BusinessMirror May 18, 2016

MEDIA PARTNER OF THE YEAR

BusinessMirror

UNITED NATIONS

2015 ENVIRONMENTAL MEDIA AWARD LEADERSHIP AWARD 2008

A broader look at today’s business

www.businessmirror.com.ph

n

Wednesday, May 18, 2016 Vol. 11 No. 221

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

MAKING LAWMAKERS TOE DUTERTE’S LINE MIGHT REQUIRE ‘CONCESSIONS’

New ‘pork-like scheme’ to lure Congress feared

E

B D C

@davecaga

XPERTS are not discounting the possibility of a pork barrel-like scheme surfacing in the incoming administration, as President-elect Rodrigo R. Duterte attempts to muster enough support for his controversial reform measures in the 17th Congress.

INSIDE

DAVAO CITY GETS BIGGER ATTENTION

He [Duterte] would have to bank on his political capital.”

—D V

“He needs the strong support of Congress.

He needs to have control over Congress, which raises the question of whether there would be some form of pork barrel-like scheme,” University of the Philippines professor and former National Treasurer Leonor Magtolis-Briones told the BusinessMirror.

One of the controversial bills that Duterte promised to enact is the tax-reform program, which he wants to be passed during the first 180 days C  A

BMReports

PROPERTY

E1

FACEBOOK OPENS ITSELF UP TO NEW CONTROVERSY

Alliance of Asian budget carriers may lead to merger deals

Land-reclamation tack fraught with challenges, opportunities

T

HE creation of the world’s biggest alliance of low-cost airlines may signal that some of Asia’s struggling budget carriers are headed for the altar.

The Value Alliance, announced on Monday, stretches from Japan to Australia, and includes Singapore Airlines Ltd.’s Scoot and Nok Airlines Pcl. in Thailand. The aim is to sell tickets, or even baggage allowance and in-flight meals across the group’s eight airlines in a single transaction.

After years of cutthroat competition and financial losses, the coalition may be moving away from the typical budget model, which shuns the cost of international alliances and frequent-flyer freebies.

The union—unlike cut-rate competition in Europe and the US—could be a step toward mergers in Asia, where low-cost carriers have flooded the world’s fastest-growing travel market with plane orders, an analyst said.

“Eventually, at least in Asia Pacific, we’re going to see some of that,” Richard Laig, Manila-based partner for the Asia-Pacific region at consultancy Mango Aviation Partners Ltd. “A lot of those markets are getting so saturated.”

About a dozen low-cost airlines started operating in the Asia-Pacific region over the past decade, C  A

MEGAWORLD TO SPEND P10B FOR NEW TOWNSHIP LIFE

M

D1

DOMINATION DAY THIS May 16 photo shows a portion of a reclaimed area being developed into a new resort and leisure place in Parañaque City. NONIE REYES B VG C, L L  J M @villygc

SPORTS

C1

L

@llectura

@jonlmayuga

Conclusion

AND reclamation, explained Philippine Reclamation Authority (PRA) Assistant General Manager Joselito D. Gonzales, is the process of creating new land from ocean, sea, riverbeds, and the like.

These bodies of water, he explained,

PESO EXCHANGE RATES n US 46.5190

290,000 sq m The total office spaces coming online in the next three years, according to KMC Research and Consultancy are all state-owned.

Gonzales added that private companies pursuing to build an establishment or road infrastructure within a state

property need to seek the green light of the PRA and the National Economic and Development Authority Board.

“We are very strict when it comes to issuing permits. We require studies, which should all be complete,” Gonzales told the BusinessMirror. “For as long as we see their project fit and they have complied with other requirements, such as environmental clearance, among others, then we can issue a permit.”

C  A

B VG C

@villygc

EGAWORLD Corp. on Tuesday said it is allocating some P10 billion for its mixed-use project in a 140-hectare property in General Trias, Cavite.

To be called Maple Grove, the vast property will become the company’s 21st mixed-use development in the country, and will be built over the next 10 years with a mix of residential, retail, office and institutional components.

Megaworld said the property is 45 minutes away from Makati and other Metro Manila central business districts via Coastal Road and Cavite Expressway. Maple Grove is at the entry point of the booming industrial and residential center of the Cavite-Batangas corridor, it added.

“In the last 27 years, we have built townships that cater to the evolving lifestyles of Filipinos. As we continue to expand our township footprint in key growth areas across the country, innovation and design will be significant factors in our master plans,” Jericho Go, Megaworld senior vice president, said in a statement.

C  A

140 hectares The size of Megaworld’s property in General Trias, Cavite, where a new township will be built

n JAPAN 0.4267 n UK 67.0153 n HK 5.9923 n CHINA 7.1348 n SINGAPORE 33.9753 n AUSTRALIA 33.8984 n EU 52.6735 n SAUDI ARABIA 12.4081

Source: BSP (17 May 2016 )

A2 Wednesday, May 18, 2016

BMReports BusinessMirror

www.businessmirror.com.ph

Land-reclamation tack fraught with challenges, opportunities C  A

Another government agency that scrutinizes land reclamation projects is Public-Private Partnership (PPP) Center.

According to Andre C. Palacios, the executive director of the PPP Center, what his office does is to study the project carefully and try to mitigate risks to suit privatesector taste, and implement the bidding as soon as possible.

“The land reclamation component of a PPP project raises unique legal, environmental and social risks,” Palacios told the BusinessMirror. “The international consulting firms and their local partners—e.g., law firms—acting as government transaction advisors, are required to pay close attention to these risks and to propose mitigation measures.”

He listed down examples of reclamation issues as: “Power of agency to undertake reclamation, approvals required, classification of reclaimed land into alienable public land and to patrimonial land that can be transferred to the winning bidder, resettlement of affected families, sufficiency of environmental mitigation measures.”

Bullish sectors

PRIVATE firms, especially those in the real-estate sector, generally welcome any bid by the state to expand space, especially in urban areas.

This is so since most of the players in the property sector are bullish about the prospects in the industry, both in the office, com-

mercial and residential spaces.

A huge chunk of the commercial space is being taken by the businessprocess outsourcing (BPO) companies. Many developers see the BPO sector as a steady stream of revenue even on a medium-term contract.

Megaworld Corp., the property arm of businessman Andrew L. Tan, is one of them.

Megaworld has announced continuing construction of office spaces at an average of 100,000 square meters this year, a tack the firm began two years ago. Before 2014, Megaworld has only been building at an annual average of 50,000 sq m to 75,000 sq m. The company may end the year at supplying 712,000 sqm in office space, the bulk of which is again for the BPO sector.

Skyrocketing prices

KMC Research and Consultancy said office rentals in prime locations, such as Makati City, Bonifacio Global City in Taguig and Ortigas Center, continue to skyrocket on high demand.

Outside of these areas, however, it sees price softening.

In the Alabang market, for instance, rental rate was flat last year and is expected to remain sluggish over the next two years, as there will be new supply of office space of about 194,000 sq m through 2018.

The same is true in Quezon City, mainly in Araneta Center in Cubao, KMC said.

In the bay area, meanwhile, KMC expects vacancy rate to spike in the short to medium term.

“This is due to the impressive

Eventually, we will look at natural-gas pipeline. We have plans to put up the Batangas-Manila pipeline, so if there is an area that is government-owned and can be used for this project, then we will explore it with the Philippine Reclamation Authority.”—M pipeline of office spaces coming online in the next three years close to 290,000 sq m,” a document by the company said. “Rental-rate growth is likely to ease given the demand and supply dynamics in the submarket.”

Residential market

FOR the residential market, 8990 Holdings Inc. President Januario Jesus Gregorio B. Atencio III said that, during the recent debates of candidates for the May 9 elect ions, on ly t wo inc luded housing in their agenda: Vice President Jejomar C. Binay and Rep. Ma. Leonor Robredo of Third District of Camarines Sur. Binay is also the chairman of the Housing Urban Development Coordinating Council (HUDCC).

“The idea of housing as an economic catalyst, as an inclusive society generator, as a social leveler has not been discussed [during the debates],” Atencio said. “Does it mean that if you are

not the chairman of the [HUDCC] that housing means nothing?”

R obredo who i s c u r rent ly leading in the quick count for vice presidency, also mentioned housing as one of the catalyst of growth in the country, according to Atencio.

“Mass housing is the great equalizer because 98 percent of our buyers are nonproperty owners. In a way, this is also like land reform but in a noneconomic or agricultural setting because the result is the same,” he said. “We are able to distribute property to those who at [this] point have no land.”

Atencio declined to disclose if the mass housing developer is eyeing reclaimed land for residential property projects.

Andoni Aboitiz, president of Aboitiz Land Inc., is also bullish on the industry.

“If the new president [would be] able to lift the GDP and translates [the growth into] housing, that’s very good.”

Aboitiz Land, a relatively new entrant in the industry, as it mainly focused on development of sparse land areas in Cebu, said the company is looking for partners to expand its existing portfolio of residential space to other parts of the country.

Aboitiz Land said it will focus on the mid-range market.

Antiflooding

UNDER the current pipeline of national PPP deals, there are two projects that are currently at different stages.

One is the unsolicited proposal submitted by San Miguel Corp. to the Department of Public Works and Highways (DPWH).

According to documents from the DPWH, the P338.8-billion Manila Bay Integrated Flood Control Expressway deal will help protect the Manila Bay coastline against flooding from the sea—by means of a city flood barrier and coastal sea barrier—and provide an attractive urban waterfront development with space for new commercial activities.

The coastal sea barrier also functions as an expressway that cuts the travel time between Bataan and the National Capital Region.

Along the barrier, the project also offers reclaimed land for urban and economic development.

In between the reclaimed land and the present shoreline are mangrove forests that help develop the ecological value of Manila Bay. The project can be sorted into two subprojects: the City Flood Proofing and the Coastal Sea Barrier and Expressway.

It is currently being reviewed by a technical working group from the DPWH. The administration of President Aquino, however, is regarded to have a general distaste for unsolicited proposals.

Dead deal

ANOTHER project under the current pipeline of national PPP deals is the construction of the Laguna lakeshore expressway dike (LLED), which is as good as dead due to the lack of participation from qualified bidders. Groups interested in the contract were one and the same in their issue on the deal: it is not commercially viable.

Team Trident—composed of Ayala Corp., Aboitiz Equity Ventures Inc., SM Prime Holdings Inc. and Megaworld Corp.—has three key issues on the deal: economic viability, problems with connectivity and the complexity of the deal.

“We looked at the overall economic viability and risks. We took some of those to see if we can get this financed,” Aboitiz Equity Ventures First Vice President Roman Anthony V. Azanza said in a March 28 interview. “But we couldn’t get to a sufficient level of comfortability with the economic viability and risks and our ability to take it to the banks.”

Connectivity to different growth areas in Metro Manila was also an issue for the so-called megaconsortium. “You have to have a guaranteed access to other central business districts,” Azanza said.

“Connectivity is crucial as it is a 700-hectare development.”

The deal’s complexity, he added, made it more commercially unviable. “The other one is the complexity of the deal,” he said.

“Consequently, the technological solutions for this project were so challenging that the cost implications almost doubled than what the government initially had.”

Alternative route

THE P122.8-billion LLED project involves the construction of a 47-kilometer flood-control dike— on top of which will be a six-lane expressway—on an offshore alignment 500 meters away from the western shoreline of Laguna Lake.

It includes interchanges, bridges, floodgates and pumps from Taguig to Los Baños in Laguna.

It also involves the reclamation of 700 hectares of raw land adjoining the expressway dike.

The thoroughfare-cum-dike project is expected to help mitigate flooding along the western coast of the Laguna Lake, which runs from Taguig to the town of Bay in Laguna. The project is also

expected to serve as an alternative transport route to the congested South Luzon Expressway and enhance the hydrology for the ecosystem of Laguna Lake.

“The government also wants this rolled out in seven years. So, its complexity, less connectivity, and a very tight time frame to roll this project out. So just imagine how the risk-reward balance was clearly not in the favour of the bidders,” Azanza said.

MTD Philippines Inc. President Isaac S. David also tagged the bidding process as illegal. In its letter to the public works department, the company said the lack of a presidential proclamation “reserving the reclamation area for purposes of procurement transaction” made the tender illegal.

“Second, the the legal personality of the procuring entity is questionable. It has to be the Philippine Reclamation Authority, not the public works agency, nor the Laguna Lake Development Authority,” the company said in its letter.

With little time left, the current government will have to pass the deal’s tender process to the incoming administration of Presidentelect Rodrigo R. Duterte.

Prospects: BatMan

ENERGY Secretary Zenaida Y. Monsada said her office would look at the prospects of utilizing a portion of a reclaimed land for the use of natural gas pipeline.

“Eventually, we will look at natural-gas pipeline,” Monsada said. “We have plans to put up the Batangas-Manila [BatMan] pipeline, so maybe, if there is an area that is government-owned and can be used for this project, then we will explore it with the PRA.” The BatMan natural-gas project involves the construction of a 121-km transmission pipeline that will transport and supply natural gas to targeted markets along its route from Batangas, Laguna and Cavite and, eventually, to Metro Manila.

The BatMan project, however, faces delay due to technical issues.

The Department of Energy (DOE) needs to further review the project design, as well as the prospective off-takers for the gas supply.

With such challenge, the PRA is thankful it has not encountered road right-of-way (ROW) problems in the past.

“Effectively, there is no rightof-way issue to begin with,” Gonzales told the BusinessMirror in a phone interview.

While the Philippines, an archipelago that consists of an estimated 7,641 islands, with a total land area of approximately 300,000 square kilometers (or 3 billion sq m), grappling for more space for economic growth, the incoming administration, hopefully, would not dig itself into troubles but fill more pockets.

MEGAWORLD TO SPEND P10B FOR NEW TOWNSHIP C  A

“An integral part of the township’s master plan will be on sustainability and environmental responsibility. We hope to see our future stakeholders in Maple Grove live, work and play in a smart and green community,” Go added.

This is Megaworld’s fourth integrated urban development in the booming Cavite-Batangas growth area. The company still has over 2,000 hectares of land in this corridor alone.

Through its subsidiary Global-Estate Resorts Inc., Megaworld is also developing Twin Lakes, a 1,300-hectare integrated tourism-estate development near Tagaytay; and Southwoods City, a 561-hectare township that is surrounded by its own golf course in the boundaries of Cavite and

Laguna. Another development, the 350 -hectare Suntrust Ecotown of Megaworld ’s wholly owned subsidiary, Suntrust Properties Inc., is rising as a mixeduse township with its own industrial park in Tanza, Cavite. “The trajectory for growth in that area south of Manila is unprecedented in the last 10 years, and we see a lot more opportunities in the real-estate sector in this corridor,” Go said.

Megaworld’s income grew 12 percent to P2.63 billion in the first three months of the year, from P2.35 billion last year, as revenues rose to an all-time high.

The company said its rental business boosted its income for the period, as revenues soared to P2.3 billion, some 16 percent higher than last year’s P1.97 billion.

“We have sustained our expan-

sion plans for our office and mall businesses, which bolstered our rental revenues. In the next five years, we see our rental businesses become the key driver of our growth, as we expect a continuing momentum in consumer spending and a remarkable growth in BPO revenues,” the company said.

The company said its rental revenues will hit the P11-billion mark by the end of the year, up from about P9.16 billion last year.

Consolidated revenues of Megaworld, which includes all of its units, rose to P11.46 billion for the first quarter, an increase of 9 percent from P10.47 billion in the same period last year.

Residential sales, meanwhile, continued to grow in the first three months of the year, reaching P6.86 billion, up 10 percent from P6.24 billion a year ago.

BMReports BusinessMirror

news@businessmirror.com.ph

Wednesday, May 18, 2016 A3

No other option but Clark–Miaa’s Honrado

A

B R M

@rectomercene

IRPORT authorities admit that the Ninoy Aquino International Airport (Naia) had already reached its limits, and they see no shortterm solution to the congestion problem at the country’s premier aviation gateway except to use Clark International Airport (CIA).

“Perhaps, airlines can start thinking of using Clark; there’s [a] big number of passengers from the north and plenty of slot[s], airspace and land spaces available there,” outgoing Manila International Airport Authority (Miaa) General Manager Jose Angel A. Honrado said.

He added that Cebu Pacific, Cebgo and Air Asia can initiate the transfer to alleviate the air traffic congestion in Manila.

Sabotage

RUPERTO Cruz, chairman of the Pampanga-based Pinoy Gumising Ka Movement, however, met Honrado’s statement with derision and suspicion, especially now that Honrado is on his way out as Miaa general manager and Clark International Airport Corp. (CIAC) director.

Cruz charged that Honrado is mainly responsible for stunting the growth of Clark airport.

“Don’t make fools of us again. We don’t want to be fooled by Honrado and [Manuel] Mar Roxas [II],” he added.

“This is the same promise made by Roxas in his failed presidential campaign. They were here for six years and they failed to develop the Clark airport. They’ve done nothing and now they’re trying to promise us again,” Cruz said.

“In fact, we suspect that Honrado must be one of the people whom we suspect are out to sabotage the development of the Clark airport,” he said.

Tripartite accord

HONRADO made the suggestion during a recent tripartite meeting among the Miaa, the Civil Aviation Authority of the Philippines (Caap) and the Civil Aeronautics Board (CAB).

After the meeting, the group signed a tripartite memorandum of agreement to efficiently use the available airport slots for domestic air carriers.

Present during the signing at the Miaa office in Pasay City were representatives from Philippine Airlines (PAL), Pal Express, Cebgo, Air Asia and Seair.

Rodante S. Joya, deputy director general of the Caap, supported Honrado’s suggestion.

“In Manila, one of our problems is connectivity between terminals.

Manila is a hub. If we can operationalize Clark to become a hub for international flights and for domestic flights going to provinces… [that could be a viable solution],” he said.

Joya added that one of the government initiatives in easing traffic congestion is the enabling of operations of night-flight capability of six provincial airports.

“We have finished three [provincial airports], but perhaps, the air carriers can use these during the incoming winter schedules to transfer to Butuan, Legazpi or Dumaguete during the night to ease the pressure in Manila during day time. There is no silver bullet here,” he said.

“Manila cannot accommodate this increase in passenger and air traffic,” Joya added.

The agreement stipulates that all domestic air carriers must stick strictly to their assigned slots, and fly on the designated hour in order not to create a ripple effect that, eventually, affects all succeeding flights leading to congestion.

To avoid this, airlines are advised to submit their summer and winter schedules about 60 calendar days before implementation.

Slot utilization

CAB Executive Director Carmelo L. Arcilla said the agreement basically requires airlines to utilize their slot or face the risk of losing it.

“We want to make sure [that] the slots are available to any airline, which intends to use the airport,” he said.

Slots are issued by the Airport Coordination Australia, the Naia’s third-party slot coordinator.

Air carriers must get clearance from the Miaa, the Caap and the CAB for terminal and runway clearance, respectively, before they are given their assigned slots.

A monitoring and public assistance desk was provided at the terminals to respond to passenger concerns, and monitor the operations of the airlines. The CAB has entered into a separate agreement with the Miaa and the Caap and other local airports for the deployment of the assistance desks.

The agreement stipulates that the daily average of 684 flight movement per hour would be maximized, out of the available 880 allocations.

Sanctions

FOR carriers who violate the agreement, they would be subjected to sanctions, including termination of operation, forfeiture of slots and penalty of P5,000 per violation or per passenger.

Honrado said the agreement does not promise to increase the existing slots but to make an efficient use of all of them.

“Basically, [the slots] will not [be] increased; we will still maintain the 40 slots per hour. There are many slots available but those are early in the morning,” he said.

Arcilla, for his part, added that the agreement is meant to rationalize the allocation and maximize the utilization of the existing slots.

“So we’re talking here of efficiencies,” he said.

He squelched reports that the agreement will dampen the air carriers desire to increase flights.

“It will not dampen the desire of carriers to expand operations, of course, the more lasting solution is the supply side, but given the existing circumstances, we have to adopt the demand side approach.”

Arcilla said.

The demand side is the reality that demand for more flights is increasing and the supply side refers the ability of government

to provide the infrastructure.

He said the positive effect of the agreement is that those slots that are “misused” can be transferred to another airline waiting in line.

“This will redound to public at large and support the expansion of slots,” Arcilla said.

PAL President and COO Jaime J. Bautista agreed, saying there will be same number of slots available, but “what we can do is take advantage of available

slots. The agreement is not to increase the slots, but from my understanding of [the] agreement, the [accord will impose on] the three agencies to efficiently allocate the slots and allow other airlines to use slots not use by other airlines.”

He, however, said the agreement is not a guarantee that there will be no more delays.

Joya, likewise, said this is only one of several factors that affect efficiency of flight operations at Naia.

“We have capacity enhancements at Naia terminals,” he said, adding the total terminal capacity is only 30.5 million per year.

“Last year we had 36 million passengers, there are several capacity enhancement, such as those initiated by PAL, constructing their own parking ramps,” Joya said.

“Because of the number of airplanes [that] are coming in there’s nowhere to park them.”

He added that although there are suggestion to increase the capacity to 1,400 per hour, such as those at Gatwick airport in the UK and La Guardia Airport in New York, the Naia cannot do it “because you have to close the airport for certain hours due to repairs [and] maintenance.”

Joya, likewise, bared that the Caap is procuring a tower simulator to hone the skills and boost the level of confidence of air-traffic controllers. With Ashley Manabat

BMReports BusinessMirror

A4 Wednesday, May 18, 2016

news@businessmirror.com.ph

Sobrepeña to seek 20-year MRT 3 maintenance deal from new admin

A

FTER completing its P37.27-billion investment program aimed at fixing, improving and modernizing Metro Rail Transit Line 3 (MRT 3), the owner of the train facility said it is planning to negotiate a 20-year management contract with the government.

Robert John L. Sobrepeña, who chairs MRT Holdings Inc., said this will be in line with the plan of the current government to bid out the operations and management contract to a rail operator once the government owns the train facility.

“We would like to operate, or manage, the rail system for 20 more years. After all, this is how the government envisioned it once we pass the ownership to them,” he told the BusinessMirror.

The camp of Sobrepeña will trans-

fer the ownership of the system to the government by 2025. To recall, the Marcos administration entered into a build-lease-transfer contract with MRT Corp. for the construction of the rail facility on Edsa.

“We will also propose a revenuesharing scheme, wherein both of us can profit fairly,” Sobrepeña said.

The businessman is scheduled to fly to Davao sometime this week to discuss with presumptive President Rodrigo R. Duterte the group’s proposal on how to address

the problems of the MRT. It is an $800-million, threephased proposal that will free the government from its obligation of spending billions of pesos to improve the line.

Under the proposal, the private sector will start fixing the train line’s immediate problems, namely, the system’s dilapidated rails, outdated signaling system and its failing train cars.

The first phase involves the “fixing” of the train line. With Sumitomo Corp., the private company starts fixing the train line’s immediate problems.

The second phase involves the upgrade of the whole system, which costs about $400 million. It involves the replacement of all elevators, escalators and the makeover of the stations. The company will also buy 48 new cars to double the facility’s capacity, so that 1 million to 1.2 million passengers could ride the train system daily.

The third phase involves the

2025

The year when MRT Holdings is expected to transfer ownership of MRT 3 to the government linking of the MRT to the Light Rail Transit (LRT) Line 1’s Monumento Station. This would require another $300-million investment.

It also includes the procurement of another 48 train cars.

All these, he said, could be completed in a matter of three to threeand-a-half years.

Sobrepeña is upbeat about the next administration, as the Aquino administration repeatedly ignored its proposals. The current administration also did not reply to two other proposals

from other private companies.

Under its proposal, Metro Pacific Investments Corp. will shoulder the upgrade costs of the train system and release the government from the bondage of paying billions of pesos in equity-rental payments.

The group of businessman Manuel V. Pangilinan, which earlier entered into a partnership agreement with the corporate owner of the MRT, intends to spend $524 million to overhaul the line.

The venture would effectively expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers a day, from the current 350,000 passengers daily.

It was submitted in 2011, but the transportation agency’s chief back then rejected the proposal.

