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Disaster risk resilience among APEC 2019 priorities

April 16, 2019

AN  INITIATIVE spearheaded by the Philippines and Japan on proposed measures that aim to strengthen the financial resilience to natural disasters of the 21 member-economies of the Asia-Pacific Economic Cooperation (APEC) forum  will be on the priority list for discussion in the APEC finance ministers’ meeting in Chile this October, according to Finance Assistant Secretary Paola Alvarez.   Chile, which is hosting this year's  APEC meetings, decided to include disaster risk resilience as among the priorities to be discussed by the  finance ministers  of the 21 Pacific Rim economies,  following the conclusion of the APEC Finance and Central Bank Deputies Meeting (FCBDM)  held last month in the South American country’s capital city of Santiago.  Alvarez, who heads the Philippine delegation to the FCBDM, said the inclusion of disaster risk resilience in the list of APEC’s priorities this year underscore the need for Pacific Rim economies to come up with policies and solutions to mitigate the adverse economic impact of natural disasters and help them recover quickly from such losses. Most APEC economies are situated around the “Pacific Ring of Fire,” which is the world’s most active fault line where 90 percent of earthquakes and volcanic eruptions occur.  As co-chair this year of APEC’s Disaster Risk Financing and Insurance  (DRFI) Solutions Working Group,  the Philippines hosted the APEC DRFI Study Course on the Financial Management of Disaster Risks during the FCBDM in Santiago City last March, Alvarez said.  Japan and the Philippines have co-chaired this working group since 2017. The first APEC DRFI Technical Working Group was formed in 2016 with Peru and the Philippines as co-chairs. The course, which is part of APEC’s series of study courses on earthquake, El Niño, and flood insurance schemes for property and agricultural assets, is among the deliverables this year of the working group co-chaired by the Philippines and Japan.  Alvarez said, "The course intended to familiarize the participants on the different financial strategies on disaster risk resilience not only from the perspective of the Philippines but also from other member economies.”  “The discussions touched on the role of the state, the private sector, and regional cooperation in providing DRFI solutions to mitigate the adverse impact of natural disasters on people and the economy,” Alvarez said.  Among the participants in the study course were representatives from the United States, Japan, Chile, Malaysia, Indonesia, Asian Development Bank (ADB), World Bank, International Monetary Fund (IMF), and the APEC Business Advisory Council (ABAC).  Alvarez, the focal person of the Department of Finance (DOF) on disaster risk resilience,  shared with  officials of APEC economies the Philippine  government’s  efforts in institutionalizing mechanisms and policy initiatives to promote  collaboration  with  the private sector and communities so as to empower them to become more responsive and resilient in the face of various disasters that beset the country.     She also shared the government’s ongoing initiatives with the ADB on institutionalizing  the Philippine City Disaster Insurance Pool (PCDIP), and the country’s  experience in developing  the Philippine Catastrophe Insurance Pool through the collaboration of   the World Bank, Insurance Commission (IC), and Philippine Insurers and Reinsurers Association (PIRA).  Alvarez also cited the crucial role by the private sector in mitigating, or responding to, the debilitating effects of disasters.  For instance, in the aftermath of supertyphoon Yolanda, “micro-insurance companies facilitated the disbursement of funds to the local households, especially the unbanked, more quickly,” Alvarez said.  “We also underscored the need to also protect the interests of the people against the possible risks that may come with such schemes. Nonetheless, given the enormity of disaster-related concerns, the government continues to reach out to the private sector to encourage active participation in DRFI initiatives,” she said.  During the FCBDM, Alvarez  also discussed with her  APEC counterparts the Philippines’  Parametric Insurance Pilot covering 25 disaster-prone provinces, a program  implemented starting in 2017  with the assistance of the World Bank.  Alvarez explained, that this mechanism, “as opposed to the traditional indemnity insurance, does not require long and tedious assessment to determine actual loss and corresponding claims. As such, this provides local government units (LGUs) with funds that can be easily disbursed especially during testing times.” The APEC member-economies are: Australia; Brunei Darussalam; Canada; Chile; China; Hong Kong, China; Indonesia; Japan; South Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia; Singapore; Chinese Taipei; Thailand; United States and Vietnam.

