate hike in the fourth quarter 2015, to the third quarter 2016, when election-related uncertainty should be over, and inflation starting to pick up,” Barclays said.
Monetary authorities decided to keep interest rates unchanged during its policy setting meeting last Aug. 13 but cited risks brought about by the longer-than-expected El Niño weather condition.
The BSP has kept policy rates steady since September last year. The overnight borrowing rate is pegged at four percent and the overnight lending rate at six percent.
BSP Governor Amando Tetangco Jr. earlier said the decision to keep key policy rates unchanged was based on its assessment that prevailing price and output conditions support maintaining current policy settings.
“In deciding to keep the BSP’s monetary policy settings unchanged, the Monetary Board observed that the recent benign inflation outturns have been a result of favorable supply-side conditions, which are seen as largely transitory,” Tetangco said.
Monetary authorities noted the upside risks coming from pending petitions for power rate adjustments and the impact of stronger-than-expected El Niño dry weather conditions on food prices and utility rates.
However, he explained the modest rise in food and commodity prices as well as slower global economic activity could pose downside risks to inflation.
“This makes it clear that while inflation is low, the bank is watchful of supply side shocks that could push up prices. There have recently been some signs that food production may come under pressure, as the Philippines recently announced that it would miss its 2015 rice production targets, raising the likelihood of higher imports in order to ensure adequate stocks,” Barclays said.
On the other hand, ANZ Bank said the BSP is likely to keep policy rates steady until the first half of next year.
“We therefore maintain our forecast that the central bank will remain on hold through the first half 2016. The expected effects of El Niño, coupled with the persistent delays in infrastructure, both beyond the influence of the central bank, are the main risks to growth,” ANZ Bank said.
The investment bank pointed out monetary authorities arrived at the decision despite external shocks brought about by the weakening of the peso after the People’s Bank of China decided to devalue the yuan.
“The BSP did note that developments on the global front need careful monitoring, but also noted that this was from a perspective of financial stability. Our reading of the BSP reaction is that prudence, i.e. a steady hand on policy settings, remains the likely outcome going forward,” ANZ Bank said.
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BSP rates seen to hold until 2016 | Business, News, The Philippine Star | philstar.com
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GDP growth outlook cut to 5.7% in 2015
By Lawrence Agcaoili (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - ANZ Bank slashed its economic growth projections for the Philippines this year and next year due to anemic spending by the administration of President Aquino.
In its latest research note, ANZ Bank lowered its gross domestic product (GDP) growth forecast for the Philippines to 5.7 percent instead of 6.1 percent this year and to six percent instead of 6.3 percent next year.
ANZ Bank said government spending continued to disappoint in the first half of the year.
“Public spending continued to disappoint in the first half of 2015, which led to a year-to-date budget surplus of P13.8 billion, far from the annual target deficit of P283.7 billion,” the investment bank said.
Latest data from the Department of Finance (DOF) showed the country recorded a budget surplus of P13.8 billion in the first six months of the year, reversing the P54 billion deficit recorded in the same period last year.
The government has penned a budget gap target of P155.08 billion for the first half of the year and P283.7 billion for 2015.
Revenues collected mainly by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) went up 16 percent to P1.086 trillion from P933.7 billion, while expenditures rose nine percent to P1.072 trillion from P987.7 billion.
At this rate, ANZ Bank said the government would have to post an average of P49.6 billion deficit every month for the rest of the year to reach its target.
“Thus, we now believe the government’s deficit target of two percent of GDP is no longer attainable and we downgrade our 2015 fiscal deficit forecast to 0.08 percent of GDP,” the investment bank said.
The country’s GDP growth slowed down to 5.2 percent in the first quarter of the year from 5.6 percent in the same quarter last year amid weak government spending.
The government sees the GDP growing between seven and eight percent this year.
Socioeconomic Planning Secretary Arsenio Balisacan admitted that meeting the lower end of the government’s GDP growth target this year remains a challenge amid the weak global demand.
“It’s a big challenge to get the seven percent. But we’ll see,” Balisacan said earlier.
Latest data from the Philippine Statistics Authority (PSA) showed the country’s merchandise exports slipped 4.7 percent to $28.8 billion from January to June this year compared to $30.23 billion in the same period last year.
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GDP growth outlook cut to 5.7% in 2015 | Business, News, The Philippine Star | philstar.com
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Philippine gaming firms in losing streak in H1
By Iris C. Gonzales (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - Gaming companies in the Philippines are losing their winning streak due to mounting costs and because of what seems to be a spillover of the gaming slump in Macau, as seen in their first half losses.
