BusinessMirror March 10, 2016

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A broader look at today’s business n

Thursday, March 10, 2016 Vol. 11 No. 154

Issue EOs to hasten rollout of economic reforms–JFC PRAYERS, CHEERS AS ECLIPSE T DARKENS SWATH OF ASIA B J M N.  C

INSIDE

LIFE

Phantom goods disguise billions in China ‘illicit’ money flows

HE Aquino administration can consider issuing executive orders (EOs) to introduce reforms while it awaits the enactment of key economic measures, according to local and foreign business groups.

REDISCOVERING THE ONE-STOP ISLAND HAVEN FOR FAMILY BONDING

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HEALTH&FITNESS

Local and foreign businessmen belonging to the Philippine Business Groups and the Joint Foreign Chambers (JFC) said recently Congress should also pass laws to make these reforms more permanent.

“Use of an executive order or departmental order can hasten introduction of a reform, as was the case with open skies in 2011 using EOs 28 and 29. Within months of approval, a new policy can be implemented by the bureaucracy,” the groups said.

Specifically, businessmen are pushing for the enactment of the Public-Private Partnership (PPP) Act to further strengthen the basic legal framework in undertaking PPP projects, and to ensure that projects will continue to be implemented even after President Aquino steps down from office in June.

“While the Philippines has many excellent laws, there is continual need to update old ones and legislate for new developments. Usually, the legislative process moves very slowly,” they said.

On September 9, 2010, President Aquino has signed EO 8, reorganizing and renaming the Build-Operate-Transfer Center to the PPP Center of the Philippines, and transferring it to the National Economic and Development Authority from the Department of Trade and Industry.

Malacañang said EO 8 was issued to fast-track the implementation of PPP programs and projects as a “cornerstone strategy” of the national development plan to accelerate the infrastructure development of the country and sustain economic growth.

S “JFC,” A

SC finally lifts sequestration of POTC and unit Philcomsat

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

B J R. S J

HE Supreme Court (SC) has lifted the sequestration order that the Presidential Commission on Good Government (PCGG) had issued against the Philippine Overseas Telecommunications Corp. (POTC) and its wholly owned subsidiary Philippine Communications Satellite Corp. (Philcomsat), formerly controlled by the Marcos family and their “cronies.”

In a 17-page decision penned by Associate Justice Jose Portugal Perez, the High Court’s Third Division reversed the ruling issued by the Sandiganbayan in October 2005, which upheld the sequestration of POTC and Philcomsat, and denied their claim that their sequestration was invalid and should immediately be lifted.

As the sequestered

property has already been disposed [of], the ultimate purpose of sequestration has already been attained; the evil sought to be prevented is no longer present.”—SC

S “SC,” A

PESO EXCHANGE RATES n US 46.9780

D

AYS after the Switzerlandbased Bank for International Settlements played down fears over capital flight out of China, new trade data have put the spotlight on a channel used to ferret out billions worth of illicit money flows: phantom goods.

A steep rise in China’s reported imports from Hong Kong has raised concerns that trade invoices are being manipulated to get capital out of the country, amid fears the yuan will continue to weaken.

February data released on Tuesday show those imports jumped 89 percent from a year earlier, even as total imports fell 14 percent.

While the rise wasn’t as great as in January, economists said the spike follows similar patterns in recent months that point to companies using trade channels to pay for goods far in excess of their value, or even those that don’t exist at all.

FILIPINO students use welder’s glasses to view the partial solar eclipse at the University of the Philippines in Quezon City on Wednesday. A total solar eclipse was witnessed along a narrow path that stretched across Indonesia, while in other parts of Asia a partial eclipse was visible. The next solar eclipse will be on August 21, 2017, to be witnessed in the United States. The next total solar eclipse that can be viewed from the Philippines, meanwhile, will be on April 20, 2042. STEPHANIE TUMAMPOS, AP

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EOPLE gazed at the sky in wonder and cheered while others knelt in prayer, as a total eclipse of the sun unfolded over Indonesia on Wednesday, briefly plunging cities into darkness and startling wildlife.