The group revived its proposal before Congress in 2014.

Sobrepeña met with the group of Pangilinan on Friday afternoon to arrive at a possible joint venture for the rehabilitation and modernization of the train system. Officials of Metro Pacific were not available for comment as of press time.

Meanwhile, a German-Filipino consortium is seeking to place the whole train system under a massive transformation program to augment its capacity and to provide a safe and comfortable travel to commuters from the northern and southern corridors of Metro Manila.

The P4.64-billion proposal, submitted in February last year with Filipino partner Comm Builders and Technology Phils. Corp., calls for the complete overhaul of the 73 light-rail vehicles of the MRT, the replacement of the rails, the upgrading of the line’s ancillary system, the upgrade of the track circuit and signaling systems, the modernization of the conveyance system, and a three-year maintenance contract.

Alliance of Asian budget carriers may lead to merger deals   A

ordering hundreds of aircraft from Airbus Group SE and Boeing Co. Budget carriers have racked up a 54-percent market share in Southeast Asia, compared with 26 percent globally, according to the International Air Transport Association.

AirAsia missing

THE alliance includes Vanilla Air, a unit of Japan’s ANA Holdings Inc., Tiger Airways Australia, controlled

by Virgin Australia Holdings Ltd., Cebu Pacific Air in the Philippines and South Korea’s Jeju Air. Scoot’s CEO Campbell Wilson told reporters in Singapore on Monday that the alliance is open to any airline that wishes to join.

Missing from the group are the

region’s best-known and biggest low-cost carriers, AirAsia Bhd. and Jetstar, which is owned by Qantas Airways Ltd. AirAsia CEO Tony Fernandes and media offices of Jetstar and Lion Air in Indonesia didn’t immediately respond to emails seeking comment. IndiGo, India’s No. 1 carrier, is not part of the group, as well. Its operator InterGlobe Aviation Ltd. declined to comment.

Incremental gain

“IT is obviously an attempt by smaller low-cost carriers to respond to larger airlines,” said Brendan Sobie, a Singapore-based analyst at Capa Centre for Aviation. “Even if the incremental gain is relatively small initially, it’s still a good ploy to just get together and

try to improve your distribution and brand awareness, and get some incremental traffic.”

It will be tough for the new union to generate extra revenue for its members because low-cost carriers —which often shuttle the same plane between two cities several times a day—find it hard to match arrival and departure times, said Laig at Mango Aviation.

“They don’t really have the ability to coordinate schedules,” he said.

“We’re skeptical as to specific things they can offer.”

Rule hurdles

STILL, mergers won’t be easy. Most countries have rules against overseas investors buying shares in domestic airlines. In Japan it’s 33-percent maximum stake, and in Australia 49

percent. Also, in Asia, several countries have state-owned full-service flag carriers, as well.

The possibility of a consolidation in Asia has some parallels in Europe, where capacity of low-fare airlines —led by market leaders and profitable Ryanair Holdings Plc. and EasyJet Plc.—is set to rise four times faster than the continent’s GDP. They are competing in a market where full-service European carriers have merged into three large groups, led by Deutsche Lufthansa AG, Air France-KLM Group and British Airways, whose owner is IAG SA. In the US a series of mergers over the past 15 years has left the industry dominated by American Airlines Group Inc., Delta Air Lines Inc., United Continental Holdings Inc. and discounter Southwest Air-

lines Co. Growing ultra-low-cost carriers, such as Spirit Airlines Inc., have expanded into markets dominated by larger rivals, touching off price wars during the past year that have affected most of the industry.

According to Value Alliance, its members offer flights to more than 160 destinations with a fleet of 176 aircraft. AirAsia and AirAsia X Bhd. have a combined fleet of 199 aircraft, while IndiGo has 108 planes.

Limited scope

IN a joint news conference in Singapore on Monday, Wilson said the Value Alliance is limited in scope by design. It also means that the alliance won’t need any regulatory permits to proceed.

“We’re doing this for our rea-

sons,” he said. “The fact that there are no other companies here is self-explanatory.”

The accord could be successful if travelers can hop from one member to the next as they fly around Asia, said David Miles, the head of advisory services at Ambidji Group, a Melbourne-based aviation consultancy. But that cooperation could rack up costs, eating into any benefit, he said.

The alliance partly reflects the challenge of making money as a lowcost carrier in one of the world’s most competitive markets, Miles said.

“With so many competitors in the market, some are going to suffer,” he said. “A merger usually comes when one or more parties are struggling and they realize they need help.” Bloomberg News

New ‘pork-like scheme’ to lure Congress feared   A of his administration, to adjust the tax brackets according to inflation that has eaten into the purchasing power of middle-income earners during the almost three decades since the enactment of the Tax Code.

The highest tax rate of 32 percent is currently imposed on individual taxpayers with an annual taxable income of P500,000, which is admittedly now only within the range of what could be considered as a middle-income salary.

Other controversial bills, which Duterte would need strong support in Congress, are the revival of the death penalty for heinous crimes and the move to change the Constitution to shift to a federal system of government, both of which could be divisive. He is expected to take care of the Freedom of Information bill through an executive order to require the Executive branch to disclose important information on matters of public concern.

Duterte, just like any president, would also benefit from having the support of at least two-thirds of the membership of the House of Representatives to preclude any initiation of impeachment proceedings against him.

University of the Philippines Vice President for Public Affairs Prospero de Vera said the incoming administration might find some need to give “concessions” to members of Congress during the budget-crafting process to gain support at the House of Representatives and the Senate.

De Vera said these concessions could be in the form of giving appropriations to the projects of congressmen in their districts

during the actual budget deliberations.

He, however, said it would be very difficult to revert to the previous practice of giving legislators the discretion on where to spend their lump sum pork-barrel funds, which had already been struck down by the Supreme Court in 2013.

De Vera said there might be a need to induce some of the congressmen to support bills like the revival of the death penalty. This is because some lawmakers might be constrained to vote against the revival of the death penalty for fear of retaliation by the Catholic Church in their respective districts.

“In our country, the Catholic Church does not control the outcome of the elections, but only in the sense that they cannot make you win; but they can make you lose,” de Vera said.

In the Senate, which has a tradition of being independent regardless of whether the Senate leadership is politically allied with the president, Duterte’s provocative language against some senators for bullying resource persons during congressional investigations does not help.

But de Vera said Duterte would just have to rely on his overwhelming political capital at the start of his term to be able to rally senators to vote in favor of his legislative agenda. In his media conference on Monday, Duterte said senators should stop bullying and denigrating government officials and resource persons invited in their congressional investigations.

“He would have to bank on his political capital because the senators would be afraid to cross swords with a very popular president,” he said.

news@businessmirror.com.ph

AseanWednesday BusinessMirror

Indonesia turns to Singapore’s Temasek as investment model

I

NDONESIA is turning to Singapore’s Temasek Holdings Pte. as a model to create a sovereign investment company to drive development in Southeast Asia’s biggest economy.

The government is considering starting an investmentholding company for four or five state-owned entities, which could then buy shares in Indonesian companies, Finance Minister Bambang Brodjonegoro said in an interview in Jakarta on Monday. If the fund is successful, it may, over time, invest in assets overseas, as Temasek did, he said.

“A superholding of our SOEs, that could be a very good sovereign wealth fund for Indonesia,” Brodjonegoro said. “This process has to start.”

President Joko Widodo took office at the end of 2014 with a mandate to spur economic growth through public spending to combat a slowdown in demand from China for the nation’s commodities, such as coal and palm oil. He is seeking to fast-track infrastructure projects and has pledged to cut red tape to attract businesses.

Record assets

TEMASEK was founded in 1974 to own and manage shares and assets held by Singapore’s government, such as shipyards previously controlled by its former colonial power, the UK. It began investing in foreign equities in 2002 and had record assets of

S$266 billion ($195 billion) at the end of March last year.

“There are still a lot of big Indonesian companies not really owned by Indonesians, so this could be a good opportunity,” Brodjonegoro said. “They can invest, they have the financing capability, and later, maybe if the thing is already settled, with investing in Indonesia, they can of course go abroad.”

State banks and energy firms may be possible targets for an investment holding company.

Dwi Soetjipto, CEO of PT Pertamina, said this week he wants to combine with gas company PT Perusahaan Gas Negara. Stateowned Enterprises Minister Rini Soemarno said in April that PT Danareksa Investment Management will be a holding company for government-owned financial firms.

Indonesia is also putting efforts into boosting tax revenue to fund its infrastructure drive, with a planned amnesty for declaring and repatriating hidden offshore funds seen as key to widening the tax base. Brodjonegoro said he expects the planned tax amnesty bill to be passed by parliament this month.

“We need to have the amnesty to bring part of the money back to Indonesia,” he said. “We need to improve our tax base.”

The economy will probably expand more than 5 percent in the second quarter, as public spending picks up and farming output improves, the minister said. Bloomberg News

Editor: Max V. de Leon • Wednesday, May 18, 2016 A5

Vietnam success foiling hack shows risk of Swift connection

A

FOILED hacking attack on a small Vietnamese bank may have been a practice run for an $81-million cyber assault on Bangladesh’s account at the Federal Reserve Bank of New York, and points to vulnerabilities in how banks connect to the Swift interbank messaging system.

Vietnam’s Tien Phong Commercial Joint Stock Bank, known as TPBank, informed the country’s regulators on Monday that it had fended off a fraudulent transfer request late last year for more than €1 million ($1.13 million). The request came through a third-party service that the bank used to connect to the Swift interbank messaging system, the Hanoibased lender told the central State Bank of Vietnam. The regulator said it’s investigating, though the incident didn’t result in any losses.

“What cyber criminals have been trying to do is focus on banks that might be using outdated versions of Swift or third-party vendor software,” said Kenneth Wong, cyber-security leader of PricewaterhouseCoopers China and Hong Kong, calling the Vietnam attack “most likely” a warmup for the Bangladesh incident.

“There’s always a race between software companies and hackers.”

When I look at banks across Asia, most of them are unprepared for these types of attacks.”

—B  FE Suspicious link BANKS are also vulnerable if workers simply click on a suspicious link that places malware on workstations used to make monetary transfers, he said.

“The Swift payment system is only as strong as the operational controls built and enforced around it,” said Mark Williams, a lecturer at

Boston University and author of Uncontrolled Risk on the rise and fall of Lehman Brothers. He blamed “a lack of strong policies and procedures” for increased vulnerabilities.

In February Bangladesh lost $81 million, after its central bank was infected with malware, according to Mohammed Farashuddin, chief of the government panel on the Bangladesh Bank heist. He pointed the finger at Swift and also said the Federal Reserve Bank of New York didn’t conduct enough due diligence.

“The Vietnam case shows that the global banking system is vulnerable to cyber attacks, and we should make a global effort to prevent these attacks,” Bangladesh Bank Spokesman Subhankar Saha said on Monday. Swift has warned users that it was aware of several similar cases, and last week it said that the Bangladesh heist was carried out by malware infecting a PDF reader used by a customer to check statements. In its warning on Friday, Swift said customers using PDF reader applications to check confirmation messages should take particular care. Hundreds of billions of dollars are moved internationally through the Swift system every day.

Matching malware

UK-BASED security firm BAE Systems Plc. said in a blog post that malware samples uploaded from Bangladesh and Vietnam are a match, and that the hacks also match a third breach, the 2014 attack on Sony Pictures.

“Looking at it broad base, the Vietnam attack, Bangladesh attack, and going back to Sony, there could be indicators telling us that it’s a very syndicated and sophisticated attack,” said Bill Taylor-Mountford, vice president for the Asia-Pacific region at LogRhythm Inc., a security-intelligence company.

“The malware looks very similar.”

Banks in developing countries such as Vietnam are prime candidates for such attacks and are vulnerable because they often lack the resources to build technological firewalls against hackers, said Alan Pham, chief economist at VinaCapital Group in Ho Chi Minh City. “When I look at banks across Asia, most of them are unprepared for these types of attacks,” said Bryce Boland, chief technology officer for the Asia-Pacific region at FireEye Inc., a malware and network-threat protection system, which has a team hired to conduct a forensics investigation into the Bangladesh heist.

Yet, TPBank, a closely held bank with assets of just $3.4 billion at the end of 2015, managed to thwart the hacker’s assault during the fourth quarter of last year, the bank said in an e-mailed statement. Hackers may have installed malware into the third-party software the bank used to use to connect to the Swift system, it said, citing information from Swift. The bank has stopped using the third-party vendor’s service and now deploys its own technology with stronger security to connect directly with Swift, it said, without identifying the vendor. Bloomberg News

A6

The World BusinessMirror

Wednesday, May 18, 2016

news@businessmirror.com.ph

IN this April 25 photo, a boy from the community that call themselves the “Muhammasheen,” or “the Marginalized,” stands near his hut in a slum area of Sanaa, Yemen. They are Yemen’s untouchables, a dark-skinned ethnic group that for centuries has been consigned to the bottom of Yemen’s social scale, faced with discrimination and racism, and shunned by others. Vulnerable with no tribal protection, they have been hit particularly hard in Yemen’s civil war. AP

‘Untouchables’ of Yemen caught in crossfire of war

S

ANAA, Yemen—They are Yemen’s untouchables. They call themselves the “Muhammasheen,” or “the Marginalized,” a dark-skinned ethnic group that for centuries has been consigned to the bottom of Yemen’s social scale, faced with discrimination and racism, shunned by others.

They live in shantytowns on the outskirts of cities, are often refused schooling and work menial jobs like shoe-shining or street cleaning or turn to begging. Other Yemenis have traditionally called them the “Akhdam,” or “servants.”

In a country where belonging to a tribe is vital to guaranteeing protection, status and livelihood, their community—which some estimates say numbers nearly 3 million people—is without a tribe and ignored by the government.

As a result, they have been hit particularly hard in Yemen’s civil war that is pitting the government, backed by a Saudi-led coalition, against Shiite rebels known as Houthis and forces loyal to Yemen’s ousted president.

Their neighborhoods have been pounded both by coalition airstrikes and Houthi shelling, shattering their makeshift homes cobbled together from sheets of metal, cardboard and blankets.

Many have been thrown into a state of constant displacement, with no one to take them in. Some tell of fleeing from strikes by one side, only to be hit again by another of the many factions and combatants in the conflict. Yemeni groups distributing humanitarian aid ignore them, they say.

“We are naked. We have nothing,” Houssna Mohammed said, choking back tears as she stood at the charred remains of her shack in a slum of the Marginalized in the western city of Taiz. She said her home was burned down in March when a mortar hit her neighbor and the fire was blown to her shack.

Nothingness

WALID ABDULLAH, a 20-year-old member of the Marginalized, said his home district in Taiz, al-Jahmaliya, was hit early on in the war by shelling. The whole community of 200 families fled to al-Rahda, another town in Taiz province.

Later they had to flee again when Saudi airstrikes hit al-Rahda.

Now he is in Sanaa, the Yemeni capital, and he says his family is spread around multiple slums in the city. In the air strikes, he lost his only source of income, a motorbike he offered for rent. “Now I have nothing,” he said.

An estimated 9,000 people have been killed in the past year of fighting in Yemen, and more than 2.4 million have been driven from their homes. The death toll among the Marginalized is difficult to verify because few pay attention to them.

One advocacy group, the Yemeni Organization Against Discrimination, said it has documented more than 300 killed, including 68 children and 56 women. Yahia Said, the head of the organization, said the true number is likely much higher.

Origins

THE origins of the Muhammasheen are unclear. Popular tradition has it that they are the descendants of Ethiopian soldiers who invaded Yemen in the 6th century. Other theories suggest they were African peoples who were among the first to inhabit coastal cities in Yemen.

Official government statistics have put their population at around 500,000, but Marginalized activists say they number

around 3 million. The Unicef has estimated they amount to about 10 percent of the population, or 2.6 million.

For generations, they have been treated as a permanent underclass.

Yemenis call them unclean and tell their children not to mingle with them. One common proverb among Yemenis goes, “Clean your plate if it is touched by a dog, but break it if it’s touched by a Khadem.”

Activists say schools and hospitals often turn them away. They say women in the community are vulnerable to sexual abuse by other Yemenis, who are confident courts won’t prosecute them or that their tribes will intimidate the Marginalized into silence.

In contrast, if a Marginalized man is believed to be fraternizing with an outside woman, his entire community can be driven from their homes as punishment.

Stigma

THE children of the Marginalized who defy social stigma and attend schools often face harassment from teachers and fellow students.

Said recalled how, when he was in first grade, his teacher accused the blacks of Yemen of being the descendants of those who tried to destroy the Kaaba, Islam’s holiest site, located in Mecca. It was a reference to a historical incident in which an Ethiopian Christian king of Yemen is said to have sent an army with elephants to destroy the Kaaba.

“Imagine 70 students looking at me in disgust,” Said remembered.

Saleh al-Bair studied political science at universities in the Soviet Union and Cuba in the 1990s, one of the few Marginalized to gain access to education abroad. Yet he now works as a shoe shiner in Sanaa.

He said that even before the war, his community had no rights.

“If you go to court, the judge won’t summon me using my name but would say, ‘servant.’ So what kind of justice would you expect after that?” he said. In 2014 Unicef conducted a survey of more than 9,000 Marginalized families in the city of Taiz, site of one of their largest communities. It found high levels of poverty and low levels of

3 million

The estimated number of Yemen’s untouchables who call themselves the “Muhammasheen” or “the Marginalized”

education, all far worse than national averages.

Only half the children were in school, 80 percent of the adults and nearly 52 percent of 10- to 14-year-olds were illiterate. More than half the children under 1 year old had not been immunized.

Beggars

BUTHAINA al-IRYANI, socialprotection specialist at the Unicef, said the agency distributes cash to the families of the Marginalized in Sanaa and Taiz due to their urgent needs. But she acknowledged, “This is a drop in the ocean.”

Now after a year of war, they have completely fallen off the social hierarchy. More than ever, begging has become their only source of revenue. Barefoot children with matted hair, faces covered in dust, are seen sleeping on streets while their mothers cloaked in black extend their hands to pedestrians, begging for money.

“The humanitarian situation is miserable,” said Noaman al-Houzifi, the head of the National Union of the Marginalized. While others have tribes or wealthy relatives to help or host them if they have to flee their homes, “for the Marginalized, they have nothing.”

He and other Marginalized activists say local operators distributing humanitarian aid pass them over.

“Even the blankets distributed by the aid and relief groups, the Marginalized are excluded from receiving such help,” said Misk al-Maqmari, a 25-year-old Marginalized activist running a local group called Enough. At hospitals, Marginalized wounded in fighting are often not given beds or treatment and are left to die, she said.

“As if they are animals. Even animals have rights.” AP

Companies propose deepwater wind farms off Hawaii shores

H

ONOLULU—Massive wind turbines could end up f loating in deep ocean waters off Hawaii’s shores under proposals to bring more renewable energy to the islands. Two companies have proposed offshore wind turbine projects for federal waters off Oahu as Hawaii pushes to meet its aggressive renewableenergy goals.

Their plans would use technology that f loats the tall turbines in deepwaters miles offshore. The proposals are in the early stages and would face years of environmental reviews and community meetings before possible approval.

The federal Bureau of Ocean Energy Management, the agency that would decide whether to approve ocean leases for the projects, held a meeting about the proposals on Monday.

A.W. Hawaii Wind, a Texas company that’s a subsidiary of Den m a rk-ba sed A lph a Wind Energy, is proposing two offshore floating wind farms, each generating about 400 megawatts of energ y with 50 turbines. One is proposed for the northwest side of Oahu 12 miles off the coast of Kaena Point, in waters about a half-mile deep. The company also is proposing a wind farm in waters 17 miles south of Diamond Head.

A second company, Progression Hawaii Offshore Wind, is proposing a $1.8-billion, 400-megawatt wind farm using 40 to 50 floating turbines off Oahu’s South Shore, in waters that are also about a halfmile deep.

A 4 0 0 -M W w i nd f a r m could provide roughly a quarter of Oahu’s power, said Chris Swartley, partner with Portland, Oregon-based Progression Energy. Both companies are proposing to use a technology called WindFloat, where a turbine that stands about 600 feet is attached to a triangular platform that floats near the surface of the ocean. The floats would be anchored to the ocean floor, and undersea cables would transfer the energy to power plants on land.

Offshore wind farms are not new, but most use turbines fixed to the ocean floor, and floating turbines are rare.

There are many challenges to taking on a project of this scope in Hawaii, including cultural and environmental issues, deepwater, a relatively small electric grid and unexploded ordnance in the ocean waters surrounding the island, said Jens Borsting Petersen, owner of A.W. Hawaii Wind.

“This is by far the most difficult thing in wind that’s ever been attempted on this globe,” Petersen said. “When you talk about wind energy, trying to do something on Hawaii offshore is exceptionally complicated.”

Progression Energ y has held more than 140 meetings with environmental, tourism, Native Hawaiian and other stakeholder groups, using their feedback to choose a site, Swartley said. Looking out from the beach, most of the turbines would be over the horizon, he said.

“You’ll be able to see them if you really look for them, but it will be really tough,” Swartley said. Among concerns raised so far is the potential danger that whales or submarines could bump into the cords anchoring the turbines to the ocean floor, said Henry Curtis, executive director of Life of the Land, a Hawaii nonprofit organization.

“Do you want to really turn the ocean into the next industrial site?” Curtis asked.

Some fishermen are concerned about the possible impact on birds flying over the sea. “The best fish spotters we have are birds,” said Ron Tam, secretary of the Hawaii Fishermen’s Alliance for Conservation and Tradition. “And then, are we going to be able to fish in and about and through these floating machines? We don’t know.... That has a definite economic impact.”

Hawaii has set a goal for its utilities to use 100-percent renewable energy by the year 2045. The state’s utilities are currently generating about 24 percent of their energy from renewable sources through wind, solar, geothermal and biomass energy, said Mark Glick, energy administrator for the Hawaii State Energy Office. Offshore wind farms could help the state meet the larger goal, Glick said. AP

A8

The World BusinessMirror

Wednesday, May 18, 2016

China’s state media make rare remarks on Cultural Revolution

B

EIJING—China’s official media reaffirmed on Tuesday the Communist Party’s longstanding judgment that the Cultural Revolution was a catastrophic mistake, after staying silent on Monday’s 50th anniversary of the start of the decadelong upheaval.

T he of f ic ia l pa r t y mout hpiece People’s Daily published an opinion piece on its website precisely at midnight on Tuesday unequivocally praising the 1981 party resolution that condemned the bloody political movement launched by Mao Zedong to enforce a radical egalitarianism.

“Our party has long taken a solemn attitude toward bravely admitting, correctly analyzing and firmly correcting the mistakes of our leadership figures,” the piece read.

The party has long suppressed open discussion of the tumultuous period, fearing that could undermine its legitimacy to rule and lead to direct criticism of Mao, the founder of the communist state who remains a revered figure.

So politica l obser vers have been closely obser ving the part y leadership’s attitude toward

50 The number of years since the decadelong Cultural Revolution began in China

the milestone as a bellwether of the countr y’s ideological direction. No off icia l commemorations have been held, a lthough some Mao loyalists have staged pr ivate events.

Since taking power in 2013, President Xi Jinping has made frequent references to Mao, cen-

Newsletters released from secretive NSA

W

ASHINGTON—In-house newsletters from the clandestine National Security Agency (NSA) have been released by an online news site—part of the mountain of documents leaked by former NSA contractor Edward Snowden.

The Intercept, whose founding editors were the first to publish documents leaked by Snowden, released on Monday the first batch of nine years’ worth of the newsletters, which offer a behind-thescenes glimpse into the NSA’s work. The newsletters reveal efforts to eavesdrop on a Russian crime boss, the search in Iraq for possible weapons of mass destruction and help with interrogations at the US military prison at Guantanamo Bay, Cuba.

An article in the May 2003 newsletter describes how NSA spent “many months” obtaining the phone number of a Russian organized crime figure so his calls could be intercepted. The State Department asked the NSA for information on the boss of the Tambov crime network in Russia—a figure known only as “Mr. Kumarin”—and whether he had any ties to Russian President Vladimir Putin. The man later was convicted of fraud and money laundering and sentenced to 14 years behind bars.