But the chief of the country’s gaming regulator, the Philippine Amusement Gaming Corp. (Pagcor) is unfazed with the recent developments, saying gaming revenues are still going up, attributing instead the companies’ losses to expansion expenses.
“This has nothing to do with gaming behaviour. The figures will speak for themselves. The revenues are still up,” said Pagcor chairman Cristino Naguiat Jr.
Melco Crown Philippines, the subsidiary of Melco Crown and Belle Corp., incurred a net loss of P4.9 billion in the first half of the year from P2.4 billion, which it attributed to taxes, fees and expenses related to the continuous improvement of the resort and casino complex.
The resignation of James Packer as chairman of global firm Crown Resorts also puts a cloud of uncertainty over the company’s operations.
However, local officials were quick to assure that Packer’s resignation won’t have a negative impact on operations of Melco Crown’s City of Dreams, the newest casino resort at the 100-hectare Las Vegas-style Entertainment City.
“Prospects are good. James Packer has nothing to do with Manila operations. Lawrence Ho is the CEO,” said Willy Ocier, vice chairman of Belle Corp.
Manuel Gana, chief financial officer of Belle also said Packer was not involved in the day-to-day operations of COD Manila.
City of Dreams has suspended 100 workers temporarily due to mounting costs, which the company said is a temporary streamlining.
“The company has taken a step toward a temporarily streamlining of the cost structure, and has to temporarily suspend employment with certain employees. This proactive stance, though a tough and difficult decision affecting less than two percent of its total manpower, is essential for long-term sustainability of business,” it said in a statement sent to The STAR.
It said it continues to expand across all segments, with gaming and non-gaming revenues delivering robust growth in the second quarter.
Travellers International Hotel Group, operator of Resorts World Manila, meanwhile, reported a decline in revenues in the first half to P2.4 billion, 1.67 percent lower while second quarter income fell 46.4 percent year-on-year to P622 million as gaming revenues dropped by 10.5 percent to P5.7 billion during the period.
Bloomberry Resorts Corp. likewise incurred a net loss of P786.5 million in the April to June period, widening the net loss of P533.1 million in the first quarter, its income report showed.
As a result, its first half net loss ballooned to P1.32 billion compared to a net income of P2.31 billion a year earlier.
The company said operating cost and expenses of Solaire increased by 32.3 percent to P10.98 billion in the six-months ending June on the back of costs and expenses related to the full operation of Sky Tower and related amenities in the first half of 2015.
In a recent research note, First Metro said Macau’s gaming slump has contaminated the local industry’s earnings outlook.
Analysts said there is an ongoing gaming slump in Macau due to a crackdown on corruption and a no-smoking policy in some casinos.
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Philippine gaming firms in losing streak in H1 | Business, News, The Philippine Star | philstar.com
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National Development News:
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Green Jobs bill set for House approval
By Paolo Romero (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - The House Committee on Labor and Employment has approved and endorsed for plenary approval the Green Jobs bill, a first-of-its-kind measure which seeks to open job opportunities in the field of green technology and environment conservation.
Davao City Rep. Karlo Alexei Nograles, chairman of the panel, said House Bill 4969 or the proposed Philippine Green Jobs Act has likewise passed the scrutiny of the House Committees on Appropriation, and the Ways and Means to scour funds for the implementation of the law.
The Senate, through Sen. Juan Edgardo Angara, has also committed to pass Senate Bill 2893 or their version of the Green Jobs Act, which was hailed by the United Nation’s International Labor Organization as the “first of its kind” and a creative innovation to address the challenges of climate change.
The measure seeks to promote work that produce goods and services that benefit and preserve the environment. These particularly involve business enterprises that use fewer natural resources in their production processes.
“With the adverse effects of climate change being felt around the world and its increasing threat to lives and properties, nations have found it imperative to facilitate and guide the process of making industries less harmful to the environment,” Nograles said.
The bill is also pushing for fiscal incentives and tax perks to encourage individuals and enterprises to participate in the creation of green jobs, practice the use of environment-friendly technologies and produce green goods and services.
Under the proposal of Nograles, the so-called “green companies” or business enterprises involved in the production of environment-friendly products and those that offer services to promote environmental protection and conservation are entitled to fiscal incentives that may include additional deduction of labor expense and duty-free importation of capital equipment.