The rare astronomical phenomenon was witnessed along a narrow path that stretched across 12 Indonesian provinces, encompassing three time zones and about 40 million people. A partial eclipse was visible in other parts of the Indonesian archipelago, a swath of Asia and in northern Australia.

Thousands of eclipse-chasers flocked to Indonesia from abroad and the government, which has been promoting the event for more than a year, forecast a substantial tourism boost. Some tour groups chartered ships to view the eclipse, which began in the Indian Ocean and ended in the Pacific, at sea. A dozen Americans joined a commercial flight from Anchorage, Alaska, to Honolulu,

because its flight path would rendezvous with an eclipse sweet spot north of Hawaii.

Thousands of men, women and children who gathered in Sigi Biromaru, a hilltop town of Indonesia’s Central Sulawesi province, shouted and clapped as the sun transformed into a dark orb for more than two minutes. Hundreds of others prayed at nearby mosques.

“The sun totally disappeared. How amazing this sunny morning suddenly changed to dark,” said Junaz Amir, a Sigi resident who witnessed the eclipse with his family using special protective glasses.

In Ternate, one of the last cities in the eclipse’s path, some residents said they were viewing it by looking at the reflected image in bowls of water. Experts say the total eclipse can be viewed with the naked eye but specific filters should be used during its partial phases to avoid permanent damage to the retina.

S “E,” A

$328B Amount of capital that left China between August and January through trade manipulation

“There has been a huge increase in payments,” said Andrew Collier, an independent China analyst in Hong Kong and former president of the Bank of China International USA. “The well-connected Chinese in state and private firms are using any tool in the shed to inflate overseas payments.”

China’s capital exodus accelerated through 2015, as investors were worried that policy-makers would allow the yuan to weaken to cushion an ongoing slowdown in the $10-trillion-plus economy.

The People’s Bank of China has insisted it isn’t contemplating a big change in currency policy, and spent billions of the nation’s foreign-exchange reserves defending the yuan’s value.

S “P ,” A

n JAPAN 0.4172 n UK 66.7933 n HK 6.0506 n CHINA 7.2223 n SINGAPORE 33.9289 n AUSTRALIA 34.9422 n EU 51.7369 n SAUDI ARABIA 12.5305

Source: BSP (9 March 2016 )

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UBS: Election a historical win for stock profits

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HILIPPINE investors have a knack for making money whenever the nation elects a new president—and history will repeat itself this year, the UBS AG says.

Investors should buy retail and infrastructure stocks to catch a post-election rally that could propel the nation’s benchmark equities index 8.5 percent higher this year, Jody Santiago, strategist and research head at the Manila-based unit of UBS, said in an interview.

The best companies to buy include

supermarket chain Puregold Price Club Inc. and Metro Pacific Investments Corp., the nation’s largest toll-road operator. Filipinos go to the polls to elect a new president on May 9.

“The election is an added layer of uncertainty, but once that is over and barring any adverse developments in

The macro of the Philippines is so strong that it will be difficult for the next president to screw it up.”

—S  UBS

Groups campaign for ‘green vote’ in May

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HE “green vote” campaign by civic groups manifests the loud call for the next administration to approach the issues of environment and economics as one comprehensive agenda, said Prof. Dindo Manhit, president of private think tank ADR Institute on Strategic and International Studies (ADRI).

Renowned Geologist and ADRI trustee Dr. CP David also believes that environmental issues facing the country are complex and will need to be seriously addressed by the candidates.

“Aside from mining, politicians vying for national positions should debate on marine protection forestry, solid-waste management, and, of course, climate change in relation to disaster-risk management.”

Meanwhile, environment advocacy group Philippine Business for Environmental Stewardship (PBEST) said the green vote for the upcoming 2016 elections should be about policy reform and not politics.

“A green vote can be the vehicle to force solutions to the environment issues into the election debate and adopted in their platforms,” said lawyer Ysan Castillo, PBEST secretary-general.

“More than discrediting candidates just because of their associa-

Eclipse. . .

C  A

Most eclipses are partial but when the moon is close enough to the Earth, the sun is completely eclipsed by the moon’s shadow and only a spectacular ring of rays known as the corona is visible. The last time a total eclipse occurred over Indonesia was in 1988.

