Uncertainties of 2019

Uncertainties played a definitive role throughout the year and had a decisive effect on the country’s economic growth as measured through its gross domestic product (GDP).

Delays in the passage of the proposed 2019 General Appropriations Act well into April and the ban on infrastructure projects extending to the May 12 election pulled GDP growth way below economic projections for the period, and posed serious challenges to the whole-year targets.

With the government’s Build Build Build program seriously delayed, doubts were cast on whether the original intention of relying chiefly on Official Development Assistance (ODA) could deliver the goods, and if there was a need to tweak the original methodology to achieve the target of spending P8.7 trillion by 2022.

The controversial Rice Tariffication Law was, likewise, not resulting in the desired benefits: retail rice prices were not budging lower even with the glut in imported rice or the low farmgate palay prices; and more importantly, rice farmers and mill owners were losing heavily with the delays in the release of government funds as promised by the rice law.

A presidential approval or veto on the proposed anti-contracting labor law met with sighs of relief by the business sector, which had mounted a last-minute lobby to persuade the President from totally banning contractual work.

Of course, the veto did not sit well with labor groups who had supported the President during his election bid on the promise that endo, or the end-of-contract labor practice that was being abused by some companies, would be totally stopped.

Mixed signals

Low water levels during the summer months unleashed a backlash on Metropolitan Waterworks and Sewerage System concessionaires Ayala-led Manila Water and Pangilinan-led Maynilad after the President publicly declared that the Philippine government would not pay for promised rate increases stipulated in contracts.

Additionally, the President called for a review of the 25-year contracts signed in 1996, tagging them as onerous, and with a threat of not renewing them. Manila Water and Maynilad have since waived their claim on the P11 billion estimated rate increases that they had not received, and agreed to revisit the alleged onerous terms.

In Congress, lawmakers questioned the extension of Manila Water and Maynilad’s concessions granted in 2009 for another 15 years, from 2022 to 2037. This prompted the MWSS Board to repudiate the extension, potentially paving the way for new companies to take over.

Finance Secretary Carlos Dominguez III has been quick to dispel fears of any negative impact on investor confidence on what had been seen by some sectors as squeeze play and arm-twisting tactics by the Duterte government on the private sector.

It must be pointed out that Manila Water and Maynilad have, by large, kept to their commitments by extending water coverage in their designated areas to roughly 100 percent on a 24-hour basis, with significantly reduced water leakages.

If there had been any recent water shortages, it was because MWSS failed to secure the water supply that the concessionaires needed to distribute in their areas. To date, the promised new water source from the proposed Kaliwa Water Dam in Infanta, Quezon continues to be delayed.

Yellow and red alerts

During the summer months too, Meralco was forced to issue successive yellow and red alerts after power reserves from Luzon-based electricity generation plants dipped to low levels.

In this case, the Energy Regulatory Board had failed to facilitate the construction of new power generators for a variety of reasons, including its inability to implement the retail competition and open access provisions of the Electric Power Industry Reform Act of 2001 because of a Supreme Court ruling.

Recently, the Supreme Court again issued another ruling that resulted in further delays in getting power plants off the ground, this time by insisting that Meralco undertakes a competitive selection process (CSP) in choosing partner power plants.

To date, Meralco’s ability to deliver electricity in the coming months is again threatened by more delays after the CSP it conducted recently failed because only one bidder had participated.

Coincidentally, Congress has opted to delay discussions on the extension of ABS-CBN Corp.’s operating franchise to next year, just a few months away from its expiry date of March 30, 2020. ABS-CBN is currently operating on a 25-year franchise secured through a law passed on March 30, 1995.

The worst that could happen if ABS-CBN’s franchise is not renewed would be the shutdown of its radio and television operations, founded in 1946 by the Lopez family, and now regarded as having the most extensive reach in the country and largest in earnings.

During the dictatorship years of former president Ferdinand Marcos, the Lopezes were political rivals persecuted for their ownership of ABS-CBN as well as Meralco. The latter, though, is now under the MVP Group of Companies led by Manuel V. Pangilinan.

Lone bidder

Late last year, the much-prolonged selection of the much-awaited third telecom company to challenge the duopoly of PLDT-Smart Telecommunications and Globe Telecommunications yielded to a lone bidder: Mislatel Consortium led by businessman Dennis A. Uy’s Udenna Corp. and China Telecom.

Mislatel has been renamed as Dito Telecomunity, and recently posted a report as being on track during its first year of operations to initially cover 37 percent of the whole Philippines delivering a minimum internet speed of 27 Mbps through a P150-billion capital and operational expenditure budget.

Uy, a Davao-based businessman and regarded as a close friend of the President, is also on track to expanding his business interests, which initially involved petroleum and shipping, but has now diversified into real estate and telecommunications.

Facebook and Twitter

We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.

Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

https://www.philstar.com/business/2019/12/26/1979735/uncertainties-2019