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OpinYon #10

OpinYon #10

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Published by Sara Jane

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Published by: Sara Jane on Oct 25, 2010
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Your One-Stop Publishing Company Tel. No. 843-39-89
OCTOBER 25 - 31, 2010 Vol. I, No. 10
Have No Fear, OpinYon is HereP15.00
P-Noy wakes up
Condent that he has mended his political ences P-Noy is ready to tacklethe economy. The true mark o his presidency is in his economic stewardship.
Dicd fmduci
The ways o politics distractsbut a bad turn o the economy can destroy. Worse is when we are distracted rom thedestruction that really hurts.Like a strong peso thatimpairs the buying power o the dollar-paid OFW. Or anexporter who ends up getting less or every dollar earneddue to the sudden all in the value o the dollar. Investorsmay bypass the Philippinesand look or countries wherethe currency is stable and thecost o doing business is low.
Page 2
publisher’s notes
Call Centers
By David Ricardo
The 3.5 to 5.5 percent infation rate, though lower than the pastyear, coupled with the 10.63 percent appreciation rate o the peso against the dollarcould spell disasters or the economy. The more obvious sectors that are adversely a-ected by the stronger peso, which now trades at P43 to a dollar, are the overseas Filipinoworkers (OFWs) and the manuacturing sector. One o the most vulnerable industries,however, is the business process outsourcing industry.
ISSN 2094-7372
story on PAGE 2
Failure to meetpoverty reduc-tion target
4 3
Meralcopetition fullof holes
 Why not asignal #1/2 for calamities
o C t o B E r 2 5 - 3 1, 2 0 1 0
the oly op Pape, We take a sad
 Are there hidden hands manipulat-ing the public mind to be distractedrom destruction?Distraction no. 1: the boo-boos o Malacanang like the Executive OrderNo. 2 issue. Distraction no. 2: the ar-rogance o a cabinet member, insulting a solon rom Mindanao. And as many as ve other issues that have entertainedthe public in the last over three months,making everybody busy not to noticemovements in the national economy. We are being distracted rom thereal destruction. That destruction starts where it hurts most every Filipino, hispocket. Opinyon made this clear as itimpacts against the amilies o OFWs.I you look at the numbers, i the dol-lar losses P5.00 in the exchanges, thattranslates to the economy losing thebuying power o OFWs to the tuneo over P100Billion in one year. I oneis to compute the cascading eecto this amount on the economy, it isequivalent, among others, to hundredso thousands o jobs lost. O coursethe government would miss earning all taxes rom the turn-around o thisamount. Taxes missed could easily goup to P30Billion.Because we are distracted by politics we may not see the coming destructionin our economy. The impairment o thebuying power o the OFWs will haveimmediate impact on the OFW amily.Christmas will denitely not be likethat o last year. Local commerce andindustry will slow down. While this is bad or the OFW sec-tor, this is very very bad in the exportsector. Many small export oriented en-terprise will close shop meaning hun-dreds o thousands will lose their jobs.Export marketing is highly competitiveand is done in American dollars. Soevery time the dollar loses value, theexporter suers a corresponding lossin income. When an exporter’s grossmargin is 15 percent and the dollarloses 16 percent, the businessmanloses everything including his houseto pay up bank loans.The rst to go among the exportersare those “packpackers” in the servicesector. These are the BPOs or the callcenters that employ over 500,000 o our young. These call center investorsare likened to backpackers as they havelight capital investments and are ready to go where the currency is stable, costo operations is low, and manpoweravailable. With export industry gasping orbreath, the economy will even moveslower.I am grateul Pres. Noynoy Aquinosaw the light and has assured us thegovernment is getting ready or thecurrency exchange problems. P-Noy’simmediate response tells us he wasnot distracted rom this threatening economic destruction. Right timing or P-Noy and I can not expect lessrom the economics student o ormerPres. GMA.Thank you Mr. President.
Distracted from destructions
publisher’s notes
By rAy JuniA
B rEA Ann sAntos
Subic Bay Metropolitan Authority’s (SBMA) inusiono new ideas in developing the eco-tourist sites in Subicprovided a classic example o  what the industry should doto realize the country’s ulltourism potentials.Because o its unspoiledbeaches and virgin tropicalorests, Subic has positioneditsel as the country’s primenature hub. Aside rom being named by the Departmento Tourism (DOT) as one o the country’s ocial sites orbird-watching, an increasingly popular activity among naturelovers, it has continued todraw more tourists to share itsiconic theme parks and natureadventures. Aside rom catering to localand oreign tourists perect sitesand spots, SBMA employeeshave also gained a number o awards or being instrumentalin their respective rendered ser- vices that aid in the operation o SBMA. Hence, they contributeto SBMA’s tourism by personi-ying what a true public servantshould be.