Unfounded fears and misinformation caused panic, with people papering windows and keeping children indoors.

Cloudy skies in parts of Indonesia dampened the spectacle for some. In Palembang, a Sumatran city of more than 1.4 million, thousands of residents, from mothers carrying infants to old men, gathered at its landmark Ampera bridge from well before dawn.

But the total eclipse was only briefly visible if at all. “Too bad we cannot see when the total solar eclipse occurred, but the dark atmosphere when it happened made us feel happy,”Palembang resident Martha Sembiring said.

There was also disappointment for a group of six eclipse chasers who traveled from Canada and the US to Kalimantan.

“Unfortunately we got nothing because we had rain showers and solid cloud,” said optometrist Ralph Chou, who was hoping to see his 19th total

tions with mining, the green vote should distinguish between the legitimate and highly regulated mining operations and illegal mining.

Mining by itself is not bad, but illegal practices and poor regulation resulting in damage to the environment gives a negative image to the industry that has the potential to be an economic game-changer not just on a national but on far-flung local areas with rich mineral deposits,” Castillo said.

For instance, PBEST cited three of the country’s biggest mines that voluntarily submitted their operations to third-party scrutiny last year to assess their compliance with relevant environmental regulations.

The Padcal mine of Philex in Benguet; the mine of Taganito Mining Corp., a Nickel Asia Corp. subsidiary in Surigao del Norte; and the mine of Carmen Copper Corp., Atlas Consolidated Mining and Development Corp.’s subsidiary in Cebu all scored top marks in the PBEST Environmental Performance Tracking Program.

“The environment had never figured prominently in any administration’s agenda,” Manhit lamented.

“So, the real task for the next president is determining how to strike a balance between environmental stewardship and development.” solar eclipse. Chou, a Canadian who helped develop the international standards for eclipse filters, said there were still impressive effects of light and darkness, and birds appeared confused and disoriented by dark falling again after dawn.

The previous total solar eclipse was in March last year and was best viewed on Norway’s Svalbard islands near the North Pole. The next total eclipse will occur in August 2017 and be visible over a slice of North America.

The entire eclipse, which began with the first patch of darkness appearing on the edge of the sun, lasted about three hours.

For the viewer, the length of time the sun was totally eclipsed depended on their location along the path. On land the durations were mostly between one and three minutes.

In the capital, Jakarta, thousands of residents packed a planetarium at a downtown park where officials distributed about 4,000 filtered viewing glasses that quickly ran out. The eclipse, which from the vantage point of Jakarta produced an impressive crescent, was also streamed on monitors around the planetarium.

Scientists from Nasa and Indonesia’s aerospace agency observed the eclipse from Maba in the Maluku islands. AP

global emerging markets and China, we could see a relief rally,” Santiago said. “The macro of the Philippines is so strong that it will be difficult for the next president to screw it up.”

The Philippine Stock Exchange index has rallied an average of 26 percent in the 12 months after electing a new president in each of the past four presidential polls that the nation has held since the ousting of dictator Ferdinand Marcos in 1986, according to data compiled by Bloomberg. It could climb to 7,500 after the May presidential elections, Santiago said. The gauge closed on Tuesday at 6,915.51.

The measure has been volatile this year, having rallied 14 percent since sinking to a 23-month low on January 21, when uncertainty over China’s economy and a slump in oil prices triggered a global sell-off in equities. Its yearly loss through Tuesday is just 0.5 percent. The index slid 3.9 percent in 2015, its first such loss in seven years, as

weak corporate earnings and the outlook of higher US interest rates and slowing global growth fueled a record $1.19-billion withdrawal by overseas investors.

Economic growth

STOCKS could sustain a rally after the elections and equity valuations may remain expensive relative to Asia should President Aquino’s successor continue the government’s infrastructure program aimed at boosting long-term economic growth, Santiago said.

In the 22 quarters that Aquino has helmed the $285-billion Philippine economy, growth accelerated to an average of 5.9 percent a quarter, faster than the 4.7 percent clocked by his predecessor Gloria MacapagalArroyo, who assumed the presidency from January 2001, when Joseph Estrada was kicked out of office.

Arroyo subsequently won her own six-year term in May 2004.

