B C U. O

EMERGING economies, in-cluding the Philippines, will likely report lower output growthmeasured as the gross domestic productthis year and next year due to the rebalancing in the Chinese economy at present and the lower commodity prices, according to the International Monetary Fund (IMF). In the latest World Economic Outlook (WEO) Update, the IMF fur-ther cut output-growth projections for emerging economies to only 4.7 percent in 2015, lower than the April

estimate of 4.8 percent. The IMF also cut the forecast growth for Asean to 4.7 percent this year and 5.1 percent next year, from the April estimates of 5.2 percent in 2015 and 5.3 percent in 2016.

In emerging-market economies, the continued growth slowdown re-flects several factors, including lower commodity prices and tighter exter-nal financial conditions, structural bottlenecks, rebalancing in China, and economic distress related to geopolitical factors, the IMF said.

A rebound in activity in a number of distressed economies is expected to result in a pickup in growth in

2016, it added. The IMF said the emerging econo-mies need to boost demand through a fiscal-policy rebalancing. This can be done through tax reform and spending reprioritization.

For oil-importing emerging econ-omies like the Philippines, the IMF said the lower oil prices reduced price pressures and external vulnerabili-ties. This, in turn, should ease the burden on monetary policy.

Structural reforms to raise pro-ductivity and remove bottlenecks to production are urgently needed in many economies, the IMF said.

www.businessmirror.com.ph nSaturday 18, 2014 Vol. 10 No. 40 P. | | 7 DAYS A WEEKnFriday, July 10, 2015 Vol. 10 No. 274A broader look at todays business

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PESO EXCHANGE RA TES n US 45.2320 n JAPAN 0.3747 n UK 69.4944 n HK 5.8351 n CHINA 7.2844 n SINGAPORE 33.5126 n AUSTRALIA 33.6798 n EU 50.1035 n SAUDI ARABIA 12.0616 Source: BSP (9 July 2015)

New Timta version watered downEXECUTIVE BRANCH OPPOSES REVISIONS MADE BY CONGRESS ON THE INCENTIVESMONITORING BILL

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ON THE MENU:ROASTED FILLET

OF WHITE SEA BASS IN ESCABECHE D3

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DDEAR Lord, renew in us the sense of wonder over EAR Lord, renew in us the sense of wonder over EAR Lord, renew in us the sense of wonder over Your creation. But most of all, renew in us the Your creation. But most of all, renew in us the faith we have in Your Son, who loved us and faith we have in Your Son, who loved us and gave Himself for us. What wonder! The sinless Son of gave Himself for us. What wonder! The sinless Son of God gave Himself for us, a wretch. How important we God gave Himself for us, a wretch. How important we are then that we are worth the life of the Son of God? Its are then that we are worth the life of the Son of God? Its a mystery we cannot fathom, the mystery of Your love. a mystery we cannot fathom, the mystery of Your love. Teach us never again to doubt how precious we are, that Teach us never again to doubt how precious we are, that nothing we do is useless or unimportant. It is You who nothing we do is useless or unimportant. It is You who live in us. All we do is an act of the Son of God. Amen.live in us. All we do is an act of the Son of God. Amen.

e sense of wonder

DAILY PRAYERS, VIRGIE SALAZAR AND LOUIE M. LACSONDAILY PRAYERS, VIRGIE SALAZAR AND LOUIE M. LACSONWord&Life Publications teacherlouie1965@yahoo.comteacherlouie1965@yahoo.com

THE sequel to the 2012 worldwide hit, HE sequel to the 2012 worldwide hit, Magic Mike XXL reunites Channing Tatum, Matt Bomer, Joe Manganiello, Kevin Nash, Adam Rodriguez and Tatum, Matt Bomer, Joe Manganiello, Kevin Nash, Adam Rodriguez and Gabriel Iglesias. Gabriel Iglesias. Picking up the story three years after Mike bowed out of the stripper Picking up the story three years after Mike bowed out of the stripper life at the top of his game, the movie finds the remaining Kings of Tampa life at the top of his game, the movie finds the remaining Kings of Tampa likewise ready to throw in the towel. But they want to do it their way: burning down the likewise ready to throw in the towel. But they want to do it their way: burning down the house in one last blow-out performance in Myrtle Beach, and with legendary headliner house in one last blow-out performance in Myrtle Beach, and with legendary headliner Magic Mike sharing the spotlight with them. On the road to their final show, with whistle Magic Mike sharing the spotlight with them. On the road to their final show, with whistle stops in Jacksonville and Savannah to renew old acquaintances and make new friends, stops in Jacksonville and Savannah to renew old acquaintances and make new friends, Mike and the guys learn some new moves and shake off the past in surprising ways.Mike and the guys learn some new moves and shake off the past in surprising ways.

C D

MAGICMATTAfter breaking hearts with his multiawarded turn in the acclaimedHBO film The Normal Heart, Matt Bomer again turns up the heat in the sequelto the 2012 blockbuster Magic Mike.

photographer BRIAN BOWEN SMITHproducers CAT BURKLEY FARBER, TYLER DURING OF PORTFOLIO ONE set designer RAE SCARTONstylist EVET SANCHEZgroomer DAVID COX

SportsSportsBusinessMirror C1 | FRIDAY, JULY 10, 2015mirror_sports@yahoo.com.phsports@businessmirror.com.phEditor: Jun LomibaoB D F

e Associated Press

T HE photo Rory McIlroy posted to Instagram on Wednesday shows his feet up, a black air cast around his left ankle, as he watchesWimbledonon television. The claret jug was positioned beneath the screen.

When it comes to a Grand Slam championship in his own sport, the worlds No. 1 golfer will be reduced to watching this year.

Two days after the stunning news that he ruptured a ligament in his left ankle, McIlroy pulled out of the British Open at Saint Andrews, the first time in 61 years that the defending champion will not be in the field.

He injured his ankle over the weekend while playing soccer with friends in Northern Ireland. McIlroy held out hope that he could still make it to Saint Andrews next week, but he decided it was not worth risking a full recovery.

After much consideration, I have decided not to play in the Open Championship at Saint Andrews,

McIlroy said on his Instagram post.Im taking a long-term view of this injury and,

although rehab is progressing well, I want to come back to tournament play when I feel 100-percent healthy and 100-percent competitive.

Ben Hogan in 1954 was the last British Open champion who did not defend. Hogan, who was nearly killed in an automobile accident in 1949, won the only British Open he played in 1953 at Carnoustie.

We are naturally very disappointed that Rory will be unable to defend his title at Saint Andrews next week, the R&A said in a statement. Rory will play in many more Open Championships, and our primary concern is for his complete recovery.

He was replaced in the field by Russell Knox, who grew up in Inverness in the north of Scotland and will be making his Open debut.

Though it wasnt a big surprise that he withdrewnot after the photo on Monday of McIlroy on crutchesit was no less jarring that golfs best player would not be at the home of golf to defend his title.

His absence makes Jordan Spieth the favorite at Saint Andrews in his quest for the Grand Slam. Spieth is only the fourth player since 1960 to have won the Masters and the US Open in the same year.

Its hugely disappointing, especially with him and Jordan and everything thats going on, Graeme McDowell said from the Scottish Open.

It was looking to be a really exciting Open for all involved. Im sure hes really disappointed.... No one would love to stop Jordan in his tracks next week more than Rory. With the fun rivalry going on and everything, hes going to be gutted. I saw the golf course last Saturday. I believed that Rory was rightly a favorite. I thought hed get it done around there.

