SONA FACT CHECK: The distance from Laoag to Zamboanga

 

IN HIS State of the Nation Address on Monday, President Aquino singled out the Department of Public Works and Highways for its accomplishments in road construction and repair. From the English translation of his speech:

“It is truly awe-inspiring: In addition to what the DPWH has saved, the roads that they have laid out, fixed, widened, or constructed have amounted to a total of 12,184 kilometers." 

When I saw these figures, I thought: How can I visualize 12,000 kilometers?

Think of it this way: This is equivalent to four roads that connect Laoag to Zamboanga City. And this just only accounts for the national roads; that number doesn’t include local farm-to-market roads or tourism roads.”

The conclusions we can draw about this geographically puzzling claim will depend on how we interpret “four roads.” Does he mean a Luzon road, a road through Samar, a road through Leyte, and a road through Mindanao? Or did he mean “a single road from Laoag to Zamboanga, times four?,” which is somewhat less ridiculous. Let us proceed with our analysis by assuming the first scenario.

The actual distance from Laoag to Zamboanga is more like 1,262 kilometers, according to websites that estimate point-to-point airline flying times. What this means is that someone on the President’s staff was way off in his distance estimates, perhaps getting carried away in the enthusiasm to craft a visually appealing image for the undoubtedly worthy feats of the DPWH.

This raises the question: if you flew south of Laoag for about 12,000 kilometers where would you land? Our best guess is: probably somewhere in Antarctica. If you made a stopover in Melbourne, you will have traveled 6,735 kilometers, which is just about halfway, allowing you to make a round trip with just a small top-up of fuel. If you were free to go in any direction you please, a flight of about 12,477 kilometers brings you as far as Kansas City.

All this is probably going to earn some speechwriter a bit of ribbing over the next few days, but it’s more an error of clarity than a malicious one. The real scandal is that the President went for the crowd-pleasing metaphor rather than acknowledging the real-world challenges of road building.

Not the least of the challenges is that much of the straight-line route from Laoag to Zamboanga is over water. Any actual road would have to be built through the Bicol provinces and incorporate ferry crossings in the Visayas before landing somewhere in northern Mindanao. The traveler would then spend the final leg of his journey driving roughly southwest until he reached Zamboanga City.

What is the real-world distance for anyone traveling by road from Laoag to Zamboanga City? Using a Google Maps function that gives point-to-point distances, we came up with 2,375 kilometers. If you took 2,375 kilometers and multiplied it by four, as the second “four roads” scenario might suggest, you’d come up with a total just under 10,000 kilometers, which is closer to 12,000 but still significantly short. This is the point where we might be tempted to go with the simplest explanation -- per Occam’s razor -- and conclude that some speechwriter mixed up 12,000 with 1,200 under pressure to finish the address.

Whatever may have happened in the frantic hours before Monday, we can at least come away with a nice honest discussion about geography, and the useful knowledge that should that Laoag to Zamboanga link be built someday (perhaps via a PPP project), it will be about 2,375 kilometers long. It’s not a sexy number you can brag about in a SONA, but it has the virtue of being closer to reality. -- Troy Medina and Virgil S. Villanueva

source:  Businessworld

SONA FACT CHECK: The shelf life of rice

ADDRESSING the issue of rising food prices in his State of the Nation Address, President Aquino laid down a stern warning to rice hoarders, threatening them with financial ruin when the government floods the market with low-cost shipments of the staple:

“When the additional rice we have imported arrives in the country, hoarders will be forced to sell the rice that they have stockpiled in their warehouses. To these hoarders: If a showdown is what you want, by all means, take on the government. Just remember: it only takes six months before the stock you have hoarded in your warehouses begins to rot. When we flood the market with this imported rice, you will surely go bust. You are acting against the Filipino people, while we are acting for the interest of each Filipino. Let us see who will prevail.”

Does rice really start rotting after six months? Given the context -- a government seeking to bask in the limelight of a SONA -- asking the question might seem rude. But most Filipinos know their rice rather well, some might even say intimately, and on the face of it, six months seems a bit short. And President Aquino DID say that he might base his anti-hoarding policy on the theory that hoarders can’t afford to wait out six months. In the interest of preventing the government from doing potentially expensive things based on flawed assumptions, we sought to find out what the actual shelf life of rice is.

On the low end, the United States Department of Agriculture estimates that uncooked rice is shelf-stable for about two years. All you need to know about that sort of timeline is that after two years, the Aquino administration will have expired, presumably leaving the hoarders sitting pretty with their still-edible stashes of rice.

On the high end, the website eatbydate.com gives the shelf life of rice at 4-5 years -- and as much as 25-30 years when stored in vacuum containers. This much is well known by survivalists in the United States, who store food in anticipation of a nuclear apocalypse. To be completely fair, the site does give the shelf life of brown rice and wild rice as 6-8 months -- which means the spoilage time of these varieties comes the closest to the President’s 6-month estimate for time-to-rot.

It is highly doubtful, however, that the President was referring to brown rice or wild rice in his speech. But it does raise the fascinating question of whether the President’s staff consists exclusively of elitist wild-rice eaters, who (unlike most citizens) can afford to pay the hefty premium over white rice, and who by feeding the President false information about shelf lives may have revealed themselves to be out of touch with daily realities.

What might account for the disparity between the long estimates for the shelf life of rice given by US sources and the much shorter estimates for the Philippines? It could be that packing methods, climate, or pests are a big problem here. The real worry might be that rice traders, for one reason or another, don't know how to store their rice properly, and that the food security of the Philippines might depend on an entire industry changing its ways so the produce lasts longer. But that's a story for another day.

It's always a worthwhile exercise to nitpick the President's claims, particularly when he takes his annual victory lap around Congress, because greater truths can be revealed even in small things. One of the truths we may have just have discovered is that when the President threatens rice hoarders with bankruptcy after six months, it is possible that the hoarders already know he is bluffing. -- Troy Medina

source:  Businessworld

100 million Filipinos have to fit somewhere

Maybank, CIMB rivalry extends to Philippines?

MAYBANK Philippines, Inc. said it is unfazed by the possible entry of rival CIMB Group Holdings Bhd into the Philippines, flagging that the country’s biggest lenders -- and not CIMB -- are its toughest competitors in the local market.

“When they come in, it’s not like they’re going to be a threat to us,” Maybank Philippines President and CEO Herminio M. Famatigan, Jr. said in an interview Friday, referring to CIMB. “The market is so big. In fact, the threat will still come from the top, big [domestic] banks.”

CIMB, Malaysia’s second-largest bank, has been more acquisitive than its bigger rival Malayan Banking Bhd (Maybank), with buyout plans extending beyond its Malaysian turf to include targets in the Philippines.

A newspaper report last week said that talks on CIMB’s possible acquisition of state-controlled Al-Amanah Islamic Investment Bank of the Philippines have become “more serious” -- possibly serving as CIMB’s entry point here.

Maybank Philippines is the local unit of Maybank, the biggest Malaysian bank in terms of assets. The group’s total assets stood at RM 578 billion, or approximately P7.887 trillion, as of end-March, according to data from its web site.

CIMB follows Maybank in size, with RM 380 billion in assets, or around P5.186 trillion, in the same period.

Mr. Famatigan doubts the rivalry between Malaysia’s two biggest lenders would extend to the Philippines.

“I assure you, I don’t think we look at [ourselves] as a threat to [CIMB],” Mr. Famatigan said. “Because again, on any given day, you’re looking at a P1.6-trillion bank, BDO; a P1.4-trillion bank, Metro; a P1.2-trillion bank, BPI.”

Mr. Famatigan was referring to the Philippines’ three largest banks in asset terms: BDO Unibank, Inc., the Metropolitan Bank & Trust Co., and the Bank of the Philippine Islands.

“Us worrying about CIMB or any other Malaysian bank will only be to the extent that we worry about the rest of the competitors. It should not be a special [case],” he said.

WIDER BATTLEFIELD
The industry-leading positions of Maybank and CIMB in their home market have led analysts prognosticating whether the two players would slug it out in a larger regional arena.

Recent news on a possible mega merger between CIMB and two smaller Malaysian banks have put Maybank’s position on top in doubt.

CIMB is negotiating a deal to acquire RHB Capital Bhd and Malaysia Building Society Bhd - another signal of the acquisitive stance CIMB has taken on as its CEO Nazir Razak, the Malaysian prime minister’s brother, prepares to leave the bank in September, after 15 years in the job.

Red flags have since been raised on this possible move that would see CIMB overtaking Maybank in size, with Fitch Ratings saying it is fraught with risk.

Lexter L. Azurin, research head at Unicapital Securities, Inc., said that it is “possible” Maybank Philippines would also move forward with acquisitions in response to a CIMB takeover of Al-Amanah.