“If capital is being laid out to sustain long-term earnings growth, it

Phantom goods. . .

While China has strict rules on moving capital offshore, those seeking to evade limits can disguise money flows as payment for goods exported or imported to foreign countries or territories, especially Hong Kong. Economists have said they suspect China’s December and January trade numbers were also skewed by this activity.

“Data distortions from hidden capital flows remain a problem,” Bloomberg Intelligence economists Tom Orlik and Fielding Chen wrote in a note, adding that the reported $880 million in imports from Hong Kong in January were “implausible.”

Over-invoicing for goods gives a company or individual the opportunity to skirt China’s capital controls and shift money offshore. Authorities have responded to evidence of the activity by clamping down on the myriad of illicit channels used, from curbing purchases of overseas insurance products to stopping friends and family members from pooling their $50,000-a-year quotas to get large sums of money out.

“A strong desire to get assets out of renminbi and into a foreign currency is distorting China’s official trade data at present,” economists at Fathom Financial Consulting Ltd. in London wrote in a note. “Our analysis suggests the scale of the problem may have grown exponentially in recent months.”

But China’s capital borders remain porous. In particular, little attention appears to have been paid to companies misreporting imports and exports, according to research by Deutsche Bank AG. Economists at the bank found the practice has become a key way to skirt capital controls and accounted for $328 billion of the record outflows between August and January, or 78 percent of the decline in China’s reserves. An estimate

by Bloomberg Intelligence put the total for 2015 at $1 trillion.

“China has experienced massive capital outflows since August 2015,” the Hong Kong-based Deutsche Bank economists, Zhiwei Zhang and Li Zeng, wrote in their February 29 report.

Over-reporting imports is likely the most important illicit channel, according to the Deutsche Bank research,

JFC. . .

C  A

“The PPP Act will further strengthen our public-private partnership and procurement framework,” businessmen said.

For his part, Speaker Feliciano Belmonte Jr. said House Bill (HB) 6631 or the proposed PPP Act will be passed on third and final reading when session resumes on May 23.

The lower chamber has recalled the third reading approval of the PPP Act, jeopardizing enactment of the Palace-backed measure.

Senior Deputy Minority Leader and Partylist Rep. Neri Colmenares of Bayan Muna moved to recall the third reading vote on HB 6631 in February or before Congress went on a break for the May 2016 elections, saying the approval of the HB 6631 violated Section 28, Article VI

will be easier for investors to support the rerating that followed when Aquino assumed office,” Santiago said. “To maintain the multiple at current levels, the next government must show and convince investors of its economic and fiscal policies.”

Priciest in Asia

PHILIPPINE equity valuations h ave avera ged 16 t i mes 12month estimated earnings since Aquino’s election in May 2010, higher than the 12.7 multiple reached during the nine-year Arroyo presidency. While valuations have come off from a peak of 20.8 in May 2013, the current Philippine multiple of 16.8 is still the priciest in Asia, according to data compiled by Bloomberg.

Santiago also recommends investors buy SM Prime Holdings Inc.and Robinsons Land Corp., the nation’s two largest shopping-mall operators. Robinsons Retail Holdings Inc., owner of supermarkets and department stores, is an-

C  A

In previous years, when the yield factors were favorable for China, they would bring money in through fake exports. For now, though, fake imports have likely become a useful way to take money out.”—D C M which cited official banking statistics that recorded China paying $2.2 trillion for goods imported in 2015, while China Customs data only records $1.7 trillion of imports.

“The Chinese authorities have been trying to tighten control over capital outflows in recent months, but outflows through the import channel remained high in January 2016, at $57 billion,” the Deutsche Bank economists wrote. “Now that these outflow channels are revealed, they will likely be subject to more intensive scrutiny in coming months.”

China has acknowledged the problem with fake invoicing in the past. In 2013 the government said export and import figures were overstated due to phony trade in order to bring money into the mainland. Trade data since December suggests the practice had flared up again, this time to get money out.

“As capital controls have been tightened, many market players have used various trade channels to take money out,” Daiwa Capital Markets Hong Kong-based analysts Kevin Lai and Junjie Tang wrote in a note dated March 8. “In previous years, when the yield factors were favorable for China, they would bring money in through fake exports. For now, though, fake imports have likely become a useful way to take money out.”