Take the cue from SBMAdevelopment
Tourisim Secretary AlbertoLim challenged key industry players to ocus on environ-mental protection and sus-tainable development among the actors to maximize theimpact o tourism, even ashe hailed SBMA as an idealtourism town with a balancedtourism thrust.However, Lim said thatstakeholders should be wary o the ill-eects o uncontrolledtourism to host communities,and insisted that develop-ment in this sector should beenvironment-riendly.“The only thing that theDOT would insist on is thatdevelopment should be sus-tainable. So we should notocus much on getting highnumbers [o tourist arrivals],but [on attaining] quality tourism,” said Lim.To make domestic tour-ism sustainable, Lim said theDOT advocates the use o anexhaustive tourism masterplan or identied destinationsin the country. In addition,local government units muststrictly enorce laws relevantto zoning, security, wastemanagement, and sanitation.Lim then cited the SBMA’sbalanced thrust that madeSubic Bay so popular withlocal tourists.“[The Subic Bay Freeport]is an ideal tourism town,”Lim said, pointing out thatthe SBMA has made gooduse o the ree port’s naturalendowments with modest in-rastructure support to makethem accessible to tourists.SBMA Administrator Ar-mand Arreza agreed that thekey to tourism success begins with detailed planning, andimplementing strict environ-mental and zoning laws.“Sustainable developmentand sustainable tourism - thatis something we don’t com-promise about. We are happy too that the entire ree portcommunity has adopted thattype o culture,” said Arreza.
SBMA employees receiveCSC Pagasa awards
Meanwhile, this year’s win-ners, Ranny Magno and Randy Canlas, join two others inSBMA’s roster o “Pagasa”awardees: security ocer Joel Viray (2008) and SBMA Ecology Center sta Edmundde Jesus (2009), whose respec-tive achievements in peaceand order and environmentalprotection gained the nod o the Civil Service Commission(CSC) Honor Awards Programcommittee.Magno and Canlas, em-ployees o the SBMA exempli-ed what a real public servantshould be ater receiving Pagasa awards rom the CSCor exhibiting the agency’score values o ‘Malasakit’,Excellence, and Passion.SBMA Fire and RescueTeam leader Capt. Ranny Magno and printing machineoperator Randy Canlas wereacclaimed during the CSCrecognition rites or regionalnalists held recently at King’sRoyal Hotel and Leisure Parkin Bacolor, Pampanga. Arreza proudly said the twocitations this year were “a rareeat” or the SBMA, in view o the act that the distinction isusually given to a group.“With the awards given outseparately to two SBMA em-ployees, we are doubtly proudor having two more awardeesin our ranks,” he added.Canlas was named the 2009SBMA Employee o the Year ordeveloping and implementing Inormation Technology pro-grams which, i outsourced,could have cost P6.4 million inthe last six years. I these sys-tems were ully implementedin the 52 SBMA departments,the agency’s total savings inIT could reach P25 million yearly.Meanwhile, Magno hasbeen helpul in the unctionso the SBMA Fire and RescueTeam. The same team helpedretrieve trapped miners at level700 o the Goldeld mine inItogon, Benguet in September2008.
Fm page 1
Call centers are vulnerable toa weaker peso because they donot rely on heavy investmentson real estate or machineries.These call centers are heavy on manpower, and can comein just bringing their money,sotware and clients. They willrent oce spaces and hire lotso people, and just as easily asthey can come in to invest, they can easily pack up i the condi-tions become unavorable. What President BenignoSimeon Aquino III had toutedas an economic achievemento his administration has now become a “cause or concern,”as the appreciation o the pesoagainst the dollar threatens notonly the economic power o OFWs but also industries thatrely on a weaker peso to grantcompetitive wages to localFilipino workers.
Mr. President is concerned
In his trip to Isabela last week to distribute relie goodsto the victims o super typhoon“Juan,” Mr. Aquino said theappreciating peso was a causeor concern, although he hadbeen touting the high valueo the peso as an economicachievement two weeks ago.In the previous week’s issue,OpinYon pointed out that thepurchasing power o OFWs istrimmed rom both sides, as theprices o goods are increasing  while the purchasing power o their dollars are decreasing.OpinYon came out with warnings that the appreciating peso could spell danger to thecountry’s economy because itrelies on consumer spending,mostly by OFWs who get de-cent wages abroad but get more value or their dollars whenthey bring them back here. With the continued ap-preciation o the peso, the callcenter industry, one o the ew industries that keep the Philip-pine economy afoat, is now at risk o relocating to othercountries.The exchange rate now stands at P43 to a dollar, butsome banks have expressedconcern that the peso couldappreciate to as much as P41against the dollar beore the year ends.
