Joining China-led bank will benefit PH

Joining China-led bank will benefit PH July 27, 2015 9:09 pm SHARED FROM IF PNoy really wants to do well by his fellow Filipinos during the final year of his term, he should resist the pressure being exerted by the United States and set aside his narrow-minded anti-China stance by signing up for the Asian Infrastructure Investment Bank (AIIB) organized by China. The way we see it, the country’s membership in the newly-established multilateral lending bank will be beneficial to the country in the long run. With an authorized capital of $50-billion (to be raised eventually to $100-billion), the AIIB will provide a new source of funding to build much needed infrastructure in poorer parts of Asia, including the Philippines, to help meet our region’s enormous infrastructure needs. The Asian Development Bank (ADB) has previously estimated that developing Asian countries have an infrastructure demand of about $8 trillion over the ten years to 2020. At present, however, the current crop of multilateral development banks cannot fill Asia’s enormous infrastructure funding gap. The ADB has a capital base of just over $160 billion while the World Bank has $223 billion. Moreover, big institutions like the ADB and World Bank are spread too thinly, giving out loans around the world on everything from environmental protection to gender equality. In contrast, the AIIB will concentrate its financial muscle on infrastructure and only within the Asian region. With $3.8 trillion in foreign currency reserves, China is well-positioned to take a leading role in the world’s newest multilateral development bank. As the biggest shareholder in AIIB, China can extend its influence in the region with its “soft power” as one of the top three major industrial economies in the world. This is why the United States has been lobbying its allies not to join the China-led bank, which is seen as a direct challenger to the Washington-based World Bank and the Japan-dominated Asian Development Bank. Although the US says it welcomes new multilateral financial institutions, it has covertly been putting pressure on countries around the world, the Philippines included, to keep away. Notwithstanding America’s backdoor efforts, several of its key European allies like the United Kingdom, Germany, France and Italy have joined as founding members of AIIB. Our Asia-Pacific neighbor, Australia, also joined the new multilateral bank as the bank’s sixth largest investor with its $719 million initial contribution. Even Asean economic powerhouse Singapore signed on as an AIIB founding member. The Philippines, which is locked in a territorial dispute with China, is still hemming and hawing on whether to join the AIIB. PNoy says the country needs to be “very, very cautious” about becoming a member of the China-organized bank saying that the funding extended by AIIB could be used as a political tool by China. He cited how Export-Import Bank of China (China Eximbank) called in the loan on the Northrail project (the rail line project to Clark) after the incident in Scarborough Shoal crisis of 2012 where But PNoy wasn’t being entirely truthful. What prompted China’s Eximbank to call in the loan was the nullification of the Northrail contract by the Supreme Court, which said that the award of the Northrail project to China’s Sinomach without competitive bidding was against the law. Northrail then notified Sinomach of its inability to carry out the agreement, prompting EximBank to declare a default event. PNoy should also stop using our conflict in the Spratlys to justify our non-participation in AIIB. If the conflict in the Spratlys were to define our relationship in AIIB, why did Vietnam – which is also at odds with China over latter’s incursion into the areas being claimed by Vietnam in the Spratlys – sign up with the AIIB as founding member? Although China has the biggest stake in the AIIB, it cannot afford to run the bank like its personal fiefdom, especially with member-states like Australia who joined on the assurance that China would run the bank with “appropriate transparency and accountability.” The AIIB will be a test of China’s capability to run an international financial institution at par with the likes of ADB and WB. China can ill afford to lose any member-state on account of its shoddy governance since that would deal a severe blow to its credibility. The way we see it, the biggest plus to the country’s membership in the AIIB is that it will cut down government’s over-dependence on public-private partnership (PPP) schemes to finance infrastructure projects. For the past two decades, PPP projects have only increased the costs of public services for ordinary consumers. This outcome is inevitable because private companies must maximize its profits to survive. But the focus on profits is fundamentally incompatible with government’s obligation to provide cheap, affordable and universal access to basic public services. Besides, public finance (or government borrowing) is cheaper than PPP funding. Governments can almost always borrow money more cheaply than private companies because there is very little risk of defaults. It’s time the government stopped passing the financial burden of expensive and bloated PPP projects to our countrymen. That’s not only unfair, that’s also anti-Filipino.

The TRUTH will set you FREE.