Not all of the money defined as leaving China can be dubbed capital flight. Chinese companies are buying foreign counterparts at a record pace.

And a new analysis of some of the record volumes of cash that left China

last year by the Bank for International Settlements (BIS) concluded that much of it was likely due to companies paying off foreign debt and the shrinking of offshore yuan deposits.

China’s capital outflows had “led to two different narratives,” the BIS researchers said in their report on Sunday.

“One tells a story of investors selling mainland assets en masse; the other of Chinese firms paying down their dollar debt. Our analysis favors the second view, but also points to what both narratives miss—the shrinkage of offshore renminbi deposits.”

Still, the BIS analysis only covered the period between July and September, and captures a portion of the money being transferred out of China. For example, the data don’t cover gross flows or portfolio transactions out of China.

“They are not trying to give a comprehensive picture of the balance of payments and its components,” said Louis Kuijs, chief Asia economist at Oxford Economics in Hong Kong.

“Rather, they zoom in on certain specific aspects.”

China’s foreign-exchange reserves fell at a slower pace last month as the nation’s financial markets stabilized. Still, analysts warn the uncertain outlook for the yuan means China’s capital scare hasn’t gone away. The biggest worry is if households accelerate the moving of their savings offshore, according to Zhu Haibin, JPMorgan Chase and Co.’s chief China economist.

“What we truly worry about is household behavior,” Zhu said. Bloomberg News

of the 1987 Constitution. “No law granting any tax exemption shall be passed without the concurrence of a majority of all the members of Congress,” Colmenares said, as only 136 congressmen voted during the third reading approval of PPP bill.

With the House of Representatives rolls showing a total membership of 291, HB 6631 may be passed on third and final reading by 146 congressmen. Meanwhile, the measure institutionalizing and strengthening the PPP, principally authored by Belmonte, seeks to recognize the “indispensable” role of the private sector as the main engine for national growth and development, create an enabling environment for PPP. The bill also seeks to provide the most appropriate incentives to mobilize private resources for the purpose of financing, design,

construction, operation and maintenance of infrastructure projects and services normally financed and undertaken by the government.

The PPP refers to a contractual arrangement between the implementing agency and the project proponent for the financing, design, construction, operation and maintenance or any combination thereof, of an infrastructure facility, in which the project proponent bears significant risk, management responsibility or both. Under the PPP scheme, projects in excess of P1 billion will be entitled to incentives as provided by the Omnibus Investment Code, upon prior endorsement of the PPP Center and registration by the project proponent with the Board of Investment.

A congressional oversight committee will be created to oversee the implementation of the measure.

other favorite. Santiago also likes property developer Megaworld Corp., because of its rising rental income from offices leased to call centers and business-process outsourcing companies.

“Retail has very good prospects because lower oil prices and higher income from overseas Filipinos and outsourcing companies would mean more consumer spending power,” said Santiago, who is underweight telecoms and neutral on banks, property and utilities. “Infrastructure has the highest growth potential and, because of its very low penetration rate, it will always be a priority whoever becomes president.”

Philippine economic growth, which accelerated under Aquino as he raised taxes and increased infrastructure spending to a record, is forecast by the World Bank to expand more than 6 percent this year and in 2017, to be among the fastest in the world. Gross domestic product increased 5.8 percent in 2015. Bloomberg News

SC. . .

C  A

Named defendants in the case were Jose Africa, Manuel Nieto Jr., Ferdinand Marcos, Imelda Marcos, Ferdinand Marcos Jr., Roberto Benedicto, Juan Ponce Enrile and Potenciano Ilusorio. The SC gave credence to POTC and Philcomsat’s argument that the Sandiganbayan committed grave abuse of discretion when it affirmed their continued sequestration and disregarded the anti-graft’s final and executory decision issued in June 2005 in the case of Republic of the Philippines v. Sandiganbayan, which already ruled on the ownership of the 35 percent shares of stock of the corporations.

In the said case, the Court upheld the compromise agreement between the government and Ilusorio, resulting in the conveyance of 34.9 percent of the shