BusinessMirror January 19, 2016

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Tuesday, January 19, 2016 Vol. 11 No. 103

Belmonte: ‘Sister bill’ holds key to hike in SSS pension B J M N.  C  B C

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INSIDE

ALACAÑANG and Congress have found a way to salvage the initiative to raise the pension of retired Social Security System (SSS) members—enact the measure empowering the SSS board to increase the contribution of its members.

ALAN RICKMAN

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GUSTAVE CAILLEBOTTE

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FAVORITES ON TRACK SLOANE STEPHENS yields to China’s Wang Qiang (below). AP

Sports BusinessMirror

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| TUESDAY, JANUARY 19, 2016 mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao Asst. Editor: Joel Orellana

Spurs extend franchise-record unbeaten streak

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AN ANTONIO—San Antonio stretched its franchise-record unbeaten streak this season to 24-0 by routing Texan rival Dallas, 112-83, on Sunday.

The result opened a 13-game gap between the top and second teams in the National Basketball Association’s Southwest Division, and meant the Spurs were now only one-and-a-half games behind Golden State for the Western Conference and overall league lead.

Elsewhere, Russell Westbrook posted his second straight triple-double to lead Oklahoma City to a big win over Miami, while a threepointer with 21 seconds left gave Denver victory over Indiana in a high-scoring contest.

San Antonio’s LaMarcus Aldridge scored 23 points as the Spurs stretched their unbeaten

Stephens exits, again, in Aussie Open 1st rd

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ELBOURNE, Australia—Sloane Stephens figures she’s got plenty more Grand Slams ahead of her to improve upon her performance at this year’s Australian Open.

The 2013 semifinalist exited in the first round on Monday, losing 6-3, 6-3 to Chinese qualifier Wang Qiang, who is ranked No. 102.

The match started out well for 22-year-old Stephens, seeded 24th, who raced to a 3-1 lead but then lost 10 straight games as she struggled to find momentum and regain focus.

“Today was definitely one of those bad days,” Stephens said. “Nothing was going my way. A lot of shots that I’d like to make, that I normally make, weren’t going in. A lot of opportunities slipped away.”

The early exit comes after a solid start to the year for Stephens, who is seen as part of the next generation of rising American players.

Earlier this month, Stephens won her second Women’s Tennis Association title in Auckland at the ASB Classic after having won her first title a few months earlier in Washington.

After Auckland, she withdrew from the Hobart International, an Australian Open tune-up, citing a viral illness, but did not blame Monday’s loss on health issues.

“I felt fine,” Stephens said. “It just kind of got away from me.”

The hard-hitting American gained a degree of stardom at the 2013 Australian Open, where she reached the semifinals by beating Serena Williams and then followed-up by reaching the quarterfinals of Wimbledon that year.

Since then, Stephens hasn’t advanced past the fourth round at a Grand Slam and has had a few first-round exits, including at last year’s Australian and US Opens.

“I’m disappointed that I lost here but if I play until I’m 35, I have plenty more Grand Slams to go. So I just have to look past it,” said Stephens, who was in good spirits despite the loss.

Asked if she really planned to play until she’s 35, Stephens laughed.

“No! But it sounded good.” she said, adding, “Of course, I’m going to be here for a long time.” AP

streak to 33 games dating back to last season.

The 36-6 record after 42 games tied the franchise record set five seasons ago.

The Spurs won easily despite the loss of Tony Parker late in the third quarter to right-hip soreness; the same injury that forced him to sit out two games at the start of the month. Wesley Matthews led Dallas with just 12 points.

Oklahoma City cruised to a 99-74 win over Miami, with Westbrook finishing with 13 points, 15 assists and 10 rebounds. It was his fifth triple-double of the season and the 24th of his career.

Kevin Durant had 24 points and 10 rebounds for the Thunder, which set a season best for least points allowed. It was also the least points scored by the Heat this season.

NOVAK DJOKOVIC opens his title defense with a straight-set victory. AP

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The Associated Press

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ELBOURNE, Australia— Serena Williams and Novak Djokovic opened their title defenses with straight-set wins at the Australian Open in back-to-back matches on Rod Laver Arena.

The most dominant players in tennis entered the season’s first major after contrasting preparations, with Williams having to overcome a leftknee problem that limited her court time and Djokovic warming up with a run to the title at Doha.

Williams made a bright start, in a way, holding up one finger and twirling in her neon yellow two-piece outfit to celebrate her 6-4, 7-5 win over Camila Giorgi on Monday. Djokovic had a 6-3, 6-2, 6-4 win over Chung Hyeon of South Korea.

Williams and Djokovic each won three of the four major titles last season, with Williams falling two matches short of a calendar-year Grand Slam when she lost in the US Open semifinals and Djokovic’s only loss coming in the French Open final.

Williams withdrew from the Hopman Cup because of inflammation in her knee, playing just one set in Perth.

Yet, she dropped just one service game against No. 34-ranked Giorgi, who struggled with 12 double-faults, including one on the decisive break point in the 11th game of the second set.

Williams fired two aces and a service winner in the last game.

“I haven’t played a competitive match in a really long time, but I think it was really good for me to come out here,” Williams said. “I was able to stay in it and stay calm today and I think that’s what matters most.”

Williams said she needed the break to recharge at the end of last season and felt OK about her limited preparation.

“I haven’t played in a long time, but I have been playing for 30 years, so it’s kind of—I try to focus on that,” she said.

Two-time Wimbledon champion Petra Kvitova earned the distinction of winning the first completed match at the tournament when she beat Thai qualifier Luksika Kumkhum, avenging her upset three-set loss in the first round here in 2014.

Kvitova, who had to withdraw from a warm-up tournament in China because of a stomach virus, said her preparation was disrupted and she was nervous ahead of the rematch with Kumkhum.

“Now I can breathe a little bit normally,” she said. “I got really nervous before the match. I didn’t sleep well actually. The memories from two years ago were a little bit difficult.”

No. 24 Sloane Stephens, who beat Serena Williams in the 2013 Australian Open quarterfinals, lost, 6-3, 6-3, to Chinese qualifier Wang Qiang, while No. 26 Anastasia Pavlyuchenkova and No. 27 Anna Karolina Schmiedlova also went out in the first round.

Djokovic’s bid for a sixth Australian Open title started in temperatures of 34 Celsius (93 Fahrenheit), and he became annoyed with himself and his play at times, including three double-faults.

Overall, though, he was consistently too good for one of the up-and-coming players on tour. He said everything started looking up for him when he became a dad back in 2014, then joked about maybe having another baby.

Sixth-seeded Tomas Berdych, a semifinalist last year, opened his 50th consecutive major by beating Yuki Bhambri of India, 7-5, 6-1, 6-2, and No. 7 Kei Nishikori had a 6-4, 6-3, 6-3 win over Philipp Kohlschreiber.

Also advancing were No. 12 Marin Cilic, No. 15 David Goffin, No. 19.

Dominic Thiem and No. 26 Guillermo Garcia-Lopez. No. 22 Ivo Karlovic was the first of the men’s seeds to exit the tournament when he retired due to a left-knee injury while trailing Federico Delbonis, 7-6 (4), 6-4, 2-1.

The hours before the tournament began were overshadowed by news reports alleging match-fixing that had gone unchecked.

The Association of Tennis Professionals (ATP), which runs the men’s tour, and Nigel Willerton, head of the Tennis Integrity Unit, represented the four governing bodies of tennis—ATP, Women’s Tennis Association, Grand Slam Board and International Tennis Federation—in a joint news conference to reject the allegations published by the BBC and BuzzFeed News.

The reports, citing secret files, said that in the last decade 16 players—all at some stage ranked in the top 50— have been repeatedly flagged to the integrity unit.

ATP Chairman Chris Kermode said tennis authorities “absolutely reject any suggestion that evidence of match-fixing has been suppressed for any reason, or

SPORTS

Ironically, the failure of the Senate to pass this “sister bill” of the SSS pension-hike proposal also led to the now-controversial presidential veto of the proposed P2,000 hike in SSS pension.

Speaker Feliciano R. Belmonte Jr. said the sister bill, House Bill (HB) 6112, will be passed by the Senate this time.

Earlier, Belmonte and House Majority Floor Leader and Liberal Party (LP) Rep. Neptali M. Gonzales II of Mandaluyong City said there should have been no problem in passing the SSS pension-hike bill into law, if

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HB 6112

The so-called sister bill of the SSS pension-hike proposal, which, if passed, could convince P-Noy to raise SSS pension

only the Senate approved the accompanying measure that authorized the SSS board to increase the premiums of its members.

“When we approved the bill that increased the pension benefits by P2,000, we, likewise, approved an accompanying bill that authorized the SSS board to increase the premiums of its members. While the Senate approved the pension increase, it failed to approve the accompanying bill.

Thus, the President opted not to play politics and, instead, was forced to veto the bill to prevent the SSS from being bankrupt,” Gonzales said.

Belmonte said the President had no choice, as the SSS could not afford the pension hike. “The House passed a sister bill giving the SSS board powers similar to that of the GSIS [Government Service Insurance System] board to increase premiums, but it was not yet approved by the Senate. P-Noy [President Aquino] chose to be a fiscally responsible leader, and not just one driven by current politics.”

Belmonte said he had a meeting with Senate President Franklin M. Drilon, and the LP stalwart

FED TO DEATH SOFTDRINKS TAX PROPOSAL SPURS SWEETSOUR DEBATE

S “SSS ,” A

B L S. M

OR more than a decade now, the Metro Rail Transit (MRT) Line 3 has been operating way above its optimal capacity of 350,000 passengers per day, with the highest recorded passenger volume at over 620,000. This naturally resulted in the reduction of the service levels of the railway facility, worsening its state day after day.

The solution that the government

adopted years later was to add more trains to the facility. It procured 48 new light-rail vehicles from Chinese manufacturer Dalian Locomotive and Rolling Stock Co., which has so far delivered two train cars.

The delay has earned the ire of commuters, business executives and government officials. Transportation Secretary Joseph Emilio A. Abaya could not hold his horses, pointing his finger at Metro Rail Transit Corp. (MRTC) for its

“failure” to do its job of adding capacity to the train line.

“With mobility a priority for us, we are hoping to provide more available trains to the riding public through the 48 additional lightrail vehicles—an improvement that should have been done by the system’s private owner, MRTC, in the mid-2000s—in addition to system upgrades and better maintenance works,” the Cabinet official said.

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DENR eyes incentives for ‘greening’ partners CALDERON: “Performance can be rated based on the high survival rate of trees planted or for keeping the National Greening Program sites safe from forest fires.”

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Abaya, Sobrepeña exchange barbs anew over MRT 3 mess F

Dwyane Wade, who missed the previous game due to shoulder soreness, led the Heat with 22 points on his 34th birthday.

Denver’s Randy Foye hit a go-ahead threepointer with 21 seconds left to cap a comefrom-behind 129-126 victory over Indiana.

The Nuggets came back in the second half to get their seventh straight win at home over the Pacers. Danilo Gallinari had 23 points.

Myles Turner scored a career-high 25 points for Indiana.

Houston pulled away in the second half to rout the Los Angeles Lakers, 112-95. James Harden had 31 points for the Rockets.

Minnesota emphatically ended a run of nine straight losses and posted its first win of 2016 by beating Phoenix, 117-87. AP

FAVORITES ON TRACK The most dominant players in tennis entered the season’s first major after contrasting preparations, with Serena Williams having to overcome a left-knee problem that limited her court time and Novak Djokovic warming up with a run to the title at Doha.

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

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HE Department of Environment and Natural Resources (DENR) is eyeing the grant incentives for its partners in the implementation of the Expanded National Greening Program (E-NGP) starting next year.

The E-NGP mandates the DENR to continue the massive reforestation program covering the country’s 7.1

PESO EXCHANGE RATES n US 47.7220

million hectares of open, degraded and denuded forests.

Director Ricardo L. Calderon of the DENR’s Forest Management Bureau (FMB) said the incentive can be in the form of cash or noncash for a “job well done” by NGP partners. “ T his incentive prog ram is currently in the works. It is under the incentive mechanism in the E-NGP,”

said Calderon, also national coordinator of NGP. “Performance can be rated based on the high survival rate of trees planted or for keeping the NGP sites safe from forest fires,” Calderon added.

He said the current NGP contracts with people’s organizations (POs) for site maintenance and protection cover

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Second of three parts

AWMAKER Estrellita B. Suansing’s bill may lead beverage makers to sing a swan song for what she says causes overweight kids: soft drinks.

Suansing, representative of the First District of Nueva Ecija, is the main author of House Bill 3365, which aims to lessen the intake of sugar-sweetened beverages that can help decrease the chance of diabetes from occurring.

The bill would lean hard on soft-drinks manufacturers by adding a P10 excise tax on carbonated drinks and sugarsweetened beverages on top of the already imposed 12-percent value-added tax.

Besides its health slant, the excise tax will also increase additional revenue for the government. The bill projects around P34.35-billion additional funds in government coffers on the first year of implementation should it become a law.

Of course, soft-drink manufacturers and the sugar industry C  A

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n JAPAN 0.4077 n UK 68.0611 n HK 6.1211 n CHINA 7.2482 n SINGAPORE 33.1541 n AUSTRALIA 32.8189 n EU 52.0695 n SAUDI ARABIA 12.7344

Source: BSP (18 January 2016 )

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A2 Tuesday, January 19, 2016

Fed to death C  A

are not particularly fond of the said bill. The sector notes that the imposition of excise tax would, indeed, lessen consumption with a heavier price on soft drinks. This, in turn, would decrease sales and result in net revenue losses.

The Beverage Industry Association of the Philippines claims the imposition of the excise tax and decreased consumption of sugarsweetened beverages will not solve the “obesity challenge,” as the consumption of the said drinks only affects a small portion of an individual’s nutritional intake.

Sugar-sweetened beverage sales increase at a rate of 3 percent per annum globally. According to a study by Coca-Cola Co., world average consumption levels of its beverage products are at 94 portions per person per year. The Philippines is at 131 portions per person per year, the study revealed.

Evidence

TIM LOBSTEIN in a commentary in September 2014, noted, “Recent systematic reviews of literature confirm the link between increased intake of free sugars, particularly in the form of sugar-sweetened beverages and unhealthy weight gain in both children and adult, while reducing consumption of sugar-sweetened beverages has been shown to reduce weight gain in children, particularly, in those who are already overweight.”

“The weight of evidence has been sufficient for many scientific associations and expert bodies to recommend the reduction in free sugars intake; in particular, the consumption of sugar-sweetened beverages as a public-health policy goal,” wrote Lobstein, director of Policy of the London, United Kingdom-based World Obesity Federation.

According to the Seventh National Nutrition Survey, the consumption of carbonated beverages by preschool children, school-aged

children and adolescents are relatively high in the Philippines.

Soft-drink consumers among male preschool children average at about 14.07 percent, while females are at 13.46 percent; 16.20 percent consume soft drinks for male school-aged children, with females averaging higher at 16.73 percent and male adolescents comprise 24.66 percent, while females average 26.67 percent.

The study stated that soft drinks were the go-to drinks of most Filipino children during snacktime, since they are common energy source and they are the most affordable and readily available. Due to their popularity, soft drinks became the most commonly consumed food item among Filipino children.