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XU-led group to hold candidates' fora

April 15, 2019

A group from Xavier University will be holding three candidates' fora - one each for the Cagayan de Oro City mayor and vice-mayor, congressmen and councilors - as part of its contribution to the national midterm elections next month. Calling itself Lihuk, the group scheduled the forum for mayor and vice-mayor April 30, congressmen on April 23 and councilors Tuesday, April 16. All will be held at 1:00 to 5:00 p.m. at the university's little theater at the main campus along Corrales avenue here. Lihuk stands for the vernacular Lambigit Igsoon para sa Hiniusang pag-Uswag sa atong Katilingban which is a call for the electorate to actively know their candidates. According to lead convenor Nestor Banuag Jr., Lihuk had its roots in the 2016 elections aimed mainly at voters education. "It is important for the movement as our main duty and purpose to remind the Kagay-anons both voters and candidates alike of the sacredness of the elections," Banuag said. "We do this by providing opportunities for our Kagay-anons to get to know our running candidates and make that one vote count as a result of prudence." In a separate memorandum, Xavier University president Roberto Yap recommended the actions of Lihuk, saying that choosing candidates must be in line with the Ignatian value of discernment. "As Pope Francis reminds us, public service through politics is a lofty vocation and one of the highest forms of charity," Yap wrote. Xavier University is an Ateneo institution and therefore, Jesuit-run. Earlier, Lihuk conducted a series of voters' education sessions in the city as a prelude to the three events this month. Lihuk's activities don't stop there. They will conduct monitoring during Election Day this May 13.

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Dominguez urges ASEAN states to share efforts in foiling global terrorism financing schemes

April 15, 2019

THE PHILIPPINES has underscored the need for member-states of the Association of Southeast Asian Nations (ASEAN) to share their efforts and initiatives in deterring money laundering schemes, which have been proven to be  among the primary tools being used to fund international terrorist activities.  Finance Secretary Carlos Dominguez III said that on the part of the Philippines, its enactment of Republic Act (RA) No. 10168 or the Terrorism Financing Prevention and Suppression Act of 2012 represents the country’s firm commitment to fight global terrorism and its financing. Dominguez said criminalizing terrorism financing under RA 10168, has strengthened the Philippines’ efforts to trace and freeze funds used or being planned to be used to carry out terrorist attacks.  “The Philippines is currently extending efforts to stifle the occurrence of illicit trade activity. Regardless, illicit trade activity continues to pose a high risk to the country. Moreover, money laundering contributes to terrorism financing, the threat of which has been categorized as high risk. The ASEAN Member-States can thus share their efforts and initiatives in deterring this problem,” Dominguez said during the recently concluded 23rdASEAN Finance Ministers Meeting in Chiang Rai, Thailand.   Among the ASEAN members, the Philippines is considered as one of the countries with the lowest money laundering risk although illicit revenue flows remain a problem.  In the Philippine setting, Dominguez said  “close cooperation with relevant intelligence and law enforcement agencies is essential in order to trace, seize and forfeit funds used or about to be used for terrorism financing, and hurdle impediments, such as bank secrecy laws, to ensure the successful prosecution” of this crime.    He said legislative amendments to support the legal and administrative framework for the automatic exchange of information with other foreign tax authorities is currently pending in the Philippine Congress.

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I donated part of Bulua property to DPWH - La Viña

