MASS MEDIA MOGUL ON PRESS FREEDOM IN AN ERA OF DISINFORMATION

Posted on by

“And Katharine Graham made a very risky decision without knowing what the newspaper really stands for…The concept of standing up for the principles of press freedom. She made a very momentous choice by saying, ‘Publish’.”

And quoting from the movie, “The Post”, Pangilinan said, ‘News is the first draft of history.”

PLDT Inc chairman Manuel V. Pangilinan (or MVP, as popularly known in business circles) was our guest speaker during the Economic Journalists Association of the Philippines (EJAP) induction of officers on 2 February. We were told he will not give a keynote address and would just induct the incoming officers for 2018.

He surprised us with an impromptu speech, starting with the story of The Post, the Tom Hanks-Meryl Streep movie about the Pentagon Papers and the Washington Post. I think he was inspired by the movie that he was prompted to give a short speech about mass media. (He watches at least two movies a month, he said).

And as the owner of two newspapers, The Philippine Star and Businessworld, and broadcasting company TV5 Network Inc, PLDT should know the pitfalls and difficult decisions a media outfit needs to make, especially during a time when press freedom is under heavy attack.

By telling the story of The Post to us business journos, Pangilinan was relaying to us his reflections on the repercussions or the rewards of bringing out the truth…and the snowballing of the Pentagon papers and later on, the Watergate scandal.

“So it just points out to the very valuable role that media plays in a democracy like ours,” he said.

“And everyone, including the leadership, must accept that is important. It is not a weakness but it is actually a source of strength.”

REFLECTIONS OF A FORMER SMALL BUSINESS OWNER

Posted on by

I tried selling on Carousell yesterday and received some inquiries today (“Last price na po ba?”). While I don’t blame buyers for asking that (it is well within their right as customers), I can’t help but feel sorry for some small and medium-sized enterprises (SMEs) who deal with similar customers who ask for discounts that cut to the bone. And they’re not even ordering/buying in bulk.

You see, we SMEs deal with high operating expenditures (opex), taxes, and damaged goods regularly. We carry those on our books without the benefit of economies of scale. At the same time, we try to price our products and services reasonably so we can retain customers while paying salaries/opex and struggle to keep afloat.

Yes, we give discounts if it is within our means but please don’t ask unreasonable rates that they cut so deep. If you do, that means you don’t want our business.

That said, I rarely ask for deep discounts because I know how SMEs bleed, especially with the kind of business environment that we have = red tape in getting business permits, crazy tax system, and high tax rates. Really unfriendly.

Selling on Carousell triggered this within me.

You see, I was thinking of going back to selling online now that LBC Express will be launching a service that would help SMEs with their logistics. (I had drinks with their key people last week so that’s how I know). I won’t preempt them but it was something that made me think whether I can go back  to it again.

In the early 2000, we used to sell items on eBay even before they thought of putting up an Ebay Philippines branch. There was no online selling platform yet at that time and Sulit.ph was just starting out. We used eBay US and had to go through the hoops of being an early adopter/user. Had to open several bank accounts due to the unfriendliness of the payment system available then (Xoom.com, Western Union, etc.) because Paypal was hard to use at that time because we needed a US bank account. I was able to set up our Paypal when the company started accepting EON by Union Bank–the first pure online/branchless banking entity (I had to give props to them on this one). Another problem with the old system before is that some of our customers do not have credit cards since we have buyers coming from Eastern Europe or Latin America or somewhere in Southeast Asia. I had to physically cut my lunch breaks to physically queue in these banks/remittance centers to get payments and go to the Post Office to ship the items.

And oh dear, the fees! The fees really do bite! We had to price them in or else we won’t have any profit at all. Ebay selling fees, listing fees, Paypal fees, etc. But those make our products expensive, on top of the expensive shipping fees.

And don’t get me started on logistics. It was (and still is) a huge headache.

Our customers complained that our local Express Mail System (EMS) is freaking expensive but that’s the only system available to us that time (tracking numbers) that ensure that our items really do arrive. Otherwise we were blind and we don’t have any assurance that our customers are not really duping us, claiming that the items did not arrive so we had to refund so the negative feedback wouldn’t gnaw out our feet. When I became a public finance reporter, I had to ask Customs/Philpost why is that our postal service is so expensive compared to Japan and the US (we bought stuff from Japan/China and their shipping costs with tracking numbers are half of ours). No one could give me a clear answer.

It was simply exhausting to the point that doing eBay was no longer an option when they changed their feedback system and increased their cuts from profits. Then there’s the logistics headache.

Then we opened our brick-and-mortar business within the fringes of the Maginhawa food hub. Half of our business was comprised of walk-in customers and being in a busy center is good. But that comes with the predatory rent rates as well so we were priced out of the area. The opex couldn’t be justified anymore.

Fast-forward, e-commerce is booming like crazy here (but we’re still lagging compared to our neighbors in ASEAN) and SMEs have all sorts of options now, from friendlier payment systems to increased online selling platforms. Websites now are easier to make too (WordPress has become friendlier to SMEs, with all sorts of widgets available).

I remember I had to deal with a cheap domain and hosting provider then but in return i got crap security so in the end I got hacked. I abandoned all ye hope for an online store at that time. Plus I had to deal with Joomla, and that one is such a pain to use since I am no computer genius. It’s not easy setting up a shopping cart and linking my Paypal account there. I had sleepless nights trying to do it by myself.

I tried Multiply (remember that one?), the blog-social-media-cum-online selling platform of the 2000s. I ordered my Lomography stuff from a girl on Multiply and a handbag from a fashionista that only lasted me three months. I tried selling on Multiply too but it had limited reach and couldn’t make money out of it since our customers are mostly international. Multiply was ahead of its time but they couldn’t figure out how to best monetize what they had. They were like the Friendster = good concept, but slow in figuring out how to make money out of something that good.

Anyway, back to being an SME. I remember somebody telling me that SMEs in the Philippines normally have a 3-year lifespan. Well, on our third year, we went bust. So much has changed, like rent rates have gotten crazier and the proprietor’s interest has waned. Keeping afloat in this environment is a struggle. You don’t have a 9-6 day. You can’t just walk away from your shop and have a two-week Christmas vacation because that is the busiest season for SMEs. Then SSS, Pag-Ibig, Philhealth…

Then you had to deal with an employee who destroys you or steals from you. And robbers taking our cellphones and other stuff. Then BIR suddenly orders a change in receipts…so we had to order PHP 3,000 worth of new receipts and ditch the old ones. Money down the drain. Then QC government came out with an order that all brick-and-mortar stores should have CCTVs installed for security or else they would not be able tos secure business permits. How come it is the SMEs who bear the burden of maintaining peace, order and security? Isn’t that what our taxes supposed to do for us? What if we couldn’t afford a PHP 6,000 CCTV system?

It was all too much to take.

So please, if you deal with SMEs, especially those who make their own products to sell, be considerate. You can ask for discounts if you order in bulk (so that way we can offset given the small economies of scale that we can have in wholesale). But not retail. Please be kind. Especially to farmers and wet market vendors. They make so little.

Remember, SMEs provide 99% of the employment in this country.

YEP, AN INITIAL COIN OFFERING IS ILLEGAL IF YOU DON’T REGISTER IT WITH THE SEC

Posted on by

The Philippine Securities and Exchange Commission (SEC) finally said it: initial coin offerings (ICOs) are illegal if the issuers don’t register the coins with the regulators.

That was the thing I had asked them way back in November last year when Joseph Calata declared on national TV that he will offer Calata Corp minority shareholders coins in exchange for their shares as an exit in the wake of the company’s delisting and ban from the Philippine Stock Exchange (PSE). At that time, the SEC Commissioners were very careful with their response to my query. They said they are closely watching what their counterparts in Singapore and Malaysia are going to do in light of the increase in ICOs being conducted in the region.

So last week, the SEC finally issued the cease and desist order (CDO) on the Krops ICO by companies headed by Calata.

SEC_CDO

The idiot Calata reminds me of Pharma Bro. Seems like he doesn’t have any conscience at all. As I told a friend over on Facebook, para syang ipis na binato mo na ng tsinelas pero buhay pa rin. Lumipad pa papunta sa yo! Anyway, that’s a different topic for another blog entry.

So in November, I asked the SEC what they thought of cryptocurrencies and ICOs. Commissioner Emiliano Aquino said ICOs are risky and their Malaysian counterparts have issued that warning to the public. He said the Malaysian authorities will be coming out with their own set of rules governing ICOs and cryptocurrencies soon and the Philippines will be watching out for that. As it is, there are no black and white rules on ICOs yet anywhere in the world, except for the bans imposed by China and South Korea.

Aquino had said then they he personally thought that coins, in the context of ICOs, are securities,  just as what the Hong Kong and Thai regulators have declared.

“They can be considered as investment contracts so the SEC can invoke its authority over such fundraising activities. But this is a new territory and we cannot just quickly swoop in with new rules. This has to be thought carefully because we don’t want to stifle the potential of these new instruments,” he said.

I asked Bangko Sentral ng Pilipinas (BSP, the central bank) Governor Nestor Espenilla what does he think coins are, since the BSP has recognized two local coin exchangers who use these instruments in remittance services. He said:

“If it looks like a security, smells like a security, quacks like a security, then it is a security.”

There you go.

Fast forward to 29 January  2018. The SEC called for a press conference to discuss the Krop coins and ICOs in general.

Howey test

So Comm. Aquino has formally declared ICOs illegal if these coins are not registered with the SEC. Because essentially these coins are securities because they are instruments used to raise funds from other people. All securities are under the purview of the SEC.

So what are securities? Securities = they secure an investment. As mentioned above, these are contracts that ensure an investor will get something back for the amount he/she injected into a company. It can be in the form of debt (bonds, notes, commercial papers) or shares (as in equities = common shares or preferred shares) or a hybrid of that.

So no argument there, coins are securities and under the Securities Regulation Code, the SEC is the authority on that.

But why would start-ups register their coins with regulators and go through the hoops like in a regular initial public offering when the main reason why they would like to launch an ICO is they want to evade regulation and raise money fast? There is little incentive for them to do that when they could do an ICO somewhere else since we live now in a borderless world.

If we go back to the origins of digital currencies, specifically bitcoins, this quote from the creator of bitcoin is very telling: “a system for electronic transactions without relying on trust” (based on the paper Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto). Essentially, the creators, users, and investors want a currency system that is beyond the reach of central banks. No regulators, just algorithms.

I have interviewed some foreign start-ups about their fundraising plans and one of them said they want to launch an ICO this year in Hong Kong alongside their Series B fundraise because 1) it’s faster than venture capital fundraise since VC requirements are stringent (but of course they should be, they’re plunking money on unproven businesses!); and 2) there will be no or minimal dilution of existing/angel investors.

And mind you, there is an active market in Southeast Asia now for ICOs. Crowd Genie, the licensed Singapore-based peer-to-peer (P2P) lending platform, is currently conducting its ICO to raise USD 5m. I think I read somewhere that the Monetary Authority of Singapore (MAS) is closely watching this ICO to make this it’s test case.

So, if ICOs can be conducted anywhere in the world and can offer the coins to whoever, how can the Philippine SEC keep Filipinos and OFWs (they seem to be the prime target of ICOs by shady companies being tracked now by the SEC) from being victimized by dodgy coin issuers? Can they physically run after the operations of these companies like what they did with “boiler rooms” ten years ago?

Comm Aquino said they can. They are now also enlisting the help of HK authorities to verify the registration of Calata’s Krop company (because he claimed the ICO will be done in HK). Aquino said, the HK authorities have also declared unregistered ICOs illegal while those in mainland China have altogether banned the exercise.

This is just the beginning of the ICO saga.

I’ve read somewhere that VCs are now beginning to feel the competition as start-ups now turn to ICOs for fundraising. Will VC’s role in growth capital raising be dimished? We’ll see.

FENTANYL GOT THE WRONG PERSON

Posted on by

Among the artists who have recently departed this dimension, it’s Dolores O’Riordon who has affected me the most. I’m not ashamed to confess that her death personally affected me since I wasn’t able to see them live in 1996 (I was a poor college freshman) and 2012 (I just gave birth to twins) here in Manila. On the day she died, I played non-stop Cranberries songs, whatever I could find on Youtube. Then in my car, I continued my mourning as I played their songs in my Sony Walkman on a loop on my way to a coverage.

Cranberries was part of my high school life. Dolores and Alanis Morisette  were the female artists who had influenced me as a vocalist at that time.

The first time I heard “Zombie” back in 1994, I couldn’t shake it out of my head. I waited for it to be played on air so I could tape record it (yes, yes, the old-school recording to make the soundtrack of my life; it was an art form, mind you). Then I played it on my sister’s Walkman while in a van on the way to Manila from Los Banos with my classmates. We were competing in a science fair to showcase our study-sorta-thesis then. So the entire duration of that science fair, I was listening to Cranberries, Guns n Roses (Spaghetti Incident), Mr. Big (Bump Ahead [I fell in love with “Promise Her the Moon“]), Collective Soul (“Shine”), and a couple of locals like Color It Red, Rivermaya, and E-heads. Guys were borrowing the Walkman and my tapes to beat the boredom while we tended to our booths. (Girls had a different playlist back then, I was the odd one).

I followed Cranberries. I borrowed tapes or swapped with classmates. In my senior year, some guys and I formed an amateur band and we played Cranberries. Twenty-plus years on, a classmate told me that whenever she hears Cranberries, she remembers me. That’s how closely tied I was to the band.

When I read that the Cranberries was reuniting, I thought to myself I will finally have the chance to see them live. But it was never meant to be.

I was sad when Chris Cornell died. When Dolores passed, I was heartbroken.

Goodnight.

FIGHT DICTATORS

Posted on by

Black Friday Press Freedom protest

I timed my walk-jog in UP Diliman this evening to coincide with the Black Friday Press Freedom protest. I missed the first one held in Scout Area last week because I was covering the BSP Bankers Night.

The press has been under heavy attack since Duterte came into power. Incessant attacks on Philippine Daily Inquirer (and its owners) forced the Prietos to sell the opposition paper to businessman Ramon Ang (San Miguel Corp [PSE:SMC] president). Now Rappler is under threat with the revocation of its registration by the Securities and Exchange Commission (SEC). ABS-CBN’s franchise is in danger of being not renewed…because broadcast franchises are hostaged by Congress (really archaic rule, by the way).

We are living in dangerous times. Anyone critical of this administration is being silenced, be it on social media, in mainstream media, or even in the streets of this country.

freedom protest, UP Diliman

Everyday is a struggle but we must not lay down our arms. Once we give up, we will let ourselves die a slow and painful death.

Some bankers have asked me what do I think about Rappler’s Philippine Depositary Receipts. As an SEC/PSE reporter, I have my own take on it, which may be separate from the issue on hand. But this does not negate the fact that this administration is out to get us those who criticizes its policies and actions.

I will post later my opinion about the PDRs, which I had first posted on Facebook.