Health Undersecretary Kenneth Hartigan-Go cautions against pinning the obesity epidemic to soft drinks.

Citing the 2008 National Nutrition Survey, he said the most commonly consumed food of adults and adolescents identified soft drinks in the eight and seventh positions, respectively. About a quarter of all adolescents and adults consume the product on a daily basis, he added.

“The same survey identified rice to be consumed by around 94 percent of all individuals daily. Does this mean that rice is a strong factor to the development of obesity?

Or that consumption of sweetened beverages is a stronger factor?”

Hartigan-Go believes “there is a correlation between consumption and obesity.” “But to highlight any specific food item as a factor to its increase would require a study that is currently not done by the government.”

Social network

SOCIAL networks can also contribute to obesity.

Having a friend suffering from obesity increases chances of acquiring the medical condition by 57 percent. This percentage also applies to

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SSS pension… family members and relatives but at a lesser rate, one study showed.

“Family lifestyles, like sharing similar habits in eating and physical activities, peer pressure, lifestyles that limit your access to healthy foods and physical activities” also cause obesity, according to Ivy D. Ramallosa, a registered nutritionist-dietician.

Having a social network that encourages a lifestyle pattern that contributes to obesity doesn’t help, she added. Having a sedentary lifestyle, lack of physical activity, lack of sleep and day-to-day stress are also contributing factors, Ramallosa said.

She added that extended hours watching television can also contribute to a person being overweight.

Lobstein noted in his paper for the World Health Organization (WHO) that advertising in media contributes largely to children’s consumption of soft drinks.

Voluntary measures in the UK to discourage consumption “still permit advertising in the media seen by children, e.g., family TV programming and social digital media to which children gain access.”

Lobstein cited social media as an alternative platform to promote soft-drinks consumption.

“A systematic review of children’s exposure to food and beverage marketing messages found consistent evidence that exposure had continued at high levels” from the years 2007 to 2012, Lobstein said. “The review concluded that the self-regulatory criteria [set by companies] were not sufficient to ensure children were protected from the advertising of foods and beverages high in fats, sugars and salt, and that government-led criteria for restricting marketing would be preferable.”

Digging deeper

ACCORDING to Hartigan-Go, the private sector, where soft-drinks manufacturers belong to, is “an important partner in pursuing strate-

gies that will improve the health of entire communities sustainably.”

“Recognizing that [while] our methods are different, the motivation is ultimately the same,” Hartigan-Go said. “Ensuring that the population is healthy, educated, productive, creative and happy is a mutual interest between the public and the private sectors.”

“Will stopping production of goods eventually lead to a reduction in the prevalence of obesity?”

Hartigan-Go posed.

“This is a myopic perspective. As long as demand from consumers is there, supply will find a way to meet it. This forces us [in the health sector] to dig deeper.”

He explained further: “Our current paradigm identifies a lack of alternative choices that are consistent with healthier behavior, and requires reevaluation of what component is harmful if consumed in excess.”

Hartigan-Go notes that sugarsweet beverages is not the sole factor that contributes to obesity, which he calls an “epidemic.” Obesity “is affected by the complex interaction between the environment, genetic factors and human behavior.”

Ramallosa, unit manager of the Makati Medical Center’s weight and wellness unit, agrees, pointing to “eating patterns, such as irregular eating schedules; skipping breakfast; snacking at bedtime; eating too fast; eating too much when emotionally stressed, bored; or angry; mindless eating; and eating twice the usual amount when pregnant.”

She notes that sugar-sweetened beverages are not the only food items that contribute to the increase of unwanted fat.

“Excessive calorie intake leads to obesity,” Ramallosa said. “Sweetened beverages and fast foods are loaded with calories coming from sugars and fats without other important nutrients. Drinking or eating too much of them may lead to increased calorie intake for the day.”

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PEOPLE pass by the Social Security System (SSS) branch office in Makati City. The SSS board on Monday hailed President Aquino’s decision to veto the proposed P2,000 pension hike for more than 2 million retirees, saying the agency cannot provide across-the-board pension hike without raising member contributions. NONIE REYES

committed that “the Senate will do its best to pass HB 6112.”

After this, Congress will write a letter to Malacañang to urge President Aquino to order the SSS Board to implement a P1,000 hike in SSS pension. The amount is a compromise to the original P2,000 increase, so—together with the passage of HB 6112—the viability of SSS would be safeguarded.

“We want to pass it [HB 6112 into law] now...[so the SSS] will give the P1,000 pension hike,” Belmonte said, adding, “the SSS board, itself, can approve it [the pension hike] without having to pass through Congress once the bill empowering the SSS Board to increase premiums is passed.”

The SSS would need P28 billion a year to cover the P1,000-pension hike benefiting 2.1 million pensioners.

“They have greater authority to recover [from the revenue lost due to pension increase] through increased premium, through changing some limitations that exist now in the SSS law, and so forth,” he said.

Congress has resumed session last Monday but will adjourn again on February 6 as part of the preparation

for the national and local elections in May. Lawmaker only have eight session days left.

Last Thursday President Aquino has informed Congress he has vetoed the enrolled HB 5842, which provides for a P2,000 across-theboard increase in the monthly pension of SSS pensioners and adjustment of t he minimum monthly pension from P1,200 to P3,200, for members who have contributed the equivalent of 10 credited years of service (CYS), and from P2,400 to P4,000, for those with at least 20 CYS. As it is now, increasing SSS pension, of any value, is not within the realm of probability, as this will reduce the system’s ability to generate funds for future pensioners, the SSS management said.

An increase is only possible if the proposed bill is revised, putting therein a solution as to where the SSS will get the funds to finance the proposed hike in pension.

Estimated losses to the institution, as earlier announced by the SSS, is likely to hit P56 billion per year, rising by about 10 percent in losses per succeeding year, as more workers move into the pensioners category annually.

SSS President and CEO Emilio de Quiros Jr. said that “there is no problem” in implementing a pension hike, if they are to provide the financial means to the bill. What de Quiros has in mind is a hike in the contributions of members; from the current 11-percent contribution rate of SSS up to 15.8 percent to fund potential adjustments.

“What we are saying is that it is easy to give increases to pension whether it be P500 or P1,000, etc.

But it has to have a parallel contribution increase. If there is a counterpart contribution increase, there will be no problem,” de Quiros said.

The contribution rate of SSS is considerably lower than those of its neighbors in Asean, including Vietnam at 25 percent.

Market volatilities in play

THE SSS’s fund life is now projected to be up to 2027, meaning that funds will be depleted 11 years from now contrary to the earlier presentation to Congress, which indicated that funds will be depleted by 2029 should the pension hike is approved De Quiros said the change in the projected fund life is due to current low market sentiment and divestment plans.

SSS invests its finances in different financial vehicles to derive more funds to support its operations. Data showed that in terms of SSS’s investment portfolio, 39.12 percent are in government securities; 23.59 percent are in equities; 15.05 percent are lent as salary loans; 7.6 percent are deposited in banks; 7.32 percent in corporate bonds and notes; 4.32 percent in real properties; and 2.95 percent as housing loans.

In turn, its investment income from January to October 2015 yielded an annualized return of 7.04 percent. The SSS last increased the pension of its members in July 2014 by 5 percent.

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Retailers can use mobile technology to grow business

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OBILE-PHONE technology can help expand the market for consumer goods the way it disrupted the business model in providing small consumer loans.

The BusinessMirror last week published a feature on how mobile-phone technology is being tapped to help the poor in the countryside to gain access to small consumer loans that can be extended by banks even without a collateral.

This trend of expanding the market to include all mobile-phone users nationwide is also emerging in the Philippine retail business for consumer goods. Thus, while banks partner with mobile-phone companies to extend loans to the unbanked poor, retailers are also partnering with the same telcos to expand their reach to rich consumers who now shop online through their mobile phones.

According to Heidi Garayblas of Voyager Innovations, it is imperative for retailers to come up with their own mobile applications so that more of the so-called mobile first consumers can shop online for consumer goods, like clothes, gadgets, bags and accessories.

By the end of 2016, it is estimated that 30 million smartphones and tablets in the Philippines will form part of the target market for mobile financial services, marketing campaigns and retail goods.

“With the increase in smartphone users in the Philippines, we are seeing a very high demand for consumer retailers to launch their own mobile app, and promote its download and usage. Mobile applications do not only serve as a channel to promote products but also as an efficient sales channel, as a form of distribution for their products, and as a way for payment. We are seeing major growths in e-commerce, financial services and online-banking transactions.

It’s a mobile-first market,” Garayblas said.

Garayblas is the business unit head for the SafeZone service of Voyager Innovations, the digital innovations arm of PLDT and Smart.

Mobile first

THE term mobile first was coined to refer to the strategies of companies to design their products for smartphones first before making corresponding versions for desktops and laptops. Mobile-first consumers refer to that segment of the market who use their smartphones first in making Internet searches, social-media interactions and shopping. This segment of the market had been increasing the past few months, not only in the Philippines but in the world.

According to the Groupe Speciale Mobile Association’s (GSMA) Global Mobile Economy Report for 2015, the worldwide transactions made through mobile phones continue to increase not only in terms of the total amount of the transactions, but also in the percentage that mobile-phone commerce constitutes out of the total worldwide e-commerce.

In 2014 total e-commerce in the world, or total sales made through the Internet, amounted to $1.47 trillion. About 14 percent of this amount, or $204 billion, came from transactions made through mobile-phones.

Based on current trends, the GSMA predicts that by 2018, total e-commerce would reach $2.36 trillion, and 26 percent of this amount, or $626 billion, would have been from mobile-phone transactions.

Much of these e-commerce transactions and mobile-phone commerce will be in Asia, GSMA said, as can be gleaned from the increasing number of mobile-application sales and downloads.

“The global app economy is growing rapidly, with revenues from apps and related products and services reaching $86.3 billion in 2014, representing a 26-percent increase from 2013. Much of this growth is coming from developing markets, such as India and China, and out of a total global mobile developer population of 2.3 million, Asia is home to around a third,” the report said.

GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with more than 250 companies in the broader mobile industry, which also in-

30M

Estimated number of smartphone and tablet users in the Philippines by the end of 2016 cludes handset and device makers, software companies, equipment providers, Internet companies and other organizations in related industries.

Trend in Asia

THERE are an estimated 700 million Internet users in Asia today, and another 1 billion Internet users in Asia are expected within the next 15 years, making Asia the largest market for online-shopping sites.

In 2015 an average of 22-percent increase in shopping across 13 Asia-Pacific markets was registered, according to a study by Visa.

The highest growth rates in online shopping were experienced in Indonesia, China and Taiwan, with growth rates of 36 percent, 34 percent and 28 percent, respectively.

But the Philippines is not far behind, with a growth rate in online shopping of around 25 percent, mainly due to purchases of transportation services through GrabCar or Uber, and downloads of mobile-phone applications on Google Play.

United States-based analytics firm Fico is even more upbeat on the growth of the market for financial technology and consumer goods sold through mobile phones.

Fico, which compares and forecasts risks for banks and other companies through the analysis of data, also has numerous telecommunications companies in Asia as its clients.

Burton Crapps, Fico country director for the Philippines, said the mobile-first segment of the Philippine market will become a very important market not only for banks, but also for retailers.

“It is one of the most exciting segments in terms of consumerization. The telecommunications companies have very huge access to the population of the Philippines that they have more penetration than all the lending companies combined,” Crapps said.

Threats of online fraud

MOBILE data charges and threats of hacking and credit-card fraud, however, could be prohibitive for Filipino mobile-first consumers, which could hamper the growth of this market segment in the Philippines.

This is why mobile-phone operators and designers of mobile applications take pains to make their mobile-phone applications and products as accessible as possible, in anticipation that within the next two years, mobile-first consumers will form a significant portion of the Philippine retail market.

Garayblas said this is why Voyager’s SafeZone service does not charge mobile shoppers for the data, which is sponsored by the retailers, to entice even more mobile-first consumers to surf for the best deals using their mobile phones. “SafeZone, our service, allows users to conveniently inquire, transact and shop anytime, anywhere without data charges, as the data usages is sponsored by the retailers. We also empower retailers to efficiently and effectively promote the download and usage of their mobile application or web site. By enabling enterprises to be digitally present and lowering the barrier for their connection, SafeZone brings more usage and accessibility for their products and brands,” she said.

On the issue of credit-card fraud, on the other hand, Fico is working with firms in Asia to use the geolocation abilities of mobile devices in validating whether a consumer’s phone is in the same place as where a credit card is being used.

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Davao City gets 3 major infra projects

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B M T. C | Mindanao Bureau Chief

AVAO CITY—Three big infrastructure projects here are expected to decongest the present poblacion and speed up development of this city’s hinterlands.

The projects are not expected to be finished this year, but when completed, these will result in changes in transportation routes, establishment of new terminals and result in the development of a planned area for educational institutions and additional residential zones, alongside transportation route that goes to the industrial zone, Councilor Danilo Dayanghirang said.

The zoning of educational institutions in barangays Mintal and Tugbok west of downtown has been going on with the relocation or expansion of topnotch universities to these areas to help develop new urban centers to the northwest of the city, he said. Further north of these barangays is a major roadconstruction project funded by the Japan International Cooperation

Agency, which has constructed two additional highway lanes from Calinan, 30 kilometers north of downtown, and to make a left turn in Tugbok to cut a new highway going to the northern hinterlands of this city in a combination of open highway and a tunnel road.

The project is eyed as a bypass or diversion road and is intended to replace the first diversion road connecting the southern suburbs through the Ulas-Bangkal junction, and the northeastern suburbs through the Panacan-Sasa junction. The diversion road that was supposed to be an express lane has since turned into a slow-moving channel on busy daylight hours.

The Calinan-Tugbok bypass road is expected to speed up the movement of goods from the nor t hwester n production ar-

Government and business transactions may also see some changes in their locations, maybe with a new city to be developed.”

—Dayanghirang

BEAUTY OF NATURE In this file photo, locals of Samal Island in Davao del Norte enjoy the serenity of their place. Completion of the major infrastructure projects will help attract more foreign and local visitors to Davao. NONIE REYES eas connecting Bukidnon to the northeastern barangays hosting the industrial zone and seaport areas connecting Davao del Norte. The two projects in the Mintal-Tugbok area and the Calinan-Tugbok area may also speed up the development of an urban center in the northwest of the city. Running parallel to these projects are the ongoing wide highway construction near the Arakan, North Cotabato, junction down to the city’s western district of Toril, to connect the

production areas of Davao del Sur and the Cotabato provinces with the northwestern section of the city connecting with Bukidnon.

The biggest project to be implemented soon is the 200-hectare reclamation along the coastal area of downtown currently dotted with one of the biggest habitation by squatters. Proponents of the project would develop a new port area and business and office buildings.

Dayanghirang said these projects, once completed, may effect

a major change in traffic and commuting habits, and may also redirect some city and national government agencies to certain areas to decongest the city.

“Government and business transactions may also see some changes in their locations, maybe with a new city to be developed in Calinan or in Toril,” he said.

He said new subdivisions and residential areas were being built along the Buhangin area going toward Bunawan in the northeast, in a direction running alongside

the development of the industrial zone. “This will help distribute the location of people, not just concentrated in the southern portion of the city where the residences are mostly found,” he said.