April 13, 2019

IT was mayoralty candidate Jose Gabriel La Viña who willingly donated to the government 2,000 square meters of his property in barangay Bulua upon learning that the Department of Public Works and Highways (DPWH) had a road widening project in the area. In a press statement, La Viña said that it was DPWH officials who approached him in 2016 and informed him of an impending project near his property. “Sa walay pagduha-duha, ako gihatag sa DPWH aron maglampus ilang tinguha nga mapalapdan ang dalan ug tabang sab sa traffic decongestion sa area sa Bulua,” he said. The project was supposed to connect the old Cagayan de Oro-Iligan highway to the new western coastal road. In an earlier City Council hearing, DPWH project engineer Leowald Pecore said the plan to pass the access road through La Viña’s property was signed off by then regional director Evelyn Barroso. She has since retired. La Viña said he was stunned by reports that one of his neighbors complained that the now mayoral candidate insisted that DPWH redirect its access road to his property. “Ako naman hinuon ang gihimung dautan nila nga ako man gani ang agrabyad kay kung kana akong yuta kanang gipabayran, moabot sa P20 million ang kantidad ana apan akong batasan nga nasunod sa akong mga ginikanan nga modonar g’yud og luna alang sa kaarangan sa Kagayanon,” he said. La Viña speculated the expose of the issue is pure politicking because his neighbor could have complained about the matter three years ago when DPWH decided on the course of the project. “Gipamolitika lang nila kay wala man sila makita nga lain ilabay nga lapok sa ako,” he said.

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3rd PH Sports Tourism Awards Nominations now open

April 11, 2019

Nominations for the 3rd Philippine Sports Tourism Awards are now open to all sports and tourism related associations, event organizers, companies and local government units that have excelled in supporting, organizing and managing sports events to attract visitors to their destinations. The prestigious awards will from this year be given annually to the various categories in the private and government sectors for domestic or international events. Introduced by Selrahco Management, a marketing and promotions company focusing on destination and sports marketing, the PSTA is a spin-off of the Sports Tourism Forum which was formed in 2004. PSTA is now managed by Selrahco-Primetime. Previous honorees include Sunrise Events, Inc (2015-2017) as private event organizers, Dumaguete City (2017) and Municipality of Lubao, Pampanga (2017) as government event organizers; Tabuelan 111(2015) and Visit Davao Summer Festival (2017) as domestic event of the year; Ironman 70.3 Cebu (2015) and Ironman 70.3 Asia Pacific Championship (2017) as event of the year;  Philippine Inter-Island Sailing Federation (2015) and Philippine Football Federation (2017) as national sports association of the year; Province of Cebu (2015) and Cebu Pacific Air (2017) for destination marketing; Resorts World Manila Masters (2015) and Century Tuna Ironman (2017) for event sponsorship of the year; Fat Boy 10s Rugby (2015) and Fundlife International (2017) were named charity events of the year, Philippine Airlines was was named 2017 airline of the year while Shangri-La's Mactan Resort & Spa romped away with the hotel of the year 2017 award. The prestigious award of destination of the year was won by Clark Freezone in 2015 and Subic Bay in 2017.   Nominations for events held only in 2018 will be considered. The categories are: Destination of the Year, Organizer of the Year (LGU), Organizer of the Year (Private), Event of the Year (Domestic), Event of the Year (International), Destination Marketing of the Year, NSA of the Year, Hotel of the Year, Event Sponsorship of the Year, Airline of the Year, Charity Event of the Year Four new categories are added for this year - Tour Operator of the Year, Sports Venue of the Year, Sports MICE event of the Year, and Media Coverage of Year. Deadline for nominations will be on June 30, 2019. Nomination forms are available online in the PSTA Facebook page at www.facebook.com/ThePSTAwards/  There is no fee in nominating an entry. Only shortlisted nominations will be announced. For more information, call Mr Gabe Tomboc  at +639064067051   or email gabe.selrahco@gmail.com

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P15-Billion Windfall for Gencos with Mindanao WESM

