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Thursday, April 7, 2016 Vol. 11 No. 180

SM, AYALA AMONG FIRMS READY TO TAKE PART IN PROPOSED HOUSING PPP

Socialized-housing PPP whets developers’ appetite

B J M N.  C

ERE is a more concrete way of solving the country’s ballooning housing backlog: Convert at least 5,821.57 hectares of land in the National Capital Region (NCR)—currently either sitting idle or occupied by informal settlers—into socialized-housing sites via the publicprivate partnership (PPP) route.

INSIDE

5,821.57 ha Total land area in Metro Manila eyed for socialized-housing PPP

P.  |     | 7 DAYS A WEEK

PANAMA PAPERS COULD ADD TO OUTRAGE IN U.S. PRESIDENTIAL CAMPAIGN Setting up an offshore company Setting up an offshore company or trust can take as little as a few days. The basic steps:

Find a registered agent or intermediary – even on the internet.

And the big developers, such as Ayala Land and SM, are ready to participate, said Rep. Alfredo B. Benitez of Negros Occidental, chairman of the House Committee on Housing and Urban Development. He said of this 5,821.57-hectare total land area, 1,234.85 hectares are government-owned and currently being

Voila! You’ve now managed to hide your fortune.

C  A

The agent will register the entity in a taxfriendly location, maybe Panama, that ensures your anonymity.

You can link to the company from a bank account anywhere.

GUAM ON THE LAM

The agent can supply you with managers and a board of directors, none of whom have any real control, but who shield your identity.

LIFE

Source: McClatchy Washington Bureau

Graphic: Robert Dorrell, GraphFix Lab/TNS

HE Panama Papers, which illustrate how a small class of global elites find elaborate ways to shield their wealth from tax collectors, bank regulators and police, offer a glimpse into what’s driving the populist outrage that has marked this year’s US presidential campaign. The trove of 11.5 million leaked documents have thus far shed light mostly on foreign figures, such as the prime minister of Iceland, who resigned on Tuesday after the public learned that he used a shell company to shelter large sums of money while his country’s economy foundered. The reaction in the US, meanwhile, has been relatively muted. But voters and experts say the documents validate the frustration felt by Bernie Sanders’s supporters on the left, who feel hard work is no longer S “P,” A

HEALTH&FITNESS

FRENCH Ambassador Thierry Mathou discusses ways to boost Philippines-France trade relations during the BM Coffee Club forum on Wednesday. ROY DOMINGO

Expansion of PHL-France relations to focus on 6 areas–Mathou B C N. P

ANILA and Paris are k e e n on e x pa nd i ng cooperation in six key sectors, following the revival of the Philippines-France joint economic committee (JEC) last year. Thierry Mathou, newly appointed ambassador of France to the Philippines, said the two countries would like to focus on energy, urban development, agribusiness, health care, creative industries and infrastructure. Mathou said Manila and Paris will discuss strategies to improve

PESO EXCHANGE RATES n US 46.2220

The lack of foreign direct investments is still one of the major bottlenecks to development.” —M trade relations in these areas during the next meeting of the reconvened JEC, which could be held in the Philippines early next year. “Since we reactivated [the committee] last year, we now want to be effective and work concrete-

ly on [the six] sectors,” he said during BusinessMirror’s Coffee Club forum held in Makati City on Wednesday. The high-level Philippines-France JEC is a governmentto-government platform that allows the two countries to improve economic relations.

It was reactivated last year, as Filipino firms have begun investing outside of the country, most notably Andrew Tan’s Emperador Inc., which purchased United Spirits’s whisky brand Whyte & Mackay and Spain’s Fundador. Energy is the top priority sector for France, which hosted the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change last year. “ We con sider pa r t nersh ip with the Philippines [on fighting climate change] important. We have to implement the resolution agenda and develop new energies,

whether solar, waste energy or any kind of renewable energy,” the French envoy said. Urban development is also a significant area for enhanced cooperation between the two governments. President Aquino’s visit to Paris last year led to the signing of a memorandum of understanding (MOU) between the Bases Conversion and Development Authority (BCDA) and the French consortium Viva-polis to develop Clark Green City. “We want to be a part of the development of Clark Green City,” S “E,” A

n JAPAN 0.4190 n UK 65.4596 n HK 5.9594 n CHINA 7.1379 n SINGAPORE 34.1021 n AUSTRALIA 34.8560 n EU 52.6330 n SAUDI ARABIA 12.3292

Source: BSP (6 April 2016 )

A2 Thursday, April 7, 2016

BMReports BusinessMirror

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Socialized-housing PPP whets developers’ appetite C  A

occupied by informal-settler families (ISFs); 2,185 hectares are idle public land and ready for housing programs, and the remaining 2,401.72 hectares are privately owned but also occupied by ISFs. According to Benitez, these properties could be used as lands and sites for government socializedhousing programs. “Majority of that [land] will be offered for freedom, or will be unlocked for partnership for development, and with that, we expect the participation of several property developers. But for one condition—they [property developers] should follow the govern-

Expansion. . . C  A

Mathou said. The envoy said there have been several meetings between Vivapolis and the BCDA since the MOU signing, as French companies are keen on rolling out projects in the country’s first “smart city.” Mathou said Paris is also keen on forging a framework agreement with the Department of Agriculture to boost productivity and help the government build more farm infrastructure. “We also want to sign an agreement with the creative industries’ sector for greater interaction in this area. We both have active firms in this sector,” he said.

ment plan, which seeks to provide affordable and decent housing for Filipinos,” he said. The legislator added that affordable housing provides a more cost-effective solution to address homelessness in the Philippines. “The issue of affordability affects majority of our population. Both the informal and formal sectors are unable to afford the available housing units and loans provided by the government,” he added. The lawmaker also said the government will talk to the owners of the private land. “We will now go on negotiated arrangement [with private land owners]. The government can initiate land sharing or buy it out, or have an However, the French envoy said the foreign equity limitation in 1987 Constitution could impede the work of the JEC. “[The lack of] foreign direct investments [FDI] is still one of the major bottlenecks to development, so it’s clear we need more FDI and to attract more FDI, the country needs to change some rules. I’m referring to the 60-40 rule,” he added. Based on data from the Department of Trade and Industry, total bilateral trade between the Philippines and France in January to November 2015 amounted to $ 1.3 billion. France enjoys a surplus with the Philippines. France is the 16th-largest trading partner of the Philippines during the period.

agreement to be able to free that land and create decent housing.” With these available lands, Benitez said they will propose the construction of medium rise, or 4- to 5-story buildings, with estimated 100,000 to 150,000 units,” Benitez added. He said the proposal is not just for ISFs, but also for lowand middle-income earners, as they can have decent shelter under the government’s socialized-housing programs, which aim to provide long-term housing rental and rent-to-own schemes for homeless Filipinos. “The government will do that [PPP], but they [property developers] need to replan Metro

Panama. . .

C  A

enough to get ahead in America, and the anger of Donald Trump partisans on the right who say it will take someone who knows the insider system to dismantle it. “ We’ v e r e c e n t l y h e a r d t h e star tling revelations about the tax dodge that is taking place in Panama,” Sanders told supporters in Wyoming on Tuesday night after his win in the Wisconsin Democratic primary. “In a time of massive income and wealth inequality, how does it happen that you have large, profitable multinational corporations, who, in a given year, pay zero, not a penny, in federal income taxes?”

Manila through the creation of better housing units. Currently, we didn’t do anything to replan it properly, that’s why there are traffic and floods in Metro Manila,” Benitez said. He added that the land-development arms of SM and Ayala have already expressed interest in the project. “Everybody was given a chance to take a look at what the plan is, and some property developers have already proposed their participation. Their proposals will be reviewed by the NHA [National Housing Authority]. But, of course, it will remain a proposal until after the May 9 election...we will have to wait for the next administration

to be able to decide on what kind of arrangement the private sector will participate in,” Benitez added. The PPP proposal was part of the culmination program of the National Housing and Urban Development Summit held on Monday at the San Juan Arena. During the culmination activity, Benitez—together with Senate Committee on Urban Planning and Shelter and Resettlement Chairman Sen. JV Ejercito—also pushed for the adoption of the in-city housing policy complemented by the transfer of government agencies to the provinces. The summit seeks to solve the 5.5 million housing backlogs and 584,425 ISFs in NCR.

“For the past many decades the housing backlog has been increasing for just only one reason— affordability. People cannot afford to own a house and lot or a housing unit because they cannot afford it. If you will make a quality and affordable housing units that everybody can afford, everybody can have his or her own house,” Benitez said. “The housing challenge in the Philippines has been largely attributed to the increasing housing backlog, bloating number of informal-settler families in the urban centers and the lack of availability of affordable housing unit for majority of the Filipinos from the low- to middle-income segments,” he added.

Retired Wisconsin high-school teacher Steve Nibbe, who was voting for the Vermont senator in Tuesday’s primary, said word of the documents made him “sit up and take notice.” But he said he was not shocked. “It just seems that those who have wealth—and sometimes that comes with privilege—are able to do things that other people are not,” said Nibbe, 60, from Verona, outside the state capital of Madison. Joe Brettell, a Republican strategist based in Houston, doubted whether the public’s fury could get much worse. “The populist anger being fueled primarily by white working-class Americans didn’t need any more fuel,” Brettell said.“They’ve already lived through the financial meltdown. They’ve already lived through the lack of middle-class

wage increases, even as the stock market boomed.” The passports of at least 200 Americans are included in the documents, according to news organizations that have access to them, though none are thought to be as famous as celebrities and politicians from other countries, such as Russian President Vladimir Putin and Argentine soccer star Lionel Messi. In all, 12 current or former heads of state are included in the legal records from Panama’sMossack Fonseca law firm. They were first leaked to the Sueddeutsche Zeitung newspaper based in Munich, Germany, and published on Sunday by a consortium of news organizations around the world. Charles Postel, a history professor at San Francisco State University who has

studied American populism and wrote a book, titled The Populist Vision, said of Sanders, “This is just the type of thing that is animating his base.” He described Trump as “more of a nationalist.” “His issue is not that these rich people are not playing by the rules. It’s that we need powerful people who will protect Americans,” Postel said. “That’s a different thing that provokes outrage.” The New York billionaire might even actually win points with supporters if he were among the rich and famous mentioned in the documents, Postel said. “If Trump said, ‘Of course, I put half of my money in the Virgin Islands,’ none of his voters would object to that,” Postel added. “They’d say: Sure, he’s a billionaire. If I was a billionaire, I wouldn’t pay my taxes either.” AP

BMReports BusinessMirror

news@businessmirror.com.ph

Thursday, April 7, 2016 A3

Growth of Asian SMEs hinges on tax incentives and open credit facilities

B C U. O

SIAN economies, including the Philippines, must provide tax incentives and open credit facilities to boost the growth of small and medium enterprises (SMEs), according to the Asian Development Bank Institute (ADBI). In a study, the Tokyo-based ADBI said the growth of SMEs is the key to sustaining growth in the region. The paper said SMEs could be the next growth sector of Asia because over 90 percent of firms in a number of Asian economies are SMEs. “SMEs face challenges from increased competition, the ability to adapt to rapidly changing market demand, technological change and capacity constraints relating to knowledge, innovation and creativity,” the paper said. “For many SMEs, however, their potential is often not fully realized due to factors related to their

66%

Average contribution of small and medium enterprises in Asia to national labor force from 2007 to 2012, according to the Asian Development Bank Institute. small scale,” it added. The ADBI said these factors are financing, lack of SME database, lack of research and de-

velopment, and insufficient use of technology. To address the lack of financing for SMEs, the paper said Asian economies must develop creditguarantee schemes, such as those coming from the government and/ or private sector. The ADBI study also recommended the creation of hometown-investment trust funds, which can finance “risky SMEs” and start-ups. These trust funds already exist in countries like Japan, where hometown trust funds are set up for wind-power generators and musicians. These trust funds help generators finance the construction of wind power generators and the creation of music, where the trust fund can earn a higher rate of return for their investment. “Some of the funds set up in Japan are regarded as charities, with some investors viewing them as a way to invest in their region to support new business ventures,” ADBI said. The lack of SME databases makes it difficult to assess SMEs, which make investors and credit providers wary of them. Howe ver, t h i s c a n b e re -

For many SMEs, however, their potential is often not fully realized due to factors related to their small scale.”—ADBI

solved through a system similar to the Credit Risk Database (CRD) in Japan where SMEs are rated based on financial and nonfinancial data. The CRD in Japan has information for 2.21 million incorporated SMEs and 1.099 million sole-proprietor SMEs. It is now considered the largest SME database in Japan. “If such systems could be established in other parts of Asia to accumulate and analyze credit risk data, and to measure each SME credit risk accurately, SMEs would not only be able to raise funds from the banking sector, they could also gain access to the debt market by securitizing their claims,” ADBI said. ADBI said, meanwhile, that addressing the lack of R&D requires more than just providing grants, contracts and loans. It requires help from governments through tax incentives.