The incentives shall be determined and administered by the Department of Finance.
With this bill, Nograles hopes to see the establishment of many “green investments” in the Philippines such as those involved in the production of electronic vehicles, solar panels and even power companies that use renewable resources.
“This is the future. I think that in the next 10 to 20 years, we will already see a lot of homes equipped with their own solar panels and homes that have their own water recycling facilities. What we need now is to encourage more investments on green technology. This is like in the early ‘90s where mobile phones were only for the rich whereas today, every Filipino has their own cellular phone,” he said.
With the world’s dwindling resources, he said countries have no recourse but to move toward a more sustainable use of their natural resources and harness the full potential of renewable resources.
“Public policy must center on developing a green jobs agenda, enhancing workers’ skills, and ensuring a just transition to a green economy,” Nograles said.
The Department of Labor and Employment is tasked to create a national green jobs human resource development plan, which will sustain the transition into a green economy.
“It shall include programs, projects, and activities pertaining to basic, higher and technical vocational education and training, a database that identifies and links green job opportunities with private and public entities, and information on knowledge and skill requirements of a green economy,” Nograles said.
The bill also seeks to delegate the Secretary of Labor and Employment as an additional member of the Climate Change Commission as well as mandates the Department of Education and the Commission on Higher Education to design and implement the appropriate curriculum in support of the green economy.
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Green Jobs bill set for House approval | Business, News, The Philippine Star | philstar.com
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Military and Defense News:
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Japan joins U.S.-Philippine humanitarian drills amid China sea dispute
World | Sat Aug 15, 2015 10:01am EDT
SUBIC BAY, Philippines
(This August 14, 2015 story was refiled to say this was the first Japanese role at Subic Bay)
Japan has joined U.S.-led maritime humanitarian exercises off the Philippines for the first time, as concerns mount among the three allies about China's growing assertiveness in the disputed South China Sea.
A Japanese navy replenishment ship was in Subic Bay, a former U.S. naval base, to refuel a U.S. Navy floating hospital en route to Vietnam for the seven-nation humanitarian mission.
It was the first time a Japanese navy ship has taken part in the humanitarian assistance and disaster relief drills from Subic Bay. Japan has participated in past Pacific Partnership missions in other areas.
A flotilla of Japanese training vessels, including a submarine, makes annual port calls in Manila.
Rear Admiral Charles Williams, commander of U.S. Seventh Fleet's Task Force 73, said humanitarian assistance and disaster relief exercises were becoming a regular component of military exercises in the Philippines.
"You are seeing in exercises ... a shift from strictly bilateral engagement to multilateral, which is why you see the Japanese here today," Williams told journalists aboard USNS Mercy, one of two U.S. hospital ships.
China claims most of the South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Taiwan and Brunei also have overlapping claims. Japan and China also have conflicting claims in the East China Sea.
Williams said the presence of Admiral Katsutoshi Kawano, head of Japan's Self-Defence Forces, "speaks volumes about their commitment to the region and their commitment to being part of a multilateral engagement".
Kawano met early this week with his Philippine counterpart, General Hernando Iriberri, and Defence Secretary Voltaire Gazmin in Manila, where he expressed interest in holding joint amphibious landing exercises and operations with Philippine marines.
In a meeting with Gazmin, Kawano also expressed interest in sharing information in the South China Sea and capacity building, particularly in humanitarian assistance and disaster relief.
Williams said humanitarian assistance and disaster relief operations were "a great avenue towards increasing maritime stability and security in this region", part of Washington's rebalance to Asia policy.
China hit back on Monday at U.S. criticism that it restricts navigation and overflights in the South China Sea. U.S. Secretary of State John Kerry also said China's construction of facilities on man-made islands for "military purposes" was raising tension and risked "militarization" by other claimant states.
(Reporting By Manuel Mogato; Editing by Nick Macfie and Tom Heneghan)
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Japan joins U.S.-Philippine humanitarian drills amid China sea dispute| Reuters
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BSP rates seen to hold until 2016
By Lawrence Agcaoili (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - Barclays and ANZ Bank see the Bangko Sentral ng Pilipinas (BSP) keeping interest rates steady until the first half of next year amid the benign inflation environment.
Barclays said it expects the BSP to tweak policy rates in the third quarter of next year instead of the fourth quarter of this year after the central bank lowered its inflation forecast to 1.8 percent from 2.1 percent this year.
The BSP has set an inflation target range of two to four percent this year.