#Shell is a crook, COA ruling confirms

COA ruling confirms Shell is a crook June 22, 2015 9:25 pm shared from The recent 11-page decision of the Commission on Audit (COA) confirmed that Shell and company screwed and swindled the country out of P53-billion in royalties for seven years from 2002 to 2009. And this does not include the royalties when the Aquino administration took over in 2010.For the longest time, many Filipinos suspected that the country got the short end of the stick when we gave the exploration rights to the Malampaya gas field to the Shell consortium. Well, the cat is out of the bag. This COA ruling is long overdue. We recall that sometime in September 2010, there was already a COA auditor’s report on the Department of Energy (DOE), which found that Shell and company had understated the proceeds from the Malampaya Gas Project to the tune of P53 billion because they were deducting their corporate income tax from the 60 percent share of the government in the project. Apparently, the original report of the COA auditor on the P53 billion shortfall was appealed by Shell to the Commission proper. It was only around two weeks ago that the COA commissioners resolved Shell’s appeal. The Shell consortium had long been insisting that its corporate income taxes should be taken out of the government’s 60 percent allotment rather than from the contractor’s 40 percent share. Ironically, the DOE sided with the oil giants in the controversy, arguing that the government assumed Shell and company’s income taxes as it was allegedly permitted under Presidential Decree 87 (or the Oil Exploration and Development Act of 1972). In fact, Energy Secretary Carlos Jericho Petilla – who is sounding more and more like the spokesman for Shell – even warned that the COA ruling may set a bad precedent and imperil other service contracts. But as theCOA ruling said, there is no provision in the law which specifically provides that the income taxes of the contractors will be taken from the share of the government. “The supposed tax assumption…cannot prevail over the express provision of PD 87 which categorically states that contractors are subject to income tax,” the COA ruling stated. “In this case, the government’s share ultimately became less than 60 percent as a result of the supposed tax assumption, in clear violation of the provisions of PD 87 and PD 1459. As a result, the 60 percent government share was reduced by the amount equal to the corporate income tax of the contractors, while the 40 percent share of the contractors remains undiminished,” it added. The COA thus correctly concluded that since “the government is being made to shoulder the tax liabilities of private entities, these contractors [i.e. Shell and company] are, in effect, not paying anything.” Perhaps this is why Shell is so eager to hold on to the Malampaya gas project that it’s already pushing for the 15-year extension of its service contract to 2039 even though the contract won’t expire for nine more years or until 2024. With its virtually income tax-free status, Shell would be stupid to give up its Malampaya “gold mine.” On the other hand, we (Filipinos) are being fried in our own lard (ginigisa tayo sa sarili nating mantika) by Shell. This is not the first time that Shell tried to pull a fast one on our countrymen. For the past 17 years, Shell has also refused to follow the Oil Deregulation Law requiring oil refiners to publicly list “through the stock exchange…at least ten percent of its common stock.” The obvious intent of the public listing was to allow ordinary Filipinos to own and share in the profits of these oil refiners. Since 1998, Shell has been giving a litany of excuses on why it could not do an IPO, ranging from alleged poor market performance, purported volatility at the Philippine Stock Exchange, to the supposed pendency of a final investment decision on its Tabangao, Batangas refinery upgrade. How this Dutch oil giant managed to put off its initial public offering (IPO) all these years – through four different presidents (including PNoy) – without facing any government prosecution, is a case study on regulatory capture, political impotence and corporate greed and corrupt practices. As expected of a Shell toadie, all Petilla did was to ask Shell (headed by country manager Edgar Chua) to “explain” the status of its compliance with the Oil Deregulation Law. “We will ask them again [on the] status of IPO rather than compel [them],” Petilla said. Seriously?!! By allowing Shell to charge its income taxes from the government’s share – and to delay its public listing/IPO – in clear violation of our laws, Petilla is not only causing undue injury to the government but is also giving a private party (i.e. Shell) unwarranted benefits, advantage or preference. Perhaps it’s time Ombudsman Conchita Carpio-Morales erased her PNoy loyalist tag by immediately filing graft charges against Petilla and other DOE and Shell officials involved in this massive irregularity before the Sandiganbayan.

The TRUTH will set you FREE.