Interrogations

IN a newsletter article published on December 22, 2003, an NSA liaison officer recounts a temporary duty assignment at Guantánamo Bay, where the task was to provide intelligence to support Defense Department, Central Intelligence Agency and Federal Bureau of Investigation interrogations of detainees picked up off battlefields.

The job entailed relaying information back to NSA, based at Fort Meade in Maryland. But sometimes, NSA would share “sensitive NSA-collected technical data” to help the interrogators. According to Intercept, “Neither the Senate Intelligence Committee’s report on the CIA’s detention and rendition program [which confirmed the existence of two CIA facilities at Guantánamo] nor a 2008 Senate Armed Services Committee report on detainee abuse by the military addresses the role of the NSA, at least, in the heavily censored versions that have been made public.”

Taxing

IT was serious business, but in their off hours, NSA liaisons at scenic Guantanamo Bay could

visit the “Tiki Bar,” or enjoy water sports, such as sailing and snorkeling.

“Learn how to operate a boat in a weekend,” the liaison wrote. “Become a certified open-water scuba diver within weeks.... The local dive shop has all the gear and tips to ensure a perfect outing.”

In a more taxing assignment, the newsletter reports on a rendition where six Algerians, linked to a plan to bomb the US Embassy in Sarajevo, were moved from Bosnia to Guantánamo in early 2002. The US rendition program involved secretly sending foreign captives to other countries that have more lax practices for the humane treatment of detainees. A Bosnian judge ordered the Algerians released for lack of evidence, but the US persuaded the Bosnian government to turn them over to US custody.

A WOMAN walks past a rack displaying the cards depicting former Chinese leader Mao Zedong and the great army of the Cultural Revolution for sale at a souvenir shop in Beijing on May 17. AP

tralized control and deployed pol it ic a l st agec ra f t c a r r y i ng echoes of Mao’s rule, drawing criticism from Chinese liberals and political opponents.

The official commentary on Tuesday sought to thoroughly lay to rest any further debate of the Cultural Revolution and urged the country keep moving ahead under under Xi.

The 1981 resolution “on the Cultural Revolution [as a catastrophe] has withstood the test of time and it remains unshakably scientific and authoritative,” it said. “We summarize and absorb history’s lessons with the goal of using history as a mirror to better move forward.”

In a separate commentar y, the Global Times newspaper pub-

lished by People’s Daily said the events of 50 years ago had inculcated an abhorrence of disorder and craving for stability among the Chinese public.

“Completely denying the values of the Cultural Revolution is not only an understanding throughout the party, but also a stable consensus of the whole of Chinese society,” the paper said. AP

China’s tech giant Huawei looks to build global smartphone brand

S

AN NSA staffer wrote about the movement in the newsletter, as part of a series replete with stories about working overtime for the agency. As soon as they were released, the Algerians were to be transported from Sarajevo to another Bosnia city and then on to Guantánamo. The staffer’s job was to watch the route for a possible ambush from a military convoy.

The Algerians’ release “was delayed for several hours due to a large demonstration outside the building they were being held in,” and “the convoy did not leave Sarajevo until after midnight,” she wrote.

One of the Algerians, Lakhdar Boumediene, went on to file a lawsuit that led to a landmark decision in June 2008 that Guantánamo detainees had the right to challenge their detention in federal court.

WMDs

Stars, singers

OTHER tales came from NSA’s work in Iraq. NSA staffers worked to research the locations for weapons of mass destruction material, although claims about Iraqi leader Saddam Hussein’s alleged weapons of mass destruction proved to be false.

NSA also provided timely intelligence support, including a “summary of contacts” that helped efforts to capture a top Baathist official in May 2003. Aziz Sajih Al-Numan, accused of torture and murder in Iraq, was the king of diamonds in the US Central Command’s deck of cards of most-wanted Iraqis. The newsletter boasted: “Al-Numan was caught within 25 hours after the Army contacted NSA to request support.” AP

briefs

WORLD AND REGIONAL POWERS MEET IN VIENNA ON SYRIA VIENNA—World and regional powers are meeting in Vienna to overcome stubborn divisions among Syrian factions that have led to the rise of Islamic extremists and claimed hundreds of thousands of lives since violence turned to war five years ago. But the gathering is not expected to substantially advance efforts to find peace. A diplomat familiar with the talks says participants will agree on a document focusing on trying to firm up a shaky cease-fire and improving efforts to deliver humanitarian aid.

He demanded anonymity because he is not authorized to discuss the statement before its release. AP

FRENCH PREXY VOWS TO LOWER TAXES IF GROWTH IS SUFFICIENT

HENZHEN, China—Chinese tech giant Huawei wants Americans to start thinking of it as a stylish smartphone brand.

Huawei Technologies Ltd., which pulled out of the US market for network switching gear four years ago due to security fears, became the No. 3 global smartphone seller last year and passed Apple in China.

This year it launched a new flagship smartphone, the P9, and is positioning it to compete with Apple and Samsung.

“China has yet to create a highend consumer brand. We want to take that goal onto our shoulders,” Eric Xu, one of Huawei’s three rotating co-CEOs, told industry analysts at a meeting in April.

To do that, Huawei must succeed in the United States the second- largest market for handsets after China, accounting for onesixth of global sales, according to industry analysts. There, it starts with almost no market share and a name that consumers, if they know it at all, might associate with anxiety about possible Chinese spying rather than technology and style.

“It is more difficult than any other market they have ever entered,” said Nicole Peng of research firm Canalys. “I don’t think they have concrete plans yet.”

Delays

news@businessmirror.com.ph

OUTSIDE the United States, the company is cranking up a global marketing campaign for the P9 featuring Hollywood stars Henry Cavill and Scarlett Johansson.

For markets from Bangladesh to Mexico, it has recruited pop singers and football teams. It partnered with German photography powerhouse Leica to develop the camera on the P9. The company has yet to say when it might sell the Androidbased P9 to Americans or exactly how it will rebuild its US presence.

“We’re definitely very patient with the US market,” said Joy Tan,

Huawei’s president for communications, when asked how it planned to connect with buyers. “We hope these phones will be accepted by American consumers.”

To meet its ambitious sales growth target of 30 percent a year, Huawei must increase its US market share to double digits from below 2 percent now, said Peng of Canalys.

Deep understanding

HUAWEI, pronounced “Hwah’way,” has big resources to back up its aspirations. It made a 36.9 billion yuan ($5.7 billion) profit last year on sales of 395 billion yuan ($60.8 billion). That was equal to just one-quarter of Apple Inc.’s sales, but Huawei spent $9 billion on research and development to Apple’s $8.1 billion.

Huawei shipped 108 million handsets last year, the first Chinese company to pass the 100 million mark. That is a distant third behind Samsung Electronics Ltd.’s 325 million handsets and Apple’s 231.5 million.

The company headquartered on a leafy campus in this southern Chinese tech hub adjacent to Hong Kong beat Apple and Samsung to market with a camera equipped with side-by-side lenses, one in black and white and one in color, that it says produces clearer images. The handset is slimmer than the iPhone 6s or Samsung’s Galaxy 7, but its screen is bigger than the Apple’s.

Huawei’s phones now are sold in the US only through its web site.

But it has a potential opening with phone carriers that are the main sales channel and want more products, according to Gartner analyst Tuong H. Nguyen.

Its “deep understanding” of mobile technology “could be leveraged for quick product launches of good quality products,” Nguyen said in an e-mail. That depends on overcoming any lingering security fears.

Security threats

THE US market for Huawei’s network gear evaporated in 2012 after a congressional panel deemed Huawei and Chinese rival ZTE Corp. potential security threats and recommended Americans avoid doing business with them. The previous year, a government panel forced Huawei to rescind its purchase of a small California computer company.

“This makes it difficult for Huawei and other Chinese vendors to penetrate this market,” Nguyen said.

Huawei rejects accusations it might facilitate Chinese spying and says American critics have failed to present evidence to back them up. The company is privately held, but has begun releasing financial results in hopes increased transparency will ease Western security concerns. For its part, ZTE has been making a quiet US comeback in smartphones. Its market share grew to 4 percent last year, according to Canalys. It is competing with lower prices, not going after the brand-conscious premium tier where Huawei will face formidable competition from Apple and Samsung in their biggest market.

Lifeless, soulless

FOUNDED in 1987 by a former military engineer, Huawei became the first Chinese supplier to break into the top ranks of a technology industry, where it competes with Nokia Corp. and Sweden’s LM Ericsson in network gear and wireless base stations.

Employees joked that, operating behind the scenes for its first two decades, it was the biggest company no one ever heard of.

Huawei’s priority this year is a marketing campaign to “address the No. 1 issue that many people don’t know the company—especially in Western countries,” said Glor y Cheung, president of marketing for its Consumer Business Group. AP

PARIS—French President François Hollande has promised he will lower taxes next year provided the state has sufficient leeway. The tax cut will apply on household incomes “if growth recovers,” Hollande told Europe 1 radio on Tuesday. The decision will be taken during the summer, he said.

Hollande said France’s growth might reach 1.6 percent in 2016, slightly better than last year.

France’s GDP grew by 1.3 percent in 2015, the state statistics agency Insee announced as Tuesday. AP

U.K. RURAL POLICE FEAR BEING ‘SITTING DUCKS’ IN TERROR ATTACKS LONDON—Rural police in Britain are warning they’d be “sitting ducks” in a terror attack because there aren’t enough trained firearms officers in isolated areas. A police federation leader, John Apter, says firearms officers could be as far as 110 kilometers away in an emergency.

Such areas include potential targets such as power plants and oil installations. Britain’s government has announced that it will train more firearms officers in light of attacks in France and Belgium. AP

RUSSIA SAYS NO IMF AID UNLESS UKRAINE PAYS DEBT MOSCOW—Russia says it won’t support a much-needed International Monetary Fund aid package for Ukraine unless it stipulates a debt repayment to Russia. Ukraine says it will not return $3 billion to Russia that a previous government borrowed in 2013, because Moscow refuses to agree to terms already accepted by other international creditors.

Russia insists this was a sovereign debt that should not be covered by terms offered to commercial lenders.

Russian Finance Minister Anton Siluanov said Moscow would insist the debt repayment be stipulated in the new aid package for Ukraine. AP

WORK AT IRAQ GAS PLANT RESUMES AFTER I.S. ATTACK BAGHDAD—Iraq’s Oil Ministry has resumed work at a natural gas plant north of Baghdad, two days after a coordinated dawn assault by Islamic State militants left at least 14 dead.

Deputy Minister Hamid Younis says work at the plant’s three production lines returned “to normal levels” on Tuesday in Taji. The town is about 20 kilometers north of Baghdad.

Younis says the plant was back to full capacity of producing 30,000 cooking gas cylinders a day. He says Sunday’s attack only damaged two gas storages and a few pipelines.

FRENCH ROADS BLOCKED OVER NEW LABOR LAW PARIS—Truckers are blocking highways around France to protest longer working hours in a new labor bill, but President François Hollande says he won’t abandon the contested reform. France is facing a week of new strikes and other union action against the bill, which has met fierce resistance in Parliament and in the streets. Truck drivers joined in the protests on Tuesday, blocking roads around Marseille and the western cities of Nantes and Le Mans. They fear a drop in income because the bill cuts overtime pay.

ExportUnlimited BusinessMirror

Editor: Efleda P. Campos • www.businessmirror.com.ph

Wednesday, May 18, 2016

A9

Dealing with NTMs: Why market intelligence matters

By Agnes Perpetua R. Legaspi & Celynne Layug

BUSINESS BEYOND BORDERS

T

HE proliferation of free-trade agreements (FTAs) has drastically changed the global trading environment. With the elimination and drastic reduction of tariffs, we do our best to understand the various types of nontariff measures (NTMs).

NTMs are not inherently harmful; every country has the right to exercise NTMs in pursuit of public policy objectives. However, it is also becoming more and more difficult for developing countries—especially for micro, small and medium enterprises (MSMEs)—to navigate this intricate system of NTMs. The International Trade Center (ITC) defines NTMs as mandatory requirements, rules, or regulations legally set by the government of the exporting, importing, or transit country. These are also official policy measures on export and import, other than ordinary customs tariffs, that can potentially have an economic effect on international trade in goods, changing quantities traded, prices or all of the above.