Still to be determined is how long the ankle injury keeps McIlroy out of golf.

He also is the defending champion in the Bridgestone Invitational at Firestone from August 6 to 9, and the Professional Golfers Association (PGA) Championship the

last held there in 2010.We want him back. Everybody does, Spieth said

on Tuesday at the John Deere Classic. Its unlucky, its unfortunate, and Im sure hes taking it harder on himself than anybody else.

But I dont think he did anything wrong, it was just an unfortunate situation. And hopefully, he rebounds quickly and gets back right to where he was.

Spieth will have a chance to replace McIlroy at No. 1 in the world with a good finish at the John Deere and a victory at Saint Andrews.

Tiger Woods is the only other No. 1 player to miss a major championshipthe British Open and PGA Championship in 2008 recovering from reconstructive knee surgery, and the Masters last year when he had surgery on his back.

Knox was first alternate from the world ranking published on Monday, and he was hopeful he would get into his first Open.

pro-am round at the Scottish Open. He is in the prime of his career and would have had a great chance to win there. Nobody wants to get in because someone else got injured. Its a horrible way to get in, I guess, but Im very happy Im in the field.

McIlroy has never won at Saint Andrews, though the Old Course is special to him. It was at the Dunhill Links in 2007 that he finished third to earn his European Tour card.

And he tied a major championship record with a 63 in the opening round of the 2010 British Open at Saint Andrews, only to follow with an 80 when a big wind arrived the next day. He tied for third that year.

He put a scare into the leaders at Chambers Bay in the final round of the US Open, closing with a 66.

It bodes well for the rest of the summer the way Ive hit the ball this week, McIlroy said before leaving Chambers Bay.

And Ive got a couple of weeks to work on my putting and get that up to the shape that it has been in. If I can do that.... Im really excited about what can happen

MCILROY PULLS OUT OF BRITISH OPENRORY MCILROY decides it is not worth risking

a full recovery.

ROGER-ANDYSHOWDOWNRoger Federer and Andy Murray have history on this particular patch of grass. In 2012 Federer won his 17thand, to date, lastGrand Slam title by beating Murray in the Wimbledonfinal. A few weeks later, also at Centre Court, Murray repaid the favor, beating Federer for the singles gold medal at the London Olympic Games.

not after the photo on Monday of McIlroy on crutchesit was no less jarring that golfs best player would not be at the home of golf to defend his title.

Professional Golfers Association (PGA) Championship the following week at Whistling Straits. McIlroy finished one shot out of a playoff when the PGA Championship was

into his first Open.This wasnt what he had in mind.Everyone is gutted for Rory, Knox said after his

putting and get that up to the shape that it has been in. If I can do that.... Im really excited about what can happen over the summer.

ROGER-ANDYSHOWDOWNRoger Federer and Andy Murray have history on

won his 17thand, to date, lastGrand Slam title by beating Murray in the Wimbledonfinal. A few weeks later, also at Centre Court, Murray repaid the favor, beating Federer for the singles gold medal at the London Olympic Games.

B H FB H Fe Asociated Presse Asociated Press

LONDONRoger Federer and Andy Murray ran ONDONRoger Federer and Andy Murray ran into each other on Wednesday morning in the into each other on Wednesday morning in the champions locker room at the All England Club, champions locker room at the All England Club, then walked together over to the practice area to then walked together over to the practice area to prepareon adjacent courtsfor their respective prepareon adjacent courtsfor their respective

quarterfinals later in the day.We werent chatting about anything. It was just, Hey, how We werent chatting about anything. It was just, Hey, how

you doing? Nothing interesting, Murray recounted. We get on you doing? Nothing interesting, Murray recounted. We get on well. But obviously, on Fridaydifferent story.well. But obviously, on Fridaydifferent story.

Yes, theyll meet up again on Friday, only the setting will Yes, theyll meet up again on Friday, only the setting will be far different and things might be a tad less cordial, because be far different and things might be a tad less cordial, because the two pastWimbledontitlists face each other at Centre the two pastWimbledontitlists face each other at Centre Court in the semifinals.

The No. 2-seeded Federer is closing in on his record The No. 2-seeded Federer is closing in on his record eighth trophy at the grass-court tournament; No. 3 eighth trophy at the grass-court tournament; No. 3 Murrays 2013 championship was the first for a British man Murrays 2013 championship was the first for a British man atWimbledonin 77 years.

Plus, they have history on this particular patch of grass. In Plus, they have history on this particular patch of grass. In 2012, Federer won his 17thand, to date, lastGrand Slam 2012, Federer won his 17thand, to date, lastGrand Slam title by beating Murray in the Wimbledonfinal. A few weeks title by beating Murray in the Wimbledonfinal. A few weeks later, also at Centre Court, Murray repaid the favor, beating later, also at Centre Court, Murray repaid the favor, beating Federer for the singles gold medal at the London Games.Federer for the singles gold medal at the London Games.

We both like to look back at that summer, said Federer, We both like to look back at that summer, said Federer, who is 12-11 against Murray. Me, not so much at the Olympics; who is 12-11 against Murray. Me, not so much at the Olympics; him, probably not so much at Wimbledon.him, probably not so much at Wimbledon.

Both advanced in quarterfinals, slowed only by a pair of rain Both advanced in quarterfinals, slowed only by a pair of rain delays. Federers 116-hold streak in service games, dating to his delays. Federers 116-hold streak in service games, dating to his previous tournament, ended, but that was merely a blip during previous tournament, ended, but that was merely a blip during a 6-3, 7-5, 6-2 victory over No. 12 Gilles Simon of France.a 6-3, 7-5, 6-2 victory over No. 12 Gilles Simon of France.

Murray was hardly troubled at all by a weary Vasek Pospisil Murray was hardly troubled at all by a weary Vasek Pospisil of Canada and won, 6-4, 7-5, 6-4, in a match that finished of Canada and won, 6-4, 7-5, 6-4, in a match that finished with the retractable roof closed at Centre Court, in front of an with the retractable roof closed at Centre Court, in front of an audience that included Prince William and his wife Kate.audience that included Prince William and his wife Kate.

Another past champion, No. 1 Novak Djokovic, also barely Another past champion, No. 1 Novak Djokovic, also barely was tested, eliminating No. 9 Marin Cilic of Croatia, 6-4, 6-4, 6-4, was tested, eliminating No. 9 Marin Cilic of Croatia, 6-4, 6-4, 6-4, to improve to 13-0 against the 2014 US Open winner.to improve to 13-0 against the 2014 US Open winner.

Djokovic, who wonWimbledonin 2011 Djokovic, who wonWimbledonin 2011 and 2014, plays No. 21 Richard Gasquet of and 2014, plays No. 21 Richard Gasquet of France next. Gasquet emerged from the most France next. Gasquet emerged from the most

compelling quarterfinalfeaturing two beautiful compelling quarterfinalfeaturing two beautiful one-handed backhandswith a 6-4, 4-6, 3-6, 6-4, 11-9, one-handed backhandswith a 6-4, 4-6, 3-6, 6-4, 11-9,

win over No. 4 Stan Wawrinka of Switzerland.win over No. 4 Stan Wawrinka of Switzerland.It was great to watch them go backhand-to-backhand It was great to watch them go backhand-to-backhand

today, said Djokovic, who is 11-1 against Gasquet. Some great today, said Djokovic, who is 11-1 against Gasquet. Some great points, great exchanges.

