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VP HOPEFULS SQUARE OFF IN DEBATE
“OUR principal focus right now is Cleveland. We want to bring as large a contingent as possible to demonstrate the breadth of [Donald] Trump’s appeal so that the party can see graphically what they’re going to lose if they hijack the nomination from him.”—Roger Stone, whose group Stop the Steal will be organizing ahead of July’s Republican convention in Cleveland.
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“WE love our girls. Thank you so much for so many years of joy. That’s history tonight there, ladies and gentlemen, true American icons.”— Ringmaster Johnathan Lee Iverson, after Ringling Bros. and Barnum & Bailey Circus bid farewell to its performing elephants for a final time in Providence, Rhode Island.
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Wednesday, May 4, 2016 Vol. 11 No. 207
NGCP TO PLACE LUZON GRID ON YELLOW ALERT STARTING MAY 16
Power reserve outlook in Luzon alarmingly thin 9,737MW A B L L
@llectura
N updated power-supply demand outlook for the second quarter of the year shows power reserves in Luzon would remain alarmingly thin starting on the third week of May until mid-June this year. When reserves are thin, the grid is on yellow alert. A yellow alert is issued by the National Grid Corp. of the Philippines (NGCP) when contingency reserve is less
INSIDE
MICROSOFT TAKES THE LONG VIEW ON SMARTPHONE REBOOT
LIFE
than the capacity of the largest synchronized unit of the grid. In Luzon this is equivalent to 647 megawatts (MW), or one unit of the Sual power plant.
The power supply needed in Luzon when demand is expected to peak in May
“We may experience frequent yellow alerts starting May 16, even with the dispatch of the Malaya power plant. This situation of inadequate contingency reserve is forecasted to persist until June 13,” Manila Electric Co. (Meralco) Head for Utility Economics Lawrence S. Fernandez said. S “P ,” A
BMReports D1
C.E.O. SUITE EYES BIGGER PRESENCE IN SERVICE OFFICE MARKET BusinessMirror
E1 Wednesday, May 4, 2016
Editor: Tet Andolong
CEO Suite eyes bigger presence in serviced office market B R R R
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OWADAYS, if you are a new businessperson, finding a respectable office space is like a walk in the park, so to speak.
With the entry of companies, like CEO Suite, entrepreneurs and start-ups will not have to worry on challenges, such as cost per square meters and lease, among others. In a recent news briefing, Charyna Francisco, CEO Suite regional marketing director, noted that the company is familiar with the developments in the Asian continent. “Being the only Asian-based serviced office provider, CEO Suite knows what to offer transnational clients who want to establish operations in Asia,” she said. She also said the company will be “testing the waters” in the Philippines for three months before they expand. As a one-stop office service provider, Francisco said CEO Suite has the facilities and services that can assist a company from locating the right space to hiring the local manager. She said CEO Suite also provides locators with flexible terms and space to suit the respective business plans of the locators. Francisco added that startups are the biggest clients, while the rest are from information technology and businesses in the incubation stage. CEO Suite also offers start-ups to grow their business through their virtual office package. “If the start-ups want a respectable image, we can provide them a prestige address,” Francisco said. For the virtual office package, CEO Suite provides an e-mail and phone service. If the client wishes to go international, the
company can hook them up to the global market. CEO Suite is present in 18 locations in eight countries in Asia Pacific, such as Seoul (one location), Beijing (one location), Shanghai (two locations), Kuala Lumpur (two locations), Bangkok (one location), Manila (one location), Jakarta (three locations) and Singapore (one location). Francisco said the company keeps on emphasizing the onestop shop service to locators complemented by high-end, endto-end service. To avail themselves of additional services, such as accounting, taxation, registration, receptionists, Google analytic, marketing support via online, launch social-media campaign and service maintenance, a client just needs to pay $100 a month. The office facilities are provided with the following: Fully equipped boardroom with panoramic views; well-being lounge with sauna, massage chair and shower facilities; business lounge with freshly brewed gourmet coffee; microwave ovens; projector and TV screens; and high-speed Wi-Fi access; latest telecommunication systems, including fully integrated telephony and messaging systems; data centers; videoconferencing facilities; computerized digital door locks; CCTV surveillance cameras; soothing background music; color-copying machines; high definition printers; and laminating machines and shredders.
OFFICE
MEETING room
A K9 unit with his handler regularly roams the vicinity of the Ninoy Aquino International Airport, in order to prevent any untoward incident. NONIE REYES
RECEPTION area
TAGÔ OFFERS FRACTIONAL OWNERSHIP
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VERY person has dreams of living a luxurious life, enjoying fine amenities and surrounded by beautiful things. Whether it is a beautiful vacation home or an expensive car, it can often take a lifetime to reach this dream. Despair no more, as recent business trends are leaning to a more attainable, and possibly even more dynamic, alternative to get the life you’ve always wanted through fractional ownership.
Fractional ownership 101
FRACTIONAL ownership puts owning properties of enduring class and value within easy reach. It is an innovative shared-ownership solution that allows families and friends to coown a property and maximize its use. This is an answer to the concern of vacation homeowners who do not get to frequently visit their homes, which puts into question the significant investment required to purchase and maintain it. Apart from real estate, smart buyers often use this increasingly popular acquisition alternative for other
desired items, like expensive cars and jets. In the last few years, a lot of people have invested in time-share properties, which allows them to make use of a vacation home during a set number of days within a year. In between, the common property is used by other timeshare owners who, more often than not, may be strangers. Unlike a time-share set-up, in fractional ownership, the property is owned and shared by more than one person, but with a legally divided title deed. With this scheme, usage rights, as well as maintenance and upkeep costs, are divided equitably among homeowners according to the size of the fraction purchased. This means, your share of the property belongs to you, and you can upgrade your share at anytime, benefit from any property appreciation or even hand it down to future generations. Mañosa Properties, led by CEO Dino Mañosa, takes on this trend and leads the pack by offering this option for their prime Tagaytay development, Tagô.
Tagô—which means “hidden” in Filipino—is Mañosa’s ode to the Filipino’s desire for a weekend “hideaway” to escape the frenetic pace of city living. The subdivision is an idyllic mountain retreat along Bonifacio Drive, just 300 meters off the busy Aguinaldo Highway. The area is quiet, yet vibrant, and just a short drive away from the plethora of entertainment and dining options all over Tagaytay. “We want to give our homeowners the feeling that when they are here, they are in their own exclusive enclave. But if they want to go
PROPERTY
out, the location also allows them to find dining and entertainment options just five minutes away,” Mañosa said. “No matter what your idea of ‘relaxation’ may be, you can find it here.” What makes Tagô stand out from among the developments in the area is the master-planning that was involved, making the most of the raw natural beauty of the landscape. Tagaytay’s cool climate, fresh air and verdant foliage take center stage in the overall design To ensure that each slice of real estate conforms to the overall aesthetics of the development,
the group’s architectural arm— Mañosa & Co. Inc., designed each home following the tenets of their illustrious founder, and champion of contemporary Filipino architecture, Francisco “Bobby” Mañosa.
to put the property in a corporation, with each owner as a company shareholder, while others can opt to have all the owners’ name on the title. From there, all the owners can decide how and how often they would like to make use of their vacation home. Now all you need to do is to decide whether you would like your new vacation home in Mañosa Properties’s beautiful Tagô Homes to be handed to just fully fitted or even fully furnished. As to how you plan to spend your weekend getaway in this idyllic setting, well that’s entirely up to you.
Shared ownership, greater enjoyment
INTERESTED homeowners are encouraged to approach Mañosa Properties with a group of family and/or friends who they would like to and are comfortable to coown and share a vacation home with. Two to four coowners per property would be ideal. Some opt
STAY TUNED
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Now there are rumblings, however slight, that Floyd Mayweather Jr. and Manny Pacquiao might be persuaded to do it again. WHEN Floyd Mayweather announced he was retiring after his last fight, no one truly believed that he would stay away, especially when the opportunity to win a 50th consecutive fight is within his reach. Well, on Saturday Mayweather teased the boxing community again and opened the door toward a possible return to the ring. “I’m happy to be where I’m at,” Mayweather said during an interview with Showtime’s Jim Gray during Saturday’s Badou Jack-Lucian Bute card. “Everyone is asking me is Floyd Mayweather coming back? Right now, I’m happy being on this side, but I’ve been talking with CBS and Showtime, you just never know, but right now, I’m happy on this side.”
STRONG HINTS OF RETURN
Arum said it will be hard for either fighter to move forward without the other. “If they fight anybody else there’s going to be that hangover,” he said. “If they fight each other, people will be attracted to the fight. It won’t do what the last fight did, but it might do 50 percent of the last fight.” That would be enough to make Mayweather his nine-figure purse. It would also be enough to give Pacquiao a huge payday, if not the $100 million or so he took from the Mayweather fight. And, as proven in the first fight between the two men that grossed some $600 million, anything can happen in boxing if the money is right.
and Pacquiao would do well. “All of us here would love to see that fight again, or any other fight with Mayweather,” Espinoza said. There wouldn’t seem to be a great appetite among boxing fans for a rematch of the bout that sold 4.6 million pay-per-views, but got lousy reviews. Mayweather won the fight by unanimous decision, and afterward Pacquiao revealed he fought with a shoulder injury. Both fighters are also technically retired, and Pacquiao is in the middle of a campaign for Senate in the Philippines that, if he wins, would make it difficult for him to fight again. But Pacquiao could be tempted by a chance to avenge his defeat. And Mayweather could be lured back into the ring not only by a big payday but a chance to break Rocky Marciano’s 49-0 record and win fight No. 50 in his pro career. “Obviously he’s coming back,” Arum said of Mayweather. “And I can’t see him making the kind of money he’s talking about with anybody other than Manny.” Both fighters have fought once since the big fight, with Mayweather beating Andre Berto last September and Pacquiao defeating Timothy Bradley last month. Both fights were pay-per-view busts, with sales in the range of 400,000, a tenth of what they sold in the ring together. Arum said the tepid box-office performances were largely a result of a hangover from last May’s fight. Many fans who spent a record $99.95 to buy the fight at home felt they got taken by a lackluster bout that didn’t come anywhere near living up to its hype.
headliner, Mexicans often took over the event with ranchero and mariachi bands performing in the concourses and Mexican flags waving in the stands. Even Pacquiao’s promoter, Bob Arum, had mixed feelings about staging the Mayweather fight on the date during negotiations last year. “To poach that date, which is a Mexican holiday, by nonMexicans, shows a terrible disrespect for the Mexican people, both those living in Mexico and those living in the United States,” he said. “And anybody who does the poaching ought to be ashamed of themselves.” Barring injury, Alvarez should have a hold on the Mexican holiday weekends for the foreseeable future. He’s a proven draw, with his own bout against Mayweather in September 2013 setting a then-record $150 million in revenue off of 2.2 million pay-per-view buys. The majority decision remains Alvarez’s only loss, and he’s bounced back by winning four consecutive fights, including two by knockout. If he can hold up as a 5-to-1 favorite against Khan, a matchup with Gennady Golovkin, one of the world’s top-rated pound-for-pound fighters, awaits in September. Alvarez said he had worked his entire career to get into this position. “Those are the dates that I’ve always celebrated and the dates that my countrymen have celebrated,” he said. “So I’m excited that I can now finally fulfill my dreams of continuing that tradition that many great fighters laid out.”
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Conclusion
E A R LY se ve n de c ades ago, the concept of mass surveillance was etched in ink. Today the concept is called closed-circuit television (CCTV). The CCTV camera network is one of the instruments that Philippine National Police (PNP) Chief Supt.
125,000
The total number of personnel of the Armed Forces of the Philippines fighting terrorist threats, according to Brig. Gen. Restituto Padilla
Pablo Francisco F. Balagtas regards highly in defending the three international airports against any terrorist attack and maintaining the security of passengers. According to Balagtas, commander of the Aviation Security Group (Avsegroup), facilities like the CCTV network and other installations stop any attempt to compromise the safety of the country’s airports.
P. | | 7 DAYS A WEEK
‘DEMOGRAPHICS, CHINA REBALANCING COULD BOOST PHL GDP GROWTH’ B C U. O @cuo_bm
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RANKFURT, Germany—Philippine GDP could grow by more than 7 percent a year if it can harness the potential of its expanding labor force and exploit the opportunities presented by China’s rebalancing. In a briefing here, Asian Development Bank (ADB) Chief Economist Shang-Jin Wei said improving labor productivity and increasing infrastructure investments will be “crucial” in helping Filipinos ages 15 to 64 to contribute to economic growth. The ADB said in its report, titled Asian Development Outlook (ADO), that the annual potential growth rate of the Philippines between 2015 and 2020 is 7.39 percent, based on its latest population-growth forecasts. “[A large] work force can be very good, but you need to keep people employed, you need to provide jobs for those people and you need to create an environment that firms up the need to invest,” Wei said. “That is why I stressed that population growth is a potential source of growth,” he added. Wei said the Philippines is one of the countries in Southeast Asia that have a large population and a large work force. Data from the Philippine Statistics Authority (PSA) pegged the country’s work force at 67.15 million in January 2016. However, only 40.05 million are employed. While there are 2.48 million Filipinos who are jobless, this is only a fraction of the 7.88 million Filipinos looking for decent employment or better-paying jobs. In terms of labor productivity, PSA data showed that in 2014, the year-on-year growth of labor productivity in the country slowed to 2.7 percent, from 5.6 percent in 2013. Wei said labor productivity can increase if the business climate is conducive for investment. This will bring in the necessary highproductivity jobs that are needed to boost economic growth. This, he said, requires good infrastructure, such as efficient mass-transport facilities, that can take employees to and from work, as well as reduce logistics costs for companies. Taken together, this can reduce overhead costs that companies incur when they do business in the country. This will make the Philippines a more attractive investment destination. “The Philippines needs reforms to make investment climate conducive to investment, and investments in infrastructure to reduce traffic, commuting time in Manila and the cost of logistics,” Wei said. Apart from these reforms, the
WEI
ADB PHOTO
67.15 M
The Philippines’s work force as of January 2016
Philippines must also learn to take advantage of the structural transformation is happening in China, where growth drivers are shifting from investment to consumption. Wei said Chinese households now have the financial capability to send their children to schools abroad or spend money for vacations overseas. The Philippines, he said, can offer quality education, as well as beautiful tourist destinations where Chinese visitors can stay. An increase in tourist arrivals can help boost Philippine economy in the near to medium term. PSA data showed that tourist arrivals from China declined to 394,951 in 2014, from 426,352 in 2013. “Chinese households, their purchase, consumption is growing robustly. If you take advantage of that, then you can also grow very fast,” Wei said. “If you produce what the Chinese consumers want, then you will benefit.” In March the ADB said weak external demand will likely reduce the Philippines’s GDP growth this year. In the ADO, the Manila-based multilateral-development bank estimated that GDP growth will reach 6 percent this year and 6.1 percent in 2017. In March and September 2015, the ADO noted that the country’s GDP growth will reach 6.3 percent in 2016. Apart from weak external demand, weather phenomena, such as El Niño and La Niño, could also slash farm growth and jack up food prices. The ADB said the outcome of the elections on May 9 will also have an important bearing on the country’s growth prospects in the next five years. The report also highlights youth unemployment as a key development challenge. While youth unemployment declined to 14.4 percent, the ADB said this is still more than double the national unemployment rate.
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WITH Floyd Mayweather Jr. out of the way, Canelo Alvarez circles two dates every year.
The Associated Press
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AS VEGAS—They met a year ago this week in a fight that was the richest ever, even if it disappointed most of the millions who watched it. Now there are rumblings, however slight, that Floyd Mayweather Jr. and Manny Pacquiao might be persuaded to do it again. “I would say there is a possibility a rematch happens, yes,” promoter Bob Arum said on Monday. “How big a possibility that is, I can’t really measure.” Mayweather helped stir speculation over the weekend by saying in a Showtime interview that he might be persuaded to come out of retirement if the money was big enough. He said he had talked to Showtime and CBS about another fight and that “some crazy numbers have been thrown my way.” Though Mayweather wasn’t asked specifically about Pacquiao, the Filipino might be the only opponent who can help him reach those numbers. “If I came back, of course, it would have to be a nine-figure payday and probably a championship fight and a nine-figure payday,” Mayweather said. Showtime Executive Vice President Stephen Espinoza said he is among the minority in boxing who believe Mayweather won’t come back. But Espinoza said he also believes a second fight between Mayweather
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Las Vegas Sun
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IT’S ALVAREZ’S TURN
SPORTS
Are PHL airports ready for Brussels-type attack? B R M @rectomercene R A @reneacostaBM
When he’s not traveling around the world and attending National Basketball Association games, Mayweather has been in his promoter role, as was the case on Saturday. “As of right now, some crazy numbers have been thrown my way, upward, of course, nine figures,” he said. “I’m truly blessed way beyond belief. I’m taking my time. I really don’t know what we’re going to do. Right now, I’m happy being on this side, helping fighters.” On Sunday to fan the flames further, ESPN’s Darren Rovell reported that Mayweather Promotions filed several trademarks last month, revolving around the number 50, including “TMT 50 and TBE 50.” “Every day, everyone is asking, Floyd are you coming back,” he continued. “All I want to do is continue to build my company Mayweather Promotions, help these fighters become world champions. That’s what I’m about right now. “If I came back, it would have to be a nine-figure payday and probably a championship fight.” Mayweather’s last fight was on September 12, 2015, when he defeated Andre Berto by unanimous decision, his 49th consecutive victory. This week is the one-year anniversary of his victory over Manny Pacquiao, a fight that Mayweather earned a reported $220 million. This is not the end of the Mayweather comeback speculation, it appears that it is now a matter of when and not if. Stay tuned. With The Orange County
A YEAR later, could Floyd Mayweather Jr. and Manny Pacquiao do it again? AP
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BusinessMirror
| WEDNESDAY, MAY 4, 2016 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao Asst. Editor: Joel Orellana
Sports
STAY TUNED
AUL “CANELO” ALVAREZ gives himself partial credit for the bout between Floyd Mayweather Jr. and Manny Pacquiao finally happening last year. Alvarez, the 25-year-old boxing superstar from Guadalajara, Mexico, insisted he would stage his own bout on Mayweather’s announced fight date of May 2, 2015, unless the so-called Fight of the Century was arranged. More than just a way to exert his influence, Alvarez mainly used the tactic to express his dissatisfaction with Mayweather’s scheduling demands. Alvarez protested how Mayweather domineered the boxing world by scheduling his fights only on the weekends of Cinco de Mayo and Mexican Independence Day in the last seven years of his career. “I want to recuperate those dates and take them back to the Mexican people,” Alvarez said through a translator at a recent news conference. “There should always be a Mexican fighting on those dates.” And now, according to Alvarez, there will be. With Mayweather retired, Alvarez plans to get into the routine of fighting around May 5 and September 16 annually, beginning with his middleweight title fight against Amir Khan on Saturday at T-Mobile Arena. The biggest Mexican star fighting on the boxing-crazed country’s holiday weekend continues a tradition that Julio Cesar Chavez started in the 1980s. “On that date, people want to see fights, people want to see action,” said Canelo’s promoter, Oscar de la Hoya, who himself frequently competed on the same weekend. “People want to see great boxing and they will get that on May 7 because Canelo is an exciting fighter to watch. I think it’s important that we have a fighter like Canelo own this Cinco de Mayo weekend.” Khan is something of a symbolic choice to help Alvarez usher in the new era, because in the past Mayweather has closed off that weekend to him, as well. Two years ago Mayweather ran an online poll to determine his Cinco de Mayo weekend opponent between Khan and Marcos Maidana. Despite Khan winning with nearly 60 percent of the votes, Mayweather chose Maidana. Khan remained on the short list as a potential Mayweather foe, but never got the call. “I wanted the big fights against Mayweather, Pacquiao and both fights didn’t happen,” said Khan, 29. “I wanted the next big thing, and the next big thing was Canelo.” Khan will find himself solidly in enemy territory. When Mayweather was Cinco de Mayo weekend’s
Larry Graham, a famous bassist and longtime friend of pop megastar Prince, says the artist found “real happiness” in his faith and could stay up all night talking about the Bible. Graham tells The Associated Press that Prince became a Jehovah’s Witness later in life and that it changed the star’s music and lifestyle. AP
PESO EXCHANGE RATES n US 46.9990
n JAPAN 0.4417 n UK 68.9710 n HK 6.0584 n CHINA 7.2539 n SINGAPORE 35.0739 n AUSTRALIA 36.0247 n EU 54.2133 n SAUDI ARABIA 12.5331
Source: BSP (3 May 2016 )
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BMReports BusinessMirror
www.businessmirror.com.ph
Are PHL airports ready for Brussels-type attack? C A
He cited, for one, that terrorists allegedly linked to the Islamic State in Iraq and the Levant (ISIL) would have difficulty in attacking the country. “It takes time [for them] to acclimatize. They have to undergo a case buildup first, then surveillance,” Balagtas said. “But we have many facility. like CCTV [closed-circuit television], and other installations to stop them, just in case.” Still, Balagtas admits, “There are no impenetrable barriers.” “But we rely on strict security implementation, as well as the different layers of security we have.”
Human acts ONE of the security layers Balagtas said the Avsegroup has involves humans, not machines: members of the Special Operations Unit (SOU) for antihijacking. In case of an armed attack occurring,
we have the SOU, according to Balagtas. “They are crisis-response team, our elite force.” He added members of the SOU are heavily armed and have snipers among its ranks. Asked how fast they can respond if some terrorist attack an airport somewhere in Mindanao, Balagtas said they have existing procedures to follow, such as alerting the local police and so on. The procedures lead up the ladder of command until it reaches the Avsegroup if the crisis could no longer be contained locally. “To address a serious crisis, a crisis-management committee is convened,” Balagtas said. He added the highest levels of the government are alerted all the way up to the president of the Philippines. The readiness of his mean includes being airlifted by the Philippine Air Force for a speedy rescue in a short notice. Balagtas said that, since assuming the post of
Avsegroup commander, he also strengthened the Special Weapons and Tactics (SWAT) unit by combining them into one integrated unit, which used to be separate entities. He personally trained the SWAT team to respond to any situation. “If there’s a hijacking and the local police cannot respond accordingly, God forbid, then we take over.” Balagtas added that, during Asia-Pacific Economic Cooperation summit in October last year, he was able to come up with interoperability training with other SOUs and the summit was one of the most successful events the country had hosted. He said the country’s security arrangement during the summit was patterned after the US, where other agencies are part of the whole security apparatus. In Hong Kong and Singapore, which used to be British colonies, there is only one agency to address antiterrorism or hijacking, which simplifies coordination, according to Balagtas. “But even if there are complications that arise in any situation, these are overtaken by good coordination and cooperation among the agencies.” Brig. Gen. Restituto Padilla demurs with Balagtas’s view saying the Armed Forces of the Philippines (AFP) has specialized units trained for specialized duties, “but we are not giving specifics for their own protection.” Padilla explained that members of these special units were trained abroad and were taught techniques and procedures when dealing with terrorist threats. Their training ensued following the kidnapping of the missionary couple, Martin and Gracia Burnham. The couple were kidnapped by the Abu Sayyaf Group (ASG) in 2002 and held for more than a year waiting for ransom. Martin was killed, while Gracia survived during an AFP operation to rescue them.
Last hijacking ON May 25, 2000, Philippine Airlines Flight 812 left the Davao Airport. While en route to Manila, a man initially identified as Reginald Chua announced he has hijacked the plane. Before landing, Chua reportedly threatened the 278 passengers and 13 crew members with a gun and hand grenade. He fired his gun into a bulkhead and demanded to be let into the cockpit. When he was refused access, Chua demanded the passengers to place their valuables in a bag before he commanded the pilot to descend so that he could escape using a homemade parachute. But Chua panicked and clung to the rear door. A flight attendant pushed him out of the plane. The hijacker’s body, wearing a ski mask and swimming goggle, was found buried in mud somewhere in Real, Quezon. It was speculated that he survived the fall but was killed by the mud. Chua was correctly identified through his driver’s license. That was the last reported hijacking in the country. How does the Avsegroup assure the Filipino travelers this would not happen again? “As far as we’re concerned, we are prepared for
Power reserve. . . C A
A three-month power outlook ending May indicated that peak demand is expected to occur on May 18 at 9,737 MW. This is higher than an earlier assessment for the same period re-
RIDGE OF HIGH PRESSURE AREA AFFECTING LUZON EASTERLIES AFFECTING EASTERN SECTION OF VISAYAS AND MINDANAO (MAY 3, 5:00 PM)
any eventuality but we still need the cooperation of the community,” Balagtas said. “At the end of the day, you have our assurance that every aircraft that flies in our skies are safe, through the coordinated efforts of every unit involved.” And when asked how prepared is the Armed Forces to deal with a terrorist attack, Padilla said he would throw back the same question to the reporter: “Have the Filipinos been able to experience the things that happened in the US [Boston marathon bombing], Paris and Belgium?”
Assuring words WHILE some may find comfort in the words of Balagtas and Padilla, spokesman of the AFP, the threat of a terrorist attack remains real because of the ASG. The ASG is considered the “most vicious”among the separatist groups in the Philippines. Some of its members have been said to have studied or worked in the Kingdom of Saudi Arabia and developed ties to mujahideen fighters. The ASG has proclaimed themselves as “freedom fighters.” However, even some Muslim clerics have distanced themselves from this small armed group. Padilla said the last terrorist attack in the Philippines was the sinking of SuperFerry 14, which was firebombed allegedly by ASG members on Manila Bay on February 27, 2004. At least 116 people were killed, mostly by drowning. It was considered the country’s deadliest and the world’s deadliest terrorist attack at sea. Padilla admits the country is also being subjected to threats. “But we are able to act on them,” he said. How the AFP would act would remain classified information, a consensus the BUSINESSMIRROR gave to make Padilla agree to an interview. “The government has monitoring apparatus within the community and they are silently doing their jobs,” Padilla said. According to the military spokesman, the Philippines have not experienced the intensity of the terror attacks in the US, France and Belgium “because the country’s security apparatus is working day and night to ensure that our community is safe.”
“there is a new kind of terrorism or terrorists that are extremists in nature, with total disregard for the value of life, driven by ideology and, therefore, too evil and ruthless.” Padilla said confronting these new kind of terrorists, gets complicated “because the AFP is now dealing with an asymmetrical form of warfare, where the enemy recognizes no rules, but our men’s action are governed by laws.” “Sometimes, the AFP launches an operation against suspected terrorists, but when the enemy feels that they are on the losing end, they splinter into smaller groups, bury their weapons to be retrieved later and mix with civilians.” He said when some soldiers go out in the open, like a marketplace, they recognize what looks like the faces of enemies they encounter in the field. However, he said the enemy is unarmed and looked harmless when mixing with their fellow Mindanaoans, although these are the same persons who could have planted homemade bombs. “If you don’t have proof, like a gun, what would be the basis of your arrest?” Padilla said. “That’s why the war on terror is asymmetrical.”
Machines or men?
PADILLA considers the ASG not as a terrorist group but “a bunch of bandits who are more interested in money by demanding ransom.” “The local terror groups, like the Abu Sayyaf, are motivated by money or material gains,” Padilla said. “There is rampant kidnapping at the Southern backdoor but the government has a no-ransom policy.” However, he said families of the kidnap victims usually disobey their order not to pay because they don’t like to lose any member of their family. At the same time, Padilla said these families are usually blackmailed by videos of their relatives being threatened with beheading if they do not cough up the required amount. He admits, however, that in this age and time,
PADILLA estimates it would cost the country “a lot of money” if the government installs CCTV cameras nationwide. It would be better to ask for the people’s cooperation to be watchful, according to him. “I wish the nation could have 1 million CCTV in the form of human eyes, watching suspicious activities and reporting them to the police, instead of arming ourselves with CCTV cameras to prevent crime,” Padilla said. He added that human eyes are fail-safe and do not consume electricity. “We don’t err on intelligence collection, we may not have gadgets and high technology, but we are not far behind,” Padilla said. “Many other countries work with us for information about terrorist groups.” The military believes that citizens’ participation to look out and report suspicious activities are crucial because the AFP has only 125,000 personnel looking after the welfare of 100 million Filipinos. He said the PNP has more personnel than the military because its manpower grows as the population increases. “These capabilities start from employing the military and the police,” Padilla said. “But later on, in the context of more proactive way to combat terrorism, [these capabilities entail] the whole-ofgovernment and a whole-of-a-nation approach.” He said this is true in Southern Mindanao, where the borders with neighboring countries are porous and where extremists and radical are able to get in and out without fear of getting arrested. “We need the cooperation of the whole of the government, particularly those dealing with border matters,” Padilla said. “Those that enforce our laws like, customs, immigration, maritime police, Navy and Coast Guard have to be strengthened.”