NTMs are classified into two broad categories: technical and nontechnical measures. Technical measures refer to product-specific properties, such as characteristics, technical specifications and production process of a product. It also includes conformity-assessment methods, which affirm the compliance of a product with a given requirement.

These technical regulations are generally aimed at ensuring quality and food safety, environmental protection and national security, and at protecting animal and plant health. Nontechnical measures do not refer to product-specific properties, but to trade requirements, such as shipping requirements, custom formalities, trade rules and taxation policies, among others.

In a 2010 business survey conducted by the United Nations Conference on Trade and Development (Unctad), it was observed that most exported products from the Philippines were subjected to technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS), and export-related measures (ERMs). For both TBT and SPS, the major issues were on certification and labeling requirements, product characteristic standards, and inspection and clearance.

Unlike tariffs, information on these regulatory measures is usually not readily available. Given the different objectives set for each of these measures, it is to be expected that information is dispersed across different offices and agencies. In most instances, information may be available, but a lot of research and “data mining” would have to be undertaken to complete the whole list of regulations one has to comply with when trying to export. Regulations also change quite rapidly, and one has to be vigilant in monitoring these changes.

Transparency, therefore, is a key element in understanding these NTMs. In a survey conducted by ITC, it was observed that most NTMs are very simple to address once they are known. All it takes is to bring in the private sector so that the problems could be properly identified. A number of businesses surveyed emphasized their lack of knowledge or awareness about the procedures on NTMs. Likewise, exporting companies complain about the agencies in charge of them due to their lack of transparency in their regulations (ITC SME Competitiveness Outlook Guide 2015).

There are existing mechanisms in place to address these transparencyrelated concerns involving NTMs. For the Philippines, the Bureau of Philippine Standards (BPS) has established t he stand ards and confor mance (S&C) portal to make information available on the TBT notifications to domestic stakeholders.

Since 1996, the S&C portal has provided a weekly bulletin of foreign TBT Notifications and Listing of Philippine Notifications. More important, it enjoins the private sector to report any negative impact the draft notified regulation may have on exporters through the TBT enquiry point. More information is available at www.bps.dti.gov.ph.

The Export Development Council (EDC) recently created a technical working group on NTMs under

its Networking Committee on Trade Procedures and Policies Simplification (NCTPPS), and is chaired by the Export Marketing Bureau (EMB) of the Department of Trade and Industry (DTI). It is cochaired by the Philippine Exporters Confederation Inc. (Philexport), the umbrella organization of Philippine exporters.

Both organizations are collaborating with ITC on the conduct of a country–wide NTM survey currently being undertaken. This undertaking aims to further improve the DTI’s NTM toolbox through better understanding of specific measures, especially those applied by certain countries to particular Philippine products. NTMs remain among DTI’s priority topics in its several advocacy programs, like the Doing Business in Free Trade Areas (DBFTA) and the Philippine Export Competitive Program (PECP).

There are also online tools on transparency and market intelligence developed by international organizations such as the World Trade Organization (WTO), ITC and the Unctad.

For i nst a nce, t he Integ rated Trade Intelligence Portal (I-TIP)— htt p://i-t ip.wto.org /goods/default. aspx?language=en—provides a singleentry point for information compiled by the WTO on trade-policy measures. Containing information on over 25,000 items, it aims to serve the needs of those seeking detailed information on trade-policy-measures, as well as those looking for summary information.

The ITC has also developed the Market Access Map—http://www. macmap.org/Default.aspx—to support the needs of exporters, trade-support institutions, trade policymakers and academic institutions in developing countries. It provides information about customs tariffs (including tariff preferences) applied by 197 countries and faced by 239 countries and territories. It also covers tariff-rate quotas, trade remedies, rules and certificates of origin, bound tariffs of WTO members, nontariff measures and trade flows to help users prioritize and analyze export markets, as well as prepare for market-access negotiations.

Moreover, the Unctad has its Trade Analysis Information System (TRAINS)—http://databank.worldbank. org/data/reports.aspx?source=UNCTAD~-Trade-Analysis-Information-System%28TRAINS%29—which is a comprehensive database at the most disaggregated level of harmonized system, covering tariff and nontariff measures, as well as import flows by origin for more than 150 countries. Tariff information contains not only applied MFN tariff rates, but also to the extent possible, various preferential regimes, including Generalized Scheme of Preference, Regional Trade Agreement and Preferential Trade Agreement rates, as well as many bilateral agreement rates.

Just recently, the United Nations Department for Economic and Social Affairs (Desa) launched the pilot version of its e-Ping project—http:// www.epingalert.org/—a notification system being developed to enhance the communication between publicand private-sector stakeholders in least-developed countries (LDCs) on changes in TBT and SPS measures of (potential) trading partners.

The e-Ping notification system will result in better informed stakeholders who can request assistance to address challenges related to product standards and trade. The system is developed under the UN Desa project “Building Institutional Capacity in the Use of Trade-related International Support Measures in LDCs.” With the available institutional mechanisms and online tools on NTMs, we encourage our Philippine exporters to remain vigilant in identifying NTMs that affect and may affect their businesses. For any NTM-related query, please e- mail them at ntms@dti.gov.ph.  Send your feedbacks or comments at exportunlimited@dti.gov.ph.

Agnes Perpetua R. Legaspi is the assistant director Export Marketing Bureau; and May Niña Celynne P. Layug is a commercial attaché Foreign Trade Service Corps, Geneva.

DELEGATIONS from the Philippines and Switzerland during the signing of the second Philippines-Switzerland Joint Economic Commission (JEC) in Bern, Switzerland, last April 28, 2016. The Philippines-Switzerland JEC covers trade in goods, services, investments, improvement of the business environment and cooperation, which will enhance economic ties between the two countries. The meeting was cochaired

by Swiss Ambassador Livia Lue (seated, left) and Department of Trade Undersecretary Nora K. Terrado (seated, right).

Philippines, Switzerland strengthen economic ties through second JEC

T

HE Philippines sees strengthened economic ties with Switzerland, as the two countries signed the second Joint Economic Commission (JEC) in Bern, Switzerland, last April 28, 2016.

“Pursuing an enhanced trade relationship with Switzerland is an important component of the government’s strategy to expand our country’s market access and increase investments,” Trade Secretary Adrian S. Cristobal Jr. said.

T he Ph i l ippi ne - Sw i ss J EC serves as a platform for regular dialogue and exchanges between the two countries for specific economic and trade issues, developments in the multilateral and regional fora, and initiatives to facilitate trade, as well as achieve greater collaboration among government agencies and the private sector. The agreement establishing the Philippines-Switzerland JEC was ratified on December 19, 2013, while the first JEC meeting was held in Manila in mid-2014.

The second JEC focused on the implementation of previous commitments and agreements, as well as the country’s proposals to increase cooperation in the areas of tourism, investments, renewable energ y and labor.

“The second JEC reaffirmed

60 Number of Swiss companies operating in PHL in 2015

our interest to become a part of the Swiss Import Program [Sipo], which will complement our domestic initiatives to build the capacity of local exporters, and enable them to adhere to stringent standards of the Swiss market,” Cristobal said.

Meanwhile, Trade Undersecretary Nora K. Terrado said, “We are engaging Switzerland as part of our three-pronged strategy to increase investments and gain broader market access in Europe. Our objective is to further strengthen the

emerging and thriving sectors of our industry and generate more job opportunities that will benefit our local communities.” Areas identified for Swiss investments are manufacturing (chemicals, electronics, parts manufacturing in aerospace), MRO and training for Aerospace, non-voice BPM, software development, renewable energy, and public-private partnership (PPP) projects.

The Department of Trade and Industry (DTI) said the Philippines stands to benefit from a further expanded European market, as it is also anticipating renewed trade agreements with the European Free Trade Association (Efta) and the European Union (EU). Moreover, Filipino exporters are expected to aggressively utilize the EU’s Generalized System of Preferences (GSP) Plus, which provides 6,274 eligible products duty-free access to the EU market.

Terrado noted that during the JEC, Swiss government officials and the representatives from the Swiss private sector lauded the Philippines’s positive economic outlook, as well as its pursuit of domestic and international initiatives.

“Our 6.3-percent growth in the last quarter of 2015 is a clear indicator of our stellar economic performance. This year we are projected to have a growth rate of around 6 percent, despite the weak global economic stance,” Terrado

Ease of doing business: Movement of goods and services

B

ASED on the country’s performance in 2015, World Bank Doing Business Report 2016 shows the decline in ranking of the Philippines, from 95th to 103rd among 189 countries in the world.

The decline was due to slow reforms made by the Philippines compared to what have been implemented by other countries.

The 2016 report shows the country was only able to introduce one improvement: To expedite the process of issuing an employer-registration number by streamlining the communication between the Securities and Exchange Commission and the Social Security System.

Inefficient processes, unnecessary bureaucracy, redundant documentary requirements, exorbitant fees by some regulatory agencies, and lack of infrastructure that add to the cost of the operation of a business are some of the factors that affect the ease of doing business in the country.

For instance, producers of food products say it will take three months to get a License to Operate (LTO) and Certificate of Product Registration (CPR) from the Food and Drug Administration (FDA). According to the FDA, such delays were caused by the lack of personnel and infrastructure and the centralized processing of LTO and CPR. The FDA issued Guidelines on the Unified Licensing Requirements and Procedures, but improvements in the process have yet to be seen by the stakeholders.

Automation and review of documentary requirements to expedite the

process anticipated for years by the stakeholders also need to be taken into consideration by the FDA. Another issue is the license and permit requirements of the Philippine National Police (PNP) on controlled chemicals. A manufacturer who imports chemicals as raw materials to produce products for either local distribution or export has to secure a license to manufacture, a permit to import and a permit to unload, and needs a police escort to transport the imported chemical from the port to his warehouse. It takes one to three months for the PNP to issue the license and a considerable time to issue the permits.

However, with the cooperation of the stakeholders with the PNP, streamlining this process is being crafted through the proposed Implementing Rules and Regulations (IRR) of Republic Act (RA) 9516, which governs the explosives and controlled chemicals. The proposed IRR is now awaiting the approval of the secretary of the Department of the Interior and Local Government.

Moreover, the government has taken the following measures to improve the movement of goods in the country: 1) Presidential Executive Order (EO) 204 in March 2016, expanding the coverage of EO 170 (series 2003) and EO 170-A (series 2003) to include container-chassis roll-on, roll-off (Cha-ro). When implemented, the EO will lower transport cost by at least 15 percent to 20 percent, primarily because the prime mover is not required to travel with

the chassis-mounted container onto/ from the Ro-ro ships; 2) Foreign CoLoading Act, which was approved in July 2015, allows foreign vessels to dock at any Philippine port for loading and unloading of foreign cargoes.

This reduces logistics costs and provides transshipment services needed by exporters and importers that lead to competitive pricing of goods.

Recently, the government partnered with supply-chain stakeholders to initiate projects to facilitate movement of goods from and into Manila port, e.g., Terminal Appointment Booking System), an electronic platform for booking containers in the major international ports of Manila, to minimize road traffic and prevent container buildup payment facilities, which operate only until 8 p.m., and difference in the storage fee of port operators.

Given the issues and initiatives, there are still rooms for improvement to facilitate trade in the country. The government has to take radical actions in advocating reforms that will promote competitiveness and growth of Philippine enterprises. specifically the micro, small and medium enterprises. Particularly, infrastructure projects, which help keep countries reach their economic potential, must be prioritized by the government.

Such reforms will make the Philippines catch up with other countries, particularly among other membereconomies of the Asean, in taking advantage of the Asean Economic Integration. Asnia Bayabao

said. “We are certain that our engagement with Switzerland will sustain the upward momentum of the Philippine economy.”

Terrado added that the DTI has been taking steps to strengthen local industries; improve governance by undertaking reforms; and ratifying legislations, such as the Philippine Competition Act, to simplify business transactions, ease the process of doing business by reducing the process into three steps, level the playing field for all businesses, and promote transparency in the bidding of government projects.