“If I were to decide, we have to formulate an urban development plan that would include the town of Malita in Davao Occidental in the farthest south of the region, to the town of Caraga in Davao Oriental to the farthest eastern part of the region,” he said. Dayanghirang is the city council’s majority leader.

Abaya, Sobrepeña exchange barbs anew over MRT 3 mess His statement, however, was debunked by MRT Holdings Inc. Chairman John Robert L. Sobrepeña, who said his camp was never indifferent to the qualms of the 560,000 commuters who ride the train facility every day.

T he businessma n sa id h is company had sought for the government’s approval of improving the railway system as early as 2000. The state, however, failed to respond to this.

“You cannot blame us, because we have done all our part. We have no less than three proposals to improve the train—one in 2000, another in 2005 and another thereafter,” he said. “But the government failed to reply to any of our proposals; so why blame us?”

The last proposal was addressed to the transport chief, himself, Sobrepeña pointed out.

“Up until today, we have not yet received any reply to our latest proposal to rehabilitate and improve the services of the MRT,” he quickly added. Sobrepeña was referring to his group’s “quick fix” solution to make the train system “safe for public transport.”

Together with foreign firms Sumitomo Corp. of Japan and Globalvia Infrastructuras of Spain, Metro Global Holdings Inc. is proposing to “fix” the ailing system through a $150-million investment that involves the procurement of a total of 96 new train cars and the rehabilitation of the existing 73 coaches, increasing its capacity by fourfold to 1.2 million daily passengers. Under the proposal, a single point of responsibility will be implemented, meaning the rehabilitation and the maintenance of the line will be handled by a single company.

“So, how can he be finger-pointing at this point, when he should be pointing the finger at himself?”

Sobrepeña said. “He’s completely

ED DAVAD

C  A

wrong, again, as usual.” There are two other proposals pending before the transportation department—one from Metro Pacific Investments Corp. (MPIC), and another from German firms Schunk Bahn -und Industrietechnik GmbH and HEAG Mobilo GmbH. Under its proposal, MPIC will shoulder the upgrade costs of the train system and release the government from the bondage of paying billions of pesos in equity rental payments.

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

The venture would effectively

How can he [Abaya] be fingerpointing at this point, when he should be pointing the finger at himself? He’s completely wrong, again, as usual.”—Sobrepeña expand the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. The multimillion-dollar expansion plan would double the capacity of the line to 700,000 passengers a day, from the current 350,000 passengers daily.

It was submitted in 2011, but

the transportation agency’s chief back then rejected the proposal.

The group revived its proposal before Congress in 2014.

On the other hand, Schunk is seeking to place the whole train system under a massive transformation program to augment its capacity and to provide a safe and comfortable travel to commuters

from the northern and southern corridors of Metro Manila.

The P4.64-billion proposal, submitted in February last year with Filipino partners Comm Builders and Technology Phils.

Corp., calls for the complete overhaul of the 73 light rail vehicles of the MRT; the replacement of the rails; the upgrading of the line’s ancillary system; the upgrade of the track circuit and signaling systems; the modernization of the conveyance system; and a three-year maintenance contract.

Under the amended build-operatetransfer law, the government has to inform the proponent whether it accepts or rejects an unsolicited proposal within 120 days.

“They are not following the

law, as they are not replying to us.

Then, when problems happen, they will be blaming us. So, now, we are studying our legal options, because they are practically not following the law with regard to the MRT,” Sobrepeña said.

The MRT is in a chronic state of decay, with the 16-year-old trains already maxed out of their rated capacities and the rails already experiencing difficulties in handling 560,000 passengers per day.

Currently, there are about 16 train sets operating in the MRT. This means that out of the 73 light rail vehicles that the train line has on its depot, only 48 train cars ply the North Edsa-Taft Ave. train route. The government is set to receive all the 48 Chinese-manufactured trains by January next year.

“We are aiming to have the new trains ready by the end of first quarter this year, so hopefully,

by March, the new trains from Dalian will help lessen the queues in the MRT,” Abaya said. “Commuters will experience increased passenger convenience and service reliability with the arrival of more new light rail vehicles.

After the necessary checks on the different electrical components have been completed within the week, the vehicle will be subjected to dynamic testing to ensure the reliability of parts. This includes the required 5,000-kilometer run, which will be done on the main line during nonrevenue hours.”

Once the 48 new train cars come in, MRT 3’s trips per hour will increase from 20 to 24, which will translate to a 60-percent rise in the number of passengers per hour per direction.This means that there will be 37,824 passengers who can avail themselves of the rail service every hour heading toward one direction. Currently, only about 23,640 people ride an MRT service per way every hour. But that number still depends on how many trains are running that day.

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Vietnamese stocks head for 20-mo low amid selling

$22.9M Net outflow of foreign funds that exited Vietnam’s stock market this month

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IETNAM’S stocks fell toward the lowest level in 20 months as energy shares tumbled with oil and foreign selling accelerated before a leadership reshuffle from later this month.

The benchmark VN Index slumped 4.6 percent to 518.16 at 1:30 p.m. local time, its fourth day of declines, poised for the lowest close since May 13, 2014.

PetroVietnam Gas JSC and PetroVietnam Drilling and Well Services JSC sank more than 5 percent, set for record lows.

Vietnam starts the process of picking its new leaders this month, with the party congress starting on January 20.

The once-in-five years political transition comes as the country finds itself balancing its Communist loyalty and economic dependence on China with increasing concern about that nation’s behavior over islands they both claim in the South China Sea. Foreign investors have sold a net $22.9 million of Vietnamese shares this month, data compiled by Bloomberg show. The stock index is the biggest decliner among developingnation equities, which sank to a six-year low as Brent oil traded near $28 a barrel, sapping demand for riskier assets.

“There are election rumors that we have to watch closely these days, and that might affect market quite a bit,” said Attila Vajda, managing director at Singapore-based advisory firm Project Asia Research & Consulting Pte. The drop in oil prices is also weighing on the nation’s shares, he said.

The tension with China has seen Vietnam gravitate toward the US, with the warming of military ties and the country’s involvement in the US-led Trans-Pacific Partnership trade pact. The nation’s equity measure has tumbled 10 percent this year, dragging down valuations to the lowest level since August.

“Sentiment remains very weak and the drop in oil prices is dragging the market further, triggering concerns that margin calls will happen soon,” Dang Tran Hai Dang, deputy manager of research at VietinBank Securities JSC said in Hanoi. The foreign selling has also affected local investors’ sentiment, he said. Bloomberg News

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Jokowi under pressure to revamp terror laws after Jakarta attack

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HE first Islamic State (IS)-linked attack on the world’s most populous Muslim nation puts more pressure on Indonesian President Joko Widodo to give the military a bigger role and add legal heft to antiterrorism efforts.

Unlike some countries facing threats from IS, authorities in Indonesia lack laws to arrest returnees from Syria and Iraq. Giving security forces greater leeway to lock up Islamists is a sensitive issue in the Southeast Asian nation, which until 1998 was a military dictatorship.

Last week’s attack on central Jakarta which killed four civilians was relatively unsophisticated. But it brought home to Indonesia—and the region more broadly—the risks of Asians going to fight in the Middle East and then returning skilled and more radicalized. While Widodo, better known as Jokowi, has urged countries to “wage war” against terrorism, he has not moved to bolster laws to tackle the threat.

“All that is needed is political support, but that is difficult in Indonesia,” said Ansyaad Mbai, a former head of the country’s anti-terror agency. “At the highest level people are afraid of being accused of being anti-Islam.“

Revoking citizenship

ON Friday Police General Badrodin Haiti said he wanted to be able to revoke the citizenship of Indonesians fighting with IS abroad. National intelligence agency chief Sutiyoso said laws were not sufficient to arrest and track extremists. He said Malaysian authorities can attach electronic tracking devices to suspects, while the US and France were able to strike a balance between human rights and the need for firm action.

“Those countries respect human rights and freedom,” he told reporters. “But when national security is threatened by terrorism, they can prioritize the intelligence process.“ The police chief on Saturday called for antiterrorism laws to be strengthened to allow preventative detention. “We can detect a terrorist network but we can’t act before they

All that is needed is political support, but that is difficult in Indonesia.”

—Mbai, former head of Indonesia’s antiterror agency have committed a crime,” he said.

“That is the weakness of our laws.”

Economy, jobs

REVISING the law requires getting it through parliament, a slow-moving body where the opposition has significant clout and which includes Islamic parties that could oppose giving police more powers.

Since taking office in October 2014, Jokowi has largely stuck to a campaign pledge to focus on everyday issues like the economy, health and jobs. The brazen gun and bomb attack less than 2 kilometers from his office could change that. Even so, when Rizal Ramli, coordinating minister for maritime affairs, was asked if there had been any talk at cabinet level on revising anti-terror laws or issuing an emergency regulation, he replied “not yet.”

If Jokowi gives greater powers to the army it could see it more involved in clamping down on those with radical views. It could also strengthen the military’s hand in the public sphere. There are already concerns Jokowi has allowed it a greater role in order to shore up his administration. Coordinating Security Minister Luhut Panjaitan, a former army commander, is

IN this January 15 photo, Muslims perform prayers at a mosque in Jakarta, Indonesia. A day after attackers detonated bombs and engaged in gunbattles with the police in the central part of Indonesia’s capital, Jakarta tried to get itself back on track. AP

one of Jokowi’s trusted advisers in the cabinet.

Under Suharto, the military had a broad internal security role and was implicated in human-rights abuses during crackdowns on separatists, Islamic activists and democracy advocates. It was curtailed after the fall of Suharto, but still jostles for influence with the police, including in Central Sulawesi, a remote eastern province where a small band of militants loyal to IS are based in jungle hideouts. The army has been pushing to take over counterterrorism operations from the police.

Operational involvement

“PRESIDENT Jokowi has stressed the need for the police and military to work together on terrorism prevention, but the TNI has long wanted more operational involvement,” the Institute for Policy Analysis of Conflict said in a report in May. “Each of the three services within the TNI —army, navy and air force—has a highly trained CT detachment as part of its special forces unit, but they are rarely employed.”

Indonesia, where most people practice a moderate form of Islam, has struggled against a violent radical fringe seeking the imposition of

Shariah law since independence in 1945. A group of militants, many of whom trained in al-Qaeda camps in Afghanistan, staged large-scale bombings against mostly Western targets in the 2000s, prompting a crackdown that severely weakened the movement.

‘Greater attention’

LAST month Jokowi’s government rejected an appeal by Saudi Arabia to join its coalition against IS, saying it lacked details. A devout Muslim himself, Jokowi has spoken out against extremism, but his rhetoric and action against drug smugglers, for example, has been more pronounced.

“Up until now, Jokowi has remained disengaged in defense and security matters relative to domestic issues such as boosting economic growth and improving infrastructure,“ said Natalie Sambhi, an Indonesian defense analyst at the Australian Strategic Policy Institute.

“Jokowi will be forced to pay greater attention to this issue.”

Money for Thursday’s attack was sent by an Indonesian militant, who was released from jail in 2012 and is now in Syria, Haiti said. One of the attackers had been convicted of attending a militant camp and was released

from jail in Jakarta last year, Haiti added. Since the early 2000s, the Indonesian government has funded nationwide programs aimed at blunting the appeal of extremist propaganda and “deradicalizing” convicted terrorists in jail. There have been several cases of militants returning to violence after their release.

“We must raise our awareness because terrorism has yet to be destroyed,” Jokowi said in a tweet after the attack. ”Protect your family from the influence of terrorist ideology.”

As well as boosting laws to deal with returnees, Indonesia needs to tackle radicalism online to curb recruitment . The government shut 10 web sites and social-media accounts after the attack, Rudiantara, the communications minister, said in an interview on Friday.

“From a policy point of view, they need to act against IS by finding a legal way to arrest returnees, stop people from getting to Syria and, most important, stop extremist religious figures from recruiting,” said Paul Rowland, an independent Jakarta-based political consultant.

“The public is going to want some kind of action and Jokowi has the opportunity to act now to curtail extremism.” Bloomberg News

Myanmar sees good prospects for visitor arrivals, tourism investments in 2016

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YANMAR is seeing good prospects in its tourism industry in 2016, with the number of tourists visiting the country expected to increase this year.

Tourist arrivals, as of the end of November 2015, reached more than 4.2 million. The Ministry of Hotels and Tourism estimates that the number will rise to 5 million by April 2016.

Myanmar attracted $2.64 billion worth of foreign investment in 47 projects in the sector of hotels and tourism in 2015, up $1.5 billion from 2011’s $1.14 billion in 36 projects.

Of the total foreign investment in the sector in 2015, Singapore accounted for $1.47 billion, the highest among all countries and regions, followed by Vietnam with $440 million.

The tourism sector development in Myanmar in 2016 depends on the progress of related investments in the previous year, as well as the global and Asean economy.

According to the ministry’s master plan (2013-2020), tourist arrivals are estimated to hit 7.49 million in 2020.

Tourists from neighboring countries frequently visit Myanmar on

$2.64B

Tourism-related investments attracted by Myanmar in 2015 motorbikes, bicycles and boats under the arrangements by tour companies in cooperation with the ministry.

Rising number of foreign tourists is seen, as river cruise ships arrive in the country in the tourism season, which used to start in the beginning of the year.

The cruise liner MS Seven Sea Voyage, which is carrying 699 visitors and 447 crew, will be arriving in Myanmar on a three-day visit until January 25. More cruise ships are also set to dock in Myanmar in January and February.

According to official statistics, Myanmar welcomed 25 luxury cruise ships carrying 26,000 visitors last year.

Moreover, foreign tourists are signing up for Chindwin river cruises, which offer views of Myanmar’s

A POLICE officer stands behind a police line in front of Shwedagon Pagoda, during a protest of Myanmar’s nationalist Buddhist monks and their supporters against a Thai court’s verdict sentencing two Myanmar migrant workers to death, in Yangon, Myanmar, on Sunday. AP

natural landscape and encounters with ethnic minority communities and their cultures. The number of tourism companies increased to 1,922 from 1,670 in 2014. Of them, 1,822 are owned by locals.

Myanmar’s hotels are also sprouting across the nation to give adequate accommodation to the increasing number of tourists, according to the Myanmar Hoteliers Association.

Some 340 hotels are operating

across the nation in 2015, compared with 290 in 2014, according to U Tin Win, chairman of the Myanmar Hoteliers Association.

Meanwhile, the government has established 17 hotel zones in

such areas as Nay Pyi Taw, Yangon, Mandalay and Bago regions.

Tourist arrival through Yangon International Airport totaled 759,181 in the first nine months of 2015, up 82,174 from 677,007 in the same period of last year. More than 800,000 tourists entered Myanmar by air and water, while more than 2.2 million tourists visited the country through border entrances. Tourist arrival is highest in the Yangon, Mandalay, Inlay and Bagan hotel zones.

The number of tourist arrivals to Mandalay, the second-largest city of Myanmar, reached 306,432 in 2015, up 26 percent from 242,566 in 2014.

Mandalay, the last royal capital of Myanmar, has a population of just over 1.2 million, according to the latest census. The majority of foreign tourists came from China, Thailand, France, Germany and the US. At present, eight domestic airlines and five international airlines are operating services in Mandalay and the plans are under way to expand the international flights and airline access to Mandalay.