leased in early March. Historically, the highest demand is recorded in May. “The major difference is that peak demand for Luzon is now projected to reach 9,737 MW, an upward 373-MW adjustment from an earlier forecast of 9,365 MW,” Fernandez said. The updated data was presented to industry stakeholders during a recent meeting held at the Department of Energy (DOE). “In the March version of the forecast, the Luzon grid could still avoid yellow alerts through the dispatch of Malaya,” the Meralco official said. The state-owned Malaya power plant is already on stream as a must-run unit during weekdays, where power demand is higher compared to weekends. A must-run unit must provide needed power supply on real-time basis to ensure reliability of power supply in the grid, especially when there’s a shortfall. Moreover, Luzon already recorded a peak demand of around 9,600 MW on April 14, exceeding an old forecast of around 9,400 MW. The prolonged El Niño and unavailability of some power plants during the period were the main factors why NGCP and the DOE revised their outlook. “The demand forecast was raised to consider many ongoing effect of warmer temperatures due to El Niño, which is expected to last until June this year,” the Meralco official said. A warmer temperature results in higher demand for electricity. It is estimated that every degree change in temperature translates to approximately 5 gigawatt-hours of energy consumption, Meralco said. “The higher consumption of our customers is attributed to a number of things. Clearly, temperature is a factor,” Meralco President Oscar Reyes said. Also, there are power plants that were supposed to be available during the period but are no longer included in the updated forecast. The DOE said the high demand drains power reserves and pushes power plants to their limits. The DOE earlier directed power producers to reschedule the maintenance work of their power plants after elections. They obliged, but the agency said the sudden shutdown—most were due to technical glitches—of some power plants was already beyond its control. “The DOE is not the power-plant operator. It’s out of our hands if some power plants suddenly
went on forced outage,” Energy Secretary Zenaida Y. Monsada said, adding that “we can only remind and review from time to time their operations, particularly if their plants are running smoothly or not.” According to NGCP, these two plants are Unit 1 of Malaya plant, with 300 MW of capacity, and Unit 4 of Kalayaan pumped-storage hydro plant, with 178 MW. This means that 478 MW would be shaved off from the Luzon grid. Meralco was also informed about these two power facilities. “For the power plants, NGCP reported earlier that Malaya 1 [300 MW] will be coming back online on May 6, while Kalayaan unit 4 [180 MW] won’t be back in time for the elections, but is expected to be back by May 14,” Fernandez said. Based on Meralco’s data, demand grows a little more than 3 percent year-on-year. So far, the demand has doubled to 6 [percent to 7 percent this year. Meralco, the country’s largest distribution utility serving over 5 million customers, said the revised forecast of power demand and supply would help the company to plan ahead during critical times, particularly in summer when demand for electricity is at its peak. In relation to this, Meralco has filed with the Energy Regulatory Commission (ERC) for the approval of the power supply agreements (PSAs) with various power producers: ■ 225 MW from Redondo Peninsula Energy Inc.’s 300-MW coal plant in Subic, Zambales. ■ Up to 400 MW from St. Raphael Power Generation Corp., which intends to put up a 2 x 350MW coal plant in Calaca, Batangas. ■ 1,200 MW from Atimonan One Energ Inc.’s 2 x 600 MW coal plant in Quezon. ■ 528 MW from Central Luzon Premiere Power Corp.’s 4 x 150-MW coal plant in Pagbilao, Quezon, which is scheduled to be operational not later than 2021. ■ Up to 528 MW from Mariveles Power Generation Corp.’s 4 x 150-MW coal plant scheduled to be operational not later than 2020 in Bataan. ■ Up to 70 MW from Panay Energy Development Corp., which owns the 2 x 82-MW and 150-MW coal facility in La Paz, Iloilo. The facility is scheduled to become operational by August 26 this year. ■ 600 MW from Global Luzon Energy Development Corp.’s 2 x 335-MW coal plant, scheduled to be operational by 2022. The PSAs shall become effective upon approval of the ERC, Meralco said.
Asymmetrical war
BMReports BusinessMirror
A4 Wednesday, May 4, 2016
news@businessmirror.com.ph
Naia privatization to boost PHL competitiveness B R M
M
@rectomercene
OST commercial airports in the world are governmentmanaged because of the huge financial requirements needed to build and run them.
An airport complex must have a series of runways and taxiways; lighting fixtures for the whole aerodrome; a passenger terminal building; a bonded cargo compound; a search-and-rescue department; and an efficient transport system. It must have an air-traffic control system and associated radars and telecommunication; separate police and fire stations; and public and private security groups. These and a host of related facilities are needed to assure the efficient and continued flow of people and cargo in and out of the airport. In the long run, an airport complex becomes a city in itself. Because of the beehive of activities related to their operations, airports ultimately become magnets that attract businesses and a host of other commercial enterprises. Eventually, airports get surrounded by schools, restaurants, entertainment centers, condominiums, hotels, casinos, transport hubs and many more. Following in their wake are the mass of humanity that powers and operates the businesses, including entire communities as byproducts of the airport complex. It is no coincidence that the municipalities adjacent to the Ninoy Aquino International Airport (Naia) have become bustling conurbations: the cities of Pasay, Makati, Taguig, Parañaque, Las Piñas and Muntinlupa are good examples.
Demanding job
RUNNING an airport complex today, however, has become so demanding, it requires an experienced captain of industry or a topnotch CEO to manage the whole ensemble. For example, the Hong Kong International Airport (HKIA), the world’s busiest cargo gateway and one of the world’s busiest passenger airports, is being operated by the Airport Authority of Hong Kong. In turn, the HKIA has appointed Jack So Chak-kwong as chairman to run one of the world’s largest passenger terminal buildings. So Chak-kwong, 70, is a recipient of the Order of the British Empire. He is a former chairman of the Hong Kong Trade Development Council, chairman of the Consultative Committee on Economic and Trade Cooperation between Hong Kong and Mainland China, chairman of Harrow International School Hong Kong and vice chairman of the Hong Kong Philharmonic Society. He is also a member of the Chinese People’s Political Consultative Conference, honorary consultant to the mayor of San Francisco, former international business advisor to the mayor of Beijing and was independent director of HSBC, one of the largest banking and financial services organizations in the world. HKIA is an important contributor to Hong Kong’s economy, with approximately 65,000 employees. More than 100 airlines operate flights from the airport to over 180 cities across the globe. In 2015 it handled 68.5 million passengers, making it the eighth-busiest airport worldwide.
Airport privatization
TODAY many airports are ripe for privatization to improve their chances to compete in the new global economy. What is airport privatization? Simply put, it is the transfer of ownership or management or both to the private sector, with the private entity paying the government a form of rent or some other kinds of arrangements.
The manner of ownership covers a wide spectrum: “Airports owned and operated by government departments, 100-percent governmentowned corporations, independent airport authorities, mixed enterprises with government majority ownership and mixed enterprises with private majority ownership,” according to “UK Essay.” UK Essay, a thesis written by students, provides a bird’s-eye view of the pros and cons of airport privatization. “The reasons to privatize an airport include an improved ability for an airport to diversify its operations, to enhance profitability, to fund expansion and to improve competitiveness,” UK Essay said. The arguments for privatization include the falling availability of public funds and a need to change to the market-oriented outlook that private businesses develop, it added.
Why privatize Naia?
AS things stand today, the Ninoy Aquino International Airport (Naia) is a likely candidate for privatization. While neighboring Asian airports have bounded way ahead of us in terms of efficiency, tourist arrivals and income, the Naia has become the laughing stock of the world. As Hong Kong, Singapore, Malaysia and Taiwan count their tourists in the tens of millions, the Naia is happy to announce that we have 4.5 million tourists last year. Our neighboring airports get worldwide recognition for excellence, while the Naia gets a black-eye after it was voted twice as the world’s worst. Despite mass condemnations to stop the nightmare called tanim-bala at the Naia, our authorities celebrate the arrest of passengers found with bullets in their possession, hailing the “arrests” as signal achievements in the fight against terrorism. Tanim-bala (literally meaning “planting bullets”) has become a fearful byword among members of the overseas Filipino workers (OFW) community. OFWs now look at their country’s airport as a source of scourge. Needless to say, foreign travelers are wary of the Naia, as well. Many potential foreign visitors have opted to stay away, and this is shown in the poor tourist arrivals. “They simply don’t get it,” said an exasperated airport concessionaire, referring to airport officials who don’t punish their employees mulcting travelers.
Privatization benefits
UK Essay said airports were originally considered part of a nation’s essential infrastructure, which is why less attention was paid to profit than to operations. “The three means of economic gains to be found in privatization are improvements in operating efficiency—the private for-profit business model more often leads to a further exploration for means to cut costs and boost revenues than does public management; the introduction of new management styles and marketing skills directed to serve users with a more consumer-oriented approach; and the ability to make better investment decisions.” “Privatization enables a longterm focus to meet the demands of international competition; to maintain a customer-focused plan; and to free the government from providing subsidies to an unprofitable enterprise.” The BusinessMirror asked British Ambassador Asif Ahmad his opinion about the plan to
THE Ninoy Aquino International Airport Terminal 3 façade
privatize the Naia: “Privatization of airports has been a huge success in the UK. Heathrow has expanded and has modern terminals. Other London and provincial airports are also thriving. Airlines can rely on commercial terms being applied, as opposed to the drivers of local government. Big policy decisions, however, remain in government hands, so there is no loss of control,” he said. “As we will see in Mactan-Cebu, privatization will bring in far better passenger experience. The terminal building, like so many in Asia, has a British designer,” he added. BAA, formerly the British Airports Authority, owns six British airports and operates more facilities, including rail services. Wikipedia says this British company runs the retail at Boston Logan, Baltimore Washington and Pittsburgh International Airport. The BusinessMirror tried to get the opinion of the managers of the big carrier concessionaires at the Naia, but they refused to give their views. One Naia raking official, who requested not to be named, said privatizing the Naia would speed up procurement. He cited the example of the set of batteries that power the emergency generators. They were found to be defective in October 2015, yet it took six months to procure them through public bidding. The Naia suffered one of the longest power outages—six hours —before partial power was restored last month. Only then were the batteries were bought. UK Essay said airport privatization has become a trend in the past 30 years, as economies change and the air-transport sector matures. Airport management and ownership, once mainly the domain of governments, has evolved into a mix of public and private airport ownership. “Airports must now compete with other airports around the world for business, and government may not be the best owner for a globally competitive enterprise. Airports must have the freedom to compete on the commercial level, and not just provide a service to the traveling public. Airports seek privatization, in part, to improve their abilities to develop a customer-focused business plan,” UK Essay said.
Operators of private airports have the rights of ownership, and take the responsibility of the operation with a view to earning money for investors. They pay the government an agreed amount in return. Since the inception of the former Manila International Airport in the 1960s, which became the Naia, our premier airport had seen a parade of general managers who have all been appointees by the sitting president. The last one, retired Gen. Jose Angel Honrado, is a former helicopter pilot and was appointed by President Aquino, his nephew. He has been the general manager of the Manila International Airport Authority (Miaa) since 2010. Honrado served as security consultant of President Aquino during the May 10, 2010, elections. He served as spokesman of the Armed Forces of the Philippines, and also as aide-de-camp of the late former President Corazon Aquino.
DOTC proposal
THE Department of the Transportation and Communications (DOTC) last year has announced a proposal to privatize the Naia. That arrangement in itself remains questionable. The Miaa, like the Hong Kong Airport Authority, is supposed to be independent. Yet, the Miaa depends on the DOTC for funding, although it earns P5 billion a year in revenues alone from airport takeoff and landing fees.
Maximum capacity
THE Japan International Cooperation Agency (Jica), a consultant for the DOTC, said the Naia could no longer accommodate another round of increases in passenger traffic next year: “The Naia would totally be capacity-saturated in 2015, and not be able to cater to the increasing passenger demand anymore.” The report noted that by next year, the airport was seen to handle 37.78 million passengers, the bulk of which, or 21.31 million, would be domestic traffic, while the remaining 16.46 million would be international passengers. A quarter century from now, the Naia’s passenger traffic would reach 101.49 million, the Jica study added. The optimal capacity of the Naia’s three terminals is 30 million passengers per year, while its maximum capacity is at roughly
35 million passengers annually.
Interested parties
ABOITIZ Equity Venture Inc. (AEV) President and CEO Erramon Aboitiz said the company is interested to join the privatization bidding for the Naia. Other conglomerates that expressed interest in the bidding include Ayala Corp., San Miguel Corp. and Megawide Construction Corp. Unfortunately, the administration of President Aquino will end next month and the Naia privatization would land in the lap of the next president.
Privatized airport
WE have the second-busiest airport in the country, Cebu-Mactan International Airport (CMIA), as an example of a privatized operations. In October 2014 the the GMRMegawide Cebu Airport Corp. (GMCAC) assumed management of the terminal operations of the MCIA.
Brewing conflict
TWO years into its private capacity, MCIA General Manager Nigel Paul Villarete is already having a run-in with the private operators. It was reported that, initially, Villarete said he would remain as the airport’s manager to oversee its management, but will leave the operations of the landside and airside to the private entity. Now, Villarete said he wanted the access control to the Mactan terminal, one of the biggest assets of the airport department, to be in his hands. The chairman of the AseanAirline Operators Council, Leoncio Nakpil, who had 25 years’ experience in aviation, said having the power to control access to the terminal is the same power that Honrado holds dear at the Naia. The Public Affairs Office and the Media Affairs Division (MAD) are two offices that issue access pass to the terminals. Both offices are under Honrado.
Barred media access
WHEN he took over in 2010, one of Honrado’s first official acts was to ban the media from gaining access to some areas of the premier airport. The MAD had barred media access to the tarmac and other areas within the terminal buildings. It was alleged that it was his way
of getting back at the media, who reported that Honrado, who was Armed Forces liaison man at the Naia, failed to cover up the discovery of a shipment of firearms by a Luzon congressman returning from the United States. Honrado has denied the accusations.
Oversight role
NAKPIL said any plan to privatize the Naia should be a “package deal,” and the manager’s role would be confined to oversight, seeing to it that the operators adhere to the laws governing the airport’s dayto-day operations. If any violation occurs, then the private operator is penalized, he said. Nakpil said the current Naia management, with the power to control access to the airport, used this leverage to compel some of the air carriers to do his bidding. “This is one of the reasons some of the airlines could not add more flights,” Nakpil said. He added that if some carriers will get the nod of the Civil Aeronautics Board or the Civil Aviation Authority of the Philippines for more flights to and from the Naia, they still would not be able to mount these flights. “You can have additional flights, but where are you going to park your airplanes if the Manila International Airport Authority refuses to give them parking slots,” Nakpil asked. This same leverage is exerted on airport concessionaires, who are always threatened with the withdrawal of entry privilege if they do not obey Honrado’s demands, Nakpil added. UK Essay said the arguments for privatization are many. Less public investment is needed; on the one hand, public funds are less available than they once were and, on the other hand, private corporations have a market-oriented outlook for their business plans. Private operators have deep pocket, they have their eyes on increased revenues, and tend to get the best managers to make sure they run the airport competitively. Employees and management are motivated to perform better, and a deregulated airline industry would lead to growth, which the existing model of airport management and ownership could not deliver.
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AseanWednesday BusinessMirror
Editor: Max V. de Leon • Wednesday, May 4, 2016 A5
Japan unveils $7-B plan to develop Mekong
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APAN’S foreign minister announced a $7-billion initiative on Monday to promote development in Southeast Asia’s Mekong region, which encompasses parts of Vietnam, Lao PDR and Thailand through which the river flows.
In a speech at Chulalongkorn University in Bangkok, Fumio Kishida affirmed the importance of Southeast Asia’s economic prosperity to Japan. He pledged ¥750 billion ($7 billion) in funding over the next three years to support development and growth in the region. The initiative will help promote “connectivity” within Southeast Asian countries and Japan through funding in infrastructure and development of human resources. Thailand has become a key manufacturing and export hub for Japanese manufacturers, such as Toyota and Honda. “Invigorating the flow of goods and people by connecting the region through roads, bridges and railways is indispensable for promoting economic development,” he said, adding that Japan’s cooperation will go beyond just building infrastructure. Over the next three years, “we
I am expecting the day when, as a result of these efforts, I can depart from Bangkok eastward in the morning and arrive in Ho Chi Minh City at night and enjoy pho for dinner.”—K will make use of funds amounting to ¥750 billion toward cooperation with the Mekong region,” Kishida said. Specific details have not been announced but he said Japan would like to work together with
the Mekong countries to create a framework to support the various efforts, including regional issues and theme-oriented support, in a detailed manner. “I am expecting the day when, as a result of these efforts, I can depart from Bangkok eastward in the morning and arrive in Ho Chi Minh City at night and enjoy pho for dinner,” he said. Kishida also renewed his call for the establishment of a code of conduct in the South China Sea, where China, Vietnam, the Philippines and others have competing territorial claims, and that prosperity can only achieved if there is peace and stability in the region. “In this region, there are issues of terrorism, extremism and ensuring maritime safety and security,” he said. “There are multitudes of issues now facing our Asean partners. We need to face these issues together, and maintain stability in this region. What is necessary is respect for diversity and what is fundamental for that is the rule of law.” Referring to Thailand’s current political situation and its military government, Kishida said he hoped that the people of Thailand will overcome the current difficult challenges and “play more active role in the region and international community.” The visit to Thailand is part of his regional tour that includes stops in China, Myanmar, Laos and Vietnam. AP
Thailand’s do-what-we-want law may enable building of new airport runway
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N a move that may be cheered by tourists but faulted by democracy campaigners, Thailand’s military junta aims to use a specialpowers rule to speed up the approval of a new runway at Bangkok’s increasingly stretched main airport. The measure, known as Article 44, makes any action the junta takes “lawful, constitutional and final” and it has been used for everything, from banning protests to giving soldiers authority to arrest people. It has also been invoked to kick off a slew of infrastructure projects that the slowing economy badly needs. “We may proceed with the third runway as soon as possible,” Transport Minister Arkhom Termpittayapaisith said in an April 29 interview. Arkhom said the special powers would likely be used to speed up an environmental-impact assessment for the project at Suvarnabhumi Airport. He said the powers will also likely be used for the government’s planned high-speed rail projects, as they have already been used to push through three out of seven planned double-track projects. Thailand is spending about $83 billion over the next seven years to build new railways, roads and customs checkpoints to remove bottlenecks that hamper trade with its neighbors. Many of the planned railways will have two tracks, as opposed to the current single track, which slows down both passengers and freight, as trains must wait for other trains passing in the opposite direction. The government is also negotiating with China and Japan to construct high-speed rail networks that may connect the nation’s manufacturing and shipping hubs with buyers and suppliers stretching from Yunnan in southern China to India’s northeastern frontier. Thailand slashed the length of the China route, which will now terminate in the central Thai town of Nakhon Ratchasima, about 400 kilometers short of the Thai-Laos border. Arkhom said the door remains open to further negotiation with the Chinese. Japan plans to invest in a 574 km east to west dual-track rail line linking Kanchanaburi, Bangkok and
Article 44
The measure that makes any action the junta takes “lawful, constitutional and final” Chachoengsao and extending to Sa Kaew and Rayong and a 670 km highspeed train route from Bangkok to Chiang Mai.
Absolute power
AFTER toppling the elected government and tearing up the constitution in 2014, the junta wrote an interim charter that gave it broad powers, including Article 44. Prime Minister Prayuth Chan-Ocha has repeatedly pushed back the date for possible elections, with the latest timeline calling for polls in late 2017. Arkhom defended the use of Article 44 and the pace of construction, saying his ministry has already received cabinet approval for seven of the 20 projects in its 1.79-trillion baht infrastructurespending plan.
TERMPITTAYAPAISITH
“What I committed to was to get cabinet approval and then they can start the bidding process and they can start the construction,” he said. “But this type of project takes several years. The government has a time limit only until next year, so our priority is how to get all these projects done, but not finished.” Arkhom said the approved projects include extensions to Bangkok’s mass-transit train system, three new motorways and a coastal port and improvements at Laem Chabang. The new coastal port, will encourage companies to ship goods from Thailand’s north and central provinces by river instead of road, he said. Former Finance Minister Kittiratt Na-Ranong, who was a member of the government that the military ousted in 2014, is pleased his successors are now getting going on infrastructure spending. He said in an interview last week that it should have come together faster. “They’ve lost one-and-a-half years doing nothing,” he said. Kittiratt, who championed his own major investment program, said that at least his “ideas can be implemented”—even if the junta stays in power for two decades. Bloomberg News
PRIME Minister Prayuth Chan-ocha (right) sits with Japanese Foreign Minister Fumio Kishida (left) under a portrait of Thailand’s King Bhumibol Adulyadej during a meeting at Government House in Bangkok, Thailand, on Monday. AP
Detention powers stir concern over Indonesia’s counterterrorism law
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LAWMAKER involved in vetting Indonesia’s proposed counterterrorism law says a contentious provision allowing detention without trial for six months could undermine the fight against Islamic extremism. Hanafi Rais, vice chairman of the parliamentary committee debating the current draft of the law, said on Tuesday permitting lengthy detention in undisclosed prisons would give security forces powers that could be easily abused. Speaking at a panel on extremism, Rais said parliament should pass a law that strengthens the capacity of police to prevent attacks without giving the state excessive power that could foster support for radicals. He s a id l aw m a k e r s we re “stunned” by the death of suspected militant Siyono in police custody earlier this year, which revealed a lack of professionalism in Indonesia’s elite counterterrorism squad. Efforts to strengthen laws against militant activity gathered momentum after a suicide bombing in the Indonesian capital in January, which killed eight people, including four attackers who claimed allegiance to the Islamic State group. It was the first major attack by extremists in the world’s most populous Muslim nation in six years and raised questions about whether the country was facing a new threat despite the sustained crackdown that decimated the Jema’ah Islamiyah network responsible for the 2002 Bali bombings. Rais said the new law could be ready for parliament to vote on in October. He predicted there would be a “tough” debate that could result in a reduction to the six-month detention provision. Meanwhile, Indonesian police
said they fatally shot a French citizen after he stabbed a policeman to death on Monday while resisting arrest on the resort island of Bali. Bali police chief Maj. Gen. Sugeng Priyanto said Amokrane Sabet, reportedly a former mixed martial arts fighter, was shot during a skirmish in front of his rented villa in Badung. Priyanto said police had received complaints from residents who described the 49-year-old Sabet as a violent troublemaker. Sabet, who is believed to have been in Bali for two years, reportedly often carried a knife, harassed people and ate at restaurants without paying. Priyanto said Sabet, whose tourist visa expired last September, brandished a knife when police and immigration officers came to arrest him. Sabet chased the officers and repeatedly stabbed a policeman who fell to the ground, he said. Priyanto said police shot Sabet after he ignored three warning shots. Bali police spokesman Hery Wiyanto said Sabet had been summoned twice by police for questioning but tore up the summons and failed to appear. He said Sabet died at the scene, while the policeman, a chief sergeant from the North Kuta police station, died later at a hospital. The French Embassy in Jakarta confirmed that Sabet was a French citizen and said they had been informed by Indonesian authorities about the incident. Survivors of Indonesia’s anticommunist massacres in 1965, meanwhile, submitted a list of what they say are more than 100 mass graves to the government on Monday after the president called for an investigation into the killings. Five survivors, aged in their 70s, who are founders of the Research Foundation for 1965 Murder Vic-
tims, gave the documents to the Coordinating Ministry for Politics, Legal and Security Affairs, which is responsible for the probe. The list is the product of research since 2000 and the graves, which are located on the islands of Java, Sumatra, Borneo, Sulawesi, Flores and Bali, account for nearly 14,000 victims, according to the group. Historians say half-a-million people died in the months-long frenzy of killing that began in October 1965 at the instigation of the military after six right-wing generals were killed in an attempted coup by suspected communists. Security Minister Luhut Pandjaitan was not on hand to receive the documents but his officials said he would meet with the group next week. He was instructed by President Joko Widodo to oversee an investigation into the massacres after a conference held by the government and rights groups last month broke a half-century taboo on public discussion of the killings. Luhut, a retired general, caused a stir by saying at the event that very few people were killed and vowing the government would never apologize. He later demanded that rights groups prove that mass graves exist. Bedjo Untung, a survivor of the massacres who heads the foundation, said it had documented the locations of 122 mass graves with the help of survivors and witnesses, including people who dug the graves and buried the bodies. “We believe this is only 2 percent of the victims,” he said. Kontras, an advocacy group, has refused to give its information about mass graves to the government out of fear it could be used by opponents of the investigation to conceal the truth. AP
A6
Wednesday, May 4, 2016
The World BusinessMirror
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Trump’s rise driving immigrants to become citizens
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IAMI—On a recent Saturday morning in South Florida, 50-year-old Edgar Ospina stood in a long line of immigrants to take the first step to become an American.
775k The estimated total number of legal immigrants in the Los Angeles area eligible for US citizenship
Ospina has spent almost half his life in the United States after emigrating from his native Colombia, becoming eligible for citizenship in 1990. But with Donald Trump becoming a more likely presidential nominee by the day, Ospina decided
to wait no more, rushing the paperwork required to become a citizen. “Trump is dividing us as a country,” said Ospina, owner of a small flooring and kitchen remodeling company. “He’s so negative about immigrants. We’ve got to speak up.” Nationwide, immigrants like Ospina are among tens of thousands applying for naturalization in a year when immigration has taken center stage in the presidential campaign, especially in the race for the Republican nomination. Trump, the GOP front-runner, has pledged to deport the estimated 11 million people living in the US illegally. He’s also vowed to bar Muslims from entering the country and threatened to cut off remittances that Mexican immigrants
in the US send back home. And he’s called for building a border wall—among other proposals to deal with unlawful immigration, saying the federal government has failed to protect the border from people and drugs illegally entering the country. That rhetoric, immigrant advocates and lawmakers say, is driving many foreign-born residents to seek citizenship. “There is fear of a Trump presidency,” said Maria Ponce of iAmerica Action, a Washington-based immigrant rights group that is teaming up with other organizations to help those seeking citizenship—part of a national campaign called “Stand Up To Hate.” They’ve sponsored naturalization workshops from Washington state to Nebraska and Massachusetts. Nationwide, naturalization applications are up 14 percent in the last six months of 2015 compared with the same period in 2014, according to the government. And the pool of future US citizens is large. Nearly 9 million legal permanent residents, or greencard holders, are eligible to become Americans. Of those, about
4 million are Hispanic. Rep. Luis Gutiérrez, Democrat-Illinois, was featured in a public-service announcement encouraging immigrants to become citizens so they can vote in November. He mocked Trump’s slogan, suggesting it was really: “Make America Hate Again.” “We’ve seen it in the past and we are seeing it again many times over this year,” he said. “When immigrant communities feel they are under attack, they react with a large number of eligible immigrants becoming citizens and a large number of eligible citizens becoming voters.” Erica Bernal of the National Association of Latino Elected Officials said the tenor of the presidential campaign is galvanizing Latino immigrants. She said today’s movement is reminiscent of the 1990s when Latinos in California rose up against Proposition 187, which sought to deny government services to those in the state illegally. The courts overturned it. Her group and several local ones in Los A ngeles recently launched a regional campaign to encourage Latino immigrants to
become citizens. About 775,000 legal immigrants in the LA area are eligible for citizenship. To qualify, immigrants must have been in the country five years, complete a 21-page application, get fingerprinted, pass a civics and English exam and pay almost $700 in fees. Ivan Parra, citizenship coordinator with the Florida Immigrant Coalition said immigrants laugh when he asks why they want to become Americans. “‘You know why,’ they say, ‘I want to vote against racism and hate,’“ Parra said. He says immigrants this year are “desperate to be part of the political process.” Maria Cristina Giraldo, originally from Colombia and already a US citizen, said she is so fearful of Trump becoming president that she brought five relatives to a naturalization workshop in South Florida. “Trump is anti-immigrant,” said Giraldo, who works cleaning houses. “I don’t know if it’s because he’s such a brute in his speeches or that he isn’t careful in what he’s saying, but he’s very nasty toward Hispanics.”
Her sister, Gladys Ceballos of Hollywood, Florida, agreed. She’s trying for the second time to become a citizen after failing to pass the English exam. She says she’s not fearful of Trump, but she doesn’t trust him. John Haughton, 66, a Jamaican immigrant, said: “Trump is a man who would say one thing today and may modify his views tomorrow.” “I want my voice heard,” said Haughton, a legal permanent resident since 2008. Seung Baik, 43, who was born in South Korea and brought to the US as a teenager, said he, too, believes Trump is too divisive. “It took me a little longer to become a citizen because I didn’t want to apply and treat this as a membership to something, like joining a club,” said Baik, a church pastor. “The world and this nation are changing, and my vote matters.” Baik said he won’t be registering as a Democrat or Republican but remains independent. He’s undecided about whom he will vote for in his first presidential election as a US citizen, but “it won’t be Donald Trump.” AP
Military tests unmanned ship designed for seafaring missions
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AN DIEGO—The military is starting tests on the world’s largest unmanned surface vessel—a self-driving, 132-foot ship designed to travel thousands of miles out at sea without a single crew member on board. The so-called “Sea Hunter” has the potential to revolutionize, not only the military’s maritime operations, but commercial shipping, according to military officials. If successful, it could usher in the arrival of unmanned cargo vessels moving between countries. Military officials showed off the ship in San Diego on Monday before it set off to a nearby Naval base, where the testing will be conducted. The sleek, futuristic-looking steel-gray vessel was docked at a maritime terminal in the heart of San Diego’s shipbuilding district, where TV crews filmed the robotic craft. No media access was given to the inside of the vessel. The Pentagon’s research arm, the Defense Advanced Research Projects Agency (Darpa), developed the ship along with Virginia-based Leidos. Darpa will test it in conjunction with the Navy over the next two years off California’s coast. The tests will largely focus on its ability to react on its own to avoid collisions with seafaring traffic. “For our military operations we want to make sure we have unmanned vessels like this to supplement the human mission so that we’re not putting people unduly in harm’s way,” Darpa Spokesman Jared B. Adams said. During the testing phase, the ship will have human operators as a safety net, but once it proves to be reliable, the autonomous surface vessel will maneuver itself—able to go out at sea for months at a time and travel up to 10,000 nautical miles. Program manager Scott Littlefield said there will be no “remote-controlled driving of the vessel.” Instead it will be given its mission-level commands telling it where to go and what to accomplish and then software will enable it to drive itself safely. The military initially built the diesel-powered ship to detect stealthy diesel-electric submarines, but developers say they believe it has the capability to go beyond that, including detecting mines. There are no plans at this point to arm it.