The Philippines-Switzerland JEC covers trade in goods, services, investments, improvement of the business environment and cooperation, among other areas that will enhance economic ties between the two countries.

Switzerland is among the country’s major European investors.

During the first nine months of 2015, IPA-approved investments from Switzerland stood at P377.76 million, a considerable improvement over the P349.13 million recorded in the same period of the previous year. Last year a total of 60 Swiss companies were operating in the Philippines, employing more than 15,000 Filipinos. Last year also Philippine exports to Switzerland increased by 6.47 percent.

The third JEC meeting will be held in the Philippines in 2018.

UPCOMING EVENTS MAY 18, 2016

9 a.m. to 12 noon Event: Philippine Export Competitiveness Program: Seminar series for exporters Sharing of Insights on How to Access the Kingdom of Saudi Arabia (KSA) Market for PH Food, Cosmetics, & Pharmaceutical Products Venue: Penthouse, 5th Floor, DTI International Building, 375 Sen. Gil Puyat Avenue, Makati City

MAY 1528, 2016

Event: Outbound Business Matching Mission to US and Canada Venue: New York City and Winnipeg

MAY 2528, 2016

Event: OBM to Thailand Thaifex-World Food Asia at the Impact Exhibition and Convention Center, Bangkok, Thailand (Participants to this OBM have the option to join the OBM to Myanmar from May 28 to June 1)

A10 Wednesday, May 18, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Modern MRT for us, at last

A

PPARENTLY, the mere idea that a new government administration is replacing the current one in six weeks is enough to inspire thoughts that great things can come our way in the foreseeable future. And these refer only to the traffic situation in Metro Manila.

Two proposals for the modernization and expansion of Metro Rail Transit Line 3 (MRT 3) to bring it up to first-world status, both shelved by the current administration, will be dusted off and submitted to the incoming administration for consideration. One comes from MRT Holdings Inc., the owner of MRT 3, headed by Robert John L. Sobrepeña; and the other comes from Metro Pacific Investments Corp., headed by businessman Manuel V. Pangilinan.

Each of the proposals will solve the MRT 3’s notorious woes of dilapidated rails, outdated signaling system, failing train cars, nonfunctioning elevators and escalators, antiquated stations and dangerous overcrowding.

Each will purchase new cars that will double the system’s capacity and bring in technologically advanced management for maximum passenger security and convenience.

The Sobrepeña proposal will cost $800 million, while the Pangilinan proposal will entail a total investment of $525 million. Both will be at no cost to the government. Fares will be based on bus fares, according to the first proposal; and on calculation of reasonable return on investment, according to the second proposal. A noteworthy feature of the second proposal is that it will release the government from the payment of billions of pesos in equity rents annually to the owner. In anticipation of a positive reception from the incoming administration, the two corporate groups are reported to have recently met to form a possible joint venture to implement their proposals.

We are not preempting the decision process of the incoming administration, but we cannot help feeling exhilarated at the prospect of having a modern, first-class transport facility serving us—giving us a reason to hold our heads up in the company of friends from at home or from abroad.

Why the outgoing administration rejected these proposals, all so obviously favorable to the government, in favor of stupid outlandish schemes, like buying out the owner at a price of P57 billion without a shred of benefit to the riding public (thank God, the buyout did not happen); and taking over management functions, including the purchase of disjointed trains, two of which have now arrived, that seem technologically incongruous to the MRT system, must be explained to the Filipino people…if they can.

People who think they know have an explanation: Officials of the Department of Transportation and Communications simply suffered from an inferiority complex that prevented them from meeting accomplished executives of the private sector. Some just didn’t want to see Pangilinan succeed. In fact, they also held up other Pangilinan-initiated projects.

Our deliverance from the current traffic hell on earth now seems a realistic prospect, made possible by an administration that has not even taken over yet.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder Publisher Editor in Chief Managing Editor Associate Editor News Editor City & Assignments Editor Senior Editors

T. Anthony C. Cabangon Jun B. Vallecera Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos

Online Editor Social Media Editor

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes

Chairman of the Board & Ombudsman President VP-Finance VP-Corporate Affairs VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Frederick M. Alegre Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines.

Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025.

(Advertising Sales) 893-2019; 817-1351, 817-2807.

(Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

REGIONAL OFFICES n DXQR -93dot5 HOME RADIO CAGAYAN DE ORO E-MAIL ADDRESS: homecdo@yahoo.com ADDRESS: Archbishop Hayes corner Velez Street, Cagayan de Oro City CONTACT NOs.: (088) 227-2104/ 857-9350/ 0922-811-3997 n DYQC -106dot7 HOME RADIO CEBU E-MAIL ADDRESS: homecebu@yahoo.com ADDRESS: Ground Floor, Fortune Life Building, Jones Avenue, Cebu City CONTACT NOs.: (032) 253-2973/ 234-4252/ 416-1067/ 0922-811-3994 n DWQT -89dot3 HOME RADIO DAGUPAN E-MAIL ADDRESS: homeradiodagupan@ yahoo.com ADDRESS: 4th Floor, Orchids Hotel Building,

Rizal Street, Dagupan City CONTACT NOs.: (075) 522-8209/ 515-4663/ 0922-811-4001 n DXQM – 98dot7 HOME RADIO DAVAO E-MAIL ADDRESS: home98dot7@gmail.com ADDRESS: 4D 3rd Floor, ATU Plaza, Duterte Street, Davao City CONTACT NOs.: (082) 222-2337/ 221-7537/ 0922-811-3996 n DXQS -98dot3 HOME RADIO GENERAL SANTOS E-MAIL ADDRESS: homegensan@yahoo.com ADDRESS: 2nd Floor, Penamante Clinic Tiongson Street, General Santos City CONTACT NO.: 0922-811-3998 n DYQN -89dot5 HOME RADIO ILOILO E-MAIL ADDRESS: homeiloilo@yahoo.com

ADDRESS: 3rd Floor, Eternal Plans Building, Ortiz Street, Iloilo City CONTACT NOs.: (033) 337-2698/ 508-8102/ 0922-811-3995 n DWQA -92dot3 HOME RADIO LEGAZPI E-MAIL ADDRESS: homeradiolegazpi@ yahoo.com ADDRESS: 4th Floor, Fortune Building, Rizal Street, Brgy. Pigcale, Legazpi City CONTACT NOs.: (052) 480-4858/ 820-6880/ 0922-811-3992 n DWQJ -95dot1 HOME RADIO NAGA E-MAIL ADDRESS: homenaga@yahoo.com ADDRESS: Eternal Garden Compound, Balatas Road, Naga City CONTACT NOs.: (054) 473-3818/ 811-2951/ 0922-811-3993

Printed by BROWN MADONNA Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila

Overseas Filipino workers have 30 more days to file sickness notification Susie G. Bugante

All About Social Security

T

HE Social Security System (SSS) recently added 30 more days to the five-day notification period for sickness or illnesses of overseas Filipino workers (OFWs) that do not require hospitalization. This move was done in consideration of the OFWs’ limited time and accessibility to SSS offices while abroad.

Previously, OFWs had only five calendar days from the start of home confinement to file their sickness notification. Any sickness notifications filed past the prescriptive period could result in reduced amount of sickness benefits. The new 35-day prescriptive period will help OFWs avoid lower benefit

amounts or rejected claims due to late notifications.

Under the previous SSS policy, if a sick OFW member, for example, was confined at home from June 1 to 15 and his or her sickness notification was filed only on June 12 or one week after the five-day notification period, the computed sickness

benefit would merely cover nine days, from June 7 to 15. With the extended sickness notification period, the OFW will be compensated for the 15 days that he or she was sick, given the same date of filing and assuming the benefit claim was filed on time.

Aside from sickness notifications, the SSS also observes prescriptive periods for filing sicknessbenefit claims. For voluntary members, such as OFWs, this prescriptive period is one year from the start of illness for home confinement and one year from date of discharge for illnesses with hospital confinement.

OFWs can file their sickness notifications and benefit claims in person, through a representative, via mail or e-mail at any SSS office in the Philippines or overseas. Sickness-notification and benefit-claim forms may be downloaded from the SSS web site at www.sss.gov.ph.

OFWs are advised to file their sickness notifications and benefit claims on time to ensure that benefits will be paid for each day of sickness.

For additional information, Filipinos overseas can call a toll-free number at 1-800-10-2255-777. They can also reach the SSS OFW contact services unit through e-mail at ofw. relations@sss.gov.ph or via telephone at (632) 364-7796 or (632) 364-7798, from Monday to Friday, 6 a.m. to 10 p.m. Philippine time.

For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS Call Center at 920-6446 to 55, which accepts calls from 7 a.m. on Mondays all the way to 7 a.m. on Saturdays.

Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante.bmirror@gmail.com.

The skills schools aren’t teaching but must B M R. B  J D Bloomberg View

T

HE US presidential campaign has focused a great deal on the need to expand economic opportunity, but candidates in both parties have not said enough about how they would achieve it. While helping more students go to college has been a topic of discussion and is a vitally important goal, what about those who do not go—or who drop out of high school? They are largely being ignored, as they have been for decades, by an education system that is stuck in the past. That must change.

We will not solve the critical challenges of poverty, underemployment, wage stagnation and bulging prisons unless we get serious about investing in effective programs that prepare kids who are not immediately college-bound for middle-class jobs. Other countries—such as Germany and Switzerland—have figured this out. We must, too.

About 70 percent of young Americans, and 83 percent of blacks and Hispanics do not earn a bachelor’s degree by age 29. Most who attend community college don’t graduate.

And without having gained careerfocused skills in high schools, many are getting left behind.

It used to be that a high-school diploma was enough to qualify for a job at the local factory that paid wages high enough to buy a home and raise a family. Those days are long gone.

There are still more than 12 million manufacturing jobs in the US, down from a high of nearly 20 million in 1979. But most require far more skill than they once did. A high-school diploma no longer cuts it.

The same is true for many of the fastest-growing sectors of the

economy, including health care, computer science and the construction trades. Many jobs in those fields don’t require a college degree, but they do require technical skills that high-school programs typically don’t offer. Because we have failed to strengthen and expand career and technical education, few students are given the option to pursue programs that would give them the skills that are an entry ticket into these industries.

As a result, too many students are put on traditional academic tracks that lead to dead-ends, often graduating unprepared to perform anything but minimum-wage service jobs that hold few prospects for advancement. Many cannot find work at all, increasing their risk of being involved in crime and violence. We must do better.

In Washington there is bipartisan agreement on the need to better prepare high-school students for careers, but very little has been accomplished. At the local level, school districts often lack the resources to adopt curricula geared toward the jobs of today and tomorrow. But

some cities are tackling the issue head-on, and New Orleans—where nearly one in five young people in the region are neither working nor in school—is taking an innovative approach to this challenge.

Recently, a group of Louisiana education, business and civic leaders came together to create YouthForce Nola, with the aim of providing highschool students with training and experiences that will prepare them for jobs that offer good wages.

Over the next five years, YouthForce Nola aims to help 1,600 students earn credentials qualifying them for jobs such as EMT, junior software developer and manufacturing-process technician. Each of those jobs is a first step to long-term professional advancement.

The program also aims to place more than 1,200 students in paid internships that are aligned with students’ coursework and provide experience in the workplace. That kind of experience is invaluable, because it can open students’ eyes to worlds of possibilities that they never knew existed. There is no substitute for inspiration.

Each member of the partnership, including civic leaders, like the Mayor of New Orleans, Mitch Landrieu, has a crucial role to play.

Education leaders, led by Louisiana’s Supt. of Education John White will reshape curricula. And business leaders will open pathways for students with the right training and skills. For too long, business leaders have been missing from the table in discussions about vocational programs, and it shows. Unless they

are involved, new programs will fail—and the disconnect between career-focused education and the job market will grow even wider.

To help close the gap, JPMorgan Chase and Bloomberg are providing $7.5 million to YouthForce Nola, and we hope other business leaders will join us in pushing for change in their home communities. We are preparing similar investments in Denver and Detroit, where civic, education and business leaders are also committed to educating and training young people for high-demand jobs.