The institute said the Korean, Japanese and Australian governments grant tax incentives to encourage SMEs to do R&D. This allows them to improve their products and become more competitive in the global market. In Japan, the ADBI said, SMEs are granted a credit of 12 percent of total R&D expenditure, higher than the credit of 8 percent to 10 percent of total R&D of large companies. For the last challenge, which is insufficient use of information technology for sales, the ADBI recommended a “ big brother” approach. ADBI said private organizations such as chambers of commerce should help SMEs and teach them about how information technology can boost their businesses. “Asia has been continuously growing during the recent decades, and this growth has alleviated

poverty and increased the number of middle-income countries in the region,” ADBI said. “However, the recent regional and global economic slowdown requires a new growth model for Asia, with strengthened dynamics for small- and medium-sized enterprises (SMEs) to boost national productivity,” it added. Based on the study, SMEs account for 98 percent of all enterprises and 66 percent of the national labor force on average during 2007–2012 in the region. However, SMEs only contributed 38 percent of the GDP or manufacturing value-added in Asia on average in 2007–2012. In the Philippines, SMEs employ 60 percent of the labor force. This is quite high, given that in Indonesia, SMEs account for 97 percent of employment and 28 percent in Kazakhstan. The ADBI study was done by Naoyuki Yoshino, dean and CEO of the Asian Development Bank Institute, and Farhad Taghizadeh-Hesary, assistant professor of Economics, Keio University, Tokyo, and visiting professor, Graduate School of Economics, University of Tokyo.

Banking&Finance

Thursday, April 7, 2016 • Editor: Jun B. Vallecera

BusinessMirror

El Niño-mitigating mechanism hardwired in each line agency

B D C

HERE is no need for the various line agencies to ask for fresh funds from the Department of Budget and Management (DBM) to address the debilitating impact of El Niño within their respective jurisdictions as the money for such contingencies have earlier been hardwired into each one, Budget Secretary Florencio Abad said on Wednesday.

The DBM stressed this point, as it clarified that it did not withhold an alleged P900-million fund supposedly allocated for projects that will mitigate the effects of El Niño this year. Instead, the DBM said there was a request made by the Department of Agriculture (DA) earlier this year for the release of additional funds amounting to P2.11

billion for intervention programs which can help affected sectors cope w ith El Niño, especially the small farmers. “[The] DBM informed [the] DA, as well as other agencies, with El Niño interventions to maximize their appropriations and to charge their funding requirements for [the] said interventions to existing programs, activities and projects

Tan hits Deguito for linking him anew to $81-million heist

IZA L Commercial Banking Corp. (RCBC) President on-leave Lorenzo Tan has maintained his innocence in the $81-million cyber heist and denied having told dismissed RCBC-Jupiter Branch Manager Maia Santos Deguito in an alleged social engagement to take care of casino junket operator Kim Wong. Tan, at the same time, recalled that Deguito “had already testified under oath in a previous Senate hearing that I have never instr ucted her to open any account at the RCBC-Jupiter branch, and that she merely assumed that I knew of the transaction.” “I only knew Deguito as one of 470-plus branch managers at the bank,” Tan said in pointing out that he “remembers no occasion where she met Deguito with Kim Wong in attendance, or any other event that he mentioned anything to Deguito about him.” Tan issued this statement as he scoffed at Deguito’s claim in Tuesday’s fourth hearing of the Senate Blue-Ribbon Committee that she was just a “pawn” in the scam and that her only fault was in following her then-boss Tan’s instructions for her to take care of Wong. In attempting to portray him as complicit in her actions and in prefacing her written statement before the Senate panel with a claim that she was simply a working mother out to earn a living with her husband and who merely de-

sired to be promoted in the bank, Tan said that Deguito made “a poor attempt to gain sympathy for her plight despite her knowledge that what she was doing was contrary to bank regulations, in violation of Bangko Sentral rules, and in disregard of best practices as a banker of over 20 years of experience in the industry.” Known for his impeccable integrity and exemplary leadership in the banking industry as president of Sun Life, Philippine National Bank, United Coconut Planters Bank, and now RCBC for over eight years, Tan said the prepared statement of Deguito was done by her lawyers and the anticrime group Volunteers Against Crime and Corruption who had been seen with her in the Senate hearings, “for the sole purpose of deflecting attention to the violations of bank and banking laws she had committed to purposely drag and destroy his reputation.” It will be recalled that Tan has not only helped propel RCBC to the status it currently has with 472 branches, 6,600 employees, and over 7 million depositors in its portfolio; he was also president of the Bankers Association of the Philippines (BAP) and chairman of Asian Bankers Association (ABA) for several years. Tan’s lawyers said this new tact of Deguito and her supporters is a serious attempt to downplay her direct involvement in money-laundering transactions covering funds

under their budget,” the DBM said in a statement. The statement was made in response to allegations that the DBM withheld such P900-million fund for El Niño-mitigation projects, and, thus, helped bring about the mass action by affected farmers in Kidapawan City last week, which ended with at least three farmers dead in a violent dispersal conducted by the police. The DBM said government agencies have their own quick-response funds (QRFs) in their respective budgets that may be tapped by the particular agency concerned without need of a recommenda-

tion for spending from the National Disaster Risk Reduction and Management Council, unlike the calamity fund. Under the national budget, the QRFs are built in the budget allocations of the departments of Public Works and Highways, National Defense, Education, Social Welfare and Development, and Agriculture. When such QRFs have been depleted, government agencies may request for replenishment of such funds from the DBM. The release of replenishment funds shall be approved by the Office of the President.

[The] DBM informed [the] DA, as well as other agencies, with El Niño interventions to maximize their appropriations and to charge their funding requirements for [the] said interventions to existing programs, activities and projects under their budget.”—DBM

Case clippings

B J S J R J. LABORÐdeath of seafarer after medical repatriation The phrase Òdeath of the seafarer during the term of his contractÓ in Section 20(A)(1) of the 1996 POEA-SEC should not be strictly and literally construed to mean that the seafarerÕs death should have occurred during the term of his employment; it is enough that the seafarerÕs work-related injury or illness, which eventually caused his death, occurred during the term of his employment. CF Sharp v Heirs 10 Feb 2016

GR 190534 Leonardo-de Castro, J

of the Bangladesh Bank, and pin the blame on Tan, whose standing in the banking community has remained unblemished and unquestioned for decades. Wong confirmed anew in Tuesday’s Senate probe the pivotal role of Deguito role in the heist, when Wong reiterated before the senators that she was the one who had assured high-roller Gao Shuhua that she would take care of opening the five dollar accounts at the RCBCJupiter branch, where Ding Zhize could deposit his supposed investment money in the Philippine casino business. Wong told the senators that Deguito had told him and Gao that “ako na ang bahala” in opening the RCBC-Jupiter accounts that would receive the money. In last week’s Senate hearing, Wong also cleared Tan of any involvement in the heist. When Sen. Juan Ponce Enrile asked him last week about this allegation by Deguito, Wong told the committee “Impossible...sa totoo lang hindi nangyari ’yon.” Wong, likewise, confirmed he knew Deguito and gave her business when she was still with another bank. Later, when Sen. Joseph Victor Ejercito asked Wong anew if he was certain that Tan was never involved

in the scam, Wong said: “Igagarantiya ko po ng buong buhay ko, wala po syang alam dito… Si Mr. Tan po. Ako po igagarantiya ko po.” According to Wong, “Si Maia ang gumagawa ng lahat ng paraan para mailabas ang pera sa bangko…. Si Maia ang nag peke ng five bank accounts.” Deguito’s central role in this hacking theft was bolstered by RCBC Legal and Regulatory Affairs chief Maria Cecilia Fernandez-Estavillo, who said later in the Senate hearing that the bank’s Head Office was supposed to freeze the money at the Jupiter branch, but it eventually cleared the release because Deguito insisted that she knew the account holders and that she was waiting for the money to be remitted ever since these accounts were opened a year ago. Tan’s legal counsel Francis Lim said on Tuesday Deguito’s renewed bid to unduly link Tan to the heist in the fourth and latest Senate Blue-Ribbon Committee hearing was “but the latest episode of the fired manager’s wild narrative about a supposed top-level bank conspiracy” behind this international cybercrime “ just to obfuscate the issues and downplay her role as one of the masterminds of this caper.”

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Money-laundering scandal prompts new BSP memorandum

HE Bangko Sentra l ng Pilipinas (BSP) has asked banks to exercise caution and be very vigilant in their transactions with foreign-exchange dealers, money changers and remittance agents following the discovery of crossborder money laundering and the involvement of one of the loca l lenders in the a l leged shenanigans of a few in the financial sector. In a memorandum issued just this week, the office of the supervision and examination sector, headed by BSP Deputy Governor Nestor Espenilla Jr. said henceforth all financial institutions need to perform “enhanced due diligence upon onboarding and during transaction monitoring as consistent with regulations and the bank’s procedures as provided under its Money Laundering and Terror ist Financing Prevention Program [MLPP].” “ The bank ’s MLPP should contain appropriate risk-management practices to ensure that money-laundering and terrorist-financing risks arising from dealings with foreign-exchange dealers, money changers and remittance agents are effectively identified, assessed and monitored, mitigated and controlled,” Espenilla said in a memorandum released in the wake of the alleged role of one of the country’s lenders in the hijacking and subsequent remittance of funds owned by the Bank of Bangladesh to the Philippines. Among the structures laid out specifically for local lenders i nc lude more st r i ngent r isk management pract ices,

such as dealing only with duly reg istered foreig n exchange dealers, money changers and remittance agents. The central bank said when dealing with remittance agents as remittance partners in tie ups or partnerships, or if the accounts are being used to facilitate their business, the banks have “ultimate responsibility” for conducting appropriate due diligence necessary to ensure they will not be used as channels for money-laundering and terrorist-financing activities. R isk a ssessments of for eign exchange dealers, money changers and remittance agents customers must also be conducted. Also under the memorandum, measures under the mandated “enhanced ” due diligence include obtaining of the dealers’ and agents’ proof of registration with the BSP, evaluation and understanding of their business operations and customer profile of the agents, review of their antimoney-laundering measures, requiring proof of their registration with the Anti-Money Laundering Council and obtaining senior management approval for establishing business relationship in accordance with the bank’s risk-management policy. “ Unsat isfactor y resu lt of the due diligence process shall be a ground for denying the bu si ness re l at ion sh ip,” t he BSP warned. Proactive monitoring and implementation of systems for the identification of unusual movement of funds are also required of banks. Bianca Cuaresma

Ayala, JG Summit also has confidence on RCBC management

HREE big business groups, Ayala Corp., JG Summit Group and Phinma Group of Cos. were the latest business groups, came out on Wednesday and vouched for the integrity of the management of Rizal Commercial Banking Corp. (RCBC). Aya l a Cor p.’s, AC Energ y Holdings Inc., AC Infrastructure Holdings Corp. President and CEO Eric Francia said, “RCBC has been a reliable and consistent supporter of Ayala’s energy and infrastructure projects. We hope to continue this partnership as we pursue more initiatives that contribute to national development.” Lance Gokongwei for his part said, “on behalf of the JG Summit Group, I would like to express our solidarity and confidence in RCBC under your firm leadership. RCBC has, for many decades, been a strong supporter of the JG Sum-

mit Group, and has been a vital partner in our continuing growth; with a team of RCBC professionals providing us a full suite of banking products, including cash management, deposits, loans and transaction services. In the many years of our partnership, the JG Summit Group and RCBC have operated under a relationship of deep trust and confidence. We expect this relationship to remain unwavering, and fully expect it to further deepen and strengthen in the coming years. Rest assured of our continuing trust and partnership in your leadership and RCBC in the decades to come.” Pythagoras Brion, Phinma Group of Cos.’s senior vice president and treasurer said, “Phinma Group Treasury continues to treasure its banking relationship with RCBC.”