“There are a lot of advantages that we’re still trying to learn about,” Littlefield said. Some see the possibility that the full-size prototype could pave the way to developing crewless cargo vessels for the commercial shipping industry someday, he added. Countries from Europe to Asia have been looking into developing fleets of unmanned ships to cut down on operating costs, but the idea has sparked debate over whether it’s possible to make robotic boats safe enough to run on their own far from land. The International Transport Workers’ Federation, the union representing more than half of the world’s more than 1 million seafarers, has said it does not believe technology will ever be able to replace the ability of humans to foresee and react to the various dangers at sea. Others have expressed concern about hackers capturing a robotic vessel. Military officials have been working on hacker-proof protections and say it’s possible to make drone ships cyber-secure. The “Sea Hunter” was built off the Oregon coast, and moved on a barge to San Diego’s coastline. The prototype can travel at a speed of up to about 30 miles per hour and is equipped with a variety of sensors and an advanced optical system to detect other ships. The program to develop the ship cost $120 million, though Darpa officials say the vessels can now be produced for about $20 million. During the collision tests, the ship will be programed to follow international traffic rules for traditional boats of its size. Commercial ships must have a minimal number of crew members and there are no standards for unmanned ships yet, but military officials believe that could change if vessels like this one make it out of the experimental stage. The Navy over the years has experimented with a number of unmanned systems—from d rone hel icopters to sma l l, r e m o t e l y c o nt r o l l e d b o a t s launched from ships. The Pentagon’s budget over the next five years calls for investing in more high-end Naval ships, including $600 million to be invested in unmanned undersea vehicles. AP
IN this December 9, 2014, photo, golden jellyfish swim in Jellyfish Lake in Palau. Part of a Unesco World Heritage area, the saltwater lake has long been a source of wonder for tourists, who have delighted in snorkeling among the millions of golden jellyfish, which can fill the water as thick as corn chowder. But some tourists in recent weeks have struggled to find even a single jellyfish, prompting at least one tour operator to suspend its trips. KEVIN DAVIDSON VIA AP
In Pacific nation of Palau, Jellyfish Lake losing namesake
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ELLINGTON, New Zealand—The big question at Palau’s Jellyfish Lake: Where are all the jellyfish? Part of a Unesco World Heritage area, the saltwater lake has long been a source of wonder for tourists, who have delighted in snorkeling among the millions of golden jellyfish that can fill the water as thick as corn chowder. But some tourists in recent weeks have struggled to find even a single jellyfish, prompting at least one tour operator to suspend its trips. Scientists blame a severe drought, coupled with hotter temperatures caused by the El Niño weather pattern, a warming of parts of the Pacific Ocean that changes weather worldwide and tends to push up global temperatures. While scientists say there’s every chance jellyfish numbers will rebound when conditions improve, they also worry that global warming poses a long-term threat to the delicate ecosystem of Palau, a tiny western Pacific island chain. About a month ago, scientists at Palau’s Coral Reef Research Foundation estimated the numbers of golden jellyfish at the lake had
declined from about 8 million to 600,000. Since then, the numbers have dropped further. “Just the past couple of weeks, the numbers have drastically declined,” said Collin Joseph, a coastal manager for Palau’s Koror State. He said the adult jellyfish have pretty much died out completely, while some juveniles remain. The decline is particularly concerning because the jellyfish in the lake are a unique subspecies that have developed in isolation from their lagoon ancestors. Koror State Gov. Yositaka Adachi last week decided to keep the lake open, at least for now. He said in a statement that rainfall in the area over the past four months was the lowest in 65 years, but that there remained enough polyps, which produce jellyfish, to ensure the population could eventually recover. But some aren’t waiting for that. “Many tour companies, including ours, that have been taking guests to the lake have not seen any jellyfish,” Sam’s Tours wrote in an April 22 note to its sales partners. “We, at Sam’s Tours, have, therefore, decided to suspend our tours
to Jellyfish Lake with immediate effect until further notice.” Scientists are still trying to figure out exactly how the hot and dry conditions are affecting the jellyfish. Adachi wrote that the lack of rain had reduced runoff into the lake, which had affected the tiny plants and animals the jellyfish consume. The Coral Reef Research Foundation also noted the lack of rain had caused the lake to become saltier than ever previously recorded, in monitoring which dates back to 1998. “The exact cause of the decline in the population of golden jellies is not yet understood, but it is clear at present that young [jellyfish] are not surviving very long after release by the bottom-dwelling polyp stage,” the foundation wrote in an April Facebook post. It added: “The golden jelly population could be on the verge of crashing” to the point where there were no more swimming about the lake. T he found at ion noted t he population had crashed once before, in 1999, but had rebounded 18 months later because some polyps had survived.
Jellyfish Lake is unusual in being a small body of seawater surrounded by land. Channels to the sea remain deep in the limestone rock beneath the lake. Below about 13 meters (40 feet), the lake has little oxygen and high concentrations of hydrogen sulfide, making it dangerous for scuba divers. Due to their isolation from the ocean, five marine lakes in the area have produced five different subspecies of golden jellyfish. Scientists say a common myth about the jellyfish in the lake is that they don’t sting, when in fact they can give swimmers a mild sting, which can be compounded by prolonged exposure. Los Angeles-based photographer and model Amber Arbucci discovered that in 2013, when she completed a 7-hour naked photo shoot in the lake for her collection “The Girl at Jellyfish Lake.” “I was so stung my eyes were swollen and I could barely walk,” she told The Wall Street Journal. She w rote on her website, however, that she still found the jellyfish filled with charm— “powerful and, yet, so fragile, all at the same time.” AP
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CHINA MANUFACTURING SLOWED IN APRILSURVEY
BEIJING—Chinese manufacturing activity weakened further in April despite government stimulus, a survey showed on Tuesday, indicating the economy has yet to rebound from a downturn. The Caixin magazine purchasing managers’ index declined to 49.4, from March’s 49.7, on a 100-point scale on which numbers below 50 show activity contracting. It said conditions have worsened in each of the past 14 months. AP
DEADLINE ARRIVES FOR GEORGIA GOVERNOR ON CAMPUS GUNS BILL
ATLANTA—Georgia’s governor must make a decision about legislation allowing concealed handguns on college campuses in the state. Tuesday marks the deadline for Gov. Nathan Deal to either sign or veto the measure. He told reporters on Monday that he won’t simply allow it to become effective without his signature, which is permitted under Georgia law. AP
NINE HAITIANS KILLED AFTER BOAT CAPSIZES IN this April 14 photo, a Palestinian man fills tankers with drinking water for sale at a drinking-water station in Gaza City. Poor sewage treatment is a feature of life in Gaza, a result of the rapidly expanding population, an infrastructure damaged during wars with Israel and a chronic shortage of electricity to run the wastewater plants that still function. AP
Gaza Strip sewage threatens Israel
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HATI REFUGEE CAMP, Gaza Strip—Each day, millions of gallons of raw sewage pour into the Gaza Strip’s Mediterranean beachfront, spewing out of a metal pipe and turning miles of once-scenic coastline into a stagnant dead zone. T he s e w a ge h a s d a m a ge d Gaza’s limited freshwater supplies, decimated fishing zones, and after years of neglect, is now f loating northward and affecting Israel, as well, where a nearby desalination plant was forced to shut down, apparently due to pollution. “It’s certain that Gaza Strip’s beaches are completely polluted and unsuitable for swimming and entertainment, especially in the summer,” Ahmed Yaqoubi of the Palestinian Water Authority said. Environmentalists and international aid organizations say that, if the problem isn’t quickly addressed, it could spell even more trouble on both sides of the border. But while Israel has a clear interest in Gazans repairing their water infrastructure, that would likely require it to ease restrictions on the import of building materials— which it fears the territory’s Hamas rulers could divert for military purposes—and increase the amount of electricity it sells to Gaza. Poor sewage treatment in Gaza is the result of a rapidly expanding population, an infrastructure damaged during wars with Israel and a chronic shortage of electric-
400 The total megawatts needed by Gaza Strip for its daily needs
ity to run the wastewater plants that still function. In 2007 a sewage reservoir overflowed in a village in northern Gaza, drowning five people. An Israeli blockade that has restricted imports, coupled with Palestinian infighting and mismanagement by the Hamas-run government, has compounded the problems for the enclave’s 1.8 million residents. Israel and Egypt have maintained a blockade of Gaza since Hamas, an Islamic militant group committed to Israel’s destruction, seized power in 2007. Nasser Abu Saif said he was once happy to live in a beachfront apartment in Shati refugee camp. Now, he avoids swimming in the fetid water near his house. “ T here a re mosqu itoes i n
the summer and even in the winter,” he said. “It makes our lives unpleasant.” Several aid groups have attempted to solve the sewage problem. Steen Jorgensen, country director for the World Bank in the West Bank and Gaza Strip, said the fatal sewage flood spurred his office to build a $73-million sewage-treatment plant nine years ago. He said the facility, meant to treat about one-fifth of Gaza’s sewage, would already be operational if it had a reliable power supply. Disagreements between Hamas and the West Bank-based Palestinian Authority over fuel taxes have left Gaza’s only power plant functioning at reduced capacity. Electricity from neighboring Israel and Egypt help alleviate the shortages, but usually there are only six to eight hours of power each day. “That’s just not reliable enough for a sewage plant,” Jorgensen said. He said foreign donors, including the United States, have promised to pay for a dedicated 3-megawatt electricity supply to the plant, but Israel, so far, has not consented. Cogat, the Israeli defense body responsible for Palestinian affairs, said Israel supplies 125 MW to 140 MW of power a day to the Gaza Strip. “The decision of distributing the electricity falls under the responsibility of the Palestinians,” Cogat wrote. In all, Gaza needs some 400 MW for its daily needs. Jorgensen said the World Bank plans to start running the plant in the coming months using backup diesel generators, which will increase the cost and leave sewage treatment vulnerable to fuel shortages. He said the plant will
also have solar panels, but they will only generate a fraction of the needed power. “If we don’t get this operational, then I think it’s going to be very hard to raise money for other necessary projects in Gaza,” Jorgensen said. The German state-owned development bank KfW has funded the $20-million rehabilitation of an older sewage plant in Gaza, according to Jonas Blume, director of its West Bank office. Blume said the plant can only run half-days due to lack of power. Construction is scheduled to begin in August on an additional facility in central Gaza that could handle the sewage of up to 1 million people, Blume added. But he said Israeli security restrictions have slowed the work. “At the end, we get most of the material in, but it’s a struggle, it takes time, and it causes delay, which leads to extra costs,” he said. Cogat said deliveries of cement and wood have been suspended or slowed because Hamas diverts materials for “terror” purposes. The delays in sewage treatment are exacerbating a water crisis. Years of overdrawing Gaza’s underground aquifer have allowed seawater to infiltrate into its only source of drinking water. Sewage flows into the aquifer, as well. “We can say that 100 percent of the water is not potable,” the Water Authority’s Yaqoubi said. More than 150 private waterpur if icat ion businesses have proliferated across Gaza to offer clean drinking water, he said. Eitemad Abu Khader lives with her four daughters in a cinderblock home surrounded by corrugated
zinc north of Gaza City. Sewage collects in huge ponds next to their neighborhood. Abu Khader said she cannot afford purified water. Instead, she and her daughters drink tap water and bear the consequences. “I spend my time from doctor to doctor, hospital to hospital,” she said. “My daughters always have rashes.” On a recent afternoon, her oldest daughter, 6-year-old Fayza, sat scratching her arm as insects hovered around them. There are signs that the problem is now beginning to affect Israel. Israeli Water Authority spokesman Ilana Keren said a desalination plant near Ashkelon, about 10 kilometers (6 miles) north of Gaza, was shut in January and February “because of the quality of the raw water.” She did not elaborate, but Gidon Bromberg, the Israeli director of the environmental group EcoPeace Middle East, said “there’s no doubt” it was waste from Gaza. “There’s no other source,” he said. Bromberg warned that cholera, typhoid or other pandemic diseases could easily cross into Israel via the shared underground aquifer and the sea. “It’s a single shared bathtub,” Bromberg said. “There’s 101 different ways for these bacterium to be transferred.” Ashkelon Deputy Mayor Yoram Shefer said he fears that without a wider political settlement, the sewage issue will not improve, even though he believes the water is safe enough to swim in. “The Mediterranean sea is big. Not all [sewage] goes to Ashkelon,” he said. AP
UN humanitarian summit expects 80 governments
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NITED NATIONS—The UN humanitarian chief said on Monday that 80 governments and 45 world leaders will be coming to the first UN humanitarian summit in Istanbul later this month to tackle the growing gap between the 125 million people in dire need of assistance and the money available to help them. “I’m very encouraged at the
numbers coming” and expect more, Stephen O’Brien told a news conference, even though the 80 governments who have confirmed their attendance at the May 23 and 24 summit represent just over 40 percent of the 193 UN member-states. He said there will be about 6,000 people attending, including 250 private-sector leaders, heads of humanitarian organizations and
representatives of civil society, affected communities and youth. According to a presummit report in February by UN Secretary-General Ban Ki-moon, the cost of humanitarian aid for the 120 million people in need last year was $19.5 billion, an all-time high. Yet, despite record contributions, the gap between funds needed and donated widened “to
a staggering 47 percent—$9.3 billion—in 2015,” it said. The UN chief said the world has a shared responsibility to close the gap, which ought to be possible in a $78-trillion global economy, and that is the focus of the summit. O’Brien said the answer lies in ending and preventing conflicts, demanding greater respect for the rules of war, including protect-
ing civilians, ensuring help to all people in need and streamlining aid operations to avoid duplication. Ban also urged greater focus on reducing risks from natural disasters and climate change, saying this saves lives. The goal, O’Brien said, is to deliver humanitarian assistance “more efficiently, more effective and in a more financeable way.” AP
PORT-AU-PRINCE, Haiti—At least nine Haitians have died after a small boat they were traveling in capsized in rough seas off the northern coast. Interior Ministry Spokesman Albert Guillaum-Meleon says the bodies of four men, four women and a child have been recovered. He said on Monday that it was not known exactly how many people were on the rickety boat and the death toll could be higher. The vessel was carrying passengers and food items from the northwestern Haitian town of Bombardopolis to the coastal city of Gonaives when squalllike conditions hit. AP
ARGENTINE JUDGE PROBING DRUG TRAFFICKERS ARRESTED
BUENOS AIRES, Argentina— An Argentine judge who had investigated thousands of drug-trafficking cases has been arrested on accusations he helped drug dealers in exchange for money. The official judicial news agency says federal judge Raul Reynoso was detained on Monday in the northeastern city of Salta. Reynoso denies any wrongdoing. He had been under investigation by a local judge since late 2015, but had not been detained because he enjoyed immunity as a judge. AP
SPANISH POLICE ARREST 4 FOR SUSPECTED JIHAD LINKS
MADRID—The Interior Ministry says police have arrested four people in the Madrid area suspected of spreading pro-jihad propaganda and recruiting followers. A ministry statement said Civil Guard police on Tuesday arrested two Moroccans in the town of Pinto and one Moroccan and a Spaniard in the town of Ciempozuelos, south of the Spanish capital. The statement said the four formed part of an organized group that worked intensely to spread extremist material on the Internet. AP
TURKISH COMMITTEE CLEARS CONTENTIOUS BILL
ANKARA, Turkey—A Turkish parliamentary committee has approved a contentious ruling-party proposal to strip legislators of their immunity from prosecution, hours after the meeting erupted in chaos with legislators hurling bottles of water and punches at each other. The proposed constitutional amendment, cleared by the committee late on Monday, could pave the way for the trial of several pro-Kurdish legislators on terror-related charges. AP
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Halliburton, Baker Hughes mull future
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ALLAS—Halliburton and Baker Hughes, whose planned merger is the latest big deal to be shot down by antitrust regulators, now must pick up the pieces and shore up their companies during a severe slump in oil and gas drilling. The two Houston companies are key components of the United States energy-exploration business. So big and so important, the Justice Department decided that letting Halliburton buy Baker Hughes would have hurt competition and driven up prices. At tor ne y G e ner a l L oret t a Lynch said the companies’ decision on Sunday to abandon the deal was a victory for the economy and all Americans. Investors seemed to think that Halliburton will be just fine without the acquisition, which was valued at nearly $35 billion when it was announced in November 2014, even though the company must pay Baker Hughes a termination fee of $3.5 billion. The market signaled that Baker Hughes shareholders might have missed out on a nice payoff. Shares of Halliburton rose 74 cents, or 1.8 percent, to close at $42.05, while Baker Hughes dropped 96 cents, or 2 percent, to $47.40. Halliburton and Baker Hughes help energy companies drill wells and pump oil and natural gas. Halliburton ranks second in the industry only to Schlumberger Ltd. Baker Hughes is No. 3. Because of their size, regulators in the US and overseas viewed their combination with suspicion. The Justice Department sued to block the deal on April 6, saying it would lead to higher prices by unlawfully eliminating significant competition in markets for almost two dozen services and products crucial to the oil industry.