Under the new system, there are 12 types of entry visa and three types of re-entry visa available for foreign travelers to facilitate their visit to Myanmar. PNA

The W

Business

A6 Tuesday, January 19, 2016 | Editor: Lyn Resurreccion

Merkel’s refugee showdown nears amid party revolt over borders

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ACED with the biggest challenge of her decade in power, Angela Merkel is poised for a week that may determine the outcome of her quest to keep Germany open to refugees.

The German chancellor will run straight into the gathering storm over her policy on Monday, when she chairs a meeting in Berlin of the national executive of her Christian Democratic Union (CDU) amid open revolt within the party ranks.

She then heads to the Alps for mid-week talks with her rebellious Bavarian allies and ends the week hosting a summit with Turkish government leaders, in whose hands she has placed much of the responsibility for stemming the influx of migrants to Europe.

“We want Plan A to work,” German Deputy Finance Minister Jens Spahn said in a Bloomberg Television interview on Sunday.

“We need a European solution to keep Europe together.” Merkel’s week of refugee politicking shows heightened urgency after mass sexual assaults on New Year’s Eve increased pressure on her to impose border restrictions, a demand championed lawmakers in her party bloc who plan to hand her a letter of protest on Monday.

Merkel, backed by Finance Minister Wolfgang Schaeuble, is seeking a deal within the European Union (EU) to help Turkey care for its more than 2 million Syrian refugees and resettle asylum-seekers more evenly in the EU. As Merkel’s popularity fell to its

TAIWAN’S Democratic Progressive Party presidential candidate Tsai Ing-wen (center) raises her hand as she declares victory in the presidential election on Saturday in Taipei, Taiwan. AP/WALLY SANTANA

China prepares for worst in Taiwan after Tsai victory

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SAI INGWEN’S landslide election win in Taiwan revives a long-dormant source of tension in Asia, as China waits to see how far the new president will push her party’s goal of independence.

The result, in which Tsai ’s Democratic Progressive Party (DPP) also won its first legislative majority, was fueled in part by skepticism over Taiwan’s rapprochement with its former civil war foe during President Ma Yingjeou’s eight-year tenure. While that policy put both China and the US at greater ease, Taiwanese voters anxious over dependence on their giant, Communist-run neighbor overwhelmingly elected a party that officially supports separating from the mainland.

Now, less than three months after Xi Jinping’s historic meeting with Ma in Singapore, China must revise its road map for eventual reunification with Taiwan, which it considers a province. Its ability to reach some understanding w ith Tsai will determine whether both sides of the Taiwan Strait continue to grow together, or the relationship descends into economic estrangement or even threats of attack. The mainland is Taiwan’s largest trading partner, buying 40 percent of its exports, even as the two remain military rivals.

“Cross-strait political relations are entering a new juncture,” said Xu Shiquan, a senior researcher at the government-run Chinese Academy of Social Sciences in Beijing.

“The only certainty is the uncertainty ahead, and we can’t see where it’s heading for now.”

One China

THE Communist Party’s suspicion of Tsai dates back to her days as an adviser to the Kuomintang (KMT) administration of ex-President Lee Teng-hui, when she helped draft a policy redefining the crossstrait relationship as a “special state-to-state” one, a move seen in Beijing as secessionist.

Formally joining the DPP in 2004, she served as minister for mainland affairs under DPP President Chen Shui-bian. He refused to accept the mainland’s precondition for talks and agree that both sides belong to one China, an idea known as the “1992 consensus.”

Chen’s pursuit of independence led the Communist Party to pass in 2005 a law authorizing attack to prevent secession, a threat that still hangs over the island. Such spats pose a liability to the US, which is obligated to defend Taiwan under a 1979 law.

Although Tsai has also not endorsed the so-called one-China principle, she won over moderate voters wary of provoking China by pledging to uphold the “status quo” and focus on economic issues.

‘No accidents’

“I ALSO assure you, in the future when I handle cross-strait relations, I’ll actively communicate,” Tsai told supporters after her victory on Saturday. “I won’t provoke, and there won’t be any accidents.”

40% Taiwan’s exports that go to China

Shelley Rigger, a politics professor at Davidson College who wrote Why Taiwan Matters: Small Island, Global Powerhouse, said the DPP knows it was elected to address domestic concerns first. Tsai wouldn’t risk angering Beijing and derailing her agenda with policies just to please the more independenceminded members of her party.

“Tsai Ing-wen would be really cautious about that,” Rigger said in Taipei. “Once you go off in that direction, there’s no turning back. The die is cast for the next eight years.”

For the moment, it’s unclear how the Communist Party and the new leadership in Taipei will maintain communications. The Chinese government reaffirmed the 1992 consensus as the basis for any talks in a commentary on Sunday and has previously warned relations might collapse without it.

Trade deals

OFFICIALS on the mainland will be watching Tsai for even small signs of departure from the policies of Ma, who signed 23 crossstrait agreements on everything from allowing direct flights to opening each other’s financial sectors to investment.

T he leadership w i l l be on alert for any efforts to emphasize Taiwanese—as opposed to Chinese—culture and identity

in the island ’s schools. Ma’s trade agreements give China a myriad of new options for putting economic pressure on Taiwan that don’t involve military threats. They could reduce the more than 4 million mainland tourists that visit annually or withdraw from talks on reducing trade barriers to agricultural and manufactured goods.

They could also resume efforts to lure away the last 22 states that still have diplomatic relations with Taiwan. “A little bit of economic and trade suppression would probably inf lict enough pain on the island,” said Chang Ling- chen, a professor of political science at National Taiwan University. “And a bit of squeezing here and there in the international space would also be very tangible.”

Bumpy relations

STILL, China benefits from closer economic ties with Taiwan, which advance its ultimate goal of reunification. The Communist Party must be careful not to appear too aggressive and alienate more Taiwanese voters, particularly young people who mounted student protests in 2014 against a services trade pact with the mainland.

Tsai won with the biggest margin of victory since Taiwan’s first democratic presidential election two decades ago. The DPP also secured 68 seats in the 113-seat Legislative Yuan. “Relations are going to be more bumpy and perhaps tense, but Beijing’s interest is to make Taiwan more dependent, rather than less dependent, upon the mainland,” said Jean-Pierre Cabestan, a political science professor at Hong Kong Baptist University who specializes in cross-strait relations. “So it will try to weaken and isolate Tsai, but not to cut all ties with Taiwan.” Bloomberg News

lowest point since October 2011 in a ZDF television poll last week and the organized protest by backbenchers took shape, Schaeuble, a key ally in her CDU and Germany’s longest-serving lawmaker, rose to her defense.

“I support what the chancellor says with total conviction,” Schaeuble, Germany’s most popular politician, told Sueddeutsche Zeitung in an interview published on Friday.

Merkel is working “to the point of exhaustion” to solve the refugee crisis and “things are moving too slowly in Europe,” he told the newspaper.

The letter by a group of lawmakers in Merkel’s parliamentary bloc will urge her to bar refugees arriving from other EU countries, according to a lawmaker involved in the drafting, who asked not to identified because the letter isn’t public yet. Spahn, who’s also a lawmaker, disagreed with the form of protest.

“People are discussing what to do, what is the situation after Cologne, with even more emotions, and we have the same discussion within the party,” he said. “We don’t need a letter to say what we think.”

Merkel plans to travel to Bavaria on Wednesday for the second time in two weeks for talks with the state’s ruling Christian Social Union, which has opposed her refugee stance for months and is threatening to file a constitutional complaint against it. The southern state is the main entry point for asylum seekers arriving in Germany. AP

Beyond the headlines: Five things to watch in China’s GDP report

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H I L E C h i n e s e s t o c k s h a ve whipsawed investors, growth in the world’s second-largest economy is still forecast to come in just under the government’s 7-percent target.

The nation’s fourth-quarter and full-year GDP report will be released on Tuesday at 10 a.m. in Beijing, or 9 p.m. Monday on Wall Street. Economic growth for the quarter and year were both 6.9 percent, according to a Bloomberg survey of economists as of late on Friday.

The stakes are high, and not just for policy-makers’ credibility: Data showing a sharper slowdown may spur more fiscal and monetary stimulus, while a stronger reading may provide a tonic for jittery global markets concerned about China’s outlook. Policy-makers have signaled they’ll allow some slowness as they tackle painful tasks like reducing excess capacity, but nothing that could threaten President Xi Jinping’s goal of at least 6.5-percent growth through 2020.

Aside from the headline growth rates, a closer examination of the report will help gauge the health of various facets of the economy.

Price pressure

BY calculating the difference between n o m i n a l g ro w t h ( n o t a d j u s te d f o r inflation or deflation), and real growth (which is adjusted), we’ll be able to see the latest on the GDP deflator, which was negative in the first nine months of last year. Deepening deflation, stemming from a record stretch of more than three years of producer-price declines, would be a negative sign for an economy grappling with slowing profits and rising debts—both of which are also priced in nominal terms.

Income, jobs

RAPID income growth over the last decade has made Chinese consumers an increasingly powerful force, snapping up Apple iPhones, Tiffany diamonds and Toyota sedans. Fresh evidence of that ascent will be revealed this week in a section of the GDP report on per capita disposable income.

That number still has room to rise. The national average disposable income per person was 20,167 yuan ($3,272) in 2014, less than a tenth the US level. The level for urban residents was 28,844 yuan, triple the level from a decade earlier. Fresh readings should show further improvements, underpinning one of the economy’s strongest pillars last year—consumption. Wang Baoan, the new head of the statistics bureau, may give an

update on the health of the labor market at a briefing after the GDP release. Surveybased unemployment, a number Premier Li Keqiang has said he monitors, was at about 5.2 percent in September.

The nation added about 13 million new jobs last year, according to its top economic-planning body, topping the target of 10 million, thanks to a booming services sector.The government also will publish a labor market report around the GDP release date. That will show which sectors are hiring, and the level of job openings across various regions.

Growth drivers

ON Wednesday the National Bureau of Statistics will publish its breakdown of total economic output, offering a more granular look into which parts of the economy are leading and lagging.

Financial services grew 16 percent in the third quarter from a year earlier, a pace that will be hard to match in the fourth quarter because of a higher base year comparison given the market boom took off in late 2014. NBS will also detail the value-added of agriculture, industries, transportation, accommodation, property and other key industries.

Housing investment

THE golden age is over for property developers, with the real estate market in a third year of downturn. Growth in fixedasset investment in real estate slowed to 2.8 percent in the first 11 months from a year earlier, compared to a 20 percent jump in the same period two years earlier. That investment gauge will turn into negative territory this year, according to JPMorgan Chase & Co. and Nomura Holdings Inc. analysts. By contrast, researchers at China’s central bank are more optimistic, forecasting a recovery on brighter sales prospects and price gains in bigger cities, according to a working paper.

Consumer cash

RETAIL sales were robust throughout the year, despite the stock market turmoil and lackluster investment. Online shoppers opened their electronic wallets November 11 to spend a record $14.3 billion in 24 hours during the Singles Day shopping holiday created by Alibaba Group Holding Ltd.December and full-year retail sales figures will be released Tuesday along with GDP. Tallies will include online sales, which soared 33 percent in the first 11 months. Bloomberg Ne ws

World

sMirror WHILE QUESTIONS LOOM ABOUT ROAD AHEAD

news@businessmirror.com.ph | Tuesday, January 19, 2016

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Obama: Iran deals vindicate diplomacy

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ASHINGTON—President Barack Obama said that while the nuclear agreement with Iran doesn’t resolve all conflicts between the United States and the Islamic Republic, it is a vindication of his emphasis on using tough diplomacy rather than military confrontation.

“This is a good day,” Obama said on Sunday. “Because once again we’re seeing what’s possible with strong American diplomacy.”

Obama spoke after a plane carrying a group of Iranian-Americans, who had been held as prisoners in Iran, left the Islamic Republic, and a day after the implementation of an agreement to curb Iran’s nuclear weapons development.

The implementation of the agreement and the release of the prisoners is a milestone for Obama, who has argued that his approach of hard-nosed diplomacy backed by onerous sanctions succeeded in keeping the US out of a military conflict in the Middle East. The nuclear deal capped more than two years of wrangling between Iran and the US, China, Russia, Germany, France and Britain. Over multiple presidential administrations and through the Cold War, “the United States has never been afraid to pursue diplomacy with our adversaries,” Obama said.

Gulf remains in relations

AMID celebration of the milestone nuclear-deal and the depature from Iran of three freed Americans, the Obama administration offered a reminder on Sunday of the gulf that remains in the countries’ relations.

The US placed new sanctions targeting 11 people or companies that work to advance Iran’s ballistic missile system, and President Obama promised to “remain vigilant.” That announcement came almost as an aside in an otherwise upbeat message but illustrated the continued strains in what is being hailed as a new relationship between enemies Iran and the US. Addressing their respective nations, Obama and his Iranian counterpart, Hassan Rouhani, praised the nuclear deal as a victory for tough diplomacy between two governments that just a short time ago were not on speaking terms.

Prisoner swap

OBAMA said the deal, fully implemented on Saturday, makes the world safer, allows Iran to join the world by lifting key sanctions and is already providing sidebar dividends: The release of five Americans who were being held in Iranian jails and were “final-

11

people or companies in new US sanctions ly coming home.” Three of them touched US territory on Sunday, at an American military base at Ramstein, Germany. The Swiss jet carrying Washington Post reporter Jason Rezaian and the others landed on Sunday evening at the base, where the freed men will undergo medical checks.

Along with Rezaian, the other two were US Marine veteran Amir Hekmati and Christian pastor Saeed Abedini. Also on board were Rezaian’s Iranian wife and his mother; locating them in Tehran on Saturday delayed the departure of the flight.

A fourth Iranian-American, Nosratollah Khosravi-Roodsari, about whom little is known, chose to stay in Iran, US officials said, adding that it was his right to decide where to go. The fifth, student Matthew Trevithick, who was in Iran studying Farsi, left earlier.

With the exception of Trevithick, the prisoners were released in exchange of seven Iranians who were jailed or facing trial in the US. They were charged with violating sanctions by attempting to illegally export prohibited items and will be granted clemency by Obama. They were on a much longer list the Iranians supplied but that was whittled down to include only those who hadn’t committed violent or terrorism-related crimes, US officials said.

Iran’s ‘golden page’

OBAMA said the nuclear deal, under which Iran has dismantled much of its nuclear arms capabilities and been rewarded by the easing of significant economic sanctions, serves as a reminder “of what we can achieve when we lead with

IRANIAN President Hassan Rouhani (left) presents a draft of the country’s new budget and sixth development plan to the Parliament Speaker Ali Larijani in an open session of parliament in Tehran, Iran, on Sunday. The end of nuclear-related sanctions and the flurry of diplomacy that led to the release of Americans held by Iran suggests a new era could be dawning in Tehran. AP/VAHID SALEMI

strength and wisdom.” And he told the Iranian people that they will be able to emerge from dark days of isolation. Iran will receive tens of billions of dollars in frozen assets as well as access to the international banking system and world markets for its oil and gas.

“We’ve now closed off every single path Iran had to building a [nuclear] bomb,” Obama said, speaking from the White House. “We’ve achieved this historic progress through diplomacy, without resorting to another war in the Middle East.”