Peso value seen tracking other currencies across Southeast Asia

HE near-term view is for the local currency the peso to gain strength against the US dollar now that the external sector has entered a period of relative calm, a development seen helping magnify the country’s economic strength, the economist of an international bank said. In commentaries centering on the local economy, ING Bank Manila economist Joey

Cuyegkeng said the year-end value of the local currency was seen to reflect greater strength than it has exhibited at present. T he pros pec t ive ly st ronger peso is a ref lection of a re g ion - w id e s t re n g t he n i n g of currencies. “The Philippine peso’s appreciation is in line with Asian currencies as local factors support PHP[Philippine peso] . In periods of external calm, the country’s

favorable fundamentals become more significant and deliver resilience,” Cuyegkeng said. According to him, the positive influences on the peso include to sanguine view on the continued economic expansion of the $285-billion Southeast Asian player, strong overseas Filipino worker remittances, healthy foreign reserves and sufficiently wide monetary policy leeway on the part of the central bank,

the Bangko Sentral ng Pilipinas. Data from the PDS Group show the peso averaging higher at 46.20 per dollar on Wednesday, or an appreciation by 6 centavos from 46.26 per dollar at the close of trading the day before. The total traded volume on Wednesday ag gregated $665 million, broadly steady from the previous day’s trading volume of $660.76 million. Negative sentiment hound-

ed the peso earlier this year a s it b e c a m e i n c r e a s i n g l y clear the US Federal Reserve (the Fed) was prepared to increase its borrowing cost as the world ’s largest economy began to demonstrate heightened capacity to expand earlier than previously believed. However, recent data have shown a shakier growth trajectory from the US, and its Fed has turned to a more hawkish tone,

giving relief to emerging-market currencies. It will not be smooth sailing for the peso, though, as Cuyegkeng cited possible sources of weakness down the line. “We expect [the] Fed tightening to be the main driver of weakness later this year. “We also expect China’s economy to show improvements and see commodity prices rise. Credit quality in China remains a concern,” the economist said. Bianca Cuaresma

Asean

BusinessMirror Editor: Max V. de Leon • Thursday, April 7, 2016 A5

www.businessmirror.com.ph

Everybody wants an automotive industry Asean-EU Perspective

HENRY J. SCHUMACHER

S the Association of Southeast Asian Nations (Asean) is set to become the world’s sixth-largest automotive market by 2018, it is expected that regional sales will double to nearly 4.7 million vehicles, from 2.4 million last year. Therefore, its 10 member-states continue to facilitate significant investments to flow into this region. A harmonization of standards and regulations has to be seen as essential step to the success of the Asean Economic Community (AEC), which formally commenced in January this year. Only with such a harmonization can the creation of a single manufacturing base, as well as free movement of goods, be secured. The Philippines is getting its act together in becoming one of the automotive production centers in Asean. The Comprehensive Automotive Resurgence Strategy Program launched by the Department of Trade and Industry will hopefully entice some car manufacturers to start making cars here. It is important to note that all countries in the world that have a strong industrial manufacturing base are involved in automotive production. The Philippines finally made the important decision to develop the automotive industry in a targeted incentives approach. Once the initial production step is made, the supply industry will naturally follow or those already here will stay. Key recommendations for Asean: 1. Alignment of automotive products with international UNECE standards Asean to adopt UNECE regulations for automotive products and to work closely with all member-countries in the region to align the 19 priority UNECE standards. Target is to achieve a single regulatory regime in Asean by 2015. Asean should implement identical testing procedures using the same metrology method, standards and application regulations. 2. Consolidation of approval and homologation processes Asean to create a single regulatory regime for homologation processes to improve time and cost efficiency. The automotive industry in Asean strongly advocates relevant authorities to accept test reports by qualified foreign bodies and align their standards, in order to facilitate exports based on UNECE-approved regulations. Implementing such a regime will assist in creating economies of scale in production countries like Thailand and Indonesia and, hopefully, soon in the Philippines. 3. Adoption of higher fuel quality and emission standards The introduction of higher fuel quality and emission standards is the prerequisite for the introduction of environment-friendly low emission technologies. In order to implement the AEC and to enable the free movement of goods, Asean will have to implement more stringent fuel quality and emission standards and harmonize those standards across the region. A concrete road map of implementation is urged by automotive manufacturers and the oil companies. 4. Harmonization of the definition on local content requirements The automotive sector is recommending a harmonization of related implementation procedures for local content and rules of origin application as part of the approval and homologation processes in order to become a single manufacturing hub in 2016. 5. Technology-neutral vehicle-taxation scheme Asean is urged to promote to member countries the introduction of a technology-neutral emission-based taxation scheme, such that vehicles with low carbon dioxide (CO2) emissions would receive a tax relief, whereas high fuel consumption and high CO2 -emission vehicles would be taxed higher, independent of their power train technology. 6. Availability and quality of skilled work force Asean governments are encouraged to facilitate public-private partnerships in engineering and technology training to ensure that the work force meets industrial demand. In the Philippines, dual education and apprenticeship need to be revived. The implementation of the Ramos-era legislation is over-bureaucratic; Technical Education and Skills Development Authority is encouraged to create a public-private sector working group to make the implementation easier. In addition to serving the regional market, Asean can assume a greater role as a global supplier of automotive vehicles and parts, and is expected to grow in importance due to a competitive production base with strong competencies in certain product ranges in some Asean member-states, for instance Thailand and, potentially, Indonesia and, hopefully, the Philippines.

Vietnam prime minister to step down after 10 years in office

IETNAM’S prime minister prepared to step down on Wednesday after 10 years in office, leaving behind a mixed legacy of promoting failed state enterprises but, at the same time, attracting foreign investment and daring to challenge China. In a formality, the rubber-stamp National Assembly will vote later on Wednesday to remove Dung, three months before the end of his term. Dung’s departure was widely expected after he lost a leadership battle during the ruling Communist Party’s congress in January. Dung lost to Nguyen Phu Trong, who was reelected party general secretary for a second five-year term. The National Assembly is scheduled to appoint Dung’s deputy, Nguyen Xuan Phuc, as prime minister on Thursday. In Vietnam, the Communist Party general secretary, the prime minister and the

president form the triumvirate of power. Dung was easily the most high-profile prime minister Vietnam ever had. He was charismatic, a good orator and mixed easily with foreign leaders, which raised the country’s profile. But within the party, he was blamed for the failures of huge state-owned enterprises, including the monumental collapse of the Vietnam Shipbuilding Industry Group and Vietnam Shipping Lines. Many of the state-owned enterprises ended up with mountains of public debt. “Over the course of his tenure, Dung distinguished himself as a highly public and entrepreneurial leader, even as the substance of his policy initiatives drew criticisms from both conservative and reform elements within the party,” said Jonathan London, a Vietnam expert at the City University of Hong Kong, said in an e-mail interview. AP

New center a step forward for food safety in Asean

OOD safety has taken a big step forward with the formal launch of the Asean Risk Assessment Center (Arac) for Food Safety as the first of its kind in the region.

The establishment of Arac stems from a meeting of Asean health ministers in 2014 in Hanoi, where member-countries committed to strengthen national food-control systems and work together to contribute toward safe, quality food in the Asean community. The 10 countries recognized that risk assessment is an important tool to provide scientific input in developing evidence-based food safety measures and capacity building for integrated risk assessment, said Dr. S. Subramaniam, Malaysia’s public health minister, at the launching of the regional institute in Putrajaya. The institute’s secretariat has been established in the Food Safety and Quality Division of the Ministry of Public Health of Malaysia. The center will help promote a wide range of regional cooperation programs. It will help coordinate the conduct of food safety risk assessment, strengthen the capacity of Asean member-states to undertake risk assessment and facilitate sharing of information and experiences, the minister said. Arac would also help to compile and maintain a database on food consumption and other related data for risk assessment. “Each country can work together.

Arac

New institution that will coordinate food-safety risks in Asean

That is very important,” Subramaniam said. “For example, if Thailand says ‘we have problems [on food safety] and we need your help,’ I am sure the center will help Thailand deal with such a situation. If we can define operating procedures whereby this can be done, I am sure, speaking for Malaysia, that we can respond to any countries to help them based on their requests.” Arac is also supported by cooperation with the European Union (EU), with an aim to raise the standards for the food-safety industry in Asean in keeping with current scientific data. “It is a very good measure to enhance common experiences among Asean countries, and bring experts and the scientific communities within Asean to actually work together, to actually come out with a common

standard, research and platform,” the minister said. “This is important because, as a region, we are not producing food just for our own local consumption. We produce food to export to other countries. Countries, such as Malaysia, Thailand and Vietnam, when they export food to other countries, of course they have their expectation that the food will be up to the standard of food safety they have defined and it is up to our institution to meet those standards until there is no question.” Consequently, there is a need for Asean industry participants themselves to have higher awareness of assessing risks themselves, he cited. “I suggest that we need the establishment of a common certification and accreditation system that could be internationally accredited. I am sure it will take time because each of our countries has its own evolution,” he said, adding that such a proposal would be made to the Asean health ministers’ meeting in Brunei later this year. “With one [regional] certification, you can go to many countries in the world. You don’t need to worry, otherwise you’d have to deal with every country with individual standards. That will make a lot of economic sense.” Subramaniam said Malaysia had major manufacturing companies that exported food to other countries and those exporters need certification. “They need accreditation so that their food can be exported anywhere. They have to bring themselves to a

higher level. That is our aim and I hope that we can reach that state one day,” he said. Elsewhere in Asean, major processors in countries, such as Indonesia and Thailand, understand the process of obtaining common certification to be able to export their products to anywhere in the world. Vietnamese producers also want to assure their food meets the same standards as in other countries, such as Malaysia, he added. “Three years ago, we had a crisis when the EU did not take our fish. But after we transformed our fishing industry to meet [the requirements], we can reexport to EU countries. Evolution is important in every country,” he said. Asean Secretary-General Le Luong Minh, who joined the Arac launch, said that having such a body would certainly benefit the region now that it has formed the Asean Economic Community. “I am confident that it will benefit all Asean member-states and their people,” he said, adding that the center would enhance coordination among member states. “Now the center is just getting established. It will be developed in a more concrete way.” Food safety, he said, was an international issue, and a challenging one, so all Asean member-states should pay considerable attention to the issue. “Arac is an important institution to pursue our objectives as a regional centre to coordinate food safety risks. It will help signify the strong commitment by the region to contribute to food safety and quality food,” he said. MCT

Myanmar lawmakers OK new executive post for Suu Kyi

YANMAR’S parliament on Tuesday approved the creation of a new post for Aung San Suu Kyi, head of the country’s newly installed ruling party, that is similar to prime minister. Suu Kyi is banned by the constitution from becoming president because her children hold foreign citizenship.

State counselor New position given to Aung San Suu Kyi by Myanmar’s parliament The bill establishing the position of state counselor was opposed by the military’s representatives in parliament, but passed easily because of the strong majority that Suu Kyi’s National League for Democracy won in last November’s election. The bill must be signed by President Htin Kyaw, Suu Kyi’s close ally, before taking effect. The military representatives who, under the constitution drafted under the former military regime hold 25 percent of parliament’s seats, boycotted Tuesday’s vote, standing in protest. Suu Kyi, who is already foreign minister, met on Tuesday with visiting Chinese Foreign Minister Wang Yi. China is Myanmar’s biggest neighbor and most important economic partner, and was the main ally of the former military government. It has come under criticism for allegedly exploitative and environmentally unsound projects in Myanmar.

LEADER of the National League for Democracy party and Myanmar’s new Foreign Minister Aung San Suu Kyi (right) shakes hands with Chinese Foreign Minister Wang Yi in Naypyitaw, Myanmar, on Tuesday. AP

The projects include a mega-dam and mines in the country’s northern Kachin state, a gas pipeline in western Rakhine state, a large copper mine in central Myanmar and several special economic zones. At a news conference after their meeting, neither minister indicated whether those sensitive issues

had been discussed. Wang congratulated Myanmar on installing its first civilian government in decades and declared that China would work only on projects that were beneficial to both countries. The move to make Suu Kyi the country’s de-facto top leader, initi-

ated last week, was the new government’s first legislative act. Suu Kyi, 70, originally took on four Cabinet posts—foreign affairs, education, energy and the president’s office—but dropped the education and energy portfolios as the move to give her the influential new position was launched. AP

TheBroa

Business

A6 Thursday, April 7, 2016

San Miguel vows better In D

B L S. M

ESPITE losing its titan of a partner from Australia, San Miguel Corp. (SMC) will continue to pursue the launch of its mobile unit this year, still bearing the promise of delivering fast, reliable and affordable Internet services for smartphones this year.

Industry sources said there were two things that have caused the collapse of the talks between the diversified Filipino conglomerate and Telstra Corp. Ltd. First is the unbalanced allocation of risks and rewards. Andrew Penn, the chief executive of Telstra, said in an earlier announcement to the Australian Stock Exchange that his company and SMC could not meet halfway with regard to the commercial arrangements for Bell Telecommunications Philippines Inc. “While this opportunity is strategically attractive, it was obviously crucial that the commercial arrangements achieved the right risk-reward balance for all involved,” he said in a March 14 statement to the Australian bourse. The second one, observers said, involves the “risk” that Penn mentioned. He might, according to sources, be referring to the risk of entering a duopolistic market with incumbents battling for the asset that Telstra’s potential partner owns—the 700-megahertz (MHz) frequency band. The resurrection of the seemingly dead issue on the reallocation of the precious frequency band started a few more months after the announcement of Telstra’s potential entry to the Philippine telecommunications market. Such a foray into the Southeast Asian economy was so huge that it caused quite an uproar in Asia’s rising tiger. People, according to telecommunications and technology experts, were too fed up with “the relatively mediocre” services that the two incumbents—Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc.— have been offering since the dawn of the new decade. Fearing that their market shares will be eroded, as some analysts have predicted, the two companies moved to pressure the National Telecommunications Commission (NTC) to reallocate the 700-MHz spectrum.

Real estate

SPECTRUM is the real estate on which telecommunication operators develop their respective networks to deliver services to customers. The amount of spectrum assigned to a telecommunications company (telco) impacts the cost, the build capacity, overall network performance, ability to offer new multimedia services and general customer experience of wireless services. The US Federal Communications Commission (FCC) has described the 700-MHz band as a beachfront property: it “is an important swathe of spectrum available for both commercial wireless and public-safety communications.” The band consists of 108 MHz of spectrum running from 698 MHz to 806 MHz, and was freed up as a result of the digital television transition, the FCC said on its web site. “The location of the 700-MHz band—just above the remaining TV broadcast channels—gives it

excellent propagation characteristics,” the FCC said. “This allows the 700-MHz signals to penetrate buildings and walls easily and to cover larger geographic areas with less infrastructure [relative to frequencies in higher bands].” The 700-MHz band is key to expanding mobile broadband into the outlying islands and rural provinces in the Philippines, enabling mobile operators to reduce capital and network costs, thereby accelerating rollout and lowering prices for end-users, according to a report of international telecommunications association Groupe Speciale Mobile (GSMA). Utilizing the 700-MHz spectrum would allow the deployment of a high-capacity Long-Term Evolution (LTE)-based wireless and fixed broadband network to deliver higher data rate and LTE wireless broadband service, according to a GSMA report in 2011. With the use of the 700-MHz frequency, broadband prices can go down, further benefiting consumers. And since SMC holds the right to operate all of the 700-MHz band, this makes it a formidable competitor with so much firepower on its back. Telstra is known to be one of the first few telcos in the world to have successfully capitalized on the 700-MHz band. But without Telstra’s technical know-how on the 700-MHz band, it might be difficult for SMC to compete with the incumbents. This raises the question, would the two incumbent telcos still pursue the reallocation of the precious asset?

Battle goes beyond Telstra

ACCORDING to Globe Spokesman Yolanda C. Crisanto, “the fight for the 700 MHz goes beyond Telstra.” “It is a fight for the immediate benefit to be felt by the consumers who are clamoring for faster and better Internet services,” Crisanto said in an e-mail interview. She added that mobile users of her company will benefit largely from the benefits that the spectrum carries. “Consumers should not be deprived of the benefits of this digital dividend, and the potential benefits of this spectrum can only be realized if it is distributed to all telco players,” she said. Smart Communications Inc. Spokesman Ramon R. Isberto said his camp will also continue to fight for the right to own a portion of the spectrum. “Smart Communications filed its application way back in 2008, well before the San Miguel-Telstra joint venture became the subject of speculation here in the Philippines,” Isberto said. “We are pursuing our application because the 700-MHz band will enable us to significantly improve the broadband service that we provide our customers.” He explained that the frequency band is “ideal for economically deploying mobile broadband over large areas—especially in rural areas,” hence, it can help his group provide services in areas that are previously tagged as unreached. “It can also improve cover-

age and service quality in urban areas—including in-building penetration. This will benefit not only the telecoms industry. Studies by global organizations like GSMA show that the use of the 700MHz band for mobile broadband will create jobs and boost the economy,” Isberto said. GSMA estimates that by 2020, the digital dividend for the AsiaPacific region could be worth almost $1 trillion in additional contribution to the country’s GDP. Delaying the decision to allocate the 700-MHz band would have an impact on the total socioeconomic benefits of the technology. For instance, delaying the harmonization could lead to loss of employment opportunities and tax revenues for the government, as well as loss of new business activities.

All means possible

BOTH Isberto and Crisanto said their camps will be exhausting all means available for their respective groups to get a fair allocation of the said band. “We will use all legal and moral means possible to make this happen,” Crisanto said. Isberto added: “We are hopeful that the commission will soon take steps to officially reassign this valuable frequency from broadcast TV to mobile telephony, and then allocate this to operators in a transparent manner. All we seek is a fair share of the 700-MHz band, and that the normative practice worldwide has been to allow existing and new operators the opportunity to secure an equitable allocation of this spectrum.” He also cited the initiatives of neighboring countries for the harmonization of the said frequency band. “It’s important to point out that governments all over the world are in the process of assigning the 700-MHz band in their respective jurisdictions to mobile operators,” he said. This followed the decision of the International Telecommunications Union (ITU) at the World Radio Conference (WRC) in October 2007 to reallocate this frequency band from broadcast TV to mobile telephony. This move was further reinforced by the decision of the ITU in the WRC in December 2015 to “globally harmonize” the 700MHz spectrum. “This paves the way for handset and equipment manufacturers and mobile operators to work together in providing mobile broadband service on that frequency band all over the world based on common standards,” he said. The Philippines, Isberto noted, is one of the two countries in the Asia-Pacific region which have not made progress in assigning the 700-MHz band for mobile telephony, based on international standards. The other one is Thailand. “At the same time, we have a situation wherein the entire 700MHz band has been given to a single operator. Our view is that it will become increasingly ‘hard’ for the NTC to maintain its current stance, while the whole world moves forward in utilizing the 700-MHz band,” he said. Globe President Ernest L. Cu noted that he is “open” to acquiring companies of SMC that hold the rights to the band. These are Liberty Telecoms Holdings Inc., with 80 MHz; High Frequency Telecommunications, with 10 MHz; and New Century Telecommunications, 10 MHz.

Refarm all spectra

MARY GRACE MIRANDILLASANTOS, an independent researcher on information and communications technology and telecommunications policies, said this exercise

“may include legal and political pulling of strings.” She noted, however, that other countries are successful in providing better Internet services despite not having harmonized the said frequency band. “Other countries that have fast and reliable Internet connection speeds do not necessarily operate on the 700-Mhz band. While this spectrum is known for wide

propagation, hence less capital-intensive infra deployment, it is not known for supporting high bandwidth,” Mirandilla-Santos said. She urged the telecom regulator to reform the spectrum resources, should the need for such an initiative arises. “If the NTC were to take any action on spectrum, it should not target just the 700 MHz of San Miguel, but also review the

aderLook nternet via 700-MHz band

sMirror

www.businessmirror.com.ph | Thursday, April 7, 2016

“What the local telcos need to address is the problem of congestion. Are there enough cell sites to service the growing number of mobile broadband subscribers? Apart from the much-blamed local governments, what are the other reasons for not having adequate infrastructure?” she said. Mirandilla-Santos added: “Is the capital expenditures allocated by local telcos for infrastructure deployment commensurate to the mobile broadband services they continue to offer? Is the capex supported by the telcos’ profit margins, or is there still room for increasing the former? Are the telcos able to balance good service and their shareholders’ interests?” There are about 15,000 cell sites spread across the Philippine archipelago. This is relatively fewer than its peers in Asia, according to data from Globe. Cu blames the red tape in local government for the slowpoke deployment of additional cell towers across the country. He said, “The government should also pass a legislation that mitigates bureaucratic red tape and other political hurdles that stand in the way in the deployment of telecommunication and broadband infrastructure, such as cell sites.” Specifically, an open-access law for the telco industry would expedite the issuance of all the relevant permits for all telecommunications facilities at the local government level. NTC officials were not available for comment.

Capacity buildup still priority

spectrum holdings of all players and seriously study the need to refarm spectrum resources, if necessary,” she said. Mirandilla-Santos pressed on: “This would result in freeing up some spectrum for smaller players and new market entrants. Deregulation of some spectrum bands for open and shared use should also be considered.” The PLDT Group has the right

to operate the 800-MHz, 900-MHz, 1,800-MHz and the 2,100-MHz bands. Globe, on the other hand, has rights to the 900-MHz, 1,800-MHz and the 2,100-MHz bands. The issue on spectrum, she said, should be overshadowed by the problem on congestion. This means that local telcos and the regulator must focus on building up capacity to provide better Internet services.

WITHOUT the access to the 700MHz spectrum, telcos will have to spend more to provide better services to consumers. Globe has set roughly P35 billion in capital this year, while rival PLDT will spend P43 billion this year. The bulk of the Globe’s capital expenditures for 2016 will be spent “to deploy fiber-optic cables in 20,000 barangays all over the country to provide faster and more reliable Internet access in about 2 million homes nationwide,” the company said in a statement on March 29. Cu noted that this program will future-proof Globe’s network for another round of data explosion. The infrastructure build is expected to take five years and will extend network coverage to more areas that currently have no connection or spotty service. Cu “emphasized that elsewhere in the world, new digital trends, such as cloud computing, mobile web services and e-commerce, are already radically changing the digital landscape,” the company’s March 29 statement continued. “In line with its vision of ushering in a digital nation, the network build will also increase the capacity of its network for both mobile and wirelines using different technologies, including 3G, LTE and even Wi-Fi.” Globe added it “will, likewise, replace the old copper wires that have been used for wireline connections in the past.” “One of the most important advances in broadband technology, fiber optics offer the fastest way to access data, providing consumers with higher download and uploads speeds, lower latency, faster Internet browsing, including streaming of high-definition multimedia content, among others.” “Coverage is something that consumers have, but coverage is not enough,” Cu said earlier. “We have to retune our network once again to increase our mobile and wireline capacity by 70 percent.”

More of the same

CRISANTO said Globe Telecom’s business strategy will remain the same— with or without a third player.

“We will continue to focus on our customers, we will provide them with innovative products and superior customer experience so they will prefer Globe over other providers,” she said. “As for our plans this year, we intend to strengthen our network service by building more cell sites, improving capacity and coverage, while using the latest technologies so Filipinos can enjoy their digital lifestyle.” Isberto, for his part, said his group will be more aggressive in rolling out new services on top of a buildup in its capacity and coverage. “Yes, we are going to pursue our preparations for the entry of a third player. After all, San Miguel officials have said they will launch a mobile service even without a joint venture with Telstra,” he said. “Moreover, telecommunications has been liberalized since the 1990s. Operators have to take competition as a given [n]ot only among telecom operators,” Isberto said. “We are also facing intense competition from global Internet players. Given this situation, we shall continue to pursue our efforts to become the preferred provider of communications and digital services in the Philippines.” Isberto added: “This entails delivering the most extensive and best-quality connectivity services, combined with an increasingly diverse suite of digital services that enrich the lives of our customers.”

Leaning in

THE outcome of this capturing of the 700-MHz band, however, depends on how telcos relate with government regulators. A BusinessMirror report in December last year provides a glimpse of how this relationship has gone and is going. Before the new year, PLDT’s Ray C. Espinosa hinted at going after NTC Director Edgardo V. Cabarios. Espinosa, who heads PLDT’s regulatory affairs and policies office, said they are studying the possibility of seeking administrative and judicial sanctions against Cabarios. Cabarios was quoted that time as having told reporters that reallocating the 700-MHz band would require a quasijudicial procedure, a painfully long process that could go on for years. “Strangely, while stating that the issue now surrounding the 700MHz radio frequency band is a quasijudicial matter—referring obviously to the quasijudicial function of the commission en banc—Director Cabarios, whose department’s function is purely administrative in nature, expressed unofficial and personal biased statements in favor of the current holders of the 700-MHz radio frequency in clear and wanton disregard of applicable laws and regulations covering the repurposing of the use of radio frequencies,” Espinosa said in a news briefing in mid-December. Espinosa, who represents one of the biggest telcos in the country, accused the director of taking sides on the issue, despite the pending petitions submitted by Smart in 2008 for the reallocation of the band, all frequencies of which have been allotted for SMC’s telecommunications units. “Worse, he made these statements despite being fully aware of the pendency of the applications of Smart and Smart Broadband Inc. before the commission en banc since 2008 for an equitable allocation of the 700-MHz radio frequency band for mobile telecommunication use,” Espinosa said. He added: “Director Cabarios, therefore, prejudged the merits of these applications and preempted the decision of the commission en banc on these matters in clear and wanton disregard of the ap-

plicable rules and procedures of the commission.” For his part, Cabarios clarified that his statements were made not on a personal account, but on behalf of the telecommunications regulator. “I was just replying to the media’s questions, and all of my answers are based on facts. I’m not speaking on personal grounds, I am speaking on behalf of the commission,” he said. “I was given the go signal to answer questions.” Globe Telecom appeared to share a different view on the matter, with a spokesman saying that the legal aspects of the reallocation of the frequency band shall only be discussed within the company’s leadership. “Our position is clear: We will continue to pursue the 700MHz band, and we will continue to urge the government to harmonize the frequency,” Crisanto has said last December. The case stemmed from reports on the director’s comments on the 700-MHz issue raised earlier by PLDT and Globe. In a November 10 interview with the BusinessMirror, Cabarios said the process of reallocating the frequencies held by SMC would be too long a procedure, and would require the filing of a case for a recall. Espinosa, however, took this as a negative, saying the comments of Cabarios “would deny the government the opportunity and ability to auction this valuable radio frequency band and raise muchneeded government revenues, as has been done in many countries, including Australia.” The applications of Smart, he said, have become even more urgent in light of the more recent harmonization initiatives and actions taken by the Asia Pacific Telecommunity and the ITU, to which the Philippines is an active member, for the repurposing of the 700MHz radio frequency band from broadcast use to international mobile telecommunication use.