$3.5B
The termination fee Halliburton must pay Baker Hughes after the US Justice Department shot down the merger of the two Houston companies
The Obama administration has taken credit for stopping more than 30 mergers were abandoned after antitrust regulators sued or threatened to sue, especially to block deals in highly concentrated industries. In dozens of other cases, the regulators reached settlements that allowed deals to go ahead, including big airline mergers. Like other merger applicants, Halliburton confidently said it would divest enough assets for the deal to pass antitrust scrutiny. But David Gelfand, deputy assistant attorney general in the Justice Department’s antitrust division, said the deal was not fixable. The combined company would just have had too much control over too many markets. Critics of megamergers applauded. They said for too many years, regulators were too deferential to company arguments that mergers could reduce costs and create efficiency in a way that helps consumers. Now the assumption is that, in industries with only three or four major
IN this November 17, 2014, file photo, traders gather at the post that handles Baker Hughes on the floor of the New York Stock Exchange. Two companies crucial to the business of US energy exploration—Haliburton and Baker Hughes—have abandoned their planned merger. The Justice Department disclosed the plans on May 1. AP
players, mergers will be very difficult to pull off. “No efficiencies argument is going to win the day,” Diana Moss of the American Antitrust Institute said. Those mergers “are just anticompetitive, and remedies (asset sales) are going to be hard to put together.” The Justice Department’s opposition stemmed in part from fear among the oil and gas companies that rely on Halliburton and Baker Hughes. Gelfand said the department heard from dozens of companies and more than 100 individuals, although he declined to identify the companies and did not detail their concerns. In a statement on Sunday, Hal-
liburton Co. CEO Dave Lesar said both companies had expected that the deal would “result in compelling benefits to shareholders, customers and other stakeholders,” but regulatory obstacles and industry conditions made it best to walk away. Baker Hughes Inc. CEO Martin Craighead said a combined company held great potential for shareholders, customers and employees. Matthew Marietta, an analyst for Stephens Inc., said Halliburton misjudged in two ways: It underestimated the severity of the downturn in oilfield services, which left few companies willing to buy the assets that Halliburton and Baker Hughes
would divest and its advisers underestimated the Justice Department’s tenacity. Marietta said both companies probably suffered lost market share internationally while they were distracted by the failed transaction. On Mond ay Ba ker Hughes began laying out its post-deal future. It said it would cut $500 million in annual costs, focus its oilfield-services business more narrowly and use some of the termination-fee bounty to buy back $1.5 billion in shares and pay down $1 billion in debt. For Halliburton, some analysts had already concluded that the deal wasn’t such a good one because it would have been forced to sell
billions in assets during a deep slump in the services business. Halliburton emerges $3.5 billion poorer because of the breakup fee, but it remains in a strong position as the leader in fracking and in completing US wells, said Bill Herbert, an analyst with Simmons & Co., part of Piper Jaffray. Baker Hughes, he said, “is more of a restructuring opportunity.” While Halliburton failed to buy Baker Hughes, that doesn’t mean deals are impossible in the oil patch. After all, No. 1 Schlumberger recently made a $12.7-billion acquisition of equipment maker Cameron International. Regulators said there wasn’t enough overlap to raise competitive concerns. AP
Who created bitcoin? The long search may not be over S
AN FR ANCISCO—Who is Satoshi Nakamoto? For many in the tech world, the identity of bitcoin’s elusive creator has been a long-running parlor game. And the speculation might not be over. Australian entrepreneur Craig Steven Wright, who announced on Monday that he founded the digital currency, convinced at least one longtime bitcoin contributor that he’s the real deal. He managed that feat via a technical demonstration involving Nakamoto’s secret bitcoin keys. But Wright’s public documentation, which he posted online on Monday, underwhelmed others and left the question of Nakamoto’s true identity far from settled. “There’s no way you can conclusively prove that you are the creator of bitcoin,” said Jerry Brito, executive director of Coin Center, a Washington, D.C.-based cryptocurrency think tank, who is skeptical of Wright’s claims. Trac k i ng a pseudony mou s cryptographic genius would be challenging under the best circumstances. And here, we’re talking someone who invented a way for people to send money around the world anonymously, without banks or national currencies. Someone who apparently disappeared five years ago for unknown reasons. None of that has stopped people from trying. Journalists, researchers and amateur detectives have scoured Nakamoto’s e-mails and online posts, plus the original
bitcoin code, for unusual phrases, cultural references and other potential clues to their author. One of the most celebrated candidates—to his own dismay—was an unassuming Japanese-American engineer who found himself in the cross-hairs of Newsweek magazine in 2014. A Newsweek cover story fingered Dorian Satoshi Nakamoto, a retired resident of suburban Los Angeles County, after citing circumstantial clues and a vague comment that Nakamoto made when confronted briefly on his front doorstep. The article sparked a media frenzy and a car chase with reporters that ended at the Los
Angeles offices of The Associated Press—where Dorian Nakamoto emphatically denied any involvement with bitcoin. An earlier contender named in a 2011 New Yorker magazine piece was Michael Clear, then a graduate student in cryptography at Trinity College in Dublin. The New Yorker cited some of Nakamoto’s writings, which used British slang such as “maths” for mathematics and “ f lat” for an apartment. It also noted that Clear had worked on currencytrading software for an Irish bank and coauthored a paper on “peer-to-peer” technolog y similar to that used in bitcoin.
At first, according to the New Yorker, Clear was evasive when asked at a cryptography conference if he had created bitcoin. But he later denied it repeatedly. He also suggested another candidate to the New Yorker reporter, naming Finnish researcher Vili Lehdonvirta, who studied virtual currencies and created video games. “I would love to say that I’m Satoshi, because bitcoin is very clever,” Lehdonvirta told the New Yorker, after laughing for several seconds. “But it’s not me.” Speculation has also focused on a Hungarian-American computer scientist
named Nick Szabo, who was called a likely candidate by linguistic experts who conducted their own “reverse textual analysis”—essentially, looking for distinctive phrases or word patterns—on an early white paper by the bitcoin creator. The only problem? Szabo, who has worked on other digital currencies, has repeatedly denied creating bitcoin. Other scientists’ names have surfaced over the years; some theories pose the notion of two or three working together. But denials have usually followed each new mention.
At one point, two Israeli mathematicians floated, and later retracted, the notion that bitcoin was created by the founder of Silk Road, an online bazaar known for trade in various illicit goods. Conspiracy theorists have even speculated it could have been the work of some shadowy government agency—no one’s saying which government—to undermine established currencies or somehow monitor online transactions. (That theory depends on the unproved notion that the creator retained the ability to decode bitcoin’s encryption.) AP
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UBER, CHINA’S ALIPAY EXPAND COOPERATION TO FOREIGN MARKETS
BEIJING—Ride-hailing service Uber and the online-payments unit of e-commerce giant Alibaba Group are expanding a partnership to allow Chinese travelers to summon and pay for a car anywhere Uber operates. The agreement announced on Tuesday adds to expanding links between US and Chinese companies in the growing global market for smartphone-based transportation services. Uber and Alibaba’s Ant Financial said Chinese travelers will be able to use either company’s app to summon a car in 400 cities in 69 countries where Uber operates and pay for it using Ant Financial. AP
ENBRIDGE PREDICTS $62 MILLION IN FINES, PENALTIES TIED TO OIL SPILL
IN this June 24, 2011, file photo, supporters of the Communist Party hold banners demanding cancellation of the sales tax, during a demonstration by opposition parties demanding an end to government corruption, in front of the prime minister’s office in Amman, Jordan. White placard on right reads, “People want the stolen money back.” A new report by an anticorruption watchdog reveals that nearly 30 percent of people in the Middle East have had to pay a bribe to access some kind of public service and that courts had the worst bribery rate of six services asked about. AP
Survey finds bribery runs highest among courts in the Middle East
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UBAI, United Arab Emirates—A new report released on Tuesday by an anticorruption watchdog shows that on average, almost a third of the people in nine countries surveyed in the Middle East have had to pay a bribe to access some kind of public service. The poll by Transparency International also found that courts have the worst bribery rate out of six services that were surveyed. T he watchdog inter v iewed nearly 11,000 people—or about 1,200 people in each of the nine countries—and found that bribery was especially rampant in Yemen. In the impoverished Arabian Peninsula country, 77 percent of respondents said they had to pay a bribe to access public services. The interviews in Yemen were carried out before the start of March 2015 Saudi-led airstrikes targeting Yemen’s Shiite rebels,
after which the country’s crisis descended into war. Around 50 percent of people surveyed in Egypt, Sudan and Morocco said they paid bribes for public services. Transparency International also surveyed people in Lebanon, Algeria, Tunisia, Jordan and the Palestinian territories. The poll was carried out in direct interviews at various times in 2014 and 2015, and gave a 3-percent margin of error. Public anger over corruption among government officials, social inequality and the lack of justice and transparency were catalysts of
the 2011 Arab Spring movements that ousted longtime leaders in Tunisia, Egypt, Yemen and Libya. Transparency International’s chief Jose Ugaz said that failing to stop bribery also affects people’s human rights. “It’s as if the Arab Spring never happened,” he said in a statement accompanying the report. The poll results show that on average, almost one in three people surveyed paid bribes in dealings with courts, while one in four paid bribes to police—and around half or more of those who paid bribes to the courts and police had to pay multiple times. About one-in-five people surveyed said they had to pay a bribe for public medical services. In Morocco that figure was 38 percent. Transparency International noted the case of a man who called the watchdog’s local anticorruption hotline after he was told by a nurse to pay $60 in addition to the hospital fee for his partially blind daughter to get an urgent brain scan. He was advised to call the attorney general’s office and
77%
The total number of respondents in the impoverished Arabian Peninsula country who said they had to pay a bribe to access public services
two undercover officers returned with him to the hospital, where the nurse was arrested and imprisoned for two months. Around 30 percent of people polled in Lebanon said they paid a bribe for public services, while a staggering 92 percent said they thought corruption had increased. The Lebanon part of the survey was conducted before an eightmonth long trash-collection crisis erupted in July 2015. Thousands protested and campaigners blamed
corruption and government paralysis for the delay in solving the problem. Speaking to The Associated Press over the telephone, Middle East regional coordinator for Transparency International Kinda Hattar said the institutions of justice and law enforcement should be the least corrupt because they should be the ones prosecuting corruption. “Unless the government and the state work for the independence of the judiciary...then we will not be able to have a system that builds trust with the people,” she said. Though only 9 percent in Tunisia and 4 percent of respondents in Jordan said they paid a bribe in the year preceding the survey, Hattar said there are often other problems that exist in Mideast countries that cannot be quantified and measured in surveys. One such issue, she said, is nepotism, or what is known as a wasta in Arabic. Getting a job or gaining access to public services can depend on a person’s wasta, or relationship with someone who is well-connected. AP
MARSHALL, Michigan—A pipeline company says it expects $62 million in fines and penalties related to a 2010 Michigan oil spill. In a filing on Monday with the Securities and Exchange Commission, Enbridge says $55 million represents penalties under federal water law. The Albertabased company says no final fine or penalty has been ordered yet as negotiations continue with the United States government. AP
SAINT LOUIS JURY AWARDS $55M IN JOHNSON & JOHNSON CANCER SUIT
SAINT LOUIS—A jury in Saint Louis has ordered Johnson & Johnson to pay $55 million to a South Dakota woman who claimed the company’s talcum powder caused her to develop ovarian cancer. Court records show the jury returned the verdict in favor of plaintiff Gloria Ristesund on Monday. It comes after a Saint Louis jury in February awarded $72 million to the family of an Alabama woman who sued Johnson & Johnson over ovarian cancer she said was caused by using its baby powder and other products containing talcum. AP
4 ARRESTED IN SLAYING OF HONDURAN ACTIVIST
TEGUCIGALPA, Honduras— Honduran authorities arrested four people on Monday in the killing of environmental activist Berta Caceres, including an active duty army officer and at least one man who worked for a hydroelectric project she opposed. A spokesman for the public prosecutor’s office, Yuri Mora, said the three did work for or were direct employees of Desarrollos Energeticos SA, also known as Desa, which was developing the project that Caceres’s organization successfully stopped. AP
When is a ‘boot on the ground’ not a ‘boot on the ground’? W ASHINGTON—No one disputes that US m i l it a r y forces a re fighting in combat in Iraq and Sy r ia— e xcept, maybe, President Barack Obama and some members of his administration. The semantic arguments over whet her t here a re A mer ic a n “boots on the ground” muddy the view of a situation in which several thousand armed US military personnel are in Iraq and Syria. Obama has said more than a dozen times that there would be no combat troops in Iraq and Syria, as the number of service members in those countries grows; last week Defense Secretary Ash Carter acknowledged the military personnel there were in combat and “we should say that clearly.” So, when is a military boot on the ground? And what does it all mean?
Are US military troops in Iraq?
Yes. More than 5,500 US service
members. The Pentagon, however, counts them in different ways. Obama recently authorized an increase in the number of troops that can deploy to Iraq to advise and assist Iraqi forces in fighting the Islamic State (IS). The cap was increased last week from 3,870 to 4,087. But a number of troops aren’t counted against the cap because of the military’s personnel accounting system. For example, troops assigned to the US Embassy for security or those sent to Iraq for temporary, shortterm assignments are there in addition to the 4,087.