April 11, 2019

The extension of the Philippine WESM into Mindanao can be done legally and becomes technically possible only upon completion of the Visayas-Mindanao HVDC Interconnection. According to a paper submitted last year by the Mindanao Coalition of Power Consumers, an isolated WESM in Mindanao or anywhere else in the Philippines is not mandated by the EPIRA, although neither is it explicitly prohibited by the EPIRA. “So the Department of Energy (DoE) is probably thinking of going ahead with the establishment of an isolated Mindanao WESM, because it is good for the generating companies in Mindanao, and there is no legal prohibition against an isolated WESM in Mindanao,” said Engr. David A. Tauli, MCPC President. “But even if the DOE can legally establish an isolated WESM in Mindanao, they still have to tell the public now, and tell the legal courts when the issue is brought to the courts, what are the economic benefits of a Mindanao WESM,” Tauli added. The MCPC said advocates of a Mindanao WESM have failed to establish the economic benefits that would accrue to the people of Mindanao as a result of its operation. The extension of the Philippine WESM into Mindanao can be done legally and becomes technically possible only upon completion of the Visayas-Mindanao HVDC Interconnection. According to a paper submitted last year by the Mindanao Coalition of Power Consumers, an isolated WESM in Mindanao or anywhere else in the Philippines is not mandated by the EPIRA, although neither is it explicitly prohibited by the EPIRA. “So the Department of Energy (DoE) is probably thinking of going ahead with the establishment of an isolated Mindanao WESM, because it is good for the generating companies in Mindanao, and there is no legal prohibition against an isolated WESM in Mindanao,” said Engr. David A. Tauli, MCPC President. “But even if the DOE can legally establish an isolated WESM in Mindanao, they still have to tell the public now, and tell the legal courts when the issue is brought to the courts, what are the economic benefits of a Mindanao WESM,” Tauli added. The MCPC said advocates of a Mindanao WESM have failed to establish the economic benefits that would accrue to the people of Mindanao as a result of its operation.   Average Annual Rate of Electricity in Mindanao The MCPC said the average rate being paid by consumers for bulk generation in Mindanao today, without a WESM, is around P4.20 per kilowatt-hour. When a WESM is established in Mindanao, the price of bulk generation during peak loads, assuming that there is adequate capacity of generating plants available, will be P7.00/ kWh. In times of power capacity shortage, which will occur during periods of droughts or when major power plants are undergoing repair or maintenance, the price in the WESM will go up to at least P20 /kWh, assuming that the dominant generating companies do not abuse their market power.   WESM Windfall for Gencos Based on these assumptions, the MCPC calculates the operation of a WESM in Mindanao at this time would result in a windfall profit of at least P15- billion annually. These are the economic impacts of the WESM in the short run, two or three years into the future. In the long run, a WESM in Mindanao will be disastrous for everyone, including the generating companies. Investors will not come to Mindanao because of the high prices of electricity, consumers will reduce their usage of electricity, and the more expensive power plants will have to shut down because they will no longer be needed.   High power rates stunt growth Despite the windfall profits accruing to the remaining gencos, the industry would earn fewer revenues due to the reduction in consumption and the negative effects of the high electricity rates on growth. In the long run, this would force power intensive industries which originally located to Mindanao because of its lower power rates to locate elsewhere.   With Mindanao WESM A Mindanao WESM would increase power rates in the island because of its pricing mechanism which would be the same for Mindanao as the pricing mechanism being implemented now in the Philippine WESM. In a Mindanao WESM, the price for all generation, during normal periods when there is adequate generation, will be the highest bid price of the generators that are dispatched. The last generator dispatched during peak load hours will be a diesel-fueled power plant, with a price of 7.00 pesos per kWh. This will be the price of the generation of all power plants dispatched during peak hours. During hours of intermediate load, the price will be the price of the last diesel-fueled power plant dispatched, which will probably be around P6.00/kWh, lower than diesel-fueled power plants used for peak loads. And during the hours in which only baseload power plants are operating, the price will probably be around P5.00/kWh, the price of the most expensive coal plant that is dispatched. Thus, with a WESM there will be an inevitable increase in the prices of bulk generation, even if there will be no exercise of market power by the dominant generating companies generating companies in Mindanao. The average rate of electricity sold in the WESM over an entire year will be around P5.60/kWh.   Without WESM Under the economic dispatch of generating plants being implemented by the National Grid Corporation of the Philippines (NGCP) in Mindanao at present, the rates for bulk generation are the rates for the bilateral contracts between distribution utility companies and generating companies. This would be an average of around P4.20/kWh, after normalizing the rates for the FDC coal plant in Villanueva, Misamis Oriental and the Mt. Apo geothermal power plant. The current rates of these power plants are abnormal, but the rates should be normalized in 2017 after legal actions by consumers against the exorbitant rates of the 100-MW Mt. Apo geothermal power plant and the FDC 405-MW coal plant.   