Inflation averaged 1.9 percent in the first seven months of the year after easing to a 20-year low of 0.8 percent in July from 1.2 percent in June amid stable food prices and lower utility rates.
“Benign inflation leave a room to keep policy on hold for the time being, especially with the recent weakness in the peso. As such, we are pushing back our forecast of a rate hike in the fourth quarter 2015, to the third quarter 2016, when election-related uncertainty should be over, and inflation starting to pick up,” Barclays said.
Monetary authorities decided to keep interest rates unchanged during its policy setting meeting last Aug. 13 but cited risks brought about by the longer-than-expected El Niño weather condition.
The BSP has kept policy rates steady since September last year. The overnight borrowing rate is pegged at four percent and the overnight lending rate at six percent.
BSP Governor Amando Tetangco Jr. earlier said the decision to keep key policy rates unchanged was based on its assessment that prevailing price and output conditions support maintaining current policy settings.
“In deciding to keep the BSP’s monetary policy settings unchanged, the Monetary Board observed that the recent benign inflation outturns have been a result of favorable supply-side conditions, which are seen as largely transitory,” Tetangco said.
Monetary authorities noted the upside risks coming from pending petitions for power rate adjustments and the impact of stronger-than-expected El Niño dry weather conditions on food prices and utility rates.
However, he explained the modest rise in food and commodity prices as well as slower global economic activity could pose downside risks to inflation.
“This makes it clear that while inflation is low, the bank is watchful of supply side shocks that could push up prices. There have recently been some signs that food production may come under pressure, as the Philippines recently announced that it would miss its 2015 rice production targets, raising the likelihood of higher imports in order to ensure adequate stocks,” Barclays said.
On the other hand, ANZ Bank said the BSP is likely to keep policy rates steady until the first half of next year.
“We therefore maintain our forecast that the central bank will remain on hold through the first half 2016. The expected effects of El Niño, coupled with the persistent delays in infrastructure, both beyond the influence of the central bank, are the main risks to growth,” ANZ Bank said.
The investment bank pointed out monetary authorities arrived at the decision despite external shocks brought about by the weakening of the peso after the People’s Bank of China decided to devalue the yuan.
“The BSP did note that developments on the global front need careful monitoring, but also noted that this was from a perspective of financial stability. Our reading of the BSP reaction is that prudence, i.e. a steady hand on policy settings, remains the likely outcome going forward,” ANZ Bank said.
-----
BSP rates seen to hold until 2016 | Business, News, The Philippine Star | philstar.com
-----
GDP growth outlook cut to 5.7% in 2015
By Lawrence Agcaoili (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - ANZ Bank slashed its economic growth projections for the Philippines this year and next year due to anemic spending by the administration of President Aquino.
In its latest research note, ANZ Bank lowered its gross domestic product (GDP) growth forecast for the Philippines to 5.7 percent instead of 6.1 percent this year and to six percent instead of 6.3 percent next year.
ANZ Bank said government spending continued to disappoint in the first half of the year.
“Public spending continued to disappoint in the first half of 2015, which led to a year-to-date budget surplus of P13.8 billion, far from the annual target deficit of P283.7 billion,” the investment bank said.
Latest data from the Department of Finance (DOF) showed the country recorded a budget surplus of P13.8 billion in the first six months of the year, reversing the P54 billion deficit recorded in the same period last year.
The government has penned a budget gap target of P155.08 billion for the first half of the year and P283.7 billion for 2015.
Revenues collected mainly by the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) went up 16 percent to P1.086 trillion from P933.7 billion, while expenditures rose nine percent to P1.072 trillion from P987.7 billion.
At this rate, ANZ Bank said the government would have to post an average of P49.6 billion deficit every month for the rest of the year to reach its target.
“Thus, we now believe the government’s deficit target of two percent of GDP is no longer attainable and we downgrade our 2015 fiscal deficit forecast to 0.08 percent of GDP,” the investment bank said.
The country’s GDP growth slowed down to 5.2 percent in the first quarter of the year from 5.6 percent in the same quarter last year amid weak government spending.
The government sees the GDP growing between seven and eight percent this year.
Socioeconomic Planning Secretary Arsenio Balisacan admitted that meeting the lower end of the government’s GDP growth target this year remains a challenge amid the weak global demand.
“It’s a big challenge to get the seven percent. But we’ll see,” Balisacan said earlier.
Latest data from the Philippine Statistics Authority (PSA) showed the country’s merchandise exports slipped 4.7 percent to $28.8 billion from January to June this year compared to $30.23 billion in the same period last year.
-----
GDP growth outlook cut to 5.7% in 2015 | Business, News, The Philippine Star | philstar.com
-----
Philippine gaming firms in losing streak in H1
By Iris C. Gonzales (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - Gaming companies in the Philippines are losing their winning streak due to mounting costs and because of what seems to be a spillover of the gaming slump in Macau, as seen in their first half losses.
But the chief of the country’s gaming regulator, the Philippine Amusement Gaming Corp. (Pagcor) is unfazed with the recent developments, saying gaming revenues are still going up, attributing instead the companies’ losses to expansion expenses.
“This has nothing to do with gaming behaviour. The figures will speak for themselves. The revenues are still up,” said Pagcor chairman Cristino Naguiat Jr.
Melco Crown Philippines, the subsidiary of Melco Crown and Belle Corp., incurred a net loss of P4.9 billion in the first half of the year from P2.4 billion, which it attributed to taxes, fees and expenses related to the continuous improvement of the resort and casino complex.
The resignation of James Packer as chairman of global firm Crown Resorts also puts a cloud of uncertainty over the company’s operations.
However, local officials were quick to assure that Packer’s resignation won’t have a negative impact on operations of Melco Crown’s City of Dreams, the newest casino resort at the 100-hectare Las Vegas-style Entertainment City.
“Prospects are good. James Packer has nothing to do with Manila operations. Lawrence Ho is the CEO,” said Willy Ocier, vice chairman of Belle Corp.
Manuel Gana, chief financial officer of Belle also said Packer was not involved in the day-to-day operations of COD Manila.
City of Dreams has suspended 100 workers temporarily due to mounting costs, which the company said is a temporary streamlining.
“The company has taken a step toward a temporarily streamlining of the cost structure, and has to temporarily suspend employment with certain employees. This proactive stance, though a tough and difficult decision affecting less than two percent of its total manpower, is essential for long-term sustainability of business,” it said in a statement sent to The STAR.
It said it continues to expand across all segments, with gaming and non-gaming revenues delivering robust growth in the second quarter.
Travellers International Hotel Group, operator of Resorts World Manila, meanwhile, reported a decline in revenues in the first half to P2.4 billion, 1.67 percent lower while second quarter income fell 46.4 percent year-on-year to P622 million as gaming revenues dropped by 10.5 percent to P5.7 billion during the period.
Bloomberry Resorts Corp. likewise incurred a net loss of P786.5 million in the April to June period, widening the net loss of P533.1 million in the first quarter, its income report showed.
As a result, its first half net loss ballooned to P1.32 billion compared to a net income of P2.31 billion a year earlier.
The company said operating cost and expenses of Solaire increased by 32.3 percent to P10.98 billion in the six-months ending June on the back of costs and expenses related to the full operation of Sky Tower and related amenities in the first half of 2015.
In a recent research note, First Metro said Macau’s gaming slump has contaminated the local industry’s earnings outlook.
Analysts said there is an ongoing gaming slump in Macau due to a crackdown on corruption and a no-smoking policy in some casinos.
-----
Philippine gaming firms in losing streak in H1 | Business, News, The Philippine Star | philstar.com
-----
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National Development News:
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Green Jobs bill set for House approval
By Paolo Romero (The Philippine Star)
Updated August 17, 2015 - 12:00am
MANILA, Philippines - The House Committee on Labor and Employment has approved and endorsed for plenary approval the Green Jobs bill, a first-of-its-kind measure which seeks to open job opportunities in the field of green technology and environment conservation.
Davao City Rep. Karlo Alexei Nograles, chairman of the panel, said House Bill 4969 or the proposed Philippine Green Jobs Act has likewise passed the scrutiny of the House Committees on Appropriation, and the Ways and Means to scour funds for the implementation of the law.
The Senate, through Sen. Juan Edgardo Angara, has also committed to pass Senate Bill 2893 or their version of the Green Jobs Act, which was hailed by the United Nation’s International Labor Organization as the “first of its kind” and a creative innovation to address the challenges of climate change.
The measure seeks to promote work that produce goods and services that benefit and preserve the environment. These particularly involve business enterprises that use fewer natural resources in their production processes.
“With the adverse effects of climate change being felt around the world and its increasing threat to lives and properties, nations have found it imperative to facilitate and guide the process of making industries less harmful to the environment,” Nograles said.