Are US military troops in Syria?
Yes. Last week the Pentagon announced an increase in the number of US forces working in Syria from 50 to 300. Those troops are working with local Syrian forces and are mainly Army special forces, but the latest increase will also include medical and logistics units.
So, that would mean there are US “boots on the ground” in Iraq and Syria, wouldn’t it?
Yes, it would. In Iraq there are advisers, trainers, specialoperations forces and others stationed at Iraqi bases, working with the Iraqi forces. Last week, Carter announced that some advisers would begin working with Iraqis at the brigade and battalion level. They had been working with Iraqis at the division headquarters level. The change would embed those teams of advisers with smaller units, who would likely be closer to the fight. In Syria the US has about 50 special-operations forces going into Syria from a base in a neighboring country to meet with local Syrian opposition forces. They aren’t based in Syria, so they travel in and out, sometimes staying in the country for several days at a time. According to officials, the additional 250 forces will do the
same thing. They will not be based in Syria, but will, instead, work out of neighboring countries, such as Iraq or Turkey. And they are not there to fight alongside the Syrians, they are there to provide advice and other assistance.
What about airstrikes? Aren’t pilots flying combat missions? Yes. they are. Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff made it clear during a Senate hearing last week that US fighter jets conducting airstrikes in Iraq and Syria are conducting combat missions.
Why does the administration say there are no US boots on the ground? Obama administration officials have consistently told the American public since 2013 that there will be no combat “boots on the ground” in Iraq and Syria. Their argument is based on the idea that there are no conventional
US ground forces in large units fighting the IS militants in direct combat. Saying there are “no US boots on the ground ”—while inaccurate—is meant to convey the administration’s view that US troops are not on the front lines waging the war. Instead, US troops are advising and assisting the Iraqi and Syrian forces, providing training, intelligence, and logistical support from behind the battlefront. The parsing of words is meant to differentiate the latest IS conflicts from earlier wars in Iraq and A fghanistan when thousands of US troops were battling the enemy in small units and in close combat. Carter told the Senate Armed Services Committee last week that US troops are not going to war to substitute for the local forces, but are trying “to get them powerful enough that they can expel Islamic State of Iraq and the Levant with
our support. And when we provide that support, we put people in harm’s way. We ask them to conduct combat actions.”
Aren’t special operations forces in direct combat in Iraq or Syria?
Probably. But the Pentagon doesn’t talk about the often highly classified operations that US commandos—including Army Delta Force or Navy SEALs—are doing no matter where they are. And Army special forces—or Green Berets—are in many war-torn countries providing training and assistance, because that’s one of their key jobs. In some cases, US officials have acknowledged special operations missions to capture or kill high-value targets or to try and rescue hostages. But those are not considered “ boots on the ground ” because they often move in and out quickly, and stay for short periods of time. AP
A10 Wednesday, May 4, 2016 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Justice for Renato Coronado Corona
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HE passing away of former Chief Justice Renato C. Corona a few days ago marked the end of an illustrious personal career. Let’s hope it will also signal the beginning of a national debate on the justness of his impeachment and consequent removal from office. Actually, such a debate has started, right after the impeachment conviction, but it quieted down when many felt that the President, deemed the mastermind of the act, would use the vast powers of his office to punish those who dared oppose him as he had exacted vengeance on political opponents for one reason or another. It was more prudent to wait until the President stepped down from office, which will be two months from now. To recall, the Chief Justice was convicted on the basis of Articles of Impeachment rushed through the House of Representatives, hardly read by the 188 congressmen who affixed their signatures on them and by others who went along without bothering to sign them. The conviction, in the Senate, was based on a specific charge that was not even mentioned in the original Articles and that was, in any case, correctible without penalty under the law. Sen. Jingoy Estrada later revealed that the senators who convicted the Chief Justice were rewarded by Malacañang with financial allocations, some before and some after the conviction. The senators received P50 million each, while their leaders received anywhere between P92 million and P100 million each. As chairman of the Senate Finance Committee, Sen. Franklin M. Drilon received the P100 million. Three senators who voted for acquittal—Sens. Miriam Defensor-Santiago, Joker Arroyo and Ferdinand Marcos Jr.—were, naturally, given nothing. In the House, at least 46 incumbent and former members received a total of P230 million from the President’s Development Acceleration Program— some parts of which were later declared unconstitutional by the Supreme Court (SC)—for a so-called milk-lending program 10 days after the Corona conviction. The Aquino government did not stop there. It filed tax evasion and other cases against the Chief Justice. The Chief Justice himself attributed the President’s action as vengeance for the SC’s decision of April 24, 2012, requiring the distribution of the Cojuangco-controlled 6,000-hectare Hacienda Luisita to the farmer-tillers under the Comprehensive Land Reform law. Throughout this ordeal, the Chief Justice maintained his innocence and vowed to fight all cases against him. However, he died before the cases can be brought to a conclusion. Whatever the motivation of the impeachment proceeding, it was clear that bribery by the President had taken place. Since the President will have returned to private life by the time any charge is filed against him, he can no longer be impeached. However, he can be made to answer under other applicable laws. The time has come for people with authentic interest in justice to get together and pursue the case against Benigno C. Aquino III and give justice not just to Renato C. Corona and his family, but to all fair-minded Filipinos.
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Bringing SSS members toward the full road to recovery Susie G. Bugante
All About Social Security
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HILE Filipinos are admired for their resilience, it is linked with the sad reality that our countrymen are left with no choice but to survive in the face of the natural disasters that visit the Philippines every year. Recent years have afflicted the country with calamities of punishing proportions, such as Tropical Storm Ondoy in 2009 and Supertyphoon Yolanda in 2013. Many members of the Social Security System (SSS) have yet to achieve full recovery after suffering from calamities. Among them are members who have struggled to pay back their short-term SSS loans, which can compromise the value of social protection they and their beneficiaries will receive from the SSS in the future. Overdue loans bring additional burden to calamitystricken members, since these incur continuing interests and penalties for every month that these loans remain unpaid. To help them, the SSS recently launched the Loan Restructuring Program (LRP), which effectively lengthens the period that delinquent member-borrowers can pay their overdue loans. Members have one year to avail themselves of the program, from April 28, 2016, to
April 27, 2017. To qualify for the LRP, the member-borrower must either be residing or working in a calamity area, as duly declared by the National Disaster Risk Reduction and Management Council or the national government. The covered calamities include the storms and typhoons Ondoy (2009); Sendong (2011); Pedring, Quiel and Pablo (2012); Labuyo, Maring, Santi, Yolanda and Agaton (2013); Glenda, Mario, Ruby and Seniang (2014); and Lando and Nona (2015). Apart from storms and typhoons, the program also applies to the Mount Pinatubo eruption and earthquake (1990s), and Zamboanga armed conflict and Bohol-Cebu earthquake (2013). Members are granted muchneeded relief through the conditional condonation of all loan penalties
after the overdue loan principal and interest have been fully paid under the LRP. It is “conditional,” because members who avail themselves of the LRP would no longer become eligible for SSS restructuring and condonation programs in the future. Under the program, all delinquent loans of each borrower that are coverable by the LRP are consolidated under what is called the Restructured Loan 1 (RL1), which includes the loans’ principal and accrued interest. The RL1 can be paid by installment under a restructured term of up to five years, with a low annual interest rate of 3 percent applied on the diminishing balance. The deadline of installment payments falls on the 10th day of each month. T he LR P helps delinquent loan borrowers restore their good standing with the SSS, including their loan privileges, since they can apply for another SSS loan six months after their RL1 is fully paid. More important, they no longer have to worry about loan-payment deductions from their final SSS benefit claims, such as retirement, permanent total disability and death. However, if the member fails to pay the RL1 within the restructured term, the unpaid amount and proportionate penalties will be booked as a new SSS loan called the RL2 (Restructured Loan 2). The RL2 is immediately due and demandable, and shall be charged an interest of
10 percent per annum. A wide range of SSS loan programs is covered by the LRP, such as Salary Loan, Salary Loan Early Renewal Program, Emergency Loan, Calamity Loan, Voc-Tech Loan, Y2K Loan, Investments Incentive Loan, Study Now Pay Later Plan, and the old Educational Loan, which differs from the Educational Assistance Loan Program currently offered by the SSS. These member loans must be past due for at least six months to be considered for loan restructuring. Members whose contingency date for retirement, total permanent disability or death falls on or before the last day of the availment period can also apply for loan restructuring. Their corresponding application for such SSS final benefits must be filed within the availment period to be duly covered by the LRP. Borrowers can file their LRP applications at the SSS branch nearest them. They can also monitor their loan statement of account online by registering at the My.SSS facility of the SSS web site (www.sss.gov.ph).
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.
Warren Buffett falls in the confidence trap
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B F W | Bloomberg View
ARREN BUFFETT, chairman and chief executive of Berkshire Hathaway, is a confident man. Having built one of the greatest businesses in history, and having become one of the world’s richest men in the process, he sees great prosperity in the rear-view mirror, and more of the same ahead. Speaking on Saturday at his company’s annual shareholders’ meeting in Omaha, Buffett said: “Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more.” Buffett provides an almost perfect illustration of what Cambridge University politics professor David Runciman calls “The Confidence Trap.” Runciman published a book with that title in 2013, in which he explored a neurotic tic of successful democracies: the tendency to muddle through on the assumption that muddling through has historically worked out well for democracies, and probably always will. “Things look bad,” Runciman wrote, surveying political and economic dysfunction in Europe and the US after the 2008 crash, “but the historical record of democracy suggests that nothing is as bad as it seems. This is why we find it so hard to know how
seriously to take the current crisis of democracy.” In his talk, Buffett didn’t just project a delightfully rosy half-century of US economic gains. He made a point of reassuring shareholders that today’s discordant politics wouldn’t jeopardize tomorrow’s prosperity. “If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett said. The 85-year-old added: “No presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they can’t end it.” Buffett has history on his side. The Great War. The Great Depression. World War II. Vietnam. Stagflation. Globalization. The 2008 Crash. Each threatened democracy in its way. None succeeded in puncturing its steady rise and expansion. So the lesson is clear: Neither snow, nor rain, nor heat, nor gloom of Trump can disrupt the US
economy on its appointed rounds. Yet, that’s just the sort of analysis of democracy’s capacity that Runciman regards with a hint of dread. “I think Buffett’s taken the wrong lesson from the last hundred years,” Runciman said, via e-mail. “He seems to think the real story is that economic fundamentals trump [if we’re still allowed to say that] political incompetence. He treats politics as secondary. But politics is primary and it still has the ability to screw everything up. America didn’t prosper over the past century, because it was bound to prosper. Things could have gone badly wrong. The success of American democracy was down to a mixture of skill and luck. Luck can run out. So can skill.” It’s doubtful that Buffett would contend that Berkshire Hathaway would continue to prosper with an incompetent executive at the helm. But for some reason, he thinks dodgy leadership wouldn’t threaten the larger and more complex (if less lauded) enterprise of the United States government. “This is one of my bugbears—the 21st century view that politics doesn’t really matter, because innovation and enterprise is what counts,” Runciman continued. “That view is just dead wrong. Bad political choices can precip-
itate wars, financial disasters and ecological catastrophes that no amount of innovation will ever make right. And believing that politics doesn’t matter makes it more likely that we will screw things up: That’s what makes us complacent.” The temptation to fall into the confidence trap is almost irresistible. Consider American intervention in Vietnam. The war was a series of catastrophic mistakes. Now, Vietnam is eagerly making concessions to join an American-led Pacific trade deal. What doesn’t kill us seems only to make us more powerful. Trouble is, the past is an imperfect guarantor of the future. Trump would be by far the most untested and unreliable president in modern history. Maybe everything would turn out fine. But maybe, this time, it wouldn’t. Maybe our faith in democratic resiliency would be misplaced, and our current ill temper, instead of fading, would be dangerously exploited by a mercurial opportunist. “At some point, that combination of anger and complacency is going to put American democracy at risk, no matter what Buffett says,” Runciman said. “And when American democracy is at risk, then everything else is at risk, too.” Maybe even Berkshire Hathaway.
Opinion BusinessMirror
opinion@businessmirror.com.ph
Wednesday, May 4, 2016 A11
Money laundering An innovative instant solution to the traffic monster in the insurance industry Michael Makabenta Alunan
ON THE CONTRARY
Atty. Dennis B. Funa
INSURANCE FORUM Part One
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ONEY laundering converts illicit money into assets which appear legitimate. These assets may appear as insurance policies, bank deposits and even real estate. Money-laundering activities are not limited to financial institutions, as nonfinancial institutions, such as travel agencies, realestate industries, casinos and gambling, are now used for money laundering. The nature of money laundering, though, in the insurance industry is different from the nature in other industries. The Financial Action Task Force (FATF) has identified certain insurance products as being exposed to the threat of money laundering. The seriousness of this threat is underlined in a FATF Report: “The experts viewed the insurance sector as potentially vulnerable to money laundering because of the size of the industry, the easy availability and diversity of its products and the structure of its business. In regard to this last point, it is important to note that insurance is, in some jurisdictions, often a cross-border business and more frequently than not involves the distribution of its products through brokers or other intermediaries, who are not necessarily affiliated with or under the control or supervision of the company that issues the product. Moreover, because the beneficiary of an insurance product is often different from the policyholder, it is sometimes difficult to determine when and for whom it is necessary to perform customer due diligence [for the policyholder only, or also for the beneficiary?].” The US Department of Treasury, Financial Crimes Enforcement Network (FinCEN) has identified certain “covered products” that pose a “higher degree of risk for money laundering.” These “covered products” are: a permanent life-insurance policy, other than a group life insurance policy; an annuity contract, other than a group annuity contract; and any other insurance product with cash value or investment features. Not all insurance products are at risk of being used by money launderers. It has been recognized that the risk of money laundering in general insurance is low.
Vulnerability of life insurance
INSURANCE products, particularly in life insurance, provide a very attractive and simple means of laundering money. In particular, investment type life-insurance products are vulnerable. The FATF pointed out that, between 1999 and 2003, about 65 percent of money laudering was through life-insurance products. The American Council of Life Insurers stated that 99 percent of money-laudering risk is in the life insurance sector.
Typologies
ACCORDING to the FinCEN, “the most significant money laundering and terrorist financial risks in the insurance industry are found in life insurance and annuity products, because such products allow a customer to place large amounts of funds into the financial system and seamlessly transfer such funds to disguise their true origin.” It also added, “Permanent life-insurance policies that have a cash surrender value are particularly inviting money-laundering vehicles. Such cash value can be redeemed by a money launderer or can be used as a source of further investment of his tainted funds—for example, by taking loans out against such cash value.” An investment-linked single premium insurance policy is the most attractive to money launderers. It has been argued, however, that single premium type insurance are usually sold by banks with premium payments coming from bank accounts and consequently with reduced
money-laundering risks. Another is the annuity contracts, which allow money launderers to exchange illicit funds for an immediate or deferred income stream. A refund of premiums, particularly during a cooling off period or in case of overpayment, is another. Surrendering a policy, even with a surrender penalty, is another mode. Another mode is where a person purchases a policy in his or her name and then later transfers the policy or changes the beneficiary to a third party. Another mode is through a policy loan. A client buys a single premium policy and applies for a policy loan which he or she does not repay. The outstanding loan is deducted from any future claim. Another typology is the cooling off period where the client can cancel the policy and receive a full repayment of any premium paid (return of premiums), another is the return of overpayment of premiums, especially those with instruction that the reimbursement be paid to a third party. Another is the assignment of claims. A money launderer may arrange with groups of, otherwise, legitimate people, perhaps, owners of businesses, to assign any legitimate claims on their polices to be paid to the money launderer. The launderer promises to pay these businesses, perhaps, in cash or money orders, a percentage of any claim payments paid to him above and beyond the face value of the claim payments.