Until Gasquet dropped to his back at the baseline Until Gasquet dropped to his back at the baseline when French Open champion Wawrinkas last backhand when French Open champion Wawrinkas last backhand sailed long, it appeared this might be the first sailed long, it appeared this might be the first Wimbledonsemifinals in 20 years involving men seeded 1-4.Wimbledonsemifinals in 20 years involving men seeded 1-4.

Gasquet truly is an interloper, the only remaining man Gasquet truly is an interloper, the only remaining man without a major title. Never been to a final, even.without a major title. Never been to a final, even.

Im the worst, Gasquet said with a smirk, when you see Im the worst, Gasquet said with a smirk, when you see Federer, Djokovic and Murray and me.Federer, Djokovic and Murray and me.

Hell be in his third Grand Slam semifinal. Djokovic, in Hell be in his third Grand Slam semifinal. Djokovic, in contrast, owns eight major championships and reached his 27th contrast, owns eight major championships and reached his 27th major semifinal, sixth in a row at Wimbledon.major semifinal, sixth in a row at Wimbledon.

Obviously, Djokovic said, the experience of being in these Obviously, Djokovic said, the experience of being in these final stages of Wimbledonmany times is going to help me.final stages of Wimbledonmany times is going to help me.

Imagine how Federer feels.Hes into his 10th Wimbledonsemifinal (hes 9-0) and 37th Hes into his 10th Wimbledonsemifinal (hes 9-0) and 37th

at all majors (25-11).Im very proud of my achievements here, dont get me Im very proud of my achievements here, dont get me

wrong, said Federer, who turns 34 on August 8. But its not wrong, said Federer, who turns 34 on August 8. But its not like something I walk around, beating my chest, saying, like, like something I walk around, beating my chest, saying, like, Im great here.

Federer, runner-up to Djokovic last year, needed only 95 Federer, runner-up to Djokovic last year, needed only 95 minutes to dispatch Simon. The most noteworthy moment minutes to dispatch Simon. The most noteworthy moment came when Federer served for the second set at 5-4. Up to then, came when Federer served for the second set at 5-4. Up to then, Federer had won all 67 games hed served the past two weeks, Federer had won all 67 games hed served the past two weeks, following 49 in a row at a tuneup tournament in Halle, Germany.following 49 in a row at a tuneup tournament in Halle, Germany.

Simon broke Federer at love, looked to the guest box and Simon broke Federer at love, looked to the guest box and shook his right fist.

Played a perfect game, Simon would say later.Played a perfect game, Simon would say later.Federer, meanwhile, was relieved to get broken, saying, I Federer, meanwhile, was relieved to get broken, saying, I

guess were not going to talk about that anymore.guess were not going to talk about that anymore.Certainly didnt throw him off against Simon.Certainly didnt throw him off against Simon.Federer broke right back, then served out the set this way Federer broke right back, then served out the set this way

in a game interrupted by rain after the first point: 125 miles per in a game interrupted by rain after the first point: 125 miles per hour ace, 115 mph service winner, 109 mph ace, 122 mph ace.hour ace, 115 mph service winner, 109 mph ace, 122 mph ace.

I dont serve 140s, lets be honest, Federer said. I have to I dont serve 140s, lets be honest, Federer said. I have to work my way through those service games.work my way through those service games.

So far, so good. Now Murray will try to solve that serve.So far, so good. Now Murray will try to solve that serve.

ROGER FEDERER (right) (right)and Andy Murray advance and Andy Murray advance

to the quarterfinals, to the quarterfinals, slowed only by a pairslowed only by a pair

of rain delays. of rain delays. AP

SPORTS C1

MAGIC MATT

KING OF WHEELS

ROGERANDY SHOWDOWN

LIFE D1

MOTORING D3

GREECE SEEKS NEW 3YRAID PROGRAM FROM E.U.WITH a deadline just hours away to come up with a de-tailed economic-reform plan, Greece requested a new three-year rescue from its European part-ners on Wednesday, as signs grew its economy was sliding toward free fall without an urgently needed bailout. As its banking system teetered near the edge, the government ex-tended bank closures into next week, while international creditors were in open disagreement over whether to award the country debt reliefwith Germany at odds with the Interna-tional Monetary Fund. Without a deal, Greece faces an almost inevitable collapse of the banking system, which would be the first step for the country to fall out of the euro. As Thursdays deadline loomed, the government sought to reassure its European creditors that it would enact tax and pension reforms quickly

in exchange for loans from Europes bailout fund, the European Stability Mechanism. In a formal request that was filled with vague promises but short on de-tails, the Greek government pledged to immediately implement a set of measures as early as the beginning of next week but did not specify what these were. After months of fruitless negotia-tions with the Greek government, the skeptical euro-zone creditor-states have said they want to see a detailed, cost-accounted plan of the reforms by Thursday. That is meant to give enough time to review the plan before all 28 leaders of the full European Union (EU) meet on Sunday in what has been termed as Greeces last chance to stay in the euro. But Greeces major creditors were hardly in lock-step over what path to take in dealing with the struggling but defiant EU member-nation. AP

Emerging economies to seeslower growth in 2015IMF

MOTORING MOGUL

ENGAGING THE MILLENNIALS BUSINESSMIRROR Publisher T. Anthony C. Cabangon gives his presentation The BUSINESSMIRROR Millennials Page: Engaging the Generation Y at the Asian Marketing Leaders Summit: 50 Shades of Marketing held at Sofitel Hotel in Pasay City. NONIE REYES

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AFTER debating for a long time on their conflicting versions of the proposed Tax Incentives Management and Transparency Act (Timta), the Department of Trade and Industry (DTI) and the Department of Finance (DOF) are united this time in opposing the changes made by Congress on the contentious bill.

The DTI and the DOF joined the Department of Budget and Man-agement (DBM) and the Nation-al Economic and Development Authority (Neda) in expressing concern that Timta has been wa-tered down, thus, defeating the purpose for which the Executive branch is lobbying for the bill s

passage in Congress. In a position paper signed by the secretaries of the DOF, DTI, DBMand the Neda, the Executive branch expressed its opposition to two par-ticular amendments made by Con-gress to the proposed Timta. The objections were made against

BusinessMirror news@businessmirror.com.ph Friday, July 10, 2015 A2 News

the deletion of the reporting requirement for the Neda to conduct a cost-benefit analysis on the economic impact of tax incentives on a regular basis. The agencies also opposed the insertion of a deemed approved provision, which provides that proposed tax incen-tives shall be deemed granted if the Bureau of Internal Revenue (BIR) fails to inform the Board of Investments (BOI) or the con-cerned investment-promotion agency (IPA) of its findings on whether such tax incentives should be granted. The four agencies said the two amendments contained major policy and administrative deviations from the original intent for which the DOF and the DTI are pushing the passage of Timta. The position paper said the reporting require-ment for the Neda to conduct a regular analysis

on the cost-benefit of any particular tax incen-tive is important to ensure that any grant of fiscal perks contributes to the overall improvement of the economy. The publishing of the impact of tax incentives by Neda to relevant government offices and au-thorities allows for a higher level of understanding of how tax incentives work for the benefit of the economy. The reporting requirement ensures fis-cal transparency, in line with the goal to institute a transparent and accountable public financial-management system, the position paper said. On the deemed approved provision, the Executive branch reminds Congress that the shortened time within which the BIR may audit an entity proposed to be given tax incentives is not enough for the BIR to examine the entitys books for purposes of whether the proposed tax incentive should be approved.

Under the amendments to the Timta made in Congress, the BIR is now only given 180 days, instead of the original three-year pe-riod, within which to inform the BOI or the concerned IPA and the taxpayer of the BIRs findings on whether the tax incentive should be granted. The BIR said that, even the original three-year period is already a short enough time with-in which the BIR can conduct an audit of the taxpayers books. Timta aims to promote transparency and accountability in granting tax incentives to business entities, private individuals and corporations. Under the bill, data and information on tax-incentive claims of registered entities and individuals, and the amount of tax and duty incentives granted them, shall be evaluated and monitored under a comprehensive database.

New Timta version watered down. . . Continued from A1 Economies. . . Continued from A1

Automakers. . . Continued from A8

China scrambling to protect stock market from further dip. . . Continued from A8issued shares in Shanghai, raising $16.6 billion, according to a study by the accounting firm EY. Hong Kong was No. 2, with 31 deals that raised $16 billion. Shenzhen was No. 5, with 112 deals that raised $7 billion. Now analysts say the flood of new shares is overwhelming the market and helping to push prices down. Moreover, the government began to worry the market had reached dangerous levels, and Chinese regulators have started to tighten rules on margin lending.

What has the Chinese government done to contain the issue?AftEr hitting a peak last month, Chinese stocks have been in free-fall. Originally, investors in China and abroad treated the selling as a much-needed release from a market that had soared 150 percent over the past year. As the losses have deepened, though, worries have increased, and officials have taken direct action to stem the selling. Over the weekend, 21

Chinese brokerage companies announced they would create a $19-billion market stabilization fund, and would continue to buy Chinese stocks. Any companies that were going to go public sus-pended their plans. the selling continued, so Chinese officials an-nounced that major shareholders in companies and executives were banned from selling their holdings for six months.

Has that slowed the selling?ItS actually made things worse. the selling has not stopped, and now it is affecting Asian mar-kets, like Hong Kong and Japan. US stocks also fell sharply on Wednesday. Most anxiety-ridden investors have turned to purging stocks that act as a proxy or have direct exposure to China, with most of the damage happening in Hong Kong. the terri-torys Hang Seng index dropped 5.8 percent on Wednesday, its worst one-day drop since the financial crisis. the Hang Seng China En-

terprise Index, which is an index of so-called H-Share companies, or mainland Chinese com-panies that trade in Shanghai and Shenzhen, as well as Hong Kong, fell 6.1 percent.

Isnt Chinas economy huge? Should I be worried?tHE exposure that US investors have directly to Chinese stocks is limited. Outside investors have only been able to access the Chinese stock market since October, and that required purchasing stock in Hong Kong. to buy di-rectly in the Chinese stock market required a special license. the lack of access has made it difficult for investors, including US fund managers, to get exposure to the Chinese stock market. for example MSCI, a company which publishes stock indexes, made a decision last month not to include Chinese A shares, or stocks traded on the mainland, in its global indexes. MSCI largely cited the lack of access for foreign investors

to Chinas market as the reason to continue to keep China out of its indexes.

Do I own Chinese stocks?If you have a 401(k), theres a good chance you have a few. target-date mutual funds have be-come a popular way to save for retirement be-cause they take care of how to invest a nest egg, and most hold some Chinese stocks. the percent-ages, though, are small. the largest target-date mutual funds built for people hoping to retire in 2030, for example, generally have less than 3 percent of their portfolios in Chinese stocks. You likely have more exposure if you own a fund that focuses on emerging-market stocks. Its been a popular area, with more than $13 billion flow-ing in this year, and Chinese stocks can make up about a quarter of these types of funds.

How much money has been pulled out?EvEN though US investors have limited exposure

to Chinas market, there is still money there. In-stitutional investors have pulled $22 billion out of Chinese stock funds this year, according to EPfr Global. Institutional investors have been taking money off the table most of this year and part of last year, said Cameron Brandt, direc-tor of research at EPfr Global, which tracks fund flows around the world. My sense is that theyve been expecting something ugly from this retail frenzy that has been driving Chinese markets.

Is there a point where I should get worried?tHE biggest concern is whether the drop in Chinas stock market will cause the countrys economy to slow. Many US and European com-panies do business in China, and a weaker Chi-nese economy could result in lower sales and profits for them. regarding this question, its frankly too soon to tell. AP

Global output growth was seen accelerating to only 3.3 in 2015, lower than actual output growth of 3.8 in 2014. The continued expansion of the advanced economies was estimated to average 2.1 percent this year from last years 1.8 percent. Risks to the forecast include disruptive asset

price shifts and a further increase in financial market volatility. The WEO recommended that advanced economies should continue with accommodative monetary to support economic activity and boost inflation. With Elisse Leonne P. Perez

Our automotive industry is riding with the other industries growth, Gutier-rez said. Microenterprises and small and medium enterprises are expanding, which made for the robust demand for AUvs and SUvs and light commercial vehicles. We just ended the first semester on a very strong note. Industry is confident that it will reach the 310,000-unit sales it

set for this year, he added. toyota Motor Philippines remains as the market leader with 43.9-percent share. Mitsubishi Motors Philippines Corp. followed with 19.2-percent market share. ford Motor Co. Philippines had a market share of 7.9 percent; Isuzu Philip-pines Corp., 7.7 percent; and Honda Cars Philippines Inc., 6.6 percent.

By Recto Mercene

As the country continues to face persistent problems of malnu-trition and hunger, sen. Juan Edgardo M. Angara has filed a resolu-tion to look into the unchanging pat-terns of malnutrition in the country and find ways to improve the nutri-tional well-being of Filipinos.

Lawmaker wants probe on PHLs nutrition security

Angara cited the Food and Nu-trition Research Institutes (FNRI) 2013 National Nutrition Survey, which showed that 19.9 percent of children under the age of 5 are un-derweight, 30.3 percent are stunted and 7.9 percent are wasted.

For children aged 5 to 10, the 2013 FNRI survey showed that 29.1 percent are underweight, 29.9 percent are stunted and 8.6 percent are wasted.

To address the prevalence of undernourished children in the

country, Angara, during his days in Congress, authored the Early Years Act of 2013, or the Republic Act 10410, which ensures that adequate health and nutrition programs are ac-cessible to young children and their parents, from the prenatal period to the early childhood years.

Angara has also been pushing for the passage of the Child Nutrition bill, which seeks to institutional-ize a school feeding and child nu-trition program throughout the public-elementary school network in the country.

Under Senate Bill (SB) 202, the Na-tional Nutrition Council, the Depart-ment of Health, and the Department of Education (DepEd) are mandated to initiate, maintain and expand a system of distribution of milk, fortified snack foods and vitamin supplements to public-elementary school entrants.

The most effective means to

combat child hunger and malnutri-tion is through the public-school network, where we could target chil-dren who belong to poorer families, Angara said in a statement.

Currently, feeding programs are being implemented only in selected schools by the DepEd and the Depart-ment of Social Welfare and Develop-ment (DSWD).

Moreover, the DSWDs Pantawid Pamilyang Pilipino Program pro-vides cash grants to families that send their children to school and health checkups.

It has long been recognized that the achievement of food and nutri-tion security requires a multisectoral approach. Presently, there are more than 20 government agencies, with no single lead agency, which ensure that nutritious food is accessible to the Filipino people, the senator said, calling on the government authori-ties and other stakeholders to take

ANGARA: It has long been recognized that

the achievement of food and nutrition security

requires a multisectoral approach. Presently,

there are more than 20 government agencies,

with no single lead agency, which ensure

that nutritious food is accessible to the

Filipino people.

Friday, July 10, 2015 Editors: Vittorio V. Vitug and Max V. de Leon

EconomyBusinessMirrorA4 news@businessmirror.com.ph

a more concerted effort in address-ing food insecurity and eradicating hunger in the country.

Given all the government-led initiatives and efforts to address food insecurity, there is a need to integrate these programs and en-sure that they are maintained across time, added Angara, a coauthor of SB 2137, or the Right to Adequate Food Framework bill filed by Sen. Miriam Defensor-Santiago.

The proposed measure provides for a framework law that will help strengthen food programs and coordinate the governments action to achieve zero hunger in 10 years.

Angara has also urged the gov-ernment to ensure food and nutri-tion security given the higher risk of hunger and malnutrition due to natural disasters.

The Philippines is vulnerable to a myriad of natural hazards, such as typhoons, flooding, landslides, earthquakes and volcanic activities, which plunge Filipino families into poverty, hunger and malnutrition, he said.

As we celebrate the National Nu-trition Month, I call on the appropri-ate government authorities to take into consideration the effects of cli-mate change, and to ensure food and nutrition security among Filipinos amid natural and man-made hazards and conflicts, Angara added.

By Catherine N. Pillas

The Chamber of Real estate and Builders Association (Creba) said on Thursday that the inconsis-tent implementation of government regulations has led to the dilemma now confronting DMCI, the developer of the Torre de Manila condominium project.

Property developers slam inconsistent govt policies

Creba President Noel Cario and Chairman Charlie C. Gorayeb defend-ed its member, DMCI, in its ongoing battle with the Order of the Knights of Rizal and the National Commission for Culture and the Arts (NCCA) on the condominium development.

The government must get its act together because the developer has followed all the requirements of the law, both local, through the local government unit [LGU] and nation-al, through the Housing and Land Use Regulatory Board [HLURB], Gorayeb said.

Billions have already been poured into the project [Torre de Manila], only to be stopped in the middle of its construction, he added.

Early this year, the NCCA issued a cease and desist order (CDO) on the 49-story condominium building of DMCI, saying it is damaging the aesthetic landscape of the Jose Rizal monument in Manila.DMCI contin-ued construction and said the NCCA had no authority to issue the CDO and that the claim was subjective.

Last month the Supreme Court (SC) granted the Order of the Knights of Rizals petition for a temporary re-straining order (TRO) on the construc-tion of the project. DMCI was barred from selling any condominium units since the TRO was issued.

Just this week DMCI sought P27 million in damages from the NCCA for the CDO it issued in January.

While Creba officials await the SCs final ruling on Torre de Ma-nilas case, they urged LGUs and the national government to streamline the process for securing building authorizations.

Local governments issue their own ordinances to require clearanc-es, but under the law, only HLURB is authorized to issue locational clear-ance. Thats confusing, Gorayeb added. Creba officials also want to clarify NCCAs authority in devel-opment projects, particularly their role in an LGUs crafting of laws on building and development.

For NCCA, if they have a pack-age of requirements, these should be part of the LGUs process in pass-ing local ordinances. We dont even know their coverage and the extent of their power. We were not told that we need to get a permit for example, from NCCA, Gorayeb said.

The case is now with the Supreme Court and we will abide by whatever they rule they come up with; but we hope the Supreme Court can see the merit of the case since permits were granted, he added.

Cario said that while that the TRO had no chilling effect on de-velopers, he admitted that they are now more cautious of the cultural sensitivities of certain areas.

URBAN PLANNING World-renowned Arch. Felino Jun Palafox (right) and urban planner Karmi Palafox talk about urban development, township planning and tourism planning during the Asia CEO forum held at the Makati Diamond Residences. ROY DOMINGO

By Recto Mercene

WHERE is the much-vaunt-ed flood-control projects of the government to ease flooding in low-lying areas, in the face of waist-deep water and impassable streets from recent tor-rential rains?

This question is being raised by Sen. Francis G. Escudero, as follow up on the governments project to ease flooding, directed at 4,750 hectares of flood-prone areas.

Escudero said the Senate Com-mittee on Finance, which he chairs, will conduct a mid-year review of the status of flood-control projects implemented by the Department of Public Works and Highways (DPWH) and the Metropolitan Manila Devel-opment Authority (MMDA) within the nations capital region.

Escudero made the statement af-ter torrential rains brought Metro Manila to its knees, submerging some areas in waist-deep waters and making streets impassable to vehicles. He wants to find out from the MMDA whether it will be able to fulfill its promise to reduce the number of flood-prone areas in the metropolis by 10 percent this year.

The MMDA has promised that it will work for a 10-percent reduc-tion of flooded areas, or from 4,570 to four, 105 hectares for a rainfall intensity of less than 40 millime-ters per hour, and that floodwaters in areas under its jurisdiction will subside 40 minutes to one hour af-ter a downpour, measuring less than 40 millimeters per hour, Escudero said, noting that the scope of the flood-prone areas is twice the size of the city of Manila.

These performance guarantees are attached to the P2.19-billion subsidy the MMDA will receive from the national government, he said.

He added that on top of the subsi-dy, the MMDA relies on membership contributions from local govern-ments and income from fees, such as those paid by traffic law violators to fund its operations.

However, Escudero noted that the P276 million the agency has al-located this year for flood-control and sewerage-management servic-es in a metropolis 63,600 hectares big and with an estimated daytime population of 15 million, is clearly not enough.

He said he believes that, as far as flood control is concerned, both

the MMDA and the national govern-ment should be involved.

Hence, the focus of the review will be on the status of flood-control projects being done by the DPWH in Metro Manila.

On a national scale, the DPWH has a budget of P42.2 billion for flood-management services this year, a bulk of which will be spent in Metro Manila.

Among the items in the DPWHs flood-control budget for 2015 are DPWH-North Manila Engineer-ing Districts allocation of P1.26 billion; P680 million for its Las Pias-Muntinlupa District Engi-neering Office; P1.37 billion for its two engineering districts in Quezon City; P460 million for its Malabon-Navotas district office; and P1.6 bil-lion for its National Capital Regions (NCR) First District Office.

These, he said, are on top of al-locations booked under the central office of the DPWH and its regional office for NCR. He wants to know how many percent of the1,295 proj-ects nationwide have been started this year.

The DPWHs performance tar-gets for 2015 is100-percent comple-tion within contract time.

Lawmaker to review status of several DPWH, MMDA flood-control projects

IF the world will allow China to put up a no fishing sign around the Great Wall of Sand it is ag-gressively building in the West Phil-ippine Sea, it will starve Filipinos of a staple in their diet.

This was the dire warning aired on Thursday by Sen. RalphRecto, who added that the ban will hit us where it hurts mostour stomach.

There lies the greatest danger of Chinese incursion in our territory. Its a formula for starvation. More than a national security question, it involves food security, Recto said in a statement.

This is the reason why, regard-less of our politics, whoever our bet for 2016 is, we should unite in support of our Philippine delega-tion to The Hague. Because when China succeedsthrough might, not rightin making the West Phil-ippine Sea its exclusive fishpond, it will not only lead to the disappear-ance of a large chunk ofspace from our territory, but also fish from our table,Rectoadded.

He said annual per-capita consumption of fish and marine

products in the Philippines is about 36 kilograms.

Filipinos eat about 3 kilos of round scad every year, 2 kilos of tuna and 4 kilos of dried fish, including one kilo of fish sauce,Rectosaid.

Of the 4.7 million metric tons (MMT) of fish caught in 2013, com-mercial fishers contributed 1.06 MMT, while municipal fishermen added 1.26 MMT. The rest, or 2.37 MMT, was raised through aquacul-ture. By one estimate, more than three-fourths of total commercial and municipal fishing production came from the rich fishing grounds in the West Philippine Sea.

Iyang sardinas natin sa lata, karamihan galing doon [Most of our canned sardines came from there], he said.

The value of what commercial and municipal fishermen produced in 2013 was about P150 billion.

A house of Representatives think tank estimated that 20 per-cent to 25 percent of all the coun-trys annual fish catch come from the waters west of Palawan and Luzons western seaboard, two

areas now embraced bythe Chinese nine-dash line map.

Rectodescribed the West Phil-ippine Sea as a nursery, breeding ground of our fish.

He said Chinas push into the Philippine water was motivated in part to secure rich fishing grounds that will satiate Chinese appetite for marine products.

Its a market of 1.360 billion people, each eating 31 kilos of fish each year. Who would not be tempt-ed, when the West Philippine Sea is part of the Coral Triangle, one of the richest fishing grounds in the world?Recto said.

Encompassing 5.7 million square kilometers of ocean waters in six countries, the Coral Triangle sup-ports the sustenance of 120 million people who earn $6 billion a year in fishery exports and tourism.

The Arbitral Tribunal at the Permanent Court of Arbitration is presently hearing the Philippiness complaint against Chinas excessive territorial claims at thePeace Palace at The Hague, Netherlands.

Recto Mercene

Sea dispute with China threatening food security in the countryRecto

BusinessMirror Friday, July 10, 2015news@businessmirror.com.ph A5Economy

Friday, July 10, 2015

OpinionBusinessMirrorA6

Another side of Chinas economy

editorial

The Chinese economy under central government manage-ment has gone from ghost cities to now having a ghost stock market. While there are those who are now gloating about Chinas stock-market crashand rightly sothere is more to Chinas economy than all the negatives.

Chinese economic data is often pure fantasy. The bogus numbers used in the West are tricked by creative accounting practices, such as double seasonal adjustments.

The Chinese just skip the adjustment step, and put down whatever figures made by the government to make it look like it knows what it is doing to get the results that are politi-cally acceptable.

When many years ago the Chinese were reporting double-digit growth of their manufac-turing output, the electricity-consumption increase was single digit. This led to speculation that Beijing had figured out a way to make things using something besides generated power. The Chinese economic miracle is part-smoke, part-mirrors, but also part-reality. But, notwithstand-ing current problems, you cannot dismiss the power of over 1 billion people, even if they are but a generation removed from the economic Stone Age.

All economies, developed and underdeveloped, hold a portion of wealth off the books and in the black economy. While accurate numbers are impossible to discover, even the aboveground economic numbers give an idea of what the nation is doing.

While we know that a large number of Filipinos are not part of the traditional banking sys-tem, we do know that savings in Philippine banks amounted to P3.2 trillion ($70 billion) in April. Converted to US dollars, that is about $700 for every Filipino. how much money may be buried in the backyard is not really important.

In the fourth quarter of 2014, the amount of savings in the US amounted to about $620 bil-lion, or $2,000 per person. As of the end of 2014, savings deposits in China are $21 trillion, or about $15,000 equivalent per person.

While we can dispute the accuracy of all these numbers, they are the best available using disclosed filings of the financial statements from all these nations banks.

We can shake our heads at the sheer foolishness of government-manipulated stock markets losing a few trillion dollars worth of value in a month, but, in the longer-term picture, this may be only a bump in the road. When we consider that the total aboveboard and reported global economic output is about $75 trillion, Chinese savings put to use in the global financial and eco-nomic system would have a substantial impact.

Premier Li Keqiang, an economist, has been pushing to reduce the role of personal invest-ment in the domestic economy, like real estate and stocks. One reason he has not been suc-cessful is another reason China badly wants complete convertibility and use the renminbi as a reserve currency. Li wants China to shift from a large net importer of capital to one of the worlds largest exporters of capital.

China may often behave like a raging, crazed dragon but it cannot be ignored and taken lightly.

After the end-to-end demonstration of his Precinct Automated tallying System (PAtaS), former Commissioner Gus C. Lagman amended his original proposal by recommending the elimination of the use of the tally board. for the uninitiated, the tally board is the large sheet of paper where stick markscalled tarasare jotted down to tally the votes received by each and every candidate. Lagman takes issue with the size of the tally board.

Tally-ho

In manual elections, however, huge tally boards are actually a good thing, because they allow watchers to easily monitor the running tally of each can-didate. this was, in fact, a cornerstone of the transparency guarantee Lagman premised his rejection of automation on. According to him, the manual count and the accompanying manual tallyingusing the tally boardas-sured the public that each ballot was actually being counted. It was on this claim that he built up the ideologi-cal predecessor of PAtaS, the Open election System.

Although this was an idea that reso-nated well with some people, an idea that works well in theory doesnt necessarily translate into an equally acceptable re-ality. Lagman seems to have found that out during the demo of PAtaS and he now says, With the much bigger and

brighter projection of the results on the screen, the tally board has become a re-dundancy that only serves to delay the counting process.

Sounds reasonable, but does it stand up to scrutiny?

first and foremost, Lagmans state-ment is an admission that his original claims were, at the very least, not com-pletely thought out. Obviously, he has now been forced to acknowledge the truth of what hed been glossing over up until now: that the manual system is not as simple and straightforward as hed been making it out to be; and that, in fact, at least one major com-ponent of the manual system is unac-ceptable. this begs the question, what other parts of that system can we do away with?

Second, Lagmans statement that the tally board is a redundancy that can be

replaced with an onscreen projection is another example of real-world com-plexities being reduced to insignificance through the expediency of a punchy sound bite.

Let me explain. In order for the rea-soning behind Lagmans amended posi-tion on tally boards to make any sense, it is necessary to establish that the on-screen projection is every bit as accept-able as the tally board it is supposed to replace. Lagman certainly makes it sound like that, when, in fact, no such thing has been provencertainly, not by the PAtaS demo

At the very least, the projection at the PAtaS demo should have been shown to present at least as much information as the tally board could at a single glance, it should clearly show when and how taras are added to the tally of each candidate, and, of course, it should accurately re-flect the count.

In its report to Congress, however, the Commission on elections drawing on multiple witness accounts revealed that only five to six candidate names could be viewed at any one time with the PAtaSs onscreen projection. In an elec-tion where five to six candidates might not even represent all the candidates for any one position, this is a very limited view that seems to actually be more of a deterrent to transparency than a guaran-tee. even assuming, for the sake of argu-ment, that the display could be tweaked to fit more names onscreen, that would require reducing the size of the display to unreadable levels. How, then, could that help transparency?

As for showing when and how taras

are added to the tally, the PAtaS display shows very thin marks that appear sud-denly with very little warning. If you blinked, you would literally miss it. With a tally board, the very act of adding a mark is amply signaled by the teacher moving to the appropriate place on the board and announcing the placement of the mark. Compare the two and the inadequacy of the onscreen projection as a means of promoting transparency becomes very apparent.

And, of course, in the matter of ac-curacy, all observers at the PAtaS demo saw how the onscreen projection did not match the tally-board count, lead-ing the Board of election Inspectors members themselves to say that the machine tabulation was not very reli-able, since it did not tally with the elec-tion returns and the tally board. the BeI even pointed out that, since it was man-operated, it was prone to human errors and weaknesses. Given all that, how can the onscreen projection system demonstrated by PAtaS be considered a viable replacement for the tally board?

Lagmans proposed elimination of the tally boarda critical transpar-ency guarantee in the manual-counting modelreveals a disturbing tendency to pounce on ostensibly bright ideas with scant regard for how things work in real life. One can only wonder what other bright ideas will dim once subjected to rigorous examination; the budgetary re-quirements of a hybrid system, perhaps?

James Arthur B. Jimenez is director of the Commission on Electionss education and information department.

spoxJames Jimenez

HOM

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annotationstito Genova Valiente

It is raining outside, and umbrellas are making an entrancing procession down below the window of this old caf. the storm outside would not stop our meeting, which was about books and poetry and cultures.

Caf story

Overshadowed good news

there is an old saying which says, Culture or civilization is when you can eat strawberry ice cream while a storm is raging outside.

We were eating mushrooms in garlic, as the rains continued to buf-fet the walls, windows and rooftops of this caf. But we could not care less. We are civilized. We have stocked up on mushrooms and garlic. the rest of the individuals in the caf could not care less. Mushroom in the rain is a line that the great Ella Fitzgerald could munch on and transform into classic melodious thoughts about love delectable and love lost.

My generation has almost for-gotten about this caf. We have forgotten cafs or bistros, as some of these places were known in the late-1970s. We have now coffee shops with a variety of drinks made bitter or cooked with butter. In a sense, we really have not developed caf societies, the kind where people are in near whisper when they talk. Eavesdropping is a game and a trick in these societies.

It is good to be out in the rain, Ella sings in the background. We barely could hear her, because that is the rule in cafs: no loud music, no lyrics exposed to the rains or sun. We barely could hear the other table, except when we quieted down, and we listen to the old couple. they were talking about debts and inter-est while eating omelette with Em-mental cheese. the taste is so soft we could barely hear the lines of this cheese, no despair and no seduction in this cheese because this is about the lightness of being.

No one hums the tune playing in this caf. When this caf was built, no one predicted that, one day, music will be sung by people who read the lyrics onscreen. the songs continued and the air from a distant typhoon wrapped its chill around the caf. the music that was playing belonged to the so-called standards. the bohe-mian circle that kept alive bistros and cafs never could imagine that, one day, standards would lower the level of artistry of many prospective good

singers. No one then ever thought that the day would come when songs like My Way could cause singers to murder other singers.

Outside the caf, we imagined the city years ago when people dis-cussed books and trade informa-tion about foreign films in this caf. tenderly, the song said, but the decibel of the conversation had risen across the table. We could not un-derstand what the three men were talking about but we knew they were Koreans. South Koreans, we clari-fied. Where did the Japanese go?

When this caf became the toast of the town, women and girls of this republic went through auditions. the test was very simple: Sing a few lines and your card got a check. Your manager signed a contract that would give job to the talent, a noun designating a person rather that de-scribing someone as having it, you know, like skill, acumen, or genius. these women and girls traveled to Japan, worked in bars or snack, which did not serve sandwiches or burgers but things more illegal and sinful. And, yet, no one moralized on the issue. Small towns and villages saw the female population earning lots of cash and bringing appliances, devices and babies.

How disturbing it is for us as we drank expensive beer that this caf defined a generation not in terms of what it was but how it remembered itself. that in the late-1970s, when Manila became a metropolis through a political assignation, there were places that almost required persons

to be intellectual before they could be allowed entry to those sites.

It is, perhaps, the boon of the young men and women now that ca-fes no longer require a modicum of so-phistication. No one really discusses poetry over latte and chocolate. Wi-Fi access and strong mobile-phone sig-nals are prerequisite to good cafs. these practical considerations do not undervalue the present drinkers; they merely create new consumers and new thinkers.

Where did Bohemian Manila go? they went the ways of anti-estab-lishment sentiment. Uprisings or the feeling about subverting estab-lished institutions were pushed by central monolithic values. Global-ization and the sprouting of options brought about less attention to insti-tutions than to personal interests. the hand-held devices, cheaper and more efficient, have removed sites of home. When one calls and connects to a person, the caller can never as-sume the person being called is at home or in his office.

Offices are located where devices are found. tables where photos of families are preserved and presented are unnecessary. the social media create albums. the albums are not permanent but ephemeral.

It is when we return to cafs with their old posts and old waiters that we learn how much have been altered. Cafs, thank God, return to us certain permanence until the rains subside and we step out into a world that is flying us away into other worlds.

JACK MA, executive chairman of Alibaba, clearly takes pride in the fact his company trades on New York stock exchanges. But he hasnt been able to escape the ongoing stock market rout in China.

Alibaba cant escape Chinas rout

EaGLE WatCHalvin ang

As Chinas stocks plunge, trad-ers have been rushing to cut ties with the country, and Alibaba, the New York stock exchanges biggest bet on Chinese consumers, hasnt been spared. the companys biggest selling point its access to Chinese shoppers has suddenly become its biggest vulnerability. On tuesday its stock slid to its lowest price since its initial public offering.

And theres little reason to ex-pect Alibabas fortunes will improve anytime soon. Even if the stock rout doesnt crash Chinas economy, it will likely reduce President Xi Jinpings ap-petite for sweeping economic reform.

that shift threatens Alibaba more than Ma would ever publicly admit. In a series of New York speeches last

month, Ma detailed his companys vast ambitions for global growth. they included expanding warehous-ing investments in the Westin ways that must have worried execu-tives at Amazon.comand helping American start-ups go to China and sell their products to China.

to succeed outside China, though, Ma first needs a vibrant home mar-ket. And that depends on Xi having the courage to accelerate efforts to transform China into a service econ-omy led by a thriving private sector. Xi would have to diversify the coun-trys growth engines, not just reopen its credit floodgates.

But Chinas economy is dominat-ed by giant state-owned enterprises whose political connections make

change hard in the best of times. With shares plunging, those monopolies resistance to any reduction of their influence will only intensify. Xis team will likely have less leeway to interna-tionalize the countrys financial sys-tem, free its interest rates and liber-alize currency trading. Beijing might now take a more cautious approach regarding capital account opening, given that too rapid an opening may further amplify domestic fluctua-tions, especially given fragile funda-mentals and flawed regulations, says economist tao Wang of UBS.

Chinas plunging stocks will also have an impact on Xis efforts to make China the linchpin of a new global order. Beijing hinted at its am-bitions this year by unveiling plans for a $100-billion Asian Infrastruc-ture Investment Bank, a $40-billion effort to recreate the Silk Road and as much as $1.25 trillion of outbound investments over the next 10 years. the idea, of course, is to supplant the USs outsized influence over the global economy. But how is China supposed to remake global economic rules that are decades in the mak-ing when it has shown it cant run a simple stock market at home?

When you engineer a rally using state media, public funds and every

regulatory gimmick you can think of, youre not operating a market so much as a rigged casino, one where the house wants everyone to win. And unsurprisingly, that strategy cant hold up. Even when 1,323 companies abruptly stopped trad-ing shares on Wednesday, it couldnt stop the Shanghai Composite Index from falling another 5.9 percent. With losses in China equating to 15 times Greeces gross domestic product, global markets should be paying attention.