Is PNoy beholden to Shell?

shared from the by ATTY. DODO DULAY Mon, May 19, 2014, 4:28 PM PHT October 21, 2013 9:25 pm That’s the question being asked by many of our readers and friends who are wondering why President Benigno Aquino 3rd has not cracked down on Pilipinas Shell Corp. (Shell) despite the oil giant’s flagrant violation of the law requiring oil refiners to like Shell to publicly list “through the stock exchange . . . at least ten percent of its common stock.” They point out that under RA 8479 or the 1998 Downstream Oil Industry Deregulation Act, Shell should have already completed its initial public offering (IPO) as early as 2001. For the past 12 years, however, the oil giant has managed to hold off the IPO of its shares for one reason after another. In 2002, then Shell outgoing chairman Oscar Reyes claimed they couldn’t push through with their IPO allegedly because the Philippine market was not ready for such an offering. Seven years later, Shell’s new country Chairman Edgar Chua said they couldn’t come up with a concrete plan to list their shares because their IPO plan was tied to their Tabangao, Batangas refinery expansion program which they were supposedly finalizing. When the Aquino administration took over in 2010, Chua claimed they still hadn’t made a decision to list its shares because they weren’t done “reviewing the future of [their Tabangao] refinery.” Last June, Chua again asked the DOE to give it more time – not for an IPO – but only to submit the plan for an IPO. Why? Because the oil giant was (again) still finalizing the study on upgrading their Tabangao refinery. It’s the same old tired excuse that Shell has been dishing out to the public for the past four years. With the time it has taken Shell to finalize the refinery upgrade study, it’s on track to break the Guinness Book of World Records title for the world’s longest-running research ever. Besides, some people ask, if Shell can finish the feasibility study on the more costly and complicated liquefied natural gas (LNG) regasification plant project in Batangas in less than a year, why couldn’t it finish a simple upgrade study after four years? Obviously, Chua is seeking to delay the IPO as long as legally and humanly possible – and the so-called “study” on its Tabangao refinery expansion/upgrade was the means to achieve that delay. Shell’s reluctance to do an IPO shouldn’t really surprise anyone. As a public company, Shell will not only be exposed to competitors and government regulators. It will also be forced to open up its books to the scrutiny of potentially hostile and inquisitive Filipinos unhappy with skyrocketing gas prices amidst the company’s burgeoning profits. And unlike public utilities whose profits are regulated by the government, oil companies like Shell are free to squeeze as much profit as they can from Filipino consumers. It’s no wonder Shell is the country’s third largest corporation by revenue. Controlling more than one-fifth of the local market for fuel products, Shell reported a net profit of P4.694 billion on gross revenues of P190.086 billion in 2011. That’s a humongous profit which Shell’s exclusive group of local and foreign shareholders may have difficulty sharing with other Filipino investors if the company goes public. Based on Securities and Exchange Commission records, Shell is 67-percent owned by the Netherlands-based Royal Dutch Shell Plc., with the remaining 33-percent owned by select foreign and Filipino shareholders such as the International Finance Corp., The Insular Life Assurance Co. Ltd., LBC Properties Inc., Rizal Commercial Banking Corp., Pan Malayan Management and Investment Corp., Ayala Life Assurance Inc., BPI/MS Insurance Corp. and Aboitiz and Co. Inc. Some folks, however, attribute a more sinister motive to Shell’s hesitance to go public, saying that while the oil giant doesn’t want to do an IPO, it nevertheless wants to keep its oil refinery business because it provides a convenient vehicle for the company to import petroleum products at lower duties and taxes. They cite the P24-billion tax evasion case filed by the Bureau of Customs (BOC) against Shell in 2010 for intentionally misdeclaring its 2005-2009 shipments of catalytic cracked gasoline (CCG) as raw materials used in Shell’s refinery instead of finished petroleum products, in order to evade payment of excise taxes and VAT. According to the BOC, Shell admitted that CCG is the same as unleaded gasoline and was paying the corresponding excise tax for unleaded gasoline on its previous importations of CCG. So they ask: “If Shell can evade the legally-mandated IPO requirement without being sanctioned by the Aquino administration, what’s stopping it from circumventing other laws?” Although we believe that such a ballsy scheme is farfetched, we can understand why some of our countrymen are skeptical of Shell’s IPO delaying tactics as well as PNoy’s tepid response. After all, the only thing PNoy has to do is to enforce the law, plain and simple.

The TRUTH will set you FREE.