Dollar fetches fewer pesos
Call center companiesmarket their services to clientsbased in the United States, andas such close contracts andreceive payments in dollars.These contracts are closedmonths beore, but etch ewerpesos now to pay the salaries o call center agents.These companies, however,have to pay their highly-skilledFilipino workers in pesos, mostoten at a premium becausethey have to work odd shitsbecause they have to take callsrom the customers o theirUS-based clients.I the peso appreciatesagainst the dollar, then thesecall center companies wouldstill have to pay the same wagesthat they give their employees when the peso was weaker. I they get paid $1 million or anaccount, then they would haveto shed more o that prot or wages so they could keep pay-ing their employees the same wages.
BPO in tight squeeze
 With the appreciation o the peso, these call centercompanies could nd them-selves in a tight scal positiono maintaining the salaries o their workers while keeping the prots sustainable. Or they could just pack up and leave.The call centers do not haveto make heavy investmentson real estate or machinery,and thus could easily pack upand leave i they would nd itharder to do business here thanin other places like China orIndia because o the appreciat-ing peso.OpinYon had already beenreceiving reports o big callcenter companies downsizing their operations in the Philip-pines, which would invariably lead to more work or those who would be retained but withoutthe corresponding increases intheir salaries.
Call center collapse
SBMA lauded for its tourism practices
What President Benigno simeonaquino iii had touted as an economicachievement of his administrationhas noW Become a cause for concern.
sBMA emplee rad Cala (le) ad ra Mag (gh) hw he phe adcefcae  wg he CsC Pagaa Awad
the oly op Pape, We take a sad
o C t o B E r 2 5 - 3 1, 2 0 1 0
SubScribe now
The Publisher
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This conrms my subscripon toOpinyon for the terms indicator below:
30 weeks Basic Rate Php. 420.0052 weeks Basic Rate Php. 728.00Payment:Check enclosed payable to Digitek Publishing HouseCash deposit in your bank. (Please call 843-3989 for details.)Name:Address House Oce:Tel. No.: Email:
Haver no Fear, OpinYon is Here
Meralco’s application oranother round o increases inits distribution, supply andmetering (DSM) charges romits present rate o P1.4917 perkilowatt hour (pkwh) to P1.9036by 2015 is so ull o holes andso top-heavy it would sink likedeadweight i set on water.I it gets to that, may I sug-gest that it be set at the moutho murky Pasig River, so it getsthe watery burial it deserves?Meralco enjoys a legislativemega-ranchise that covers 23cities, 88 municipalities, 4.8million customer connectionsand a population o over 19million in some 9,300 squarekilometers o ranchise terri-tory. By any measure, that is ahuge chunk o territory.The ranchise requires Mer-alco in clear and unequivocallanguage to provide electricity to its captive customers in aleast cost manner, or whichit can collect aordable andreasonable rates that will giveit a just and reasonable returnon its investments.The ranchise is clear aboutMeralco’s monopoly undertak-ings and the corresponding returns or the same. In other words, as in every monopoly,eciencies rom economies o scale and zero market risk musttranslate into better service andreasonable costs or the captivecustomer.Not so in the case o Mer-alco, however.Since 2009 when its DSMrate surged rom P0.9657 pkwhto P1.2227 pkwh, Meralco now asks or annual increases rang-ing rom P0.06 pkwh to P0.26pkwh. Lest we lose contexton these increases, bear inmind that at annual electricity sales o 36 Billion kwh, P0.01pkwh or just one (1) centavo isequivalent to P360, 000,000.00.In sum, this will give Meralcoadditional revenues o aboutP33.08 Billion. We are not against thecollection o rates or servicesrendered, provided it meets thecriteria set by law and jurispru-dence. Neither are we against autility making additional prots,provided it is earned and de-served rom growing the marketor improved eciencies and notrom whimsical increases inrates or asset appraisal. Would Meralco’s presentapplication covering the periodrom 2012 to 2015 meet thecriteria? We doubt it. To begin with,everything in their applicationis a projection or an estimate,and thereore dicult to testas to prudence, necessity, rea-sonableness and benet to thecustomers.The experience rom the im-mediately preceding years wouldhave been instructive but theEnergy Regulatory Commission(ERC), the abolition o which wealready called or earlier, wouldnot grant the audit requested by the consumers.Barring that or now, let’spick a ew items rom the Mer-alco application.Table 6, Proposed Operating & Maintenance Expenditures,under Regulated Retail Ser- vices, there is a total o someP878 Million or Inormationand Instructional Advertising Expenses. In the Commissionon Audit (COA) Report o November, 2009, covering the years 2003 and 2007, advertis-ing expenses were disallowed.For 2011, employee pensionamounting to P1.863 Billionis also part o the proposedexpenses. A similar item waslikewise disallowed in the lat-est COA audit.Miscellaneous expensesamounting to P1.3 Billion, withno details, will most likely bedisallowed i presented oraudit, because costs that arenot clearly shown as prudent,reasonable and necessary, andredounding to the benet o customers, are excluded by COA. A curious item is Regulatory Liaison & Compliance in theamount o P374 million. We will be keenly interested in thedetails o those liaisons.On page 5 o Meralco’sapplication, it is stated:” TheGuaranteed Service Level (GSL)scheme requires the Applicant(Meralco) to provide pay-outs todirectly compensate a customeri certain service delivery per-ormance standards are not met. XXX Total pay-outs amounted toP99.9 M and P66.0M or RY2008and RY2009.” Apparently, this is the stickin the reward system that would keep the utility ecient.In the judicial adavit o Roderick Dennison N. Nacu,Meralco Manager or Area De- velopment o Utility Economics,page 5, he talks about utilitiesbeing “entitled to an amountequal to 0.5% o its ARR (An-nual Revenue Requirements)(excluding corrections) or thepurpose o meeting require-ments under the GSL. For 2012,Nacu pegs GSL Allowance atP236M based on P47.2 B ARR,P250M or 2013, P264M or2014, and P277M or 2015.