Group thought

IN the World Radiocommunication Conference (WRC-15) last year, the ITU formally moved to allocate the 700-MHz band—specifically 694 to 790 MHz—to the global mobile industry. ITU officials specifically stated that this move was taken to help bridge the digital divide, pointing out that the long range of radio over the 700-MHz band will be especially beneficial for underserved, rural areas. “It goes a long way in enabling bridging of the digital divide, while fully protecting the other services currently operated in the band,” ITU Secretary-General Houlin Zhao was quoted as saying. For his part, ITU Radiocommunication Bureau Director François Rancy said: “The global harmonization of the 694-MHz to 790-MHz frequency band that has been decided by World Radiocommunication Conference paves the way for manufacturers and mobile operators to offer mobile broadband at an affordable price in currently underserved areas.” GSMA Chief Regulatory Officer John Giusti said his group commends the vision shown by many countries seeking the flexibility to use the sub-700-MHz band for mobile broadband. “Not only can legacy television services in the band be delivered far more efficiently using less spectrum, but the reality is that consumer habits are evolving, as video content is increasingly accessed via mobile devices. Allowing both mobile and broadcasting in the band gives these governments the ability to respond to the changing needs of their citizens,” he said.

Thursday, April 7, 2016

The World BusinessMirror

news@businessmirror.com.ph

Dramatic increase in executions last year—Amnesty International

IN this grab taken from video, Iceland’s Prime Minister Sigmundur David Gunnlaugsson leaves after holding a meeting at Iceland’s Parliament in Reykjavik on April 5. Iceland’s embattled prime minister has resigned amid a controversy over his offshore holdings, a Cabinet minister said on Tuesday as outrage over the accounts roiled the North Atlantic island nation. AP

Increased scrutiny on officials worldwide in offshore leaks

ONDON—Iceland’s prime minister became the first major figure brought down by the leak of millions of records on offshore accounts, as the scrutiny intensified around officials from other countries, including Ukraine’s president. Icelandic leader Sigmundur David Gunnlaugsson stepped aside on Tuesday amid outrage over revelations he had used a shell company to shelter large sums while Iceland’s economy was in crisis. Officials in several other countries also are facing questions about possibly dubious offshore tax-avoidance schemes, following the publication of the names of rich and powerful people linked to the leaks, dubbed the Panama Papers. They include Ukraine President Petro Poroshenko who, the leaks show, set up an offshore holding company to move his candy business offshore, possibly depriving Ukraine of millions of dollars in tax revenue. Poroshenko insists he has done nothing wrong and hasn’t managed his assets since being elected. Still, some adversaries are calling for his removal from office. China and Russia, meanwhile, suppressed news of the leaks and rejected any allegations of impropriety by government officials named in the release of more than 11-million financial documents from a Panamanian law firm. The reports are from a global group of news organizations working with the Washington-based International Consortium of Investigative Journalists. They have been processing records from the Mossack Fonseca law firm that were first leaked to Germany’s Sueddeutsche Zeitung newspaper. One of the firm’s cofounders, Ramon Fonseca, said it has filed a complaint w ith Panamanian

11M The number of financial documents that was leaked and traced to a Panamanian law firm and dubbed the “Panama Papers”

prosecutors, a l leg ing that the data was stolen by a hack ing attack from somewhere in Europe, but he declined to g ive any details. The announcement that Gunnlaugsson was stepping down as leader of Iceland’s coalition government came from his deputy, Sigurdur Ingi Johannsson, who is also the country’s agriculture minister. It followed the refusal by Iceland’s president to dissolve parliament and call an election, and after thousands of Icelanders protested outside the parliament building in Reykjavik. No repl acement h a s been named, and President Olafur Ragnar Grimsson did not immediately confirm that he had accepted the resignation. Late on Tuesday, a government statement said Gunnlaugsson had suggested Johannsson take over as prime minister for “an unspecified amount of time,” while Gunnlauggsson would stay on as leader of his center-right Progressive Party. Gunnlaugsson has denied any

wrongdoing and said he and his wife have paid all their taxes. He also said his financial holdings didn’t affect his negotiations with Iceland’s creditors during the country’s acute financial crisis. The leaked documents allege that Gunnlaugsson and his wife set up a company called Wintris in the British Virgin Islands with the help of the Panamanian law firm. Gunnlaugsson is accused of a conf lict of interest for failing to disclose his involvement in the company, which held interests in failed Icelandic banks that his government was responsible for overseeing. Iceland, a volcanic North Atlantic island nation with a population of 330,000, was rocked by a prolonged financial crisis when its main commercial banks collapsed within a week of one another in 2008. Since then Icelanders have weathered a deep recession and been subjected to tough capital controls—another reason the prime minister’s offshore holdings rankle many. China, on the other hand, dismissed as “groundless” reports that the Panamanian law firm had arranged offshore companies for relatives of at least eight present or past members of the Communist Party’s Politburo Standing Committee, the apex of power in China. Among those named in the leaked documents was the brotherin-law of President Xi Jinping. State media have ignored the reports and searches of websites and social media for the words “Panama documents” were blocked. C h i n a’s Fore i g n M i n i st r y spokesman Hong Lei said he would not discuss the reports further and declined to say whether the individuals named would be investigated. Shell companies aren’t in themselves illegal. People or companies might use them to reduce their tax bill legally, by benefiting from low tax rates in countries like Panama, the Cayman Islands and Bermuda. But the practice is frowned upon,

particularly when used by politicians, who then face criticism for not contributing to their own countries’ economies. Because offshore accounts and companies also hide the names of the ultimate owners of investments, they can be used to illegally evade taxes or launder money. Mossack Fonseca says it obeys all laws relating to company registrations and does not advise people how to evade taxes. Members of the Group of 20— which includes China—have agreed on paper to tighten laws relating to shell companies and make sure authorities can find out who the real owners are. Actual legislation at the national level has lagged behind the promises, however. The appearance of offshore accounts in political scandals is far from new. Shell companies played a role in the corruption scandal involving the Petrobras oil company in Brazil. The US Justice Department said in an indictment last year that offshore accounts were used to mask the transfer of bribes to officials at Fifa, the global soccer federation. Sueddeutsche Zeitung, working with Germany’s NDR and WDR public television stations, reported on Monday that 14 German banks had used Mossack Fonseca’s services to set up 1,200 letterbox companies for clients. The report said use of offshore company registrations had spiked after the European Union (EU) introduced regulations in 2005 requiring countries to exchange tax information on individual people, but not for companies. Many of the accounts, however, have since been closed. The EU has since tightened its rules on offshore companies under its Fourth Anti-Money Laundering Directive, which is being phased in as national governments pass local laws to comply by June 26, 2017. The new rules tighten requirements for companies to keep accurate information on their real owners and to make that available to authorities. AP

E W Y O R K— A m n e s t y I nter n at ion a l re por t s that there was a dramatic 54 -percent increase in e xecut ions globa l ly in 2015, with Iran, Pakistan and Saudi Arabia responsible for nearly 90 percent of the killings. The human-rights organization said the figure of at least 1,634 people executed last year— up from 1,061 in 2014—does not include executions in China where data on the death penalty is considered a state secret. Amnesty International’s Secretary-General Salil Shetty told several reporters on Tuesday that for China “our estimate is that they execute as much as the rest of the world.”He said China is currently reviewing crimes punishable by the death penalty, so there is “a slim ray of hope” that the number of executions may be reduced. On the upside, Shetty said, four countries abolished the death penalty, for all crimes in 2015— Republic of Congo, Fiji, Madagascar and Surinam—bringing the global total of countries now banning executions to 102. Other countries have also made progress: Mongolia is set to abolish the death penalty this year, China and Vietnam reduced the number of offenses that can be punished by death; and Malaysia announced legislative reforms to review the country’s mandatory death penalty laws, Amnesty said. In addition, Burkina Faso, Guinea, Kenya and South Korea

considered legislation to abolish the death penalty, it said. When Amnesty International began campaigning against the death penalty in 1977, only 16 countries had fully abolished the death penalty. “The overall trend is very clear,” Shetty said, “more than half the world’s nations have abolished the death penalty.” According to the report, the number of executions recorded in Saudi Arabia increased by 76 percent to 158; executions in Iran rose 31 percent to 977; and the 326 executions in Pakistan were the highest ever recorded by Amnesty International. Amnesty said it received information that both Iran and Pakistan executed people in 2015 who were under the age of 18 when their crimes were committed, and it said juveniles face the death sentence in several other countries. In the United States 28 people were executed in 2015 nearly half in Texas, the most active death-penalty state, which put 13 people to death, the report said. Missouri executed six people, Georgia five, Florida two and Oklahoma and Virginia one each. Amnesty said 60 percent of those executed were black or Hispanic, double their percentage in the population. On the plus side, Amnesty pointed to the governor of Pennsylvania establishing a moratorium on executions last year and the legislature in Nebraska overriding the governor’s veto of a bill abolishing the death penalty. AP

China restricts trade with North Korea over nuclear, missile tests

EIJING—China has banned most imports of North Korean coal and iron ore, the country’s main exports, in a significant increase in pressure on the North under UN sanctions against its nuclear and missile tests. China buys an estimated two-thirds of impoverished North Korea’s exports, making Beijing’s cooperation essential for trade penalties approved by the UN Security Council last month to succeed. North Korean leader Kim Jong Un has intensified nuclear activities in defiance of UN sanctions, conducting his country’s fourth nuclear test in January and testfiring missiles. In a sign of frustration with its ally, China signed onto Security Council sanctions last month that include mandatory inspections of cargo bound to and from North Korea. The council called on all countries to “redouble their efforts” to enforce the sanctions. The latest Chinese restrictions announced on Tuesday ban most imports of North Korean coal, iron ore, gold, titanium, vanadium and rare earths—a key revenue source for the mineral-rich North. T h e C e nt r a l I nt e l l i g e n c e Agency estimated North Korea’s 2013 exports at $4.4 billion, with 65 percent of that going to China and the bulk of it made up of mineral sales. Some imports for civilian use will be allowed so long as they are not connected to nuclear or missile programs, the Ministry of Commerce said. It gave no indication how large such purchases might be. The announcement also banned sales of jet fuel to North Korea, but said civilian aircraft would be allowed to refuel during flights to China. President Barack Obama and his Chinese counterpart, Xi Jinping, promised to cooperate to promote denuclearization of the Korean Peninsula during a nuclear security conference last week in Washington. In a statement on Wednesday, the US government welcomed Beijing’s trade restrictions as part of efforts to enforce UN sanctions.

“We will continue to urge China to do more until we see concrete signs that Kim has come to the realization that the only viable path forward for his country is denuclearization,” said the statement released by the American Embassy in Beijing. Beijing balked at previous demands by Washington and other governments to use trade as leverage against North Korea. Chinese diplomats said the potential humanitarian impact of sanctions had to be considered. Beijing is North Korea’s only major ally and aid donor but says its influence over Kim’s government is limited. Chinese leaders are reluctant to lean too hard on North Korea for fear the collapse of Kim’s government could set off a flood of refugees and possibly lead to US and South Korean troops being stationed in the North near China’s border. In February a Chinese diplomat told reporters the US should offer North Korea incentives to return to negotiations, such as progress on a peace agreement. The two countries are still technically at war because the 1950-1953 Korean War ended with a cease-fire, not a peace treaty. Despite such reser vations, Beijing went along with the Security Council sanctions last month that also restrict operations of North Korean banks and ban trade in dual-use nuclear and missile-related items. China is one of five permanent Security Council members with power to veto UN action. Security Council resolutions prohibit nuclear weapons development by North Korea and all ballistic missile activity. A defiant North Korea carried out a nuclear bomb test in January and called it a “H-bomb of justice.” It launched a long-range rocket in February, and in March fired a missile that flew about 800 kilometers before crashing into the sea off the country’s east coast.Kim has ordered tests of a nuclear warhead and ballistic missiles capable of carrying it. AP

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Canadian flies Mexican flag on Trump building V ANCOUVER, British Columbia—A Mexican-born Canadian construction worker said he hung Mexico’s flag atop Vancouver’s Trump International Hotel and Tower over the weekend to remind the billionaire who built the tower. Diego Reyna walked up 40 flights of stairs and recorded a 43-second video that said the building wouldn’t exist without immigrants. “It was a symbolic act,” Reyna said on Tuesday in a telephone interview. “When you say everyone in my family, my teachers, my children yet to be born are criminals and rapists, it is time to take a proactive effort.” In the video he said Mexicans performed everything from drywall to concrete finishing on the project. During his campaign for the Republican presidential nomination, Trump has been criticized after Trump for saying Mexican immigrants are bringing crime and drugs to the US and are “rapists.” “This building is standing here today, thanks to us, to our work,” he says. “There’s a little present for Mr. Trump, so every time you judge us you can think who is building your towers.” Reyna, 30, said in a separate Facebook post that Mexicans didn’t steal or rape, but just did the best work they possibly could. “Your tower here in Vancouver is premium quality, and we were a crucial part of it, not just Mexicans but immigrants as

a whole, like your ancestors were,” he said. “The insults you have said about us have not changed our work ethics.” Reyna, who arrived in Canada in 2011 and is now a Canadian citizen, arrived at the building in his construction gear with friend Alfonso Ramos, 37, early on April 2. They took an elevator 28 floors and climbed the remaining 40 floors by stairs. Reyna said Trump’s comments condemned all Mexicans. “I would like him not to generalize against Mexico,” Reyna said. The Holborn Group of Cos., the Vancouver developer behind the project, did not immediately respond to a message seeking comment on Tuesday. This isn’t the first time the building has been at the center of a Trump backlash. Last December Vancouver Mayor Gregor Rober tson sent a letter urging the developer to drop Trump’s name from the tower, citing a petition signed by more than 50,000 people asking that the US businessman’s name be removed from the tower following the Republican hopeful’s call to ban Muslims from entering the United States. Reyna said there are also Muslims working on the site. Trump visited the city in 2013 to help announce the project. The Trump Organization said it was lending its brand power and operating the tower, but that the family would not be investing in the development. AP

skunk shot dead by police, several acts of vandalism, the many empty storefronts in downtown Selinsgrove and the removal of a Christmas wreath from a building after several years, under the headline “Christmas Finally over in Grove!” Matthew Lysiak said the comments on his daughter’s stories are usually positive. “She was embraced when she was doing cuter stories, but about six months into writing the paper, she got more confident and started stepping outside the box,” Lysiak said. The debate is all about whether it’s appropriate for a girl her age to be covering such news. Lysiak said Hilde caught the journalism bug when he worked for the Daily News and would occasionally take her along on the job. “She found journalism really interesting, and my older daughter, too,” he said. “They would ask lots of questions.” She’s normally unfazed by comments and usually doesn’t read them, he said, but the tea party comment “really lit a fuse under her.” Hilde hit back with a video on her news site, posted

ASHINGTON—The Obama administration is to announce on Wednesday it will transfer leftover money from the largely successful fight against Ebola to combat the growing threat of the Zika virus, congressional officials say.

Roughly 75 percent of the $600 million or so would be devoted to the federal Centers for Disease Control and Prevention, which is focused on research and development of anti-Zika vaccines, treating those infected with the virus and combating the mosquitoes that spread it. The rest would go to foreign aid accounts to fight the virus overseas. The officials spoke on condition of anonymity because they were not authorized to publicly discuss the matter before the W hite House announcement.

Researchers fear Zika causes microcephaly, a serious birth defect in which a baby’s head is too sma ll, as well as other threats to the children of pregnant women infected with it. President Barack Obama has asked for about $1.9 billion in emergency money to fight Zika, but the request has stalled in the Republican-controlled Congress. While the administration has acknowledged that substantial Ebola funding is left over, it has already committed much of it to helping at least 30 other countries

prevent, detect and respond to future outbreaks and epidemics. It also wants to preserve money to keep fighting Ebola should it flare up again. The impending move comes as there’s greater urgency to battle the virus as summer weather leads to mosquito season and a broader spread of the virus. Republicans on Capitol Hill had suggested the administration consider reshuffling existing funds and have said they are open to paying the money back in future legislation if it’s needed for Ebola or some other purposes. Action on a stand-alone emergency spending bill is virtually impossible in the bitterly partisan atmosphere in Washington, though such funding could be attached to larger legislation later in the year. At the same time, both the White House and top Republicans have tried to work cooperatively despite the difficult environment. “I told the White House I’d be supportive of a supplemental if they could show me where the money goes and what it could do,” said

on Sunday, first reading some of the comments aloud, including, “I am disgusted that this cute little girl thinks she is a real journalist. What happened to tea parties?” and “Nine-year-old girls should be playing with dolls, not trying to be reporters.” She then defended her hard work: “I know this makes some of you uncomfortable, and I know some of you just want me to sit down and be quiet because I’m 9. But if you want me to stop covering news, then you get off your computer and do something about the news. There, is that cute enough for you?” Anne Carter, a licensed practical nurse in Selisgrove, was among those who commented disapprovingly on Facebook of Hilde’s involvement in the story. “I think she’s very talented and her aspirations are great, but it’s probably a bigger case than a 9-year-old should handle,” Carter said. “Adults in the community are having trouble wrapping their heads around what happened. I can’t imagine how a 9-year-old can cover a story like that.” AP

It kind of gets me angry because just because I’m 9 doesn’t mean I can’t do a great story; It doesn’t mean I can’t be a reporter.” —H K L

serving with the United Nations, and to impose the strongest of disciplinary and criminal sanctions warranted under their national laws,” he said. It’s up to the home country of the soldier or police officer to conduct investigations and determine the punishments if allegations of sexual abuse or exploitation are proven. Khare’s comments came on the same day that French judicial authorities announced that they had launched an investigation into new sex-abuse allegations against French troops in Central African Republic. A French official said the probe is not related to the most serious sex-abuse allegations in UN peacekeeping—accusations by a US-based group claiming that three girls told UN staff they were

tied up, undressed and forced to have sex with a dog by a French military commander in 2014. The UN has been in the spotlight for months over allegations of child rape and other sexual abuses by its peacekeepers, especially those based in Central African Republic and Congo. The UN says there were 69 allegations of sexual abuse and exploitation by peacekeepers in 2015. Last month the UN Security Council approved its first-ever resolution tackling the problem. The US-drafted resolution endorses Secretar y-General Ban Ki-moon’s decision to repatriate military or police units “where there is credible evidence of widespread or systemic sexual exploitation and abuse.” It also calls for

75% The amount allotted from a $600-million fund that would be devoted to the federal Centers for Disease Control, which is focused on research and development of anti-Zika vaccines

Republican Sen. Lindsey Graham, chairman of the Senate subcommittee responsible for foreign aid. Sen. John Cornyn, the No. 2 Republican in the Senate, said he fears a Zika outbreak in his home state of Texas, but said he hopes “reason would prevail and we’d use the money that’s already been appropriated and then we’d talk about what additional money would be needed, perhaps for either Ebola or Zika.” AP

briefs

MEXICAN TROOP FINDS OPIUM POPPIES GROWING NEAR BORDER MEXICO CITY—The Mexican army says it has discovered almost an acre of opium poppies growing in the township of Ensenada, near the United States border. Soldiers destroyed the two poppy plantations in the hills near the Baja California city, which is about 60 miles south of the California border. Opium poppies are usually a mountain crop grown farther south in Mexico. But Mexican cartels have been expanding poppy production to export heroin to the US. The army’s Second Military Region said in a statement on Tuesday the poppies were destroyed by cutting and burning. AP

POLLS OPEN IN REFERENDUM ON E.U.UKRAINE TRADE DEAL

THE HAGUE, Netherlands—Polls have opened in a Dutch referendum on a farreaching free-trade deal meant to foster closer ties between Ukraine and the European Union (EU) that has run into opposition in the Netherlands, where many see it as evidence of unwanted EU expansionism. Wednesday’s nonbinding vote in the Netherlands exposes deep divisions about this country’s place in Europe and comes less than three months before British citizens decide in their own referendum whether to leave the EU altogether. Dutch opponents of the EU-Ukraine association agreement argue its ultimate goal is bringing Kiev into the EU. AP

IN this September 2015 photo provided by Matthew Lysiak, Hilde Kate Lysiak poses for a photo at her home in Selinsgrove, Pennsylvania. Lysiak, a 9-year-old reporter, recently wrote about a suspected murder in her small Pennsylvania town and is defending herself after some locals lashed out about a young girl covering violent crime. AP

UN exec: States should take ‘strong’ action on sex abuse

NITED NATIONS—A top UN official on Tuesday stepped up pressure on all 193 member-states to impose the “strongest” disciplinary and criminal sanctions against peacekeepers found guilty of sexual abuse, less than a month after the Security Council approved its first-ever resolution on the escalating problem. Undersecretary-General Atul Khare said during a meeting of the General Assembly that sexual abuse allegations against peacekeepers must be swiftly and professionally investigated, preferably in tandem with the UN’s internal investigative unit. “We count on all member-states to live up to their responsibilities to expeditiously bring to justice those who have committed crimes while

White House to transfer Ebola funds vs Zika virus

Nine-year-old reporter defends homicide coverage after backlash

9-YEAR-OLD reporter who wrote about a suspected murder in her small Pennsylvania town is defending herself after some locals lashed out about a young girl covering violent crimes and said she should be playing with dolls. Hilde Kate Lysiak got a tip on Saturday about something untoward happening in Selinsgrove, 150 miles northwest of Philadelphia. She went to the scene to get the details and posted a story and video clip on her web site, OrangeStreetNews.com, later that day. Soon after, her Facebook page and YouTube channel were clogged with negative comments urging her to “play with dolls” and have a tea party and questioning her parents’ judgment in letting her do such work. “It kind of gets me angry because just because I’m 9 doesn’t mean I can’t do a great story,” she said on Tuesday. “It doesn’t mean I can’t be a reporter.” Hilde has run the Orange Street News since 2014. She gets help from her father, Matthew Lysiak, a former reporter for the New York Daily News, and her 12-year-old sister, Isabel Rose Lysiak, who handles videos and photos. What started out as a newspaper for her family, written in crayon, has become a community news source complete with website and Facebook page. In recent weeks, in short stories under headlines frequently punctuated with exclamation marks, she has reported on a possibly rabid

Thursday, April 7, 2016

Ban to replace contingents where allegations are not properly investigated, perpetrators are not held accountable or the secretarygeneral is not informed on the progress of investigations. French Ambassador François Delattre said during the discussion on Tuesday that allegations aga inst Frenc h peacekeepers were “shocking to us, profoundly shocking.” He said his country has taken action by providing new training that reinforces a zerotolerance policy on sexual abuse. Delattre also said that the French authorities now send allegations received from the UN to the country’s judiciary for investigation and possible prosecution. If allegations are found to be true, the judiciary should then mete out

“exemplary punishments,” he said. “France’s determination to prevent and combat the scourge of sexual abuse is complete,” Delattre said. Khare said the secretary-general has requested that member-states establish onsite court martial proceedings against peacekeepers in cases where allegations amount to sex crimes under national laws, as well as provide DNA samples from soldiers accused of sexual abuse. More than 100,000 troops and police are deployed in the UN’s far-flung peacekeeping operations, the vast majority from developing countries. The United Nations reimburses troop-contributing countries for salaries and provides allowances for the peacekeepers. AP

OBAMA ON ISLAMIC STATE GROUP: WE WILL DEFEAT THEM

WASHINGTON—President Barack Obama is underscoring that destroying the Islamic State group is his top priority. He says it remains a difficult fight, but is expressing confidence in victory. He says the group continues to lose ground in its strongholds in Iraq and Syria, and is being squeezed financially. Obama says: “We are going to squeeze them and we will defeat them.” Obama commented at a White House meeting on Tuesday with the Joint Chiefs of Staff and the combatant commanders. He says they’ll be reviewing defense strategies and the spending to carry them out. AP

BUSINESSMAN LINKED TO EX PRESIDENTS ARRESTED

BUENOS AIRES, Argentina—An Argentine businessman with close links to former Presidents Nestor Kirchner and his wife Cristina Fernandez has been arrested as part of an investigation into alleged money laundering. The official judicial news agency says Lazaro Baez was arrested on Tuesday after he landed at an airport in the outskirts of Buenos Aires. Baez got large public works contracts during the Kirchner and Fernandez administrations. He’s accused of embezzling and laundering about $5 million. He denies any wrongdoing. AP

A10 Thursday, April 7, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

High seas shouldn’t be like the Wild West

OES a cure for cancer lurk in the ocean’s darkest depths? The answer to that question is one of many reasons the world needs a new treaty governing the high seas.

The high seas—any part of the ocean more than 200 miles from a coast and beyond national jurisdiction—account for more than half the ocean’s surface area, and generate nearly half the global ocean’s biological productivity. Yet, they are only lightly governed by the 320 articles and nine annexes of the United Nations Convention on the Law of the Sea. Talks on updating the 1982 treaty, which was bolstered by a 1995 agreement on migratory fish stocks, opened last month. A lot has happened over the last few decades. The world’s fisheries are under greater strain. As bigger fleets range further afield, more of their catch is coming from the high seas, threatening the ability of stocks to rejuvenate. More than 15 percent of the world’s catch is already taken illegally, by rogue trawlers flying flags of convenience and using drift nets and other destructive methods. Science has brought the role of the high seas in mitigating climate change into even sharper relief. Unfortunately, pollution is endangering the microorganisms that help the ocean to absorb carbon. Meanwhile, no rules exist for potential geoengineering projects—seeding the oceans with iron, for instance —to reduce greenhouse gases in the air. Then there is the burgeoning field of bioprospecting. Scientists can now explore new realms, such as deep-sea hydrothermal vents with temperatures ranging from 300 to 600 degrees Celsius (572 to 1,112 degrees Fahrenheit) and ecosystems that rely on chemosynthesis. Marine organisms have already yielded compounds used to shrink tumors, block pain and treat Alzheimer’s. But while clear rules exist for mining the seabed for minerals, none do for highseas bioprospecting—a source of contention between the developed and developing worlds, as well as an obstacle to scientific research. The UN talks will take up such challenges, but things move slowly when more than 100 nations and several dozen intergovernmental and nongovernmental organizations are involved. In the meantime, nations can target illegal fishing on the high seas by agreeing to uphold UN inspection standards for foreign fishing vessels that call on their ports (as Cuba has just done). They can build on the model of the Sargasso Sea Commission, which monitors and protects a unique high-seas ecosystem. They can join the two dozen World Trade Organization members that want to curb subsidies that encourage overfishing—an initiative that needs the support of China, whose 70,000-strong fishing fleet has made it the world’s biggest producer of fish. And, of course, they are still responsible for waters within 200 miles of their coast and can take better care of their fisheries. In Twenty Thousand Leagues Under the Sea, Jules Verne wrote: “Nature’s creative power is far beyond man’s instinct of destruction.” It’s a comforting thought, and maybe even a correct one; scientists now say up to 10 million species may live in the deep seas. Still, it’s a hypothesis better left untested. Bloomberg editorial

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The Panama Papers and the political elite John Mangun

OUTSIDE THE BOX

SN’T it interesting that the greatest exposure of off-the-record financial dealings of the wealthy and their political elite occurred in the year that marks a critical turning point in the political cycle. The revelations of the Panama Papers (PP) have already thrown governments into turmoil. The prime minister of Iceland is fighting calls for his resignation. It was revealed in the PP that he had undeclared ownership in Icelandic banks that were bailed out by government money during the 2008 financial meltdown. In a nation with a population of 320,000, over 20,000 people staged a protest. Imagine 6 million Filipinos—about the number that attended Pope Francis’s Mass at the Luneta Park—suddenly descending on Malacañan Palace. But do not think this is a case of the “good guys” and the “bad guys”.

Triumph of the anti-Trumps Ramesh Ponnuru

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Brazilians President Dilma Rousseff is under intense pressure and threat of impeachment for multiple instances of alleged corruption and bribery. These include kickbacks and payoffs from Petrobras, the semigovernment-owned Brazilian oil company. However, Eduardo Cunha—the speaker of the lower house of Brazil’s legislature and the man leading the push to oust Rousseff—has been linked through PP information to offshore companies that also received bribes and payoffs in the Petrobras scandal. At this point, the amount of information from the PP is limited. For example, nothing has come out

about politicians from the United States. There may be a good political reason for that. The company that set up all these offshore companies—Mossack Fonseca—is based in Panama. Even as a Filipino in the Philippines, you cannot open a local bank account without filling out a US government form. A free-trade agreement (FTA) between the US and Panama was signed in October 2102. Written into the FTA were provisions that barred the US from cracking down on any Panamanian banking or corporate activities that might involve money laundering and corporate secrecy. Both President Barack Obama and then-Secretary of State Hillary Clinton pushed hard for the adoption of the agreement over opposition from consumer groups concerned about the tax-haven status of Panama. Clinton has been under pressure for failing to disclose millions of dollars in foreign government contributions to her Clinton Foundation while she was secretary of State and in a position to offer these governments favorable trade rulings from her department. So far, some of those implicated

BLOOMBERG

HANKS to Wisconsin, a contested Republican convention just got more likely. Donald Trump led in the Marquette University poll of Republican primary voters in January, and led bigger in February. In Tuesday’s primary, though, Ted Cruz won big. It was a broad, as well as big, victory for the Texas senator (who is an old friend of mine): According to the exit polls, Cruz won among men and women, among post-docs and high-school graduates, and among all age groups.

As much as Trump’s opponents hoped that his campaign manager’s arrest for grabbing a female reporter and his verbal stumbles over abortion would finally cause some of his supporters to leave him, that doesn’t appear to be what happened. Instead, the anti-Trump vote consolidated behind Cruz. If those controversies had an effect, it was to prevent on-the-fence voters from falling to Trump’s side. Cruz also had an advantage he

has lacked in most states: the support of the governor. And Scott Walker’s backing may have been more valuable than the backing of other governors would have been. Walker became a nationally controversial figure from his first weeks in office, when he successfully pushed to scale back unions’ collectivebargaining powers. He was subject to a recall election. The state’s conservatives bonded with him during those fights.

In other states, many conservative voters view the Republicans they have elected as wimps and sellouts. Not in Wisconsin. And so a sentiment that has helped Trump elsewhere may have been weaker there. Primary voters who consider themselves “moderate” backed Trump. A common argument for Cruz—that he is a true conservative and Trump is not one—naturally did not do much to attract them. But self-described conservatives outnumbered those moderates three to one, and they unified behind Cruz just as he had been urging them to do. Trump could still finish the primaries with a majority of delegates. But that is less likely after his defeat in Wisconsin. Since Cruz is even further away from a majority than Trump is, that defeat also raises the probability that the delegates will have to select a nominee without a clear mandate for anyone. For weeks, Trump and his surrogates have been preparing for this eventuality. They are engaged in a dual campaign. They would like to persuade Republicans that the candidate who wins the most votes and

in offshore companies that may have been used to hide assets are the nephew of South Africa’s president, also under threat of impeachment for using $16 million of public money to remodel his house, the “favorite contractor” of Mexican President Enrique Peña, who received $750 million in government contracts; the former budget minister at the French Ministry of the Economy, Finance and External Trade Jérôme Cahuzac; and the wife of the current European Commissioner for Climate Action and Energy Miguel Arias Cañete. Certainly, all of these people may have had legitimate and legal reasons for using offshore companies. That will be up to tax and judicial authorities to investigate. As the Süddeutsche Zeitung—Germany’s largest daily newspaper that had first access to the PP one year ago—wrote, “A Storm is Coming.” I wonder what will happen when it hits the Philippines. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

delegates deserves the nomination, even without a majority of either. Failing that, they want to persuade them that passing over the plurality winner will lead to an epic, and maybe even a violent, split in the party. But nominating Trump without a majority would wound the party more deeply, at least in Wisconsin. Thirty-seven percent of primary voters said they would be concerned or scared if Cruz won the presidency, but an actual majority—58 percent—said they would feel that way if Trump did. In national polls against Hillary Clinton, Cruz is much more competitive than Trump. But as those numbers suggest, both Cruz and Trump have a lot of enemies among Republicans. So as the candidates continue their long slog to the Cleveland convention starting July 18, we can expect continued wishful speculation that the convention could end up nominating someone else. If Paul Ryan is getting sick of answering questions about his interest in running for president this year, his home state’s primary on Tuesday did not do him any favors.

Opinion BusinessMirror

opinion@businessmirror.com.ph

The gig economy is powered by old people

Empowering presence

UCH ink and many pixels have been spilled over the past few years about the rise of the gig economy, sharing economy, on-demand economy, 1099 economy, freelancer economy or whatever you prefer to call it. Some of the claims about its growth have been overstated, and I’ve written several columns trying to debunk them, or, at least, put them in context. But this data, from economists Lawrence F. Katz and Alan B. Krueger’s new paper on “The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015,” is for real:

Msgr. Sabino A. Vengco Jr.

ALÁLAONG BAGÁ

HE Lord is to be extolled and thanked forever, for He turns mourning into dancing and delivers from the netherworld, and His goodwill lasts throughout life (Psalm 30:2,4, 5-6, 11, 12, 13). The risen Jesus manifests Himself to His disciples, and commissions Peter to assume the role of shepherd for the flock and predicts that Peter would suffer a fate similar to His (John 21:1-19).

You changed my mourning into dancing

After barely changing between 1995 and 2005, the share of US workers in alternative work arrangements jumped from 10.1 percent in 2005 to 15.8 percent in 2015. That’s a pretty big leap. As Katz and Krueger write, “All of the net employment growth in the US economy from 2005 to 2015 appears to have occurred in alternative work arrangements.” These arrangements, for the most part, did not involve work arranged through online gig-economy platforms—only about 0.5 percent of workers “identify customers through an online intermediary,” Katz and Krueger found. They do speculate that “technological changes that lead to enhanced monitoring, standardize job tasks and make information on worker reputation more widely available” have helped bring about the rise in alternative work. Other possible causes that they cite include shifts in the age and education characteristics of the work force (more on that in a moment); the Affordable Care Act (which generally makes it easier for independent workers to get health insurance); corporate efforts to boost profits by contracting out more work; and the lingering effects of the Great Recession. The Katz-Krueger survey was designed to be compatible with an earlier data series from the Bureau of Labor Statistics (BLS), which asked workers about contingent and alternative work arrangements in 1995, 1997, 1999, 2001 and 2005, before stopping for lack of funding. In January Labor Secretary Tom Perez announced that the survey will be conducted again in May 2017, but Katz and Krueger had already conducted a smaller version as part of the Rand American Life Panel last October and November. The differences between Katz’s and Krueger’s 15.8-percent finding and the higher percentages reported in some other recent surveys mainly have to do with definitions. The Government Accountability Office’s April 2015 estimate that 40.4 percent of US workers were in alternative work arrangements included part-time workers, as well as some self-employed workers not covered under the BLS’s definition of alternative work. It was also based on a survey conducted in 2010, when the percentage of involuntary part-time workers was still quite elevated in the wake of the recession. The 2015 Freelancing in America survey that deemed 34 percent of US workers to be freelancers included moonlighters who already had other jobs, as well as some small-business owners with employees. These different ways of counting aren’t wrong—moonlighters, for example, seem to be a big factor in the online gig economy, and Katz and Krueger miss them by only counting people whose main job involves alternative work arrangements. Katz and Krueger do that, though, to allow for comparison with past BLS surveys—and that comparability is informative. It reveals, for instance, that workers ages 55 to 75 and workers with a bachelor’s degree or higher have always (since 1995, at least) been more likely than others to be in alternative work arrangements. As a result, rising education levels and the aging of the population account for part of the overall growth in alternative work. But the share of older and better-educated workers in alternative work arrangements has also continued to rise, at a pace faster than that of the rest of the work force. Moreover, the 55 plussers are the only age category in the US that has seen its employment-to-population ratio rise over the past two decades. What this may mean is that the growth of the gig economy, at least the growth measured by Katz and Krueger, is being driven not so much by struggling millennials lining up gigs online as by 60-year-olds working as independent contractors. What’s not clear is whether they’re doing this because they’re semiretired and value freedom and flexibility, or because they’ve been downsized out of a full-time, full-benefit job and have to settle for contract work. Sometimes the gig economy empowers, sometimes it oppresses. But at least, we now know that it really is growing. Bloomberg View

THE psalmist promises to praise and thank the Lord before the assembly at worship for delivering him from the peril of death, from the dark pit of the netherworld (sheol). The Lord snatched him clear as though out of a grave. The enemies, who have threatened his life and rejoiced at his descent to the netherworld, could have been an illness or a misfortune or death itself. But God intervened and spared him. The psalmist invites the faithful ones to join him and extoll God, as well, and give thanks to His holy name. For His anger lasts but a moment, His favor, however,

throughout life. With the Lord, “weeping may tarry for the night, but joy comes with the morning.” With insistent threefold plea, the psalmist turns again to God and prays and begs for the divine mercy to continue for him. Hear me! Be gracious to me! Help me! The psalmist reminds or argues with God that he has already in his graciousness changed his mourning into dancing, his sorrow into rejoicing. He hopes then that God’s loving kindness will continue in his regard. The Lord can be counted on to come to the help of those who cry for assistance. And so the psalmist intends for his part to give thanks to the Lord without ceasing.

Thursday, April 7, 2016 A11

Tend my sheep—follow me

THE gospel is a composite of three distinct narratives welded together: the account of the miraculous catch of fish, the meal on the shore with Jesus, and the exchange between Jesus and Peter. The seven disciples out fishing did not recognize Jesus at once; they were like “children” who needed time to come to some recognition through Jesus’ actions. On shore, He took the bread and gave it to them and the fish in like manner, thus, the meal He prepared for them with its strong Eucharistic connotation showed the risen Lord in His fundamentally different state still as the one feeding them. Jesus’ exchange with Peter was in clear connection with his earlier threefold denial of his teacher/master. Taught by his sad experience of his own weakness, Peter no longer boasted of his fidelity as greater than that of the others. He was mercifully given the opportunity thrice to declare his love, and so now more compassionate he was commissioned to assume the responsibility of shepherd to the flock of Jesus. The narration ends with the prediction about the eventual death of Peter. Older and wiser, he would be led by

Antibusiness Tax Code provisions Atty. Benedicta Du-Baladad

TAX LAW FOR BUSINESS Part Four

Refund process

S I have said, time and again, unfairness in tax laws is not limited to substantive matters but also to those procedural in nature. A classic example is the process in claiming tax refunds. Sections 229 and 112 of the Tax Code, lay down the process in claiming tax refunds. Section 229 pertains to erroneously paid tax, and Section 112 pertains to refunds of excess input value-added tax (VAT). The procedures in refunding taxes under these two situations vary. Most claims for refunds filed under Section 229 relates to excess withholding taxes on income. The refund is the end-product of a defective withholding system, where withholding rates set are too high resulting in tax payments greater than one’s tax liability as determined at end of year. Taxes withheld on income are in the nature of advance payments of taxes that are, otherwise, due on April 15 of the following year. Any amount over-withheld is an erroneously paid tax, which the government is obligated to pay back. On the other hand, Section 112 pertains mostly to refunds of excess input VAT paid by sellers of exported goods and providers of services to foreign persons, on their inputs. We call them sellers of zero-rated goods and services.

The policy of the government as regards to VAT is that, no VAT shall form part of a good that is consumed abroad, or in the case of services, those rendered to foreign persons. This was adopted primarily to bring down the prices of our exports and to make it competitive in the international market. Subsequently, other goods and services were, for policy considerations, given the same concession, such as in the case of production and sale of renewable energy. There are two ways of achieving this policy: First is the automatic zero rating—meaning, no VAT shall be passed-on to a seller of zero-rated transaction. Sale to Philippine Economic Zone Authority entities is an example of this. Second is through the input-credit mechanism, wherein VAT is passed on but such tax can be subsequently claimed as refund. Our VAT system follows the second method, which is a circuitous version of the first. As laid down, whether it pertains to a refund of excess withholding tax under Section 229, or excess input VAT under Section 112, these claims

Most claims for refunds filed under Section 229 relates to excess withholding taxes on income. The refund is the end-product of a defective withholding system, where withholding rates set are too high resulting in tax payments greater than one’s tax liability as determined at end of year. Taxes withheld on income are in the nature of advance payments of taxes that are, otherwise, due on April 15 of the following year.

arose because of a defect in the tax system. It is not through mistake or fault of the claimant. Had the tax administration been more considerate in setting a withholding rate that would approximate the tax due on income at year-end, taxpayers would not end up in a tax refund position. Similarly, had the government adopted a direct, automatic zero-rating approach rather than the circuitous process of paying VAT first and then claiming it as a refund, taxpayers would not be going through the difficult and costly process of refunding. It is the tax system that puts a taxpayer in a situation that ends up in excessive tax payments. Thus, it is but fair to make refunding easy and within a short period. But this is not so. Difficult documentary requirements are imposed, reglementary periods are strict, approvals take time, and, most of all, refund claims are strictly construed against claimants since these are in the nature of tax exemptions, says the courts. In claims for excess input VAT, for example, the law gives the Bureau of Internal Revenue (BIR) 120 days to act on a claim. If the BIR does not act

Etsy and Amazon don’t just want to make shareholders rich B J F Bloomberg View

TSY and Amazon.com seem like very different companies. As Handmade at Amazon goes head-to-head with Etsy for domination of the handcrafted-stuff market, in fact, one can envision a movie version pitting ruthless Seattle corporate apparatchiks against cuddly Brooklyn funtrepreneurs. After taking a break to cry at his desk, one of the Seattleites will fall for a crafter of fascinators and mini hats, and then...go back to grinding the Brooklynites into oblivion. Then there will be a nice scene with a golden retriever in a park. Seriously, the script writes itself! Still, after reading Amy Larocca’s

story about Etsy in New York magazine, and Adam Lashinsky’s profile of Amazon founder and CEO Jeff Bezos in Fortune, I can identify an important similarity between the two companies: They clearly aren’t organized around the principle of maximizing shareholder value. (And that’s OK.) At Etsy this is explicit. The company is a B Corporation, meaning that it’s “certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability and transparency.” Meeting those standards and pursuing other idealistic goals takes priority over making shareholders rich. And since going public just under a year ago, Etsy certainly hasn’t made shareholders rich: Its

stock is down from a closing price of $30 on the day of its initial public offering to $8.32 at Tuesday’s close. But Larocca makes it sound like Etsy is a swell place to work, and it undeniably has enabled huge numbers of craftsy people (there are currently 1.6 million active Etsy sellers) to find customers for their wares. Amazon is another story, in that it is far less touchy-feely and has made its shareholders—in particular its biggest shareholder, Bezos—lots of money over the years. But it follows few of the customs of a modern, shareholder-friendly corporation. Amazon only intermittently turns a profit, and it does little to court investors. It sometimes appears to be, as journalist Matthew Yglesias once

joked, “A charitable organization being run by elements of the investment community for the benefit of consumers.” You could argue that Amazon is simply pursuing the maximization of long-run shareholder value over short-term stuff— the company’s own mantra, uttered again and again and again in earnings calls, is that “putting customers first is the only reliable way to create lasting value for shareholders.” Yet, one still doesn’t get the impression that Bezos is looking to maximize the discounted value of projected long-run cash flows with every decision he makes. He’s out to have an impact, to have fun, to crush the competition, to make his employees cry, whatever.

Bezos’s big investments outside Amazon—the Washington Post Co. and rocket maker Blue Origin—are even more obviously not aimed first and foremost at making him richer. As Bezos told Fortune’s Lashinsky, “I would not have bought the Washington Post if it had been a financially upside-down saltysnack-food company.” Is there anything wrong with a CEO or owner having priorities other than return on investment? Of course not. In a defense of shareholder-value maximization published last week, the Economist acknowledged that there are those who think it too narrow a goal for corporations to pursue, but countered that, “The trouble is identifying a goal that could replace the pursuit

somebody else where he would not want to go, referring probably to the binding of the hands of one to be crucified. Following Jesus, Peter would undergo the same sacrifice Jesus offered. Alálaong bagá, the living presence of the risen Jesus is now to be recognizable in the faithful service of Christians. All are called in baptism and confirmation and the Eucharist to feed and to tend the flock of the Lord, caring for the Church. Those called to greater responsibility in overseeing other coworkers should respond with humble love, like Peter, knowing that divine mercy alone enables them to persevere. The Church is properly judged by the character and extent of the care it provides for the most vulnerable in this world of widespread and persistent poverty and rabid violence. Like the lamb slain and exalted in heaven, what manifests and proclaims God’s glory on Earth is the faith of those who live it to the full and willing to bear any consequence, even death. Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on DWIZ 882, or by audio-streaming on www.dwiz882.com.

within this period, such inaction is tantamount to a denial of the claim. There is no sanction imposed on the BIR for such inaction. Naturally, many claims are not acted upon. The poor claimant, on the other hand, is forced to elevate his claim to the courts and pay 1-percent filing fee based on the amount claimed and pay all costs and charges including attorneys’ fees and all. To top it all, he gets a refund after more than five years (on the average) at which time, the claim had already diminished in value. In addition, he had lost the income that would have been earned had that money been rolled back in business. A reform in the tax system is sought to: (1) remove situations that puts a taxpayer in an excess tax position, such as putting reasonable cap on the withholding rates; (2) automatic zero-rating on inputs of sellers of zero rated goods and services; (3) consider a realistic period (120 days is too short considering the voluminous documents) for the BIR to review the claims and if still unacted, it is tantamount to approval, or the BIR should be sanctioned; (4) interest should be paid to the claimant for any delay in the grant of refund. To be continued The author is the managing partner and CEO of Du-Baladad and Associates Law Offices (BDB Law), a member firm of World Tax Services. The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at dick.du-baladad@bdblaw.com.ph or call 4032001 local 300.

of shareholder value.” That assumes all companies have to settle on the same goal, though. The shareholder-value philosophy that has risen to dominance since the 1950s has its good sides. Among other things, to cite the Economist article again, it gives outsiders “a methodology with which to second-guess incompetent managers.” But it is too often treated as a recipe that all corporations must follow if they are to succeed and make the economy flourish. In reality, it’s terribly difficult to discern what will bring the greatest long-run returns for an individual company or for the economy as a whole. Which is why we’re better off with different corporations trying out different goals.

2nd Front Page BusinessMirror

A12 Thursday, April 7, 2016

www.businessmirror.com.ph

All set for largest gastronomy congress in Asia B M. S F. A

‘E

Special to the BM

ATING will never be the same again.” Thus declared Arturo Boncato Jr., assistant secretary of the Department of Tourism (DOT), as he gave an overview of Madrid Fusión Manila (MFM) 2016, which opens today, April 7, at the SMX Convention Center in Pasay City. The second edition of MFM features a veritable list of “rockstar chefs” who will take to the stage and share their culinary expertise, while international food and beverage firms offer their wares to possible buyers during the three-day event. In a news conference on Wednesday, Boncato said MFM 2016 celebrates the 450th anniversary of the Galleon Trade that linked Asia to the West. “This year’s theme, ‘The Manila Galleon: East Meets West,’ focuses on the influences made by two diverse parts of the world, particularly in the global gourmet scene,” Boncato explained. The DOT and its marketing arm, the Tourism Promotions Board, are spearheading the second edition of MFM. The Galleon Trade made strides on the worldwide culinary map because of the trade of spices, sweet corn, chilies, cacao, annatto seeds and avocados, among others. Tourism Secretary Ramon R. Jimenez Jr. said: “Philippine cuisine will share the spotlight with the different cuisines of the world, as foreign celebrity chefs bring the influences of their culture to the table this year at Madrid Fusión Manila.

Good food has always played a big part in the fun element of our culture and a vital component of Filipino hospitality.” Michelin-starred chefs from Europe and Asia, as well as reputable Filipino chefs, will be speaking at what is billeted as the largest international gastronomy congress in Asia. The foreign chefs include Dani Garciá (Dani Garciá, Malaga—two Michelin stars); Fernando Perez Arellano (Zaranda es Capdella—one Michelin star); Joan Roca (El Celler de Can Roca, Girona—three Michelin stars); Nurdin Topham (Nur, Hong Kong—one Michelin star); Oscar Calleja (Annua, Spain—one Michelin star); Richard Camarena (Richard Camarena, Valencia—one Michelin star); Virgilio Martinez (Central, Lima—one Michelin star); and Yoshiro Narisawa (Narisawa, Tokyo—two Michelin stars). The Filipino chefs who will make their presentations are Leah Cohen (Pig and Khao, New York); Michael Aspiras (Scout’s Honor, Le Petit Soufflé, Garde Manger); Tatung Sarthou (Alab by Chef Tatung, Manila); and Romy Dorotan and Amy Besa (Purple

ORGANIZERS, sponsors and participating chefs raise their shot glasses for the Madrid Fusión Manila (MFM) during the news conference held in Pasay City. MFM is an important gastronomy congress which will start from April 7 to 9 at the SMX Convention Center in Pasay City. This year’s theme is “The Manila Galleon: East Meets West.” ALYSA SALEN

Yam, New York and Manila). “We must remember that cuisine is not just about food, but the skill of the one who makes it. And the success of Madrid Fusión Manila can be attributed to all the passionate Filipino and foreign chefs who have shared their culinary talents, stories and techniques in this part of the world,” Jimenez said. Boncato estimates the number of participants in MFM 2016, which will run until April 9, will reach 1,500. There are also some 1,070 booths that will exhibit this year. One of the new features at this year’s event is a marketing-assistance program between sellers and buyers, spearheaded by the Department of Trade and Industry. For its part, the Department of Agriculture (DA) will be present in the food tunnels at the trade area, wherein there will be one-hour tasting sessions for the following: Filipino coffee, heirloom rice, longganisa from various provinces, local cheeses and Filipino liqueurs and cocktails, according to Agri-

culture Undersecretary for Special Concerns Bernadette R. Puyat. The agency will also exhibit local produce from the country’s farmers. She added that the agency has also invited some renowned local chefs to participate in the regional lunches with the following themes: Day 1— Panlasa (taste), which will feature dishes that are sweet, salty, sour, savory and bitter; Day 2—Almusal (breakfast); and Day 3—Street Food, which will showcase traditional and modern Filipino street delicacies. “All chefs and food stations will be using local ingredients for their dishes,” Puyat stressed. Par ticipating chefs at the regional lunches are Margarita

Forés (Grace Park, Lusso, Cibo and Alta); Kalel Chan (Raintree Group); Him Uy de Baron (Chef Cuisine Catering, Pingpong Diplomacy and East Café); Jam Melchor (Healthy Eats Manila); Nikki Misa and Kristine Lotilla (Raffles and Scout’s Honor); Giney Villar (Café Feliza); Neil Ramos (Neil’s Kitchen); Jessie Sincioco (Chef Jessie’s); Rafael Jardeleza (Rafael’s La Cucina del Sur in Iloilo); and Patrick and Pia Roa (Patricio’s Cevicheria). “We are hopeful that this endeavor will be an opportunity to educate the consumers and potential export markets about the richness of Filipino cuisine, and the diversity of available agricultural produce and

ingredients,” Puyat said. “Moreover, the DA expects this event to open doors to our farmers to showcase their products and encourage them to continue producing high-quality food for the public.” The MFM is the main highlight of the monthlong Flavors of the Philippines Festival, which features a diverse array of the exciting foodrelated activities from food trips, special menus by participating restaurants, gourmet markets, the World Street Food Congress, special dinners with celebrity chefs, food festivals at select hotels, fiestas and food exhibits. Flavors of the Philippines envisions to position the Philippines as a “center of food and gastronomy in Asia.” It will be held simultaneously in different malls, restaurants and other venues across Luzon, the Visayas and Mindanao. To run until April 30, Flavors of the Philippines include Tapas Exhibition at the Metropolitan Museum of the Philippines, showcasing a selection of Spanish designs dedicated to the world of food; Market Tours in old Manila by Smokey Tours; a one-day culinary heritage tour to various destinations in Cavite, Malolos, Pampanga, Malabon, Antipolo-Angono and Laguna-Quezon by Food Holidays; and a Soccsksargen food and fashion event, “Treasures of SOX: A Food, Travel, and Trade Expo” from April 11 to 14 at the Glorietta Activity Center, Makati City.