The bill is also pushing for fiscal incentives and tax perks to encourage individuals and enterprises to participate in the creation of green jobs, practice the use of environment-friendly technologies and produce green goods and services.
Under the proposal of Nograles, the so-called “green companies” or business enterprises involved in the production of environment-friendly products and those that offer services to promote environmental protection and conservation are entitled to fiscal incentives that may include additional deduction of labor expense and duty-free importation of capital equipment.
The incentives shall be determined and administered by the Department of Finance.
With this bill, Nograles hopes to see the establishment of many “green investments” in the Philippines such as those involved in the production of electronic vehicles, solar panels and even power companies that use renewable resources.
“This is the future. I think that in the next 10 to 20 years, we will already see a lot of homes equipped with their own solar panels and homes that have their own water recycling facilities. What we need now is to encourage more investments on green technology. This is like in the early ‘90s where mobile phones were only for the rich whereas today, every Filipino has their own cellular phone,” he said.
With the world’s dwindling resources, he said countries have no recourse but to move toward a more sustainable use of their natural resources and harness the full potential of renewable resources.
“Public policy must center on developing a green jobs agenda, enhancing workers’ skills, and ensuring a just transition to a green economy,” Nograles said.
The Department of Labor and Employment is tasked to create a national green jobs human resource development plan, which will sustain the transition into a green economy.
“It shall include programs, projects, and activities pertaining to basic, higher and technical vocational education and training, a database that identifies and links green job opportunities with private and public entities, and information on knowledge and skill requirements of a green economy,” Nograles said.
The bill also seeks to delegate the Secretary of Labor and Employment as an additional member of the Climate Change Commission as well as mandates the Department of Education and the Commission on Higher Education to design and implement the appropriate curriculum in support of the green economy.
-----
Green Jobs bill set for House approval | Business, News, The Philippine Star | philstar.com
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Military and Defense News:
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Japan joins U.S.-Philippine humanitarian drills amid China sea dispute
World | Sat Aug 15, 2015 10:01am EDT
SUBIC BAY, Philippines
(This August 14, 2015 story was refiled to say this was the first Japanese role at Subic Bay)
Japan has joined U.S.-led maritime humanitarian exercises off the Philippines for the first time, as concerns mount among the three allies about China's growing assertiveness in the disputed South China Sea.
A Japanese navy replenishment ship was in Subic Bay, a former U.S. naval base, to refuel a U.S. Navy floating hospital en route to Vietnam for the seven-nation humanitarian mission.
It was the first time a Japanese navy ship has taken part in the humanitarian assistance and disaster relief drills from Subic Bay. Japan has participated in past Pacific Partnership missions in other areas.
A flotilla of Japanese training vessels, including a submarine, makes annual port calls in Manila.
Rear Admiral Charles Williams, commander of U.S. Seventh Fleet's Task Force 73, said humanitarian assistance and disaster relief exercises were becoming a regular component of military exercises in the Philippines.
"You are seeing in exercises ... a shift from strictly bilateral engagement to multilateral, which is why you see the Japanese here today," Williams told journalists aboard USNS Mercy, one of two U.S. hospital ships.
China claims most of the South China Sea, through which $5 trillion in ship-borne trade passes every year. The Philippines, Vietnam, Malaysia, Taiwan and Brunei also have overlapping claims. Japan and China also have conflicting claims in the East China Sea.
Williams said the presence of Admiral Katsutoshi Kawano, head of Japan's Self-Defence Forces, "speaks volumes about their commitment to the region and their commitment to being part of a multilateral engagement".
Kawano met early this week with his Philippine counterpart, General Hernando Iriberri, and Defence Secretary Voltaire Gazmin in Manila, where he expressed interest in holding joint amphibious landing exercises and operations with Philippine marines.
In a meeting with Gazmin, Kawano also expressed interest in sharing information in the South China Sea and capacity building, particularly in humanitarian assistance and disaster relief.
Williams said humanitarian assistance and disaster relief operations were "a great avenue towards increasing maritime stability and security in this region", part of Washington's rebalance to Asia policy.
China hit back on Monday at U.S. criticism that it restricts navigation and overflights in the South China Sea. U.S. Secretary of State John Kerry also said China's construction of facilities on man-made islands for "military purposes" was raising tension and risked "militarization" by other claimant states.
(Reporting By Manuel Mogato; Editing by Nick Macfie and Tom Heneghan)
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Japan joins U.S.-Philippine humanitarian drills amid China sea dispute| Reuters
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