Illustrations
AS an illustration of money laundering using life-insurance products, the first known case of money laundering using insurance was reported in the New York Times on December 6, 2002. An investigation was conducted by the US Customs Service where it was found that $80 million in drug money was used to purchase more than 200 life-insurance policies in the Isle of Man and other locations, with cartel members and their family members as the beneficiaries. They were subsequently prematurely cashed out despite penalties. FinCEN gives another illustration involving their investigation of a Colombian drugs cartel. “The money-laundering scheme involves the purchase, through several insurance brokers, of life-insurance policies with cash surrender values in an offshore jurisdiction. Cartel associates are named as beneficiaries to such policies. The life-insurance policies are funded by narcotics proceeds that are forwarded to the insurance companies by third parties from all over the world. Although the cash surrender value of the life-insurance policies is often far less than the amount invested because of liquidation penalties. The beneficiaries soon elect to liquidate the policies for their cash surrender value. Although the beneficiaries thereby suffer a substantial financial loss, the funds received, in the form of insurance proceeds, are effectively laundered.”
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NNOVATIVE win-win solutions to the horrendous worsening traffic on Edsa and other major thoroughfares in Metro Manila are still possible, given the same limits of road space, the same number of public transport vehicles and the same tight passenger capacity of the Metro Rail Transit (MRT)/Light Rail Transit (LRT) train system. However, the genuine long-term solutions are building more infrastructures, particularly more effective railway mass transit systems and more efficient public buses, which must be combined with a road-congestion pricing policy, each one of which merits separate discussions in the future. Solution takes some imagination. What it takes is a little imagination and a simple application of the principles of spatial management to solve the traffic that is causing losses of P2.4 billion a day, says a Japanfunded study. Some may disagree vehemently insisting on their views on what is right. On the contrary, perhaps, my proposal may be right for a given point in time. After all, what is right is relative. In Filipino, right means tama. This tempts me to suggest the idea of an advocacy group, which others may pick up and call the Transport Advocates’ Movement for Action (TAMA). It may not always claim to be right, but it may just be right at certain times. Its inherent message for immediate action simply articulates the mass frustration of both the commuters and motorists
Garcia, said this principle can also be applied to the MRT and LRT trains, despite the decline in the number of coaches owing to obsolescence. On the contrary, despite the limited number of coaches, it is still possible to increase MRT’s volume passenger capacity by reducing the train stops to three stops one-way when the volume of passengers is heavy (i.e., North to South in the morning rush and Pasay Taft to North during the evening rush), but allowing train passengers to commute backward in the opposite direction, where the volume of passengers is light, until they reach their intended destinations. Perhaps, we can have three midway stops from North to South in the morning rush, say at Cubao, Shaw and Ayala, before reaching the final destination at Pasay Taft. If one has to get off before any of these major stops, one simply has to get off way beyond, then commute on the way back to one’s intended destination. This will enable the MRT trains to make faster turnarounds, so as to avoid the one-way buildup of commuters, whose resulting long queues have spill over effects and the resulting mad scramble for alternative bus rides onto Edsa. The solutions above will not entail costs for government, but simply requires a simple executive fiat from our policy-makers. We just hope our transport leaders will take notice of the common good this time, rather than get bogged down again with indecision, incompetence and squabbles over deals and delivery of services from the MRT, car plates and drivers licenses. I hope they have the WHEEL (will) power to get the transport sector moving. E-mail: mikealunan@yahoo.com.
A basic income should be the next big thing B P D Bloomberg View
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OW and then a worthy economic proposal comes along that seems as politically unattainable as it is sensible. Then, on closer inspection, you see that it’s more than a policy-wonk’s fantasy. And you wonder whether it could actually prevail. This may be happening with the concept of a universal basic income. The notion that government should guarantee every citizen an annual stipend of, say, $10,000—no strings attached, no questions asked—is being studied by politicians, economists and policy experts worldwide. Think of it as Social Security for all. In the social democracies of Europe, Canada and South America, experiments are planned or under way. In the US it’s still little more than a concept—one that appears to have more conservative backers than liberal ones. Bernie Sanders says he’s “sympathetic” to the theory behind a universal basic income, but stops well short of advocating it. Hillary Clinton seems even less enthusiastic. By contrast, conservative economists, politicians and think-tank scholars are not as hesitant. Marco Rubio, for example, proposed the beginnings of a basic income in his 2015 tax plan. The rest of the world is taking the lead. Switzerland will hold a June 5 referendum on whether to give every adult citizen 2,500 Swiss francs (about $2,600) a month. Ontario, Canada, will conduct an experiment with a basic income later this year. The city of Utrecht in the Netherlands is conducting a pilot program,
To be continued Dennis B. Funa is currently the deputy insurance commissioner for Legal Services of the Insurance Commission. E-mail: dennisfuna@ yahoo.com.
who get stuck in daily traffic, which will get worse, considering the yearly massive sales of vehicles. In 2015 sales of these vehicles hit 310,000, about one-third of which were registered in Metro Manila. Maybe 60 percent find their way into Metro Manila, for those registered in nearby Central Luzon and the Calabarzon regions, from where many motor to work and business, or shop occasionally in Metro Manila, particularly during holidays. Standing policy? This innovative solution is premised on the fact there is no way to widen road space and that the arrival of new MRT coaches will take time. This viable and immediate solution simply increases the riding capacities of buses by reducing the number of seats from five seats to a row to only two seats per row, or limiting the seats around the inner sides of the bus, similar to seats on a train, which can be reserved for the handicapped, elderly and pregnant women. If this is possible for MRT and LRT, why can’t it be applied temporarily to city buses? This can literally be called Department of Transportation and
Communications’s (DOTC) “standing policy.” This will allow for wider aisles and more standing room that will accomodate more passengers by 50 percent to 80 percent, or more. Faster turnarounds mean less traffic. 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 immediately do time and motion studies on this by experimenting on a few buses on a pilot basis. The higher revenue returns can mean two things: For one, bus operators need no longer push for higher fares, during fuel-price hikes, which is good for commuters. Second, drivers are able to earn more with more passengers and turnovers. Thus, it will be easier to impose limits on working hours to avoid accidents that often result from sleepy drivers, working overtime, some of whom even make use of prohibitive drugs just to keep themselves awake. However, this must strictly be allowed only for Metro Manila buses, which experience slow-moving traffic and that safe speed-limit meters be installed. Spatial management may mean optimizing space, or increasing passenger riding capacities of existing public buses, it also means maximizing road space through faster turnover of commuters and motorists, so that those coming at later time schedules do not compete for road space and transport-riding capacities with those coming much earlier, who are still stuck on the road due to slow turnovers. Ironic MRT reverse rides for faster turnovers. A friend of mine, transport Koop organizer Dave
Please e-mail your letters to the editor to oped@businessmirror.com.ph. Letters chosen for publication in this section are edited for brevity and clarity.
and Finland is planning a two-year trial. A British proposal is gathering interest. In May a nonprofit group will start giving 6,000 Kenyans a guaranteed income for at least a decade and follow the results. Basicincome proposals come in many varieties, and have myriad rationales. Some progressives see it as the ultimate expression of what a developed economy can achieve: a way to lessen poverty and inequality, and ease the pain of job loss and economic stagnation. But in the US, many liberals see it as naïve and a distraction from more practical priorities, such as a $15 minimum wage and paid family leave. For conservatives, the attraction is smaller government. Dozens of social-welfare programs now costing US taxpayers about $1 trillion a year could be folded into a basic-income program, they argue. With no eligibility criteria or enforcement needed, administrative costs would be barebones. Waste, fraud and abuse would be greatly reduced, the argument goes, if not close to zero. In the 1960s a basic income was part of the mainstream political discussion. President Richard Nixon even proposed an income floor, based on ideas developed by Daniel Patrick Moynihan, then a domesticpolicy adviser. The proposal died in part because of liberal opposition to a work requirement and obstruction by a well-organizedwelfare lobby, Moynihan would later write. The earned income-tax credit, a form of basic income, took its place, but only to supplement the earnings of the working poor. The tax credit was first proposed in 1962 by conservative economist Milton Friedman. One of his aims was to end the
“earnings cliff,” in which government aid disappears once income exceeds a cap. Such a limit discourages recipients from working, a consequence that keeps them poor and dependent. The tax credit is still around and widely considered an effective antipoverty program, but the earningscliff issue has only gotten worse: The US now has 80-plus low-income programs, each with its own eligibility rules and earnings caps. The idea of a universal basic income is enjoying a renaissance today, not only in Washington think tanks but in Silicon Valley, as my Bloomberg View colleague, Justin Fox, has written. Y Combinator, a venture-capital firm, is launching a five-year research project, for example. The goal is to give a randomly selected group of people a monthly check to see if they sit around and play video games or create economic value. Why does Silicon Valley care? It can see the role of technology in accelerating job losses in the US Two Oxford University professors wrote recently that about 47 percent of US jobs are at risk of being replaced by automation. If that happens, the economy would shrink, and fewer and fewer people would be able to buy the goods that Silicon Valley creates. The fear that people with a guaranteed basic income would become slackers may be unfounded. One economist who studied trials conducted in the 1970s in Canada found the opposite: Recipients were healthier and finished high school at higher rates. Adults with full-time jobs worked the same number of hours with one exception: Women took off more time after having a baby, an utterly reasonable outcome. Yes, the costs of guaranteeing 322
million Americans $10,000 a year would be prohibitive—a whopping $3.2 trillion a year. But by excluding 45 million retirees who already receive a basic income through Social Security, the cost falls to $2.7 trillion. And if the benefit is phased out for households earning more than $100,000 (that would be 20 percent of the US’s 115 million households, or about 70 million people, assuming three to a household), the cost declines to about $2 trillion. You could confine the program to adults and shrink the price tag even more, possibly to as low as $1.5 trillion. Now we’re getting close to the $1 trillion cost of all those unemployment checks, tax credits, food stamps, housing vouchers and a myriad other means-tested benefits that a basic income could supplant. Here is where liberals start to get queasy. They don’t like that a basic income would replace the safety net, even when assured that some programs, including education, job training and entitlements, like Medicare, would be maintained. They worry that the civil servants who now run programs would be laid off. And they fear that a basic income would, in the end, be less than what many people get when all the federal government’s cash and social-service programs are combined. Those are valid concerns. But as other countries test the idea and seek improvements in their social-welfare systems, will it make sense for the US to maintain an expensive crazy-quilt of programs, many of which have not lifted people out of poverty and dependence? A Social-Security-for-all approach might not seem like such a fantasy after all.
ADB clarifies status of e-trikes project THANK you for your interest in the e-trikes project. We would like to clarify the status of the project, as described in an article published in the BusinessMirror on May 3. It is incorrect to say that the e-trikes project is “in limbo.” In fact, the project is on track and being implemented after the awarding of the
contract in February. The first batch of 3,000 e-trikes are being built by the contractor for delivery over the next several months. There is no delay in the project’s implementation, which the Asian Development Bank is monitoring together with the Department of Energy and the
National Economic and Development Authority. We sincerely appreciate your understanding on this matter. Toru Kubo Principal Climate Change Specialist Southeast Asia Department, ADB
2nd Front Page BusinessMirror
A12 Wednesday, May 4, 2016
www.businessmirror.com.ph
Disease could wipe out cavendish bananas–PBGEA
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Pilipino Banana Growers and Exporters Association (PBGEA) Executive Director Stephen Antig said the disease keeps growers and exporters on their toes. “ T he industr y is def inite ly worried that the cavendish variety might become obsolete,” Antig told the BusinessMirror in an interview. Citing data from the Department of Agriculture (DA), Antig said about 15,500 hectares of banana plantations, mostly in Region 11, have already been affected by the disease. “Assuming a production level of 3,200 boxes per hectare at the current price of $9 to $10 [per box], the potential damage should run to billions of pesos. To a certain extent, the disease has also affected our exports,” he said. Panama disease is a fungal disease caused by Fusarium oxysporum f. sp. cubense that leads to the yellowing and wilting of banana leaves and, eventually,
the death of the plant. A deadly strain of Panama disease in the 1950s left the banana variety called Gros Michel virtually extinct. Growers shifted to planting the cavendish variety, which is considered inferior but resistant to the disease. However, a new strain of the disease has surfaced and again poses a threat to banana plantations around the world. Antig said local growers want to contain the spread of the disease via quarantine measures. Connie Sugillon, supervising agriculturist of the Bureau of Plant Industry in Region 11, said in an interview that quarantine plays an important role in controlling the movement of infected bananas and keeping other trees healthy. “There are microorganisms used to control the disease in affected trees,” she added.
Disease-resistant varieties
ACCORDING to Antig and Sugil-
FILE PHOTO
HE infestation of Panama disease or fusarium wilt in banana plantations, if not immediately controlled, could wipe out local cavendish bananas, banana growers and exporters said on Tuesday.
lon, research on a new variety of banana that is resistant to the Panama disease has been ongoing for three years now. Antig said experiment sites are in Calinan, Davao City, and range from 10 to 20 hectares. He said the initial results of the experiment are “promising,” as companies have successfully shipped small volumes of the new disease-resistant variant to Japan and China. “Some companies have been exporting the new variant and it would
seem to be acceptable to the market. The volume though is not big as to replace the cavendish, which is the preferred variety,” Antig said. However, Sugillon said the new variety could be commercialized after the research has been completed. She also said farmers will have to be taught about the proper planting techniques for the new variant so they can reap “exportquality” bananas. Pending the commercialization of the new variety, Sugillon said the DA has begun distributing the
disease-resistant planting materials to small banana growers. “To date, about 50,000 small growers have already benefited from this program,” she said. Sugillon added that it may take two to three years to complete the study and commercialize the disease-resistant banana variety. For his part, Antig said the Panama disease is just one of the challenges facing the local banana industry. “We also have to contend with the peace and order situation, government policies that are not sup-
portive of agriculture and, most of all, climate change,” he said. Antig added that the country’s banana production and exports may drop by as much as 30 percent this year due to El Niño. He said the possibility of La Niña in the latter part of 2016 could also pose a threat to the country’s banana output. Data from the Philippine Statistics Author it y showed the country’s banana production in 2015 rose by 2.24 percent to 9.08 million metric tons from 8.88 MMT in 2014.