Conclusion The only change that will result from the imposition of a WESM in Mindanao would be the replacement of the present pricing of bulk generation obtained through bilateral contracting with pricing determined by the WESM. Even without abuse of market power by the half-dozen dominant generating companies in Mindanao, the average rate for bulk generation will rise from P4.20/kWh without the WESM, to at least 5.60/kWh, a 33 percent increase that would subsequently passed on to consumers. This would result in a windfall profit of approximately P15-billion annually to be paid by consumers with practically no investment on the part of the gencos and the same level of service to consumers, all thanks to the mere transfer of the present bilateral contracting scheme to the WESM market and pricing mechanism. The MCPC said the average rate being paid by consumers for bulk generation in Mindanao today, without a WESM, is around P4.20 per kilowatt-hour. When a WESM is established in Mindanao, the price of bulk generation during peak loads, assuming that there is adequate capacity of generating plants available, will be P7.00/ kWh. In times of power capacity shortage, which will occur during periods of droughts or when major power plants are undergoing repair or maintenance, the price in the WESM will go up to at least P20 /kWh, assuming that the dominant generating companies do not abuse their market power.   WESM Windfall for Gencos Based on these assumptions, the MCPC calculates the operation of a WESM in Mindanao at this time would result in a windfall profit of at least P15- billion annually. These are the economic impacts of the WESM in the short run, two or three years into the future. In the long run, a WESM in Mindanao will be disastrous for everyone, including the generating companies. Investors will not come to Mindanao because of the high prices of electricity, consumers will reduce their usage of electricity, and the more expensive power plants will have to shut down because they will no longer be needed. High power rates stunt growth Despite the windfall profits accruing to the remaining gencos, the industry would earn fewer revenues due to the reduction in consumption and the negative effects of the high electricity rates on growth. In the long run, this would force power intensive industries which originally located to Mindanao because of its lower power rates to locate elsewhere.   With Mindanao WESM A Mindanao WESM would increase power rates in the island because of its pricing mechanism which would be the same for Mindanao as the pricing mechanism being implemented now in the Philippine WESM. In a Mindanao WESM, the price for all generation, during normal periods when there is adequate generation, will be the highest bid price of the generators that are dispatched. The last generator dispatched during peak load hours will be a diesel-fueled power plant, with a price of 7.00 pesos per kWh. This will be the price of the generation of all power plants dispatched during peak hours. During hours of intermediate load, the price will be the price of the last diesel-fueled power plant dispatched, which will probably be around P6.00/kWh, lower than diesel-fueled power plants used for peak loads. And during the hours in which only baseload power plants are operating, the price will probably be around P5.00/kWh, the price of the most expensive coal plant that is dispatched. Thus, with a WESM there will be an inevitable increase in the prices of bulk generation, even if there will be no exercise of market power by the dominant generating companies generating companies in Mindanao. The average rate of electricity sold in the WESM over an entire year will be around P5.60/kWh.   Without WESM Under the economic dispatch of generating plants being implemented by the National Grid Corporation of the Philippines (NGCP) in Mindanao at present, the rates for bulk generation are the rates for the bilateral contracts between distribution utility companies and generating companies. This would be an average of around P4.20/kWh, after normalizing the rates for the FDC coal plant in Villanueva, Misamis Oriental and the Mt. Apo geothermal power plant. The current rates of these power plants are abnormal, but the rates should be normalized in 2017 after legal actions by consumers against the exorbitant rates of the 100-MW Mt. Apo geothermal power plant and the FDC 405-MW coal plant.   Conclusion The only change that will result from the imposition of a WESM in Mindanao would be the replacement of the present pricing of bulk generation obtained through bilateral contracting with pricing determined by the WESM. Even without abuse of market power by the half-dozen dominant generating companies in Mindanao, the average rate for bulk generation will rise from P4.20/kWh without the WESM, to at least 5.60/kWh, a 33 percent increase that would subsequently passed on to consumers. This would result in a windfall profit of approximately P15-billion annually to be paid by consumers with practically no investment on the part of the gencos and the same level of service to consumers, all thanks to the mere transfer of the present bilateral contracting scheme to the WESM market and pricing mechanism.

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