Biz Buzz: Good news, bad news

The good news is that everyone was all smiles during yesterday’s memorandumof-agreement signing between banks for the proposed peso-yuan spot market.

That scheme, once operational, will allow Filipino and Chinese firms to convert their respective currencies into each other’s currency, bypassing the need to do a two-step conversion via the US dollar.

Theoretically, the scheme will facilitate trade between both nations because the currency conversions will be cheaper (no two-currency “spread” or traders’ margin for each step) and faster, too.

This is important because China is the country’s largest bilateral trading partner.

The scheme will also be a boon for Chinese tourists visiting the country. Arrivals from China have been steadily rising in recent years. Some of them are workers in the booming online gaming industry, but many are tourists heading to Philippine beaches.

The other piece of good news is that the peso-yuan spot market may be operational as early as next month, with Bloomberg—the favored technology partner of the Bankers Association of the Philippines —providing the trading platform.

The most important piece of good news is that the scheme is supported by the country’s biggest banks and their owners. During yesterday’s signing, BDO Unibank president Nestor

Tan was even backstopped by the bank’s chair, Teresita Sy

Coson. And where the country’s largest bank goes, the rest are sure to follow.

Now the bad news. While the presidents of 14 banks are supporting the peso-yuan scheme, their middle managers seem to be grumbling about the proposal. Many feel that such a spot market is unnecessary because there is simply no demand—not yet, at least—for direct conversion between the peso and the renminbi.

“In fact, it’s the Chinese companies themselves who request that their Filipino counterparts pay them in dollars,” one bank treasurer said. “We don’t know where we’ll get the volume for this.”

Another issue which is raising the eyebrows of some bankers is that this latest effort to jumpstart the peso-yuan spot market is apparently the brainchild of retired banker Vicente

“Teng” Castillo, who is now a consultant at Bank of China’s local office. (He made a surprise appearance in the video presentation at yesterday’s event, that left some bankers chuckling.)

Castillo, of course, is the man behind Philippine Dealing and Exchange Corp. (PDEx), the country’s bond exchange, which was conceived by regulators several years ago, and imposed upon the banking community (which complied grudgingly).

In the case of PDEx, the bank presidents also supported the scheme, but its actual implementation was troubled by resistance from other senior bank officials. Will the peso-yuan spot market avoid this fate? On- ly time will tell. —DAXIM L. LUCAS

Speaking of which... Finance Secretary Carlos

Dominguez III— a Japanophile at heart, according to his close associates—yesterday uttered a suggestion that may as well have been marching orders to the bank presidents assembled for the peso-yuan spot market deal signing.

The finance chief recalled that, many years ago when he used to run a banana plantation in Davao, he would constantly be frustrated by the inability of his Japanese trading partners and himself to convert pesos straight to the yen and vice versa. They had to go through the US dollar first, which resulted in expensive “friction costs.”

Now, Dominguez suggested that, after the peso-yuan spot market is established, the most logical next step for local banks is to establish a peso-yen spot market.

Naturally, the banks are receptive to this idea (especially since many of the local giants deal with Japanese firms more than Chinese companies at present).

Bankers Association of the Philippines president Nestor Tan was receptive to the idea, saying that a framework can actually be established that would allow direct convertibility of the peso not just to the yuan or the yen, but to other currencies of the country’s major trading partners.

Now that would be good news. —DAXIM L. LUCAS

Blocking maneuver

Here’s the latest “telcoserye” episode: A second legal chal- lenge targeting the third telco selection process has emerged.

We are referring to the Supreme Court petition for mandamus that was filed last Oct. 23. Incidentally, this was filed on the same day the Manila court was holding injunction hearings on the first legal challenge, filed by NOW Telecom against the National Telecommunications Commission for issues the company had with the third telco selection rules.

There has been a lot of misinformation flying around so let us be perfectly clear: Both cases, if allowed to prosper by either court, will delay the NTC’s selection process on Nov. 7 this year.

In peculiar fashion, the Supreme Court case was filed by two lawyers, laudable since they were able to crack into this show with no known affiliation to the telcoserye cast. Both described themselves as “concerned” citizens and telco customers. Their case is more historical in nature, delving into the almost P70-billion buyout of San Miguel Corp.’s telco assets by PLDT Inc. and Globe Telecom in May 2016 and why it should not have been allowed in the first place.

They argued that PLDT and Globe should stop using the frequency assignments, including those in the 700 Megahertz band, obtained from SMC. This is rooted on that allegation that frequency assignments to SMC’s telco subsidiaries and units such as Liberty Broadcasting Network Inc., now called Tori Spectrum, were illegal in the first place.

The final argument is that since all of that shouldn’t have happened, the current third telco selection process should also be halted because the same frequencies in question will be awarded to the third telco player.

We said this is peculiar because of the timing, that two concerned citizens would choose this moment mere weeks from the bid deadline to air their grievances and potentially stop a selection process that has the potential to benefit millions of Filipinos.

Another peculiar aspect is how the filing assigns blame to the Philippine Competition Commission for not reviewing the PLDT-Globe-SMC transaction. Perhaps they forgot that the PCC is seeking a review, a decision on which has been pending before the SC.

The last peculiar item about the latest legal filing is its content and how it reads, to us, like a supporting document to the case filed by NOW—although the plaintiffs in both cases appear unrelated.

After all, NOW’s filing questioned the steep financial requirements such as the multibillion-peso performance security set by the NTC. But its case, less often reported in the press, has another major grievance. NOW claims, because of its franchise and NTC license, that it has pre-existing rights to the frequencies to be awarded to the third player. It specifically laid claim to 140 MHz, or more than half, of the 245 MHz identified in the NTC’s rules.

Interestingly, both filings precisely cited Liberty and described it—both underlined for emphasis—as a company that was “never eligible and technically and financially capable” to engage in broadcasting and telecommunications.

It’s probably some coincidence although Biz Buzz’s lawyer specialist told us it was unusual for the two filings to appear so similar in form.

A careful reading of both filings showed that both have near identical goals, which was ultimately to remove crucial frequencies included in the NTC’s third telco selection process and have these reassigned to others. As with any issue, one must always ask, who benefits in the end? There is a clear winner in both cases. With the SC in recess, Anto

nio Carpio, as acting chief justice, has the power to unilaterally issue stay orders on urgent cases. There are some who worry about Carpio’s close friends who support his advocacies and even acquire items of rare historical value to do so, or even an influential family member who had served on the board of a certain listed company.

We understand Carpio to be a man of integrity and a fair judge who will do what is best for the Filipino people, many of whom have been clamoring for better telco services.

The issue at hand is too big and it goes beyond any individual interest. —MIGUELR. CAMUS