In Tehran, before parliament, Rouhani lauded a “golden page” in the Islamic Republic’s history that will be the beginning of economic recovery thanks to the injection of cash and trade. “While we always remain ready to defend Iran, we bear the message of peace, stability and security for our region and the world,” he later tweeted.

Iranian officials are hopeful that the lifting of sanctions will help revive the nation’s economy, crippled by the sanctions in recent years, but the low price of oil means its immediate income will be lower than needed or expected.

Obama also announced the resolution of a long-standing claim Iran had brought in the Iran-US Claims Tribunal in The Hague, the international court through which such demands were pursued.

Dating to shortly after the 1979 Islamic Revolution, Iran said it was owed $400 million for military

equipment the deposed government was buying. In the resolution, the US paid the $400 million plus $1.3 billion in interest, which was much less than what the Iranians had sought, Obama said.

Within the framework of the nuclear negotiations, a less hostile relationship developed between the US and Iran following decades of acrimony, especially through the personal contacts of US Secretary of State John F. Kerry and his Iranian counterpart, Javad Zarif.

Many hope that can be translated into cooperation on other persistent conflicts in the region, such as the civil war in Syria.

American officials are also hopeful that the success of the nuclear deal will strengthen the hands of Rouhani and other likeminded moderate Iranians. With Iran, the tone of its rhetoric “very much changed when Rouhani was elected,” an administration official said.

“He had a mandate to engage the West on the nuclear issues.”

Yet, it is clear that change comes slowly in Iran and discord between the two countries remains deep.

New sanctions

ON Sunday, hours after the nuclear deal, the Obama administration slapped new sanctions on Iran’s ballistic missile program in connection with alleged violations of United Nations resolutions last year. The sanctions had been prepared weeks ago but held up until the prisoners were freed. The sanctions target “11

entities and individuals,” including a network based in the Middle East and China and another with suspected links to North Korea, as well as five Iranians who US officials said had worked to secure ballistic weapon components for Iran.

“Iran’s ballistic missile program poses a significant threat to regional and global security, and it will continue to be subject to international sanctions,” Adam J. Szubin, treasury’s undersecretary for terrorism and financial intelligence, said in a statement on Sunday.

The sanctions include a freeze of any assets that these entities and individuals have in the US financial system, as well as prohibitions on doing business with them.

The sanctions are separate from the sanctions against the nuclear program that were lifted this weekend. Iran launched ballistic missiles on two occasions last year in violation of the UN restrictions; Iran says it has a right to use the weapons.

Other US sanctions that remain in place on Iran include those related to activities considered by Washington to be terrorism and violations of human rights. Obama and other US officials insist they can revive other sanctions at any point, if Iran is found to be in violation of nuclear restrictions or any other sanctionable activities.

In swapping the prisoners, the Obama administration has come under criticism among Republicans and others for appearing to

exchange innocents for convicted criminals. But administration officials on Sunday defended the swap, saying it was a one-time, unusual opportunity that they saw arise on the margins of the nuclear talks.

At the start of the discussions, which were usually held in Switzerland, Iran asked the US to release many more Iranians than the seven who were ultimately freed from US custody. Over 14 months of talks, US officials said, they were able to narrow the group to those who’d committed or were accused of nonviolent sanctions violations.

“It became possible to see a way to get the American citizens home,” said one senior administration official, who would not be named discussing the private talks.

Officials acknowledged it was a calculated risk.

“Do you want to leave these Americans in prison at great risk to themselves and great hardships to their families? This was our opportunity to bring them home,” he said. “We also did not have to release any Iranians involved in terrorism or violent crimes.”

The officials said the search will continue for Robert Levinson, a retired Federal Bureau of Investigation agent working on an unauthorized Central Intelligence Agency mission in Iran, who disappeared eight years ago. He has not been found, and Kerry has said the US has no idea where he is. Bloomberg News/TNS and Los Angeles Times/TNS

With wave of Iranian oil imminent, a shudder in Saudi Arabia

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ASHINGTON—A new wave of oil from Iran will flow into a global market awash in oil where prices are plunging to depths not seen in a dozen years. With a historic nuclear deal between Iran, the United States and five other world powers set into place this weekend, a European oil embargo on the world’s seventhlargest oil producer will end.

The impact may be felt widely when crude begins trading in Asian markets on Monday, but the return of Iran to global energy markets created tremors even before the first trade was made. Saudi Arabia’s stock market plunged more than 5 percent on Sunday. Saudi Arabia is the biggest oil producer within Organization of Petroleum

Exporting Countries (Opec), the oil cartel with waning influence to which Iran also belongs.

Saturday was dubbed Implementation Day, when Iran was freed from international sanctions after being deemed as having dismantled most of its nuclear program under the deal established last summer.

“Implementation Day for the nuclear agreement means a new oil day for Iran,” Daniel Yergin, vice chairman of research firm IHS and author of a Pulitzer Prizewinning book on the history of oil, said on Sunday. The oil market has anticipated the unchained tide of Iranian oil for months, and some of that may be reflected in new lows for oil prices in the past week.

US crude oil prices have trended

down for a year and a half, and have fallen almost 40 percent in just the past three months. On Friday, the price slid 6 percent to $29.42 a barrel. That compares with a high of over $100 a barrel in the summer of 2014, and close to $150 per barrel before the US recession. There are predictions of barrels going for $20 soon.

Falling crude prices have led to lower prices for gasoline, diesel, jet fuel and heating oil. This has helped boost consumer spirits and encourage spending, but may also have slowed the overall recovery of the US economy last year as major energy companies slash investments and jobs. The astonishing fall of oil has created jitters globally as economic growth for a

major consumer, China, ebbs. That has rippled to US stock markets as well, over apprehension that the economic contagion will spread.

For Iranian oil, a big question is how much and how fast. Already, some 38 million barrels of oil are in Iran’s floating reserves, ready to enter the market, according to the International Energy Agency (IEA). Iran has signaled it aims to put as much as 1 million to 1.5 million barrels daily into the market. But the IEA estimates that 400,000 to 500,000 barrels a day is more likely; some experts see 300,000 or so barrels coming in during the next six months.

In any amount, “it’s coming at a time when the market is still oversupplied,” said Larry Goldstein,

director of the Energ y Policy Research Foundation, who predicted a decline in oil in 2014.

That could mean even more acute pressure on US oil drilling companies to cut back on new projects and jobs. It’s hard to know precisely what shape Iran’s oil fields are in. The IEA estimates that Iran’s crude oil production capacity at 3.6 million barrels a day, which is 800,000 more than current levels produced.

“We will try to maximize our crude export capacity to Europe and restore 42 percent to 43 percent share in the European market before the sanctions were imposed,” Mohsen Qamsari, director of international affairs at Iran’s national oil company,

was quoted as saying in Iran’s official news agency. The fight for control of global oil markets in Opec and outside of the cartel is entering a new phase, according to Yergin. Nothing is certain, however, as a new global landscape for energy emerges. Among the biggest wild cards right now is Opec member Venezuela, which “is about to fall apart,” said energy economist Philip Verleger.

New economic data from the country’s central bank shows an economy in shambles and annualized inflation surging into triple digits. Experts say Venezuela is dangerously close to just breaking even on the oil it produces, which accounts for 95 percent of export earnings. AP

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The World BusinessMirror

Editor: Lyn Resurreccion • news@businessmirror.com.ph

IS double standards sow growing disillusion

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AZIANTEP, Turkey—Mohammed Saad, a Syrian activist, was imprisoned by the Islamic State (IS) group, hung up by his arms and beaten regularly. Then one day, his jailors quickly pulled him and other prisoners down and hid them in a bathroom.

The reason? A senior Muslim cleric was visiting to inspect the facility.

The cleric had told the fighters running the prison that they shouldn’t torture prisoners and that anyone held without charge must be released within 30 days, Saad told the Associated Press (AP). Once the coast was clear, the prisoners were returned to their torment.

“It’s a criminal gang pretending to be a state,” Saad said, speaking in Turkey, where he fled to last October. “All this talk about applying Shariah and Islamic values is just propaganda, Daesh is about torture and killing,” he said, using the Arabic acronym for IS. Syrians who have recently escaped the IS group’s rule say public disillusionment is growing as IS has failed to live up to its promises to install a utopian “Islamic” rule of justice, equality and good governance.

Instead, the group has come to resemble the dictatorial rule of Syrian President Bashar al-Assad that many Syrians had sought to shed, with a reliance on informers who have silenced a fearful populace.

Rather than equality, society has seen the rise of a new elite class— the jihadi fighters—who enjoy special perks and favor in the courts, looking down on “the commoners” and even ignoring the rulings of their own clerics.

Despite the atrocities that made it notorious, the IS group had raised hopes among some fellow Sunnis when it overran their territories across parts of Syria and Iraq and declared a “caliphate” in the summer of 2014.

It presented itself as a contrast to Assad’s rule, bringing justice through its extreme interpretation of Shariah and providing services to residents, including loans to farmers, water and electricity, and alms to the poor. Its propaganda machine promoting the dream of an Islamic caliphate helped attract jihadis from around the world.

In Istanbul and several Turkish cities near the Syrian border, the AP spoke to more than a dozen Syrians who fled from IS-controlled territory in recent months. Most spoke on condition that they be identified only by their first names or by the nicknames they use in their politi-

30% Territory IS once held in Iraq and Syria was lost to air strikes

cal activism, for fear of IS reprisals against themselves or family.

“Daesh justice has been erratic,” said Nayef, who hails from IS-held eastern Syrian town of al-Shadadi and escaped to Turkey last November with his family, largely because of Russian airstrikes.

“They started off good and then, gradually, things got worse.” He insisted that his last name not be printed, fearing for his safety.

The group has recruited informers in the towns and cities it controls to watch out for any sign of opposition.

“Like under the [Assad] regime, we were also afraid to talk against Daesh to anyone we don’t fully trust,” said Fatimah, a 33-year-old whose hometown of Palmyra was taken over by IS early last year. She fled to Turkey last November with her husband and five children to escape Russian and Syrian air strikes.

IS has also become less able to provide public services, in large part because military reversals appear to have put strains on its finances.

US and Russian air strikes have heavily hit its oil infrastructure— a major source of funds. Over the past year, the group has lost 30 percent of the territory it once held in Iraq and Syria, according to the US-led anti-IS coalition.

Many of those interviewed by the AP said there are lengthier cutoffs of water and electricity in their towns and cities and prices for oil and gas have risen.

Abu Salem, an activist from the eastern city of Deir el-Zour, said public acceptance of IS rule is eroding.

“It has made an enemy of almost everyone,” he told the AP in the

A MEMBER of the Islamic State group’s vice police known as “Hisba” reads a verdict handed down by an Islamic court in Raqqa, Syria, sentencing many they accused of adultery to lashing. A Hisba member “must be gentle and pleasant toward those he orders or reprimands,” says an IS document obtained by the Associated Press. Yet, escaped Syrians complained of the cruelty of the Hisba. MILITANT WEBSITE VIA AP

Turkish city of Reyhanli on the Syrian border.

One sign of the distance between the claims and realities is a 12-page manifesto by IS detailing its judicial system. The document, a copy of which was obtained by the AP, heavily emphasizes justice and tolerance.

For example, it sets out the duties of the Hisba, the “religious police” who ensure people adhere to the group’s dress codes, strict separation of genders and other rules.

A Hisba member “must be gentle and pleasant toward those he orders or reprimands,” it says. “He must be flexible and good mannered so that his influence is greater and the response [he gets] is stronger.”

Yet, the escaped Syrians all complained of the brutal extremes that the Hisba resorts to. One woman who lived in Raqqa said that if a woman is considered to have violated the dress codes, the militants flog her husband, since he is seen as responsible for her. When her neighbor put out the garbage without being properly covered, she said, the woman’s husband was whipped.

Abu Manaf, a 44-year-old from Deir el-Zour, said some clerics challenged the group’s enforcers over their wanton use of strict Shariah punishments like beheadings, stoning to death, flogging and cutting off limbs.

More moderate clerics in IS argued that such punishments can only be implemented under specific conditions. They also complained about the jihadis’ custom of displaying bodies of the beheaded in public as an example to others, violating Islamic tenets requiring the swift burial of the dead.

“Many of those moderate clerics disappear, are killed or jailed for crimes they did not commit,” said Abu Manaf, who left Deir el-Zour last November, then stayed in the IS group’s de facto capital, Raqqa, for three weeks before he reached Turkey.

Saad’s account of his imprisonment in his home city of Deir el-Zour reflected the tensions between the fighters and some clerics.

He was arrested because of his media activism, reporting on the anti-Assad opposition. IS suspected him of belonging to the rebel Free Syrian Army, which is fighting the extremists. The day the cleric came to inspect the prison—set up in a former police station—he heard the cleric asking the guards if the prisoners were getting enough food and water, and whether they were being beaten, Saad said.

On another occasion, a cleric and a judge visited and spoke to the prisoners in their cells. Saad said they told him to write on a piece of paper

his name, why he’d been jailed and whether he had been tortured or made to confess under duress. He wrote that he had not been beaten, because he knew the guards would punish him if he said he had been, Saad said.

After five months in custody, Saad said he secured his release by agreeing to do media work for IS. For three months, he helped put together videos and other propaganda before escaping to Turkey.

The Syrians interviewed in Turkey said that in IS courts the judges often show a bias toward IS operatives in any legal dispute with the general public. Judges justify the bias by pointing to Quranic verses or sayings of the prophet Muhammad, including “God prefers those who fight in jihad over those who sit.” Often, IS members refer to the general population by the dismissive term “al-awam,” Arabic for “the commoners.”

Hossam, who owned a women’s clothes shop in Raqqa, said IS members receive perks that sharply set them apart from everyone else. In many cases, young men join the group to escape poverty or protect themselves from IS excesses, he and others said. He insisted that his last name not be printed, fearing for his safety.

“Those who join Daesh receive a

step up in the social ladder,” he told the AP in Istanbul. “Daesh men drive luxury cars and eat at the best restaurants and whoever has a friend or a relative with Daesh has a better life.”

One perk that IS members avail themselves of is the chance to marry local women. Several of the Syrians interviewed by the AP said families with daughters often came under pressure to marry them off to fighters, which has led many to smuggle daughters to Turkey.

Khatar, a 26-year-old who spoke in Lesbos, Greece, making her way to Western Europe, said she has two younger sisters back in Raqqa, and jihadis “have been knocking on our doors at least once a month to ask for their hands in marriage.” Her father lies to them and tells them he doesn’t have unmarried daughters, “but they keep coming back.”

But some take the opportunity to marry an IS member because the benefits lift the whole family out of the “al-awam” class.

Khatar said a 17-year-old daughter of one of her neighbors married a Saudi jihadi. When Khatar went to congratulate her, she found her loaded with expensive clothes and jewelry as a dowry. “She seemed very happy with her new, elevated social status,” Khatar said. AP

Clinton, Sanders clash on guns, health care Man dies in French drug trial

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HARLESTON, South Carolina—Democratic presidential candidates Hillary Clinton and Bernie Sanders tangled repeatedly in Sunday night’s presidential debate over who’s tougher on gun control and Wall Street and how to steer the future of health care in America. It was the last Democratic matchup before primary voting begins next month and both sides were eager to rumble as polls showed the race tightening in the leadoff states of Iowa and New Hampshire.

Clinton rapped Sanders, the Vermont senator, for voting repeatedly with the powerful gun lobby, and then welcomed his weekend reversal of position to support legislation that would deny gun manufacturers legal immunity.

Sanders, in turn, said Clinton’s assertion that he kowtowed to the gun lobby was “very disingenuous” and pointed to his lifetime rating of a D minus from the National Rifle Association.

On health care, Sanders released his plan for a government-run single-payer plan just hours before the

debate and used his opening statement to call for health care “for every man, woman and child as a right.”

Clinton, by contrast, urged less sweeping action to build on President Barack Obama’s health-care plan by reducing out-of-pocket costs and control spending on prescription drugs. She suggested Sanders’s healthcare plan would impose a heavier tax burden on the middle class.

The two tangled over financial policy, too, with Sanders suggesting Clinton won’t be tough enough on Wall Street given the big contributions and speaking fees she’s accepted. Clinton, in turn, faulted Sanders’ past votes to deregulate financial markets and ease up on federal oversight.

Clinton worked aggressively to associate herself with President Obama, claiming credit for her role in the runup to the Iran nuclear deal as well as praising the health-care law.

Turning to national security, both Sanders and Clinton voiced strong support for Obama’s diplomatic overtures to Iran and opposition to sending US ground troops into Syria.

Clinton defended her outreach to Russia early in her term as secretary of state, but hesitated when asked to describe her relationship with Vladimir Putin, whose return to the Russian presidency heralded the worsening of US-Russian relations.

“My relationship with him—it’s interesting,” Clinton said to laughs in the debate hall. “It’s one, I think, of respect.” But she added it was critical to constantly stand up to Putin, describing him as a bully who “will take as much as he possibly can.”

Clinton also shed some light on what role her husband, former President Bill Clinton, would play in her administration. Kitchen-table adviser, perhaps?

“It’ll start at the kitchen table— we’ll see where it goes from there,” she said with a laugh.

Sanders was asked about his previous criticism of Bill Clinton’s past sexual behavior. He called the former president’s behavior “deplorable” but said he wants to focus on issues “not Bill Clinton’s personal life.”

Clinton maintained a tight smile throughout that exchange, and nod-

ded as Sanders said the focus should be on issues.

The debate over gun control—an ongoing area of conflict between Clinton and Sanders—took on special import given the setting: The debate took plan just blocks from the Emanuel African Methodist Episcopal Church where nine parishioners were killed during a Bible study last summer. Gun control has emerged as a central theme in the race, with Clinton citing the issue as one of the major differences between the candidates.

The third participant in the debate, former Maryland Gov. Martin O’Malley, tried persistently to insert himself into the conversation. He focused on his record as Maryland’s governor and accused both Clinton and Sanders of being inconsistent on gun control.

Both Clinton and Sanders are competing for black voters in South Carolina, which hosts the fourth primary contest.

The debate was sponsored by NBC, YouTube and the Congressional Black Caucus Institute. AP

P

ARIS—A man died in a French hospital on Sunday after taking part in an experimental drug trial for a painkiller, and five other participants remain hospitalized after one of France’s most troubling medical incidents.

French prosecutors have launched a manslaughter investigation into the unusual case, which shined a spotlight on the practice of testing drugs on paid, healthy human volunteers. Scores of others were also given the drug.

The Portuguese pharmaceutical company testing the drug, Bial, said in a statement that it’s working with health authorities to determine what caused “this tragic and unfortunate situation.”

The Rennes University Hospital in western France announced the death in a statement, but didn’t identify the patient, who had already been in a state of brain death.

He was among six male volunteers between 28 and 49 hospitalized last week after volunteering to take the drug.

French health authorities have said three of the hospitalized volunteers face possible brain damage.

The Paris prosecutor’s office said the investigation was expanded after the death to include potential manslaughter charges.

The trial, which began on January 7,

involved 90 healthy volunteers who were given the experimental drug in varying doses at different times.

The hospital said it has contacted the 84 other volunteers exposed to the new painkiller. Ten of those volunteers underwent medical exams on Saturday, but the hospital found no anomalies, the statement says.

It said another five will have medical exams closer to their homes, but didn’t say whether the others are being monitored or tested. The drug was given orally to healthy volunteers as part of a Phase 1 trial by Biotrial, a drug evaluation company based in Rennes, on behalf of Bial.

Health Minister Marisol Touraine said that in addition to treating pain, the drug was intended to ease mood and anxiety troubles, as well as motor problems linked to neurodegenerative illnesses, by acting on the endocannabinoid system.

In this system, natural brain compounds act on specific receptors to exert their effects. Touraine said the drug was not based on marijuana or cannabis, as some reported.

Bial said clinical trials started last June following toxicology tests and that 108 healthy people had already taken part in trials with no moderate or serious reactions. AP

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Tuesday, January 19, 2016

A9

Other life forms: First flowers bloom on International Space Station T

HE first flower grown in space has bloomed.

National Aeronautics and Space Administration (Nasa) astronaut Scott Kelly, International Space Station gardener, shared photos of the prized zinnias this weekend.

“Yes, there are other life forms in space,” Kelly said on Twitter.

The story of the delicate space flowers is fraught with ups and downs, similar to gardens on Earth.

Just last month, the small crop wasn’t looking good. The leaves and buds were covered in mold because of a leak in the plant container.

“I’m going to have to channel my inner Mark Watney,” Kelly posted then, referencing the potato-growing skills of the astronaut in The Martian.

An unplanned spacewalk delayed fixing the problem in the space garden and by December 22 they were dying, Nasa’s Trent Smith said. Kelly had to act quickly to cut away the moldy leaves and dry the plant chamber.

By January 12 the plants were on the rebound and some buds had sprouted, Kelly said.

The bright zinnias are not the first crop of the Veggie experiment, but the lessons from their growing process could be applied to tomatoes, also a flowering planet, Smith said.

Red romaine lettuce was the first crop from the Veggie plant growth facility, installed in May 2014. Kelly and Astronaut Kjell Lindgren snacked on the second crop of lettuce in July 2015; the first crop was sent back to Earth for analysis.

The third round of the experiments will include Chinese cabbage and more lettuce. TNS ZINNIA flowers on the International Space Station seen on January 16 are the first flowers grown in space as part of the Veggie facility and experiment. SCOTT KELLY/NASA/TNS

POPE VISITS SYNAGOGUE, HITS RELIGIOUS VIOLENCE

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OME—Pope Francis denounced all religious-inspired violence during a visit to Rome’s main synagogue on Sunday, joining the oldest Jewish community in the diaspora in a sign of interfaith friendship at a time of Islamic extremist attacks around the globe.

During a visit marked by tight security and historic continuity, Francis also rejected all forms of anti-Semitism and called for “maximum vigilance” and early intervention to prevent another Holocaust.

Francis joined a standing ovation when Holocaust survivors, some wearing striped scarves reminiscent of their camp uniforms, were singled out for applause at the start of the ceremony. And he elicited an ovation of his own when he paused in his remarks to acknowledge the survivors in the synagogue’s front row.

The visit comes amid a spate of Islamic extremist attacks in Europe, Africa, the Middle East and elsewhere—violence which Francis has repeatedly condemned as anathema to religion, particularly given that Christians and religious minorities have often been the target.

“Violence of man against man is in contradiction to every religion that merits the name, in particular the three monotheistic religions,” Francis said, referring to Christianity, Judaism and Islam.

“Every human being, as a creature of God, is our brother regardless of his origins or religious belief.”

His sentiments were shared by members of the Jewish community, who sought to hold up the visit as a sign of interfaith friendship in the face of Muslim extremism.

“Today, the sad novelty is that after two centuries of disasters produced by nationalism and ideologies, violence has come back and it is fed and justified by fanatic visions inspired by religion,” Rome’s chief rabbi, Riccardo Di Segni, told the pope.

“A meeting of peace between different religious communities, as the one that is taking place today here in Rome, is a very strong sign against the invasion and abuse of religious violence.”

Francis’s visit is meant to continue the tradition of papal visits that began with Saint John Paul II in 1986 and continued with Benedict XVI in 2010. It also highlighted the 50th anniversary of the revolution in Christian-Jewish relations sparked by the Second Vatican Council, the 1962-1965 meetings that brought the

church into the modern era.

Among other things, the council document “Nostra Aetate” repudiated the centuries-old charge that Jews as a whole were responsible for the death of Christ.

Francis said the declaration amounted to a “’yes’ to the rediscovery of the of the Jewish roots of Christianity and a ‘no’ to every form of anti-Semitism and a condemnation of every insult, discrimination and persecution that is derived from it.”

Francis said several times that Jews were the “elder brothers” of Christians, repeating the words first uttered by John Paul during his historic visit to the synagogue 30 years ago. But he added that Christians also had “elder sisters” in the Jewish faith. Francis began his visit by laying a wreath at a plaque outside the synagogue marking where Roman Jews were rounded up by the Nazis in 1943 and at another marking the slaying of a 2-yearold boy in an attack by Palestinians on the synagogue in 1982.

He met with members of the boy’s family and survivors of the attack before entering the synagogue to rounds of warm applause, which continued during his speech, interrupting him several times.

Francis, an Argentine Jesuit, has a longstanding friendship with the Jewish community in Argentina from his time as archbishop of Buenos Aires. At the same time, recent Vatican developments have displeased some in the Jewish community, including the Vatican’s recent treaty negotiated with the “state of Palestine.”

Such issues were left unsaid on Sunday, though Jewish leaders made clear they would like for the pope and the Vatican as a whole to acknowledge the special link Jews have with the land of Israel.

Francis recalled that during the Holocaust, 6 million Jews were “victims of the most inhuman barbarism, perpetrated in the name of an ideology that wanted to replace God with man.”

“The Shoah teaches us that we must have maximum vigilance, to be able to intervene quickly in defense of human dignity and peace.”

The comments were notable because Benedict’s 2010 visit was marked by his defense of Pope Pius XII, the World War II-era pope accused by many Jews of having failed to do enough to protect Jews from the Holocaust. The Vatican has long maintained that Pius used behind-the-scenes diplomacy in a bid to save Jewish lives.

Francis made no mention of Pius. AP

UN: $40B needed to aid people in war, disasters

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UBAI, United Arab Emirates—An estimated $40 billion is needed annually to help the rapidly growing number of people needing humanitarian aid as a result of conflicts and natural disasters—and one possibility to help fill the $15-billion funding gap is a small voluntary tax on tickets for soccer games and other sports, concerts and entertainment events, airline travel, and gasoline, a UN-appointed panel said.

The panel’s report on humanitarian financing, launched on Sunday by UN Secretary-General Ban Ki-moon, says the world is spending around $25 billion to provide life-saving assistance to 125 million people devastated by wars and natural disasters—more than 12 times the $2 billion that was spent in 2000.

The nine-member panel calculated that an additional $15 billion is needed annually to reduce suffering and save lives. It warned that if current trends continue, the cost of humanitarian assistance will rise to $50 billion by 2030.

“This is an age of mega-crises,” Ban said at the launch event, which was held at a desert site in Dubai that serves as a logistical hub for UN emergency humanitarian supplies and international relief efforts.

The 31-page report said that despite $25 billion being spent last year to provide life-saving assistance to people around the world, 1.6 million Syrian refugees had their food rations cut and 750,000 Syrian refu-

gees could not attend school.

“While record sums are being given to the noble cause of humanitarian action, generosity has never been so insufficient. We cannot go on like this,” Ban said, adding that humanitarian assistance is now the UN’s costliest activity, surpassing peacekeeping missions.

The report focuses on three solutions for how to reform humanitarian aid: mobilizing additional funds, particularly from the private sector; shrinking the need for aid through prevention and quicker resolution of problems, and improving the efficiency of assistance to reflect the needs of people rather than the needs of aid organizations.

It calls for donors and aid organizations to come together in “a Grand Bargain” in which donors provide more cash, long term, with fewer strings, and aid organizations are more transparent so that everyone can “follow the money.”

The report says that today’s mas-

sive instability and its capacity to cross borders, demonstrated by the flight of people from Syria and other conflict areas to Europe, makes humanitarian aid a global public good.

“What we ought to do is morally right, but it is also in our own selfinterest because trouble in the world travels, and you never know when it will come and knock at your door,” panel cochairman Kristalina Georgieva, the European Commission vice president for budget and human resources, said in Dubai.

The report recommends that at the first UN humanitarian summit, to be held in Istanbul in May, governments voluntarily sign on to the concept of a “solidarity levy” to create a steady flow of aid.

The report gives the example of a small levy on airline tickets, initially proposed by France, which raised €1.6 billion between 2006 and 2011 from just 10 participating countries—Georgieva estimated this at $2.3 billion—to help fund diagnosis and treatment for HIV/AIDS, malaria and tuberculosis in low-income countries.

Georgieva said in a video briefing from Brussels before the report’s release that the panel couldn’t agree on the specifics of a levy because some members are against taxation. But she said she is “more optimistic on a voluntary levy, especially combined with social responsibility.”

She said the panel talked about a small tax on “high-volume transaction businesses” like Uber, concerts, entertainment, movies and sports and has been talking to some “potential players” including Fédération Internationale de Football Association, the governing body of world football.

She said people probably wouldn’t feel a 5-cent or 10-cent addition to a ticket or a ride, but the money generated could have a major humanitarian impact.

The report also calls for governments with greater wealth to provide more aid; for the humanitarian community to “harness the

$25B Being spent worldwide for 125 million people victims of wars and natural disasters

power of business to deliver its key skills and capabilities,” including by supporting the delivery of aid and creating jobs, and for Muslim countries to use “Islamic social finance” to help meet humanitarian needs. The report said that 31 out of 33 active conflicts today occur in Muslim-majority countries.

The report noted that through zakat, the annual charitable donation that is religiously required as a basic tenet of the Islamic faith, Muslims worldwide raised between $232 billion and $560 billion in 2015. However, the report said there is no coordination mechanism or independent body to help channel these funds effectively at the global level.

To improve aid delivery, the panel calls for an end to competition between aid organizations and between humanitarian and development agencies.

To shrink the need for aid, the panel calls for world leaders to commit to preventing and resolving conflicts and to increasing investments in reducing the risk of natural disasters.

“Unfortunately, it is easier to deliver humanitarian assistance than it is to invest in political solutions,” the report said. AP

A10 Tuesday, January 19, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Do not depend on the US

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HERE is an advantage to being young—energetic, enthusiastic and ambitious for the future. The advantages of being more mature are wisdom of experience, a historical perspective and a greater understanding of how conditions work.

The Philippines is a young country. While we date the end of Philippine prehistory by the Laguna Copperplate Inscription from 900 A.D. The Skirrid Mountain Inn in Wales is documented to have opened its doors for business in 1100 A.D. It is all about perspective.

But while the Philippines’s ancient history is long, it is our recent history that is limited. As one of our colleagues recently said, “You learned about that from reading Wikipedia; I learned about it from living it.”

By almost any measure—technological, financial, geopolitical—the 20th century was the American century. The Philippines was a part of America’s 20th-century journey. However, most of our personal experience and perspective of the US begins post-World War 2. That was the golden age of the American century with unprecedented economic growth.

Therefore, we do not understand the down times, as well as we should.

The US and Europe lived the Great Depression of the 1930s. Asia and the Philippines have only read about it. When the depression hit the world, the Philippines was an agricultural nation, selling its products primarily to the US duty-free. The price of these agricultural goods fell, but it was actually a benefit to ordinary Filipinos as food prices decreased. Further, Washington provided virtually all of the funding for the large middle-class bureaucracy and for major construction projects.

Being left out of direct knowledge of what led to the Great Depression helped speed Asia toward its own financial crisis in 1997. We face a similar situation today.

The government is still depending on the US, both militarily and economically in many ways, without seeing the warning signs that may make that trust in “Uncle Sam” misplaced.

Certainly, our financial professionals are well-educated and knowledgeable. But their collective wisdom is still grounded in the US, always being able to effectively deal with its problems like the oil crisis of the 1970s, and even the recent US Great Recession.

This time is may be different.

When the US Federal Reserve (the Fed) raised its interest rates last month, there was a collective sigh of relief, as certainly the Fed knows exactly what it is doing and has everything under control. However, the US economy is not strong with the current with the Federal Bank of Atlanta predicting a fourthquarter grow of a meager 0.6 percent.

The point is that the last time the Fed raised interest rates in August 1936, after prolonged low rates and economic growth was very low within six months, the US went back into a severe recession. The US stock market fell 43 percent, even as the US dollar strongly appreciated.

Shaky start, cautious optimism Manny B. Villar

THE ENTREPRENEUR

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HIS month has seen a shaky start for the economy, not only for the Philippines, but for the whole world. Everybody is predicting slower growth for developing countries in 2016.

This tells us how important external developments are to a president, particularly the president that will be elected in May. His or her performance will depend on what is going on in other countries, given the linkages in the global economy.

If the other countries, particularly the Philippines’s peer economies, move fast, then we must move fast.

If they slow down, the president must be able to meet the challenge to buck the trend.

Policy-makers should be alert in anticipating and analyzing changes in the global economy and their possible effect on the Philippines, so they can craft appropriate countervailing measures.

No less than the International Monetary Fund (IMF) expects the growth of the global economy in 2016 to be “disappointing and patchy.”

In an Agence France Presse report based on an article in the German business daily Handelsblatt, IMF Managing Director Christine Lagarde cited rising interest rates in the United States, the economic slowdown in China, the persistent fragility of the financial system in some countries and the effects of low

prices on oil-producing countries.

She also said that low productivity, aging populations and the fallout from the global financial crisis make the medium-term outlook cloudy.

Other institutions present similar projections on the global economy for this year. In its January 2016 Global Economic Prospects (GEP) report, the World Bank says simultaneous anemic growth in major emerging markets will weigh on global growth.

However, the World Bank still expects the global economy to grow by 2.9 percent in 2016, up from 2.4 percent in 2015, as advanced economies accelerate.

Growth in China is forecast to slow down to 6.7 percent in 2016, from 6.9 percent in 2015. The slowdown in China will affect the growth of exporting countries like the Philippines, according to the United Nations Economic and Social Commission for Asia and the Pacific (Unescap).

Unescap lowered its growth forecast for the Philippines for 2016 to 6.3 percent, from 6.4 percent last December.

For its part, the Bangko Sentral ng Pilipinas (BSP) expects 2016 to

be both “riveting and challenging,” because of the volatile financial conditions abroad, including the sharp drop in the Chinese equities market, which affected markets around the world. In a speech at the Rotary Club of Manila this month, BSP Governor Amando M. Tetangco Jr. said the Philippines must remain watchful of threats to stability.

The most immediate impact of the China slowdown was felt by the local stock market. On January 11 the Philippine Stock Exchange index (PSEi) closed at 6,288.26, down 287.17 points from the previous day.

According to the PSE, it was the lowest PSEi close since February 18, 2014, when it closed at 6,193.97 points.

In a report, the BSP said foreign portfolio investments, which include stocks traded on the PSE, recorded net outflows of $600 million in 2015, almost twice the $310million net outflows in 2014. The outflows were mainly accounted for

by PSE-listed securities, due mainly to profit taking, as well as concerns on the then imminent interest rates liftoff in the US and slowdown of the Chinese economy.

To make matters worse, even the much-needed long-term capital in the form of foreign direct investments (FDI) is not flowing in as much as in other peer countries.

In its GEP report, the World Bank noted that the Philippines continued to lag behind its neighbors in attracting FDI. The World Bank said Indonesia saw its highest FDI inflows since 1990, reaching $23 billion in 2014.

Thailand saw its FDI rise to precrisis levels in 2014, while in

A new dawn for Taiwan and China

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SWEEPING victory for Taiwan’s independence-minded Democratic Progressive Party in this weekend’s elections seems to guarantee a renewal of tensions with mainland China, which considers the island part of its sovereign territory. In fact, the vote could put relations on a more solid footing, if both sides exercise moderation in the coming months.

However striking the vote, this wasn’t a call for independence. While fewer and fewer Taiwanese want to reunify with the mainland, not that many more favor de jure independence—only about a fifth of the population, according to recent polls. Indeed, while opinions vary about how closely Taiwan should or shouldn’t integrate its economy with the mainland’s, there’s little doubt most Taiwanese would like to maintain the ambiguous political status quo. That means threats from Beijing

and adventurism from Taiwan’s new rulers are equally likely to provoke a popular backlash.

Neither side can afford that. Chinese President Xi Jinping is wrestling with a difficult economic transition that’s roiling global markets. And President-elect Tsai Ing-wen staked her campaign on revitalizing Taiwan’s contracting economy. That’s going to require maintaining stable relations with the mainland—which absorbs around 40 percent of Taiwan’s exports—even as she seeks to expand trade with other nations.

China could easily block any bid by Taiwan to join the Trans-Pacific Partnership, for instance—a pact that could, otherwise, provide a major boost to the island’s economy.

Xi already made a gesture of goodwill in meeting with Taiwan’s incumbent President Ma Ying-jeou last November—the first such summit since 1945—even if his goal was

to bolster the electoral strength of Ma’s Kuomintang Party. Any credit Xi might have earned, though, would quickly be lost if he now sought to isolate the leader Taiwanese have chosen. It would be more productive to leave open the option of sitting down with Tsai—who handled relations with the mainland under her party’s previous administration—after her inauguration in May. If Xi begins now to establish communication channels, it could both avoid misunderstandings and help Tsai rein in radicals in her own party, who might otherwise be emboldened by the size of their victory.

Tsai has, so far, been vague about her views on ties with the mainland. She’s refused to embrace the so-called 1992 Consensus, under which the two sides agreed that there was only “one China,” but disagreed about what that meant. Her foremost task in the interregnum period

Vietnam, FDI flows continued to be robust and were directed to labor-intensive manufacturing production.

Based on the latest report from the BSP, net FDI inflows improved by 1.4 percent to reach $451 million in October 2015, compared to $445 million in the same month in 2014.

For the first 10 months of the year, however, net FDI inflows totalled $4.99 billion, down 4.9 percent from $5.25 billion year-on-year. The BSP is targeting total net FDI of $6 billion for 2015. For 2016, the target is for a modest improvement to $6.3 billion.

Actually, net FDI inflows breached the $6-billion mark in 2014, when it reached $6.2 billion.

Still, other major economies of the Association of Southeast Asian Nations continued to attract more capital than the Philippines. Data from the United Nations Conference on Trade and Development show that in 2014 Thailand attracted $12.6 billion. Vietnam received $9.2 billion FDI during the same year, according to a separate report from the World Bank. In 2012 the government announced a target of $10 billion in annual FDI. Based on its performance, however, the $10-billion target may remain an elusive dream for the Philippines.

These developments are among the factors that make January a shaky start for 2016. However, I am optimistic, despite the uncertainties on the external front, about the Philippine economy’s prospects for 2016.

To be continued For comments, e-mail mbv.secretariat@ gmail.com or visit www.mannyvillar.com.ph.

should be to find a new formula, one that is acceptable to Xi, as well. The fact is, while her supporters have valid concerns about the “hollowing out” of Taiwan’s economy as entrepreneurs and businesses shift to the mainland, the island would probably benefit from opening up further to Chinese investment and services, as South Korea and other Asian countries have. Tsai’s challenge is to lay the political groundwork for that opportunity.

The new administration may, indeed, pose a greater possibility for friction with China, but it also offers the potential for a more stable rapprochement. In 2014 when Ma attempted to ram through a services trade pact with the mainland, angry students occupied the legislature.

Tsai has more credibility to make deals with China, and both she and Xi would do well to take advantage of the opening. Bloomberg View

Opinion BusinessMirror

opinion@businessmirror.com.ph

Oligarch, cartel and rent-seeking

Filipino giving John Mangun

OUTSIDE THE BOX

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F you are going to bash the Philippines and its economics—which seems to be a new vocation for some people—it probably makes sense to use terms that are universally “evil.” You should also throw these terms around in a general sense, instead of giving concrete examples that apply to the Philippines. These are oligarch, cartel and rent-seeking.

Oligarch is an ancient Greek term to describe economic or political power held by the few to the oppression of the many. The Athenians in the fourth century B.C. were so concerned about this that they selected government officials using a lottery system rather than an election. The way the current Philippine election is going, maybe that is not a bad idea. The Greeks worried that a professional governing class would arise and use their positions for their own benefit.

It took Filipinos 2,400 years to invent the word trapo to describe these political oppressors.

Depending on you who ask, 158, 64, 13, 10 or five families actually control the world. You can probably apply the same number to the Philippines.

However, from an economic standpoint an oligarchic system, is bad because it limits competition to the detriment of the consumer and the ordinary citizen. There are a limited number of families or corporations that have an outsized influence and even control on business in the Philippines.

The best example might be found in the banking industry.

Yet, in reality, the banking sector is fiercely competitive. When you see branches of four major banks across the street of one another, that does not indicate a lack of competition regardless of the oligarchic nature of the business. In addition, numerous evaluations from international institutions have shown the Philippine banking system to be the strongest on earth. Maybe an oligarchic system where the banks’ management owns the banks might be beneficial.

When Lehman Brothers collapsed and started the current global financial crisis, there were not any actual “Lehman brothers” running the bank who lost their fortunes; only bankers who lost their multimillion-dollar annual bonuses.

What is interesting also is that the Filipino oligarchies also have stakes in property development.

The Philippine property sector is also fiercely competitive with at least a dozen “top” developers and at least as many smaller but formidable property companies.

A cartel is formed by competing firms to control the market and prices, but, most important, to keep competitors out. We speak of a “rice cartel” that controls prices and, of course—everyone’s favorite cartel —the Philippine telecoms industry with the market shared by two companies.

We are told it is this telecoms cartel that keeps service low and prices high. Look at Japan. There are many cell-phone companies. But

then again, in Germany, Deutsche Telekom holds an 82-percent market share, as does SingTel in Singapore.

In France two companies hold a combined 77-percent share. In the US three companies hold an 85-percent market share.

The most noncompetitive business in the Philippines is beer, with San Miguel (holding more than 80 percent of the market) and Asia Brewery cornering virtually 100 percent of the market. Why aren’t we protesting that “cartel”?

Rent-seeking is when a company or individual gets profits or economic gain without creating any wealth for the society. The classic example is the feudal lord that blocks the river that flows through his property and charges people to cross it. But rent-seeking is the most misused economic term even by supposedly intelligent and knowledgeable people.

Rent-seeking in its worst form is a company that “bribes” government to pass a law providing government subsidies to consumers for buying a particular product.

The worst examples of this are found in “renewable energy” or in paying government officials to build a road on a particular property. Shopping malls gain profits from rent but also create an infrastructure that creates jobs and wealth.

Using these terms incorrectly detracts from trying to actually build an economy with less wealth and income disparity, and to provide wealth creation for a great number of people.

However, the Philippines does have a major problem—as do all nations in the current economic environment—with oligarch, cartel and rent-seeking.

The No. 1 oligarch in the Philippines controls 22 percent of the total economic output of P13.2 trillion for 2016. The Philippine government budget for 2016 of P3 trillion is equal to 22 percent of the gross domestic product.

The Philippine government is the largest cartel, deciding who can or cannot compete, setting taxi and jeepney fares and choosing those who can or cannot import rice. The government, like the cartels, picks the winners and the losers and creates other cartels, as in telecoms.

And which company or industry could possibly compete with the government for gaining economic reward without creating an equal amount of wealth for society?

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com.

Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.

Sen. Edgardo J. Angara

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HE 2011 State of Philanthropy in Asia report by the Economist Intelligence Unit (EIU) noted that among the five economies studied (China, Hong Kong, Indonesia, the Philippines and Singapore), the Philippines had the longest recorded history of organized giving.

As early as the 16th Century, the Catholic Church channeled much of the endowments from the wealthy to the obras pias—literally, pious works— which were charitable foundations that took care of orphans, the sick and the elderly, and also helped finance and underwrite the cargo of the ManilaAcapulco Galleon Trade.

After the trade ended in 1815, some obras pias funds were funneled to the first banks of the Philippines, including the Monte de Piedad (Mount of Piety), founded by the Spanish Franciscan friar Felix Huerta. With the backing of the Archdiocese of Manila and

S

Cameron’s government has declared there’s no chance of it happening.

Nevertheless, British law requires parliament to debate any petition receiving 100,000 signatures.

Whether Trump should be banned is a question that can be dispensed with quickly, and then maybe that famous British talent for oratory can be devoted to a reaffirmation of the value of free speech.

The petition’s supporters are appalled—understandably so—

University in Iloilo City with a sizable grant from American philanthropist John D. Rockefeller.

Today, institutional giving in the Philippines remains dynamic. A 2014 Singapore Management University study on philanthropy in Southeast Asia finds that the Philippine philanthropic sector is fairly mature compared to its neighbors, noting that the Constitution explicitly recognizes civil society’s developmental role.

Since Forbes Asia started its annual listing of Asian philanthropy heroes in 2004, Filipino entrepreneurs and taipans have consistently been cited.

Techno-entrepreneur Dado Banatao was recognized in 2015 for making a $1.5-million grant to the Philippine Development Foundation, which he set up to help reduce poverty through education, innovation and entrepreneurship.

In 2014 Enrique Razon Jr. of the International Container Terminal Services Inc. was cited for initiating efforts to rebuild areas devastated by Supertyphoon Yolanda, including the Tacloban airport, and raising $5.7 million for a hospital.

In the same year, Ricardo S. Po. Sr., founder and chairman of the Century Pacific Group, was recognized for his

work with the CPG-RSPo Foundation that helps serve up to 3 million meals a year to schoolchildren.

Last December the SM Foundation— the social development arm of the SM group of companies—was given the Outstanding Exemplar in the Private Sector Award for the various programs in education, health care, livelihood, shelter and environmental protection that the foundation has been supporting since 1983.

The Outstanding Exemplar Award is given out annually by the media forum Bulong Pulungan to individuals from both government and private sector who have made significant contributions to society.

To celebrate his 60th birthday last year, Hans Sy, SM Prime Holdings president, inaugurated a six-story building in Paco, Manila, which he donated to CHILD Haus (Center for Health Improvement and Life Development)—the halfway house run by beauty expert Ricky Reyes for indigent children stricken with cancer.