“But several factors have to be considered, especially the valuation of the bank. That’s really important,” Mr. Azurin said. “It has to be seen whether it would be beneficial to both parties with regards to the size.”

Maybank’s acquisition targets would “probably be small to mid-sized banks,” he said.

Mr. Azurin said that, in any case, the developments “should be beneficial for the industry, as further consolidation would lead to efficiency.”

But Mr. Famatigan ruled out a radical change in the bank’s growth strategy. He said that even if CIMB successfully gets Al-Amanah, Maybank would not speed up acquisitions.

“We are growing organically, the best way we know how, and we’ve been doing great in that regard. At the same time, we have our eyes wide open, and we’re quite sensitive in looking around for opportunities,” he explained. “An acquisition is part of the plan anytime it makes sense to us.”

He would not comment on possible acquisition targets, although he ruled out joining the bidding for state-controlled United Coconut Planters Bank, which the government is putting up for sale.

An acquisition by Maybank of a listed lender is of interest as it could be a way for the bank to comply with the Bangko Sentral ng Pilipinas’ (BSP) requirement for all foreign banks to go public.

Mr. Famatigan had said in February that the bank is “keeping all [its] options open,” including buying a listed bank, to comply with this requirement.

source:  Businessworld

The impact of budget airlines on first-time travel, in two charts

SOMETHING happened towards the end of the last decade that caused people who had never before paid for their own overseas travel to finally take the plunge in significant numbers, according to the results of an online survey conducted by BusinessWorld Online.

 

The survey asked poll participants how old they were when they first paid for their own overseas trips. The question was structured to filter out earlier trips paid for by parents or employers, and to reveal the ages at which respondents felt sufficiently adventurous and economically secure to make such a large investment. Respondents were also asked their current age so the compilers of the study could determine what year they made their first paid-for trips.

Generally speaking, the numbers consistently show a large majority going through this rite of passage in their twenties and early thirties, though one outlier made the trip as early as 16 and some would not take this step until they approached their forties. Beyond that, the survey results reveal much about how the picture has changed over time.

Chart one suggests that first-time paid-for travel spiked sometime in 2007, just as budget flying started to take off. It is probably not a coincidence that Cebu Pacific Air recorded its strongest passenger growth numbers in its history that year - 58.8% for domestic and international service combined. Two years prior, the airline was transitioning from the DC9 to the Airbus A320 family of aircraft, and 2007 represented the first full year using the more capable new planes.

 

 

 Chart two shows two trends happening simultaneously, starting from about 2007: twenty-somethings embarking on their first overseas trips at a progressively younger age, and small numbers in their late thirties also making their first paid trips. Between 2007 and 2011 the average age of first-time travelers dropped from 36.5 years to 24.4 years, before bouncing back to the mid-30s by 2014. We can make an educated guess that cheap fares worked their magic first on ever-more-adventurous young people, with a follow-on boom in travelers approaching middle age for whom air travel with more family members finally became feasible.

We can’t rule out other factors behind the boom in first-time travel, such as the improving economy and the greater ease of booking flights brought about by the Internet. But all these factors are very likely interconnected. In any event, airlines and airplanes are a good enough place to start for our purposes; having viewed the numbers, we grow confident enough to state that all the airlines' efforts at revolutionizing and democratizing the flying experience are starting to have a noticeable impact on travel behavior. -- Troy Medina

 

source:  Businessworld

 

Approved building permits rise in first quarter but may not spur construction activity

APPROVED BUILDING permits climbed by 21% in the first quarter but may not boost slackening construction activity as central bank oversight on real estate credit remains tight.

Preliminary data released by the Philippine Statistics Authority (PSA) on May 30 showed approved building permits rising to 29,468 in the first three months of the year from 24,400 in the same period in 2013.

The projects summed up to a total floor area of 6.25 million square meters and were valued at P61.15 million. Around 70% were for residential use.

Region 4A or the Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon) was site of 21% of projects. Following it were Region 3 or Central Luzon with 13%; Region 7 or Central Visayas with 12.7%; the National Capital Region with 10.3%; and Region 11 or Davao Region with 7.8%.

PSA statistics were based on building permits approved by local government units’ building officials. The permits were for construction work that ought to have been completed within the reference period -- the first quarter, in this case -- and not construction work that was completed during the reference period.

Noting the slowdown in the construction sector in the first quarter, Nicholas Antonio T. Mapa, associate economist at the Bank of the Philippine Islands, said construction activity may stay sluggish in the second quarter with the Bangko Sentral ng Pilipinas (BSP) closely watching bank lending to the real estate sector.

“Private construction makes up bulk of the construction sector and the slowdown in the private sector, in response to BSP’s measures, was enough to slow down the overall industry... Banks are [constrained] by the rule of 20% real estate lending to total loan portfolio, which ensures that only the best borrowers are granted credit...,” he said in an email.

“Construction will undoubtedly slow down possibly in the [second quarter] but rebound in the [second half] of the year due to base effects.”

Gross domestic product growth slowed to 5.7% in the first quarter from 7.7% in the same period in 2013. Growth in the industry sector fell to 5.5% from 11.3%, with growth in construction substantially decelerating to 0.9% from 31%.

To better monitor banks’ exposure to the real estate sector, the BSP has required them to report not only loans, including loans for socialized and low-cost housing, but also investments in debt and equity securities that were used to raise money for real estate activities. Real estate exposure is capped at 20% of total loans.

The definition of “real estate activities” was expanded to include buying and selling, rental and management of real estate properties on top of development and construction of real estate properties.

The BSP wanted to check price bubbles, noting how banking crises often stemmed from crises in the property markets.

Early this month, it said stress tests would be conducted to see if banks’ capital adequacy ratio remained compliant with the 10% regulatory minimum even after absorbing losses from their real estate exposure.

“The slowdown in construction [in the first quarter] was a welcome one as it was on the back of BSP’s prudent stewardship... to ensure that a real estate bubble was avoided,” Mr. Mapa said. - See more at: http://research.bworldonline.com/print_preview.php?article_id=416#sthash.5kDx8pZF.dpuf

Angara urges gov't to hire more cops

Senator Juan Edgardo “Sonny” Angara on Friday urged President Benigno Aquino III to announce in his State of the Nation Address (SONA) a massive police recruitment program to beef up the country’s national police force.

Angara said that in order to fight the increasing crime incidents in the country, the government should “put more boots on the ground” by hiring at least 50,000 policemen to augment the Philippine National Police (PNP) force by at least 200,000 cops and improve the cop-to-population ratio to one per 500 people which is the ideal.

In fact, Angara said, the ideal police-population ratio “is not an option but a mandate of law, Republic Act 6975, the 1989 law creating the Department of Interior and Local Government (DILG).”

But a quarter of a century since it was passed, the policeman-to-population ratio, which on paper currently stands at one per 675, has never been achieved, the senator pointed out.

“If I may give an unsolicited advice, I think the President should announce a massive policemen recruitment program in his second-to-the-last SONA,” Angara said.

With a current population of 100 million, the senator said the country needs about 200,000 policemen, but the authorized “uniformed personnel ceiling” of the PNP is only around 151,410.

“Filling all of these, plus adding more should be part of the last two years agenda of the Aquino administration,” he said.

“It will send a comforting message to the nation that more men are being suited up to roll back crime,” the neophyte senator said.

He said Aquino’s SONA announcement could be followed through with a request for Congress to approve funds that can be used for the hiring of rookies in the 2015 national budget.

Angara suggested that 25,000 policemen be hired in 2015 and the same number in 2016.

"The initial cost of hiring 25,000 new cops, assuming they will join the service in the second half of the year, is about P5 billion," Angara said.

While there is inevitably going to be a question of funding, the senator said the government can make use of the pork barrel funds of the senators that was scrapped in the 2014 national budget which is at P3.2-billion.

Citing police data, Angara said there were only 1,033,833 reported to the police last year which he said, could just be a fraction of the total as more victims prefer not to report crime matters to police.

The senator lamented that this may be due to persistent doubts on the ability of law enforcement personnel to catch the culprits.

“Understated the data may be, it still paints a scary picture: One is murdered every hour, a robbery is committed every 10 minutes, someone is raped every 72 minutes, a theft is happening every three and half minutes,” he said.

Other countries, particularly ASEAN neighbors, in contrast “are fielding more policemen.”

“Thailand has one for every 304 persons; Indonesia, one per 428; Malaysia, one per 267," he said.

Angara said the current Philippine ratio of one policeman to 675 population does not translate to the actual number of cops on duty at any given time.

Angara also said that aside from hiring more policemen, the PNP can maximize its force by removing police officers from their desks, and handing over administrative duties to non-uniformed personnel (NUP).

source:  Yahoo!