Where things go from Wednes-days 3507.19 close is anyones guess. Researcher Michael Every at Rabobank Group says the market is heading to 2,500, while Kinger Lau of Goldman Sachs, pointing to the large-cap CSI 300 Indexs 27-percent rally over the next 12 months, thinks China is due for a rebound. But the real issue is where Chinas reformers go in the weeks and months ahead. Do they give up or make a bold bid to strengthen the countrys economic fundamentals?

the ongoing firesale in Shanghai demonstrates how flimsy the foun-dations for the stock rally had been. theyre so flimsy, in fact, that mag-nates like Ma who thought theyd left China are now getting pulled back in.

IN the midst of the global economic headlines heralded by Greece and China, the Philippines registered one of its lowest monthly inflation of 1.2 percent for June. this is the lowest, at least in the last three decades. Prior to this, the lowest was in August 2009 at 1.7 percent, and in May 2015 at 1.6 percent (using 2006 as base year). this was also below the consensus forecast of about 1.5 percent.

An important point here shows that the consensus forecast already expected inflation to be hitting the lowest in decades. this means that analysts have been expecting inflation to fall, but actual inflation is falling faster!

this is good news, especially for the ordinary savers who have yet to experience a real positive return for their savings account since 2003. this is also happening when the economy is experiencing a low interest-rate regime (see chart). Under a low interest-rate condition with a positive real interest return, people are given a full array of choices for invest-ments. those who are risk-averse can benefit from savings and time de-posits, while those who are business-oriented can benefit from the low lending rates.

Low interest rates and low inflation also open opportunities for those considering investments with higher return and higher risks. We also view inflation to remain at this low levelin fact, possibly below 1 per-cent in the coming monthsbefore rising back above 1 percent toward the end of the year. this is, of course, assuming the continuing stability of food prices and the relatively up and down fuel prices, which, on the average, is basically flat.

Coupled with this positive development is the raising of the countrys credit rating to BBB+ by the Japan Credit Rating Agency (JCR). BBB+ is the highest rating under the lower medium investment-grade range used by Standard & Poors (S&P), Fitch and the JCR. It means that the country can now borrow at lower interest rates abroad and that the Philippines is strongly being seen as a stable investment destination.

this is the highest rating received by the country, and is the closest to reaching an A rating.

the JCR gave us this rating because of its view that the country has a stable fiscal position, strong external liquidity and solid growth potentials. Essentially, what the JCR is saying is that it believes that the Philippine economy has a good revenue condition; it can manage its expenses well; it can pay its debts; and that its current foreign-exchange position is enough to weather significant challenges by global and external headwinds.

Furthermore, the JCR is taking the current political jockeying as a stable political condition. Although this rating is not yet shared by S&P, Fitch and Moodys, it is most likely that this will lead to stronger Japanese foreign direct investments, which has been coming in since 2010. they include Bandai (toy maker), Shimano (bicycle) and a num-ber of Japanese companies that are shifting operations from China to the Philippines.

However, these good news were overshadowed by the No vote of Greece to the referendum regarding its acceptance of the austerity mea-sures proposed by the European Union (EU) and the sharp decline of the Shanghai stock market. the results of the Greek referendum have caused anxiety within the euro zone and also among peer economies.

the No vote means that Greece will have to find ways in responding its severely challenged economy essentially without the help of the EU. It is, however, known that Greece does not have enough resources to meet its need and will, therefore, be troubled. Any help to be extended by the EU without the corresponding responsibility will certainly be detrimen-tal to the finance world.

In a similar vein, the Shanghai stock marketthe darling of the last two years succumbed by 30 percent in less than a month. this is despite government efforts to shore it up and support buying.

Once investors understood that the Chinese companies listed in the stock market can no longer provide the expected growth of China, the selling started.

the relatively weaker-than-expected performance of the Chinese econ-omy is now being reflected in its stock markets. Both represent tales of OVERGreece = overspending and China = overvaluation.

these external events undoubtedly overshadowed the good news of the Philippine economy. In the short term, there should be expected effects, such as falling stock prices and weakening of the peso. However, the Philippine Stock Exchange index (PSEi) has been correcting already since April, adjusting its value to the national growth levels.

the peso has begun to weaken in May from 44.50 to the current levels of close to 45.20, mirroring the declines in the PSEi. the PSEi has already lost about 10 percent from year to date. Hence, any shock adverse effect from China and Greece may have already been factored in.

Nonetheless, it cannot be discounted that some weakening may contin-ue, as global financial adjustments will absorb the shocks until investors begin to look again at the fundamentals of emerging economies. there it will be clearly seen that the Philippines is no Greece and is no China, and, therefore, is unlikely to be lumped with them.

Alvin P. Ang, PhD, is professor of Economics and senior fellow of Eagle Watch, the macroeconomic and forecasting unit of the Ateneo de Manila University.

For more details of our forecasts and expectations for the rest of 2015 and 2016, we would like to invite you to the Ateneo Eagle Watch Mid-Year Briefing scheduled on August 6 at the Ateneo Rockwell Campus. As seats are limited, reserve your seats via eaglewatch.soss@ateneo.edu or call 426-5661 loc 5221 or 5222 and look for Riz Jao.

BLooMBERG ViEWWilliam Pesek

from last years 108,957 units. June sales also set a new record for the local industry at 24,185 units, with all segments contributing to the growth. This was 23 percent higher compared to the same month last year. Passenger-car (PC) sales rose 30 percent to 52,778 units in the first half of the year, compared to only 40,609 units in the same period in 2014. Year-to-date, commercial-vehi-cle (CV) sales recorded a 15-percent

growth boost to 78,687 units, from 68,348 units in same period last year. Under the CV segment, the Heavy- duty Trucks category already ex-ceeded its whole-year sales target of 490 units, having sold 493 units for the first semester. Lawyer Rommel Gutierrez, Campi president, credited this to stronger demand from fuel haulers and the refleeting of the con-struction industry.

A8

2ndFront PageBusinessMirrorwww.businessmirror.com.phFriday, July 10, 2015

Continued on A2See Automakers, A2

Automakers set anotherrecord-high sales in H1

China scrambling to protectstock market from further dipChinese officials are scrambling to stop a plunge in the countrys stock market, shutting down half of its market from skittish investors and forcing brokerages to pony up billions to prop up shares. The shanghai composite lost an-other 5.9 percent on Wednesday, and is now down more than 30 percent since peaking on June 12. The impact on Chinese investors is direct, but for investors in the Us, europe and elsewhere, its not as sim-ple. Chinas market is largely isolated from other world exchanges, but there are worries the financial dam-age could hurt the broader Chinese economy, which is the second-largest in the world. heres what has happened:

How did the bubble begin?There have been signs of overheating in China for a while. shares in shanghai more than doubled over the past year, despite evidence the Chinese economy is slowing. Chinese economic growth fell to 7 percent from January through March, the slowest quarter since 2009. At the same time, state-owned media has encouraged ordinary Chinese for months to load up on shares. Many bor-rowed heavily to buy stocks, taking out so-called margin loans. rising stocks encouraged compa-nies to raise money by issuing shares and to use the proceeds to pay down debt. in the first half of the year, the shanghai stock market led the world in initial public offerings: 78 companies

By Catherine N. Pillas

The local auto industry posted another record sales in the first semester of the year, notching a 21-percent growth over the same period last year.

According to a joint statement by the Chamber of Automotive Manu-facturers of the Philippines Inc.

(Campi) and Truck Manufacturers Association, January-to-June sales reached 131,465 units, a big jump