Filipino philanthropy is alive and vibrant.

E-mail: angara.ed@gmail.com.

Should Carpio inhibit from Poe DQ case?

rate-rebasing mechanism that would allow the concessionaire to adjust its water rates once every three years.

Maynilad has been allotting some P10 billion yearly for its operations, including projects to improve water delivery to customers and expand service to cover more areas. Because such improvement or expansion programs take years to finish, the rate-rebasing process done once every three years is intended to make Maynilad plan its financial requirements and recover its multibillionpeso capex or investments.

The water situation was so dire two decades ago that Congress passed the National Crisis Act (Republic Act 8041) in 1995, empowering the government to modernize MWSS’s debt-saddled and inefficient operations by privatizing them.

Under the privatization program, MWSS’s franchise area—covering the entire Metro Manila and Rizal plus parts of Cavite—was split into the West and East zones, and its many contractors and service providers were replaced by just one exclusive contractor or concessionaire for each zone.

Consistent with the privatization program prepared by MWSS with the Department of Public Works and Highways (DPWH) and two consultants— the World Bank ’s International Finance Corp. and NERA Economic Consulting—the concessions were publicly auctioned off in 1997, with Maynilad and Manila Water winning the concessions for the respective West and East zones.

However, financial and legal troubles forced the original West Zone concessionaire—Benpres Holdings Corp.—to return the concession to MWSS in 2004. Two years later the Metro Pacific Investments Corp.DMCI consortium won the exclusive rights to provide water and wastewater services to the West Zone.

To attract big-time investors, the government offered provisions in the 1997 privatization contracts allowing would-be concessionaires to recover their multibillion-peso investments in the course of their long-term service contracts. Among these provisions was allowing concessionaires to pass on certain corporate taxes to their customers in their monthly bills.

WATER consumers in Metro Manila

and portions of Cavite can expect sufficient water supply in the years ahead, as Maynilad Water Services Inc. (MWSI)—one of the two water concessionaires in the area—is spending a total of P13.6 billion on capital expenditures (capex) this year.

Maynilad’s planned capex spending will benefit consumers and the economy.

One, its huge outlay for infrastructure works will ensure a steady, adequate supply of clean water for West Zone consumers and allow it to launch pipeline-expansion projects for city folks in remote communities who continue to buy expensive water from informal suppliers or vendors.

Of Maynilad’s capex budget, P3.9 billion will go to the construction, rehabilitation and upgrade of reservoirs, pumping stations and water-treatment plants; P2 billion for non-revenue water (NRW) reduction programs, like leak repairs and pipe replacements; P4.6 billion for the construction of sewage-treatment plants or improvement of existing plants in Manila, Quezon City and Cavite; and P1.2 billion for building conveyance systems and development of sewerage facilities in Quezon City and Valenzuela.

The rest of the budget will be used, among others, to modernize Maynilad’s data management and information systems, develop new water sources, and refurbish its facilities in the Bicti basins and Ipo Dam. Two, Maynilad’s infrastructure works will help sustain the domestic economy as its significant capex spending is projected to create 41,243 jobs in its concession area.

And three, Maynilad’s capex budget underscores its firm commitment to consumer welfare, considering that it has chosen to set aside such a big amount to improve and even expand its water-delivery services despite its ongoing legal tussle abroad with the Manila Waterwork and Sewerage System (MWSS), which involves the regulatory agency’s continued rejection for three years now of key provisions of their 1997 privatization deal.

Maynilad filed two successive arbitration cases before the International Chamber of Commerce (ICC) in Singapore last year following the refusal of the MWSS to follow the terms of the firm’s original concession contract with the government in 1997 on a

Britons are not seeking to bar those who say quietly what Trump says loudly, and for good reason: Democracies require tolerance of widely diverging political viewpoints. Moreover, attempts to suppress them are inevitably counterproductive. Trump, like an author whose book is banned, could not ask the British public for better publicity.

British policy allows the Home Office to bar foreigners who engage in “unacceptable behaviors.” Among

those caught in this dragnet is conservative American radio host Michael Savage, whose nativist views have been deemed a threat to public security by the UK. Maybe those MPs can also debate why Savage is banned. A British ban on Geert Wilders, the Dutch politician who wants to prohibit the construction of mosques and selling of the Koran, did not withstand judicial scrutiny, and Britain appears to have survived his subsequent visit unscathed.

Likewise, it has survived visits from Trump, who owns two golf courses in Scotland and has traveled to the UK many times without incident (he never travels without controversy, which is not quite the same thing).

Governments are justified in barring foreigners who advocate or incite violence and terrorism. But that power ought to be used with the greatest of care, and not in response to petitions fueled by political passions.

Bloomberg View

Ernesto M. Hilario

ABOUT TOWN

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N the recent Saturday Forum@Annabel’s, we had as our guest child-rights advocate Atty. Eric Mallonga, who is the executive director of an orphanage, Meritzell Children’s World Foundation, which its web site describes as “a loving and caring environment for abandoned, neglected, orphaned and abused children.”

At the outset, Mallonga argued that a foundling like presidential aspirant Grace Poe is a natural-born citizen and therefore should be allowed to run for the highest elective position in the country. While both the 1935 and the 1987 Constitutions do not contain any explicit provisions on the rights of foundlings, Mallonga said both documents presume that foundlings are natural-born citizens and should, thus, be allowed to become professionals, or even run for president.

International conventions to which the Philippines is a signatory—and which the Constitution recognizes as part of the law of the land—also guarantee the rights of foundlings to a name and a nationality, among others, he added.

The disqualification cases against Poe assert that she is not a naturalborn citizen and does not fulfill the 10-year residency requirement since she stayed in the US for some time.

While the nine-member Senate Electoral Tribunal ruled that she is a natural-born citizen and therefore eligible to run as senator and keep her position, the Commission on Elections (Comelec) ruled otherwise. Thus, Poe has filed an appeal before the Supreme Court (SC) to reverse the Comelec ruling. The oral arguments will be heard today, January 19, by the SC. Sen. Francis Escudero has urged Senior Associate Justice Antonio Carpio, the SET chairman who argued that Poe is not a natural-born citizen, to inhibit from participating in the disqualification case against his running mate.

“Senator Grace’s lawyers also asked for his inhibition. I hope he will consider it and inhibit himself in order to address such doubts from some sectors

The UK can survive a Trump visit URELY the British Parliament has a better way to spend three hours.

On Monday members of parliaments (MPs) will debate the merits of a petition signed by more than 500,000 Britons demanding that the government block Donald Trump from setting foot on their sceptered isle. It might be the worst idea since London Mayor Boris Johnson decided to ride a zipline during the 2012 Olympics— and to his credit, Prime Minister David

Governor General Domingo Moriones Murillo, Huerta set up the Monte de Piedad in 1882 patterned after the pawnbroker institutions across Europe at the time that loaned to the poor at modest interest rates.

During the American occupation, Protestant missions brought their own charitable traditions founding hospices, hospitals, schools and orphanages.

In 1901 the Presbyterian Board of Foreign Missions founded what would become Siliman University in Dumaguete. Four years later, the American Baptist Foreign Mission Society laid the beginnings of Central Philippine

Tuesday, January 19, 2016 A11

at Trump’s demagogic tendencies.

Trump has said he would prohibit foreign Muslims from entering the US until the federal government can “figure out what is going on” concerning Islamic terrorism. He’s also played to nativist feelings by alleging that Mexico is sending its worst people— drug dealers and rapists—north of the border.

Trump’s pandering to antiforeign sentiment, while odious, has earned him a following among Americans.

regarding his impartiality in connection with the cases of Senator Poe,” Escudero said. Poe filed last month petitions before the SC to prevent Carpio and Justices Teresita Leonardo-de Castro and Arturo Brion from joining deliberations of the tribunal.

For his part, Mallonga says that since Justice Carpio during the SET hearings specifically pronounced that Poe is not a natural-born citizen but just a naturalized citizen, the jurist made a conclusive pronouncement that showed his bias and preconceived notion against her.

“A mere clarificatory hearing is not supposed to hear the arguments of the justices or the senators but to hear the stand or positions of the parties involved. So I really believe that the justices who actually made such pronouncements should inhibit themselves from the deliberations on the qualifications of Senator Poe as a candidate for the position of president,” Mallonga said at the news forum.

“During the clarificatory hearing, [what Carpio said] was actually not a clarification. He issued a conclusion of the law and not a clarification.” For this reason, Carpio committed “grave abuse of discretion,” Mallonga said.

“If you are still hearing a case, you should not make any conclusion of law because the conclusion of law should come out in your decision,” he said.

Poe is a foundling adopted by the late actor Fernando Poe Jr. and his wife Susan Roces. She was found inside the Jaro Cathedral in Iloilo in 1968. The 1935 Constitution was in effect at the time of her birth.

Relief for water consumers

E-mail: ernhil:@yahoo.com.

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A12 Tuesday, January 19, 2016

www.businessmirror.com.ph

PHL-EU bilateral trade seen breaching €13B

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B C N. P

ILATERAL trade between the Philippines and the 28-member European Union (EU) is seen hitting a record high in 2015, even as competing Asean neighbors continue to outpace the country in ramping up trade with the bloc.

Last-quarter figures are still unavailable, but Philippine-EU trade in 2015 is seen breaching the €13-billion level, assuring at least a 4-percent growth over 2014’s €12.5-billion haul, the Economic and Trade Section chief said at the EU Delegation in Manila.

“Eurostat figures are available up to September 2015, and show that overall trade has grown by 7 percent since 2014 in euros, totalling €9.7 billion for the first three quarters—indicating that 2015 could hit the €13-billion level, which would, indeed, be a new record,” Walter van Hattum said in an e-mail interview with the BM.

The growth in trade can be attributed to the recovering European economy, boosted further by the initial gains in the Philippines’s export performance due to the preferential

6,274

Products covered under the EU’s Generalized System of Preferences Plus

trade scheme, the Generalized System of Preferences Plus (GSP+), that came into effect by the end of 2014.

Total exports from the Philippines jumped 19 percent, while EU’s shipments to the Philippines slowed down by -3 percent, leading to a trade surplus for the Philippines.

Exports of goods to the EU, specifically, grew by 7 percent in the nine months of 2015, compared to

PRICE CUT A customer does grocery shopping in Makati City.

The Department of Trade and Industry has appealed for a rollback in the suggested retail prices of basic commodities, following a series of reduction in fuel prices. NONIE REYES the same period in 2014.

Overall, EU-Asean trade in goods as of September 2015 grew by 13 percent compared to 2014, faster than the Philippines’s 7-percent growth, van Hattum said.

As a result, the Philippines’s share in total trade in goods with the EU decreased to 6.6 percent as of the third quarter of 2015, from 7-percent share in 2014.

Based on the EU-Philippines Trade and Investment Fact file published by the EU Delegation in Manila, in 2014 EU’s total trade with select Asean nations are Malaysia, €33.7 billion; Thailand, €30.98 billion; Vietnam, €28.25 billion; Indonesia, €23.89 billion.

On the exports side, the EU-GSP+ has been bearing fruit.

Products that had positive tariff rates before the EU-GSP+ and were subsequently slashed to zero percent saw an increase, the EU Delegation official said.

Shipments of food and beverages covered by the scheme increased by 36.7 percent, while textiles improved by 15 percent.

Not all Philippine exports to the EU are covered by the preferential treatment. Some 6,274 tariff lines are covered, representing a fifth of total Philippine exports to the EU. On the covered products, expor ts increased 27 percent, or from €584,292.58 in 2014

to €742,788.28.

The products that registered the highest growth rate, possibly due to smaller base volume, are live animals and animal products, fish and related products, cereals, flour, nuts, chemicals, plastics, wood and wood charcoal and footwear, to name a few.

Utilization of the EU-GSP+— measured by comparing the exports that increased compared to the total exports that are eligible under the scheme—is going down, van Hattum said. In 2014 €1.88 billion were eligible under the scheme, and 65 percent was utilized.

The utilization rate has gone down, but the exact percentage was not disclosed. On the declining rate, van Hattum noted that an exact reason cannot be given, but possibly, there may be a lack of awareness on the part of exporters and difficulty on complying with the rules of origin requirements.

These modest accomplishments are good starting points, as the Philippines and the EU are about to commence official negotiations for an EU-Philippines free-trade agreement, thereby cementing the preferential trade and investment relations between the trading partners. After three years on the “scoping” stage, where both sides agree on the general areas of coverage and determine their potential offensive and defensive

interests, the parties announced last December to launch in the first half of 2016 the official negotiations. According to Undersecretary for Industry Development and Trade Policy Ceferino S. Rodolfo, this was due to the gains made by the Philippines on policy reforms.

“They saw our efforts in passing the competition law, even after two decades. Then there’s the cabotage law, and also the liberalization of the banking sector for foreign players,” Rodolfo said in an earlier interview.

“All of these are for good governance and for liberalization, and they saw that reform efforts will continue. They became confident about the Philippines,” the trade official added.

According to van Hattum, the parties have the intention of concluding an agreement that covers the elimination of customs duties and other barriers to trade, services and investment; access to public procurement markets, as well as additional disciplines in the area of competition; and protection of intellectual property rights.

“The prospective agreement will also include a comprehensive chapter that will ensure that closer economic relations between the EU and the Philippines go hand in hand with environmental protection and social development,” he added.

DENR eyes incentives for ‘greening’ partners C  A

a three-year period, during which NGP partners enjoy compensation for seedling production, site preparation, tree planting, maintenance and protection. The incentive is the compensation that NGP partners receive for every NGP site on a perhectare basis.

In 2015 the cost of the NGP is P10,000 per hectare.

This year the DENR is considering to raise the cost to P20,800 per hectare, because the number of trees to be planted will also increase from an average of 500 trees per hectare to 1,600 per hectare.

Incidentally, many of the NGP contracts entered into by the DENR with NGP partners in 2011 and 2012 have already expired. Upon the expiration of the contracts, which is specifically for site maintenance and protection,

the DENR turns them over to local government units (LGUs) or the implementing NGP partners.

The incentive system, the official said, will encourage POs to maintain the forest plantations, ensuring sustainability of the program even after their contracts expire.

“We are looking at incentivizing POs starting in 2017,” he said.

“This will ensure that they will not resort to illegal activities,” he added.

Calderon said members of POs earn extra income because of the “green jobs” generated through the NGP. He expressed fears that the NGP sites may be neglected, or worse, overexploited if those who used to benefit from its maintenance and protection would no longer receive compensation.

“After the contracts, they may be tempted to log or produce charcoal

again,” Calderon said.

According to Calderon, upland dwellers have already adjusted to a way of life wherein they no longer illegally cut trees for extra income.

Upland dwellers have changed their ways because of the total log ban and the implementation of the NGP. “Incentivizing POs for their performance will give them a reason to take care of the forest plantations they established,” he said.

The NGP, which aims to plant 1.5 billion trees in 1.5 million hectares from 2011 to 2016 had so far generated close to 2.9 million green jobs during its five years of implementation. Last year alone, a total of 636,710 jobs were generated by the NGP. Because of the success of the program, President Aquino signed Executive Order 193, expanding its coverage between 2016 and 2028.