As with so many other issues, national leaders and the presidential candidates should look at the approaches being taken by cities to modernize career education. Longterm, broad-based economic growth depends on a strong and expanding middle class that is open to all Americans, not just college graduates. That is only possible if we reinvent vocational programs so that they are aligned with macroeconomic trends, growing local industries and jobs that offer opportunities for advancement.

Without that, we will never give young people—regardless of their race or ZIP code—a chance at a better life, nor will we stop the senseless violence that claims so many young lives and imprisons even more, nor fulfill our promise as a nation devoted to the idea that equal opportunity is a birthright.

Michael Bloomberg is the founder of Bloomberg LP and Bloomberg Philanthropies and was mayor of New York City from 2002 to 2013. Jamie Dimon is the chairman and CEO of JPMorgan Chase & Co.

Opinion BusinessMirror

opinion@businessmirror.com.ph

BLESS the private sector’s help to solve traffic

Wednesday, May 18, 2016 A11

Why China doesn’t care about privacy Adam Minter

BLOOMBERG VIEW

Michael Makabenta Alunan

ON THE CONTRARY

T

HE incoming Duterte administration will face one big challenge in solving Metro Manila’s gargantuan and horrendous traffic problem, which many say is one proverbial “Gordian Knot” that can never be untied.

Gordian knot traffic. This Gordian Knot of a traffic, which perfectly describes the worsening frequent daily traffic gridlocks, has been estimated by a Japan International Cooperation Agency-funded study to be causing P2.4 billion a day in actual costs and economic opportunity losses.

As the highly government-regulated public transport has not provided any relief or meaningful solutions, it is high time to allow the private sector, cooperatives, labor unions, corporate-led groups, homeowners’ associations and civil society to take their own initiatives.

Such initiatives include the information technology-based Uber and GrabTaxi that are the private sector’s response to the inefficient, and sometimes unsafe and discourteous, regular taxi services. In fact, the proliferation and rise in commuter demand for the “FX-AUV” express vehicles is also a response to the inefficiencies of the Metro Rail Transit (MRT)/ Light Rail Transit (LRT) trains, the buses and jeepneys.

BLESS in disguise? Perhaps, the inefficiencies of the public transport are blessings in disguise for innovative out-of-the-box solutions to traffic. Thus, me and my friend Voi Aguilar have thought of the proposed BLESS program, an acronym for Bus Livelihood thru Efficient Sustainable Systems, which is a private-sector bus-shuttle service that the new government can adopt and encourage, but which the private sector can already implement anytime.

BLESS will not really replace public transport, but is aimed to encourage private motorists to leave their cars behind and, thus, help solve traffic. While these may threaten buses and disrupt the order of things in the industry, on the contrary, they may offer not really alternative but supplemental solutions that may be socially acceptable.

Why traffic is worsening?

Amid the ever increasing number of vehicles, with yearly sales of fourwheeled vehicles hitting 310,000 units in 2015 alone, apart from the 1 million units of motorcycles sold that same year, there is no way traffic will improve, given the fixed road space.

This is aggravated with cars having an average load of only 1.2 passengers each. Imagine, a bus carrying 60-80 passengers, including standing commuters, is already equivalent to 60 cars of road space.

But because our trains and buses are overcrowded, unsafe, uncomfortable and totally unreliable, there is no way you can force many motorists to leave their cars and take the bus.

Car pools are no solution. Car pools (car full) have failed, as there is no way motorists will give up their cars, if our public transport remains inefficient, as car pools will only transform motorists into drivers for others, which is degrading for them. Moreover, committing to car pool skeds will be an intrusion into their “privacy” and “freedom” to alter skeds anytime. Thus, we have seen why no motorist is fool enough to go carless.

Although the long-term solutions are building more railway mass transits with strong bus-feeder systems, what is urgent is optimum spatial management, which means increasing holding or riding capacities of transport vehicles, given the limits of road space. This is where BLESS busshuttle services become important.

In a multistory Makati building, for instance, with thousands of employees, companies or employee coops and unions can band together to form BLESS buses for its members.

What BLESS can offer. For safety, these BLESS buses may be equipped with closed-circuit television cameras, Wi-Fi, GPS, RFID, TV, videoke for entertainment and all sorts of gadgets possible that will encourage executives to leave their cars behind and, thus, contribute to reducing traffic.

As the proposed BLESS buses will operate as private shuttle services, catering only to members and prohibited from picking up passengers along the way, they no longer need Land Transportation Franchising and Regulatory Board public franchises. There is also no need for prior fare approvals, no need for yellow public-transport plates, and no need to deal with costly government bureaucratic red tapes.

Moreover, there is no need to pay for the Department of Transportation and Communications route measured capacity (RMC) fees, which become irrelevant or moot and academic, as this regulation only applies to public transport that are scrutinized on whether their entry will cause congestion, or will they serve developmental routes to meet new commuter demand. In a free market, the private sector can do what it pleases and whom it carries, provided they do not service the public or pick up passengers along the way.

Is it a treat or a threat? Will BLESS buses be a threat to existing buses? On the contrary, the resulting ease in traffic and faster turnovers will encourage more people to take buses instead of the more congested MRT/LRT trains.

As a countervailing measure that benefiting buses greatly is my proposal to reduce the number of seats from five seats to a row, to limited seats around the inner sides of the bus, similar to seats on a train, which are reserved for the handicapped, elderly and pregnant women. If this is possible on MRT/ LRT, why not on slow-moving city buses too?

This reform, which I call a bus “standing policy” will “allow for wider aisles and more standing room that will accomodate more passengers by 50 percent to 80 percent, or more. The wider aisles will allow faster disembarking and loading and, therefore, lesser time spent at bus stops, which means lesser traffic buildup, thus, resulting in faster turnovers and time savings by at least 20 percent more. The DOTC can do instant time and motion studies on this by experimenting on a few buses.

While the long-term solutions are necessary, although they require time and big infrastructure spending, what an action-oriented Duterte administration can do immediately is to simply play around with spatial management or optimizing limited road space by increasing passengerriding capacities of buses and allowing faster turnover of commuters and motorists, so that those coming at later time schedules do not compete for road space and transport with those commuting ahead of time, but still stuck on the road due to slow turnovers.

Duterte’s detour a shortcut? If Rodrigo R. Duterte has the political will to effect reforms, then if there is also a wheel, there must also be a way to roll over problems to reach a socially acceptable solution. In the end, the way out is not always a tuwid na daan, but it can also be a detour, pursuing both the right and left, which is actually a shortcut to achieve an objective or mission.

You may reach Michael Alunan at e-mail mikealunan@yahoo.com.

F

OR a few days last week, China appeared to have its own, slowmotion WikiLeaks. Via Twitter, someone using the handle @shenfenzhengleaked personal information—such as home addresses and ID numbers—of some of China’s most powerful commercial and government figures, including Alibaba’s Jack Ma, Wanda Group’s Wang Jianlin and Tencent’s Pony Ma. It was an audacious stunt, but the leaker was clear that it had a higher purpose: “I hope this encourages the nation’s scrutiny, and shows how worthless individual data is in China,” he or she wrote before the account was suspended. There’s good reason to be concerned: China is the world’s largest market for online and phone scams, many of which take advantage of the country’s lax laws and protections for personal information.

Yet, despite these and other recent scandals, online privacy remains a low priority in China, for Internet users and companies alike.

And this scandal—like much bigger data breaches that preceded it—is unlikely to scare very many people into greater vigilance.

When it comes to privacy, China’s Internet users are global outliers. In 2013 only 50 percent of them believed they had to be cautious when sharing personal information online, compared with 83 percent of those in the United States. Yet, Chinese

Internet users contend with many— if not more—of the online threats that plague Web users worldwide, and they often seem all too willing to trade private data for access to services and sites that offer little protection for it.

So what accounts for the discrepancy? The very concept of privacy, especially as it’s understood in the West, didn’t really arrive in China until the 20th century. And even then, tight living quarters, multigenerational homes and, above all, the prerogatives of autocratic governments—which esteemed collective rights over personal ones—meant that privacy was a luxury very few Chinese enjoyed.

China’s great migration online didn’t change this situation much.

When anonymous critics of the government emerged on the Web, the authorities attempted to get the country’s hundreds of millions of Internet users to reveal their real names when registering for online accounts. That effort hasn’t entirely succeeded, but it has offered

an important reminder that there’s no presumption of privacy in Communist China. The government, in theory, knows all.

China’s tech giants also show little interest in privacy. Terms of service at Alibaba and Tencent (owner of WeChat) give the companies carte blanche to use customer data pretty much as they please. So far, the Twitter scandal isn’t spurring a movement to change those policies.

But as e-commerce and online finance expand in China, an indifferent attitude toward privacy will become more of a liability. After all, e-commerce isn’t just about exchanging money; it’s also about exchanging the personal information associated with that money. China’s Internet users may not hold privacy as dear as their American counterparts, but when it comes to the sanctity of one’s checking account, the world is generally flat. If Alibaba and Tencent can’t guarantee that your bank account is safe, then you’re probably not going to link it to their services.

China’s government, constrained

Avoiding a quagmire in Iraq

A

LMOST five years ago, President Barack Obama delivered a speech in which he acknowledged—and claimed credit for—the fact that the last US combat troops would soon be leaving Iraq. “The tide of war is receding,” Obama said on October 21, 2011.

What Obama didn’t anticipate was that the Islamic State (IS), an offshoot of al-Qaeda in Iraq, would seize large amounts of territory in Iraq and Syria, inspiring and orchestrating terrorist attacks in the West. So in 2014 Obama promised to “degrade and ultimately destroy” the IS, but without getting “dragged into another ground war in Iraq.”

So far, the president has abided by that pledge. Yet, signs of mission creep in Iraq are multiplying. There are now about 4,000 US troops in

Iraq, officially in a training and advisory role, but increasingly in harm’s way. After a Navy SEAL was killed coming to the rescue of Kurdish and Christian fighters near Mosul, Defense Secretary Ashton Carter said: “It is a combat death, of course.”

More such casualties are possible as US forces assist in the counteroffensive designed to expel the IS from territory it occupies, a campaign that has achieved some success but faces significant challenges. Even if the casualty count remains small, the history of US military involvement in the Middle East—and elsewhere, notably Vietnam—will inspire concern that the US is on a slippery slope to just the sort of large-scale commitment Obama has forsworn.

One way to cou nter suc h

concerns—and constrain Obama and his successor—is for Congress to approve an Authorization for Use of Military Force (AUMF) against the IS. Strangely, the administration is conducting its campaign against that group under resolutions passed during the George W. Bush administration that provided authorization both for retaliation against al-Qaeda after the September 11 attacks and for the 2003 invasion of Iraq.

Obama has proposed a threeyear AUMF that supposedly would rule out a repeat of the Iraq and Afghanistan wars, but its wording could justify lengthy and large-scale deployments, so long as they were described as temporary and defensive. Congress needs to adopt more restrictive language.

by its desire to know as much as possible about its citizens, has, nonetheless, taken some important steps recently, such as adopting a dataprivacy law and putting tougher cybersecurity measures in place. But enforcement remains sketchy, and consumers have few ways to complain or obtain compensation if their data is misused.

That leaves e-commerce companies to fill the gap. They could certainly improve their privacy standards, especially by restricting how they share personal user data and by adopting more secure communication protocols (such as HTTPS). But far more important would be an effort to educate their users about the dangers of identity theft, and about what companies can—and cannot —do to protect them. That kind of information, which Americans and Europeans often take for granted, is rare in China.

Making it less so would improve ecommerce measurably, while helping ensure that the titans of the Chinese Internet never again find their home addresses posted on Twitter.

Even if Congress imposes limits on US involvement, the depressing prospect for the foreseeable future is that the US—ideally with more support from its regional allies— will be engaged in a significant and at times dangerous struggle with the IS and similar groups, with no guarantee of achieving all of its objectives.

For example, even if the IS were defeated in Iraq and Syria, political instability in both countries and elsewhere could give rise to similar insurgencies. As even the intervention-averse Obama has realized, it is impossible to extricate the US entirely from a conflict that’s metastasizing in many locations.

The tide of war has receded, but not as far as he or we thought in 2011. TNS