t  page 6
m  kp   
Meralco should pay National Power Corp,(NPC) over P33 Billion or electricity itpromised to buy but did not, because itbought more expensive power rom itssister generation companies.
Butch L. Junia
 Acquired in 1994, thesebarges demonstrated theiruseulness in easing thepower crisis then; thus, going by that “sale,” Mindanao waseectively deprived o some200 megawatts o power romthese PBs. And as drought caused by El Niño ell upon Mindanao inFebruary 2010, this caused thedepletion o water in hydroplants Agus and Polanguiand resulted in ve to eighthours o brownouts, leading to grave losses in productivity,employment, and personal well-being.Immediately thereater,the National Grid Corp. o thePhilippines (NGCP), whichtook control o the publicly-owned Transmission Corp.(TransCo) ater privatization,entered into a so-called Ancillary Services Procure-ment Agreement (ASPA) with Aboitiz-owned Therma Ma-rine Inc. (TMI), wherein thelatter, with the use o thosetwo power barges, wouldsupply “additional” power tothe Mindanao grid.The Energy Regula-tory Commission (ERC), inresponse to the ASPA applica-tion, approved a provisionalauthority (PA) or NGCP toraise its rates, whereby ThermaMarine would be paid or thecost o its operations by theNGCP, which will then collectthis rom the electric utilitiesand, o course, consumers’pockets. Worse, the increase in rates was based on: (a) an asset valuation o the barges threetimes their purchase pricerom Napocor; (b) the ASPA charging over 10 times greaterthan the average NGCPmonthly charges in 2009; (c)no competitive bidding, withother suppliers excluded toavor TMI; and (d) little publicconsultation prior to the issu-ance o the PA.To top it all, the capitalrecovery ee calculated by TMI o $30 million or thetwo barges when these werepurchased was raised to $84.7million--increased threeoldater being transerred romthe government to the privatesector, or a windall prot o 3billion pesos!So with this sleight o handcame news last Oct. 18 whichsaid, “Government solvesSouth power shortage,” as an-nounced by Energy Secretary  Jose Reyes Almendras, whoonce served as treasurer orboth Aboitiz Equity Venturesand Aboitiz and Co., asiderom holding other positionsin several Aboitiz-ownedcompanies. Confict-o-interest, anyone?But this seems to be o no issue to the present andpast governments so long asit pleases the oligarchy andits international partnersbacking the privatization andglobalization o RP’s publicassets and services. Just look at the cost o their“solution” on the Mindanaopeople as a coalition o Min-danao congressmen reported:“The electricity bills in Min-danao have virtually doubledrom March to April and May this year. In 2009, we paidP49.70 per kilowatt-hour/month. However, last April we paid P360 per kilowatthour/month and P606 perkilowatt hour/month in May 2010. This had caused untoldsuerings and hardships toour people in Mindanao ,specially the poor.”Privatization is a giant“1-2-3” scheme--a ruit o Edsa Uno and Edsa Dos-- which the Aquino III regimeis continuing rom the Cory,Ramos, and Arroyo peri-ods. Let us learn our lessonsand reverse this deleteriousdirection!
Mentong Laurel
There was a orecast o El Niño hittingthe country this year made in 2009.Despite the anticipated power crisis, theNational Power Corp. (Napocor) stillsold its power barges (PB) 117 and 118 tothe Aboitiz group around that time.
Pw b ‘1-2-3’
We are not against thecollection of rates for servicesrendered, Provided it meetsthe criteria set By laW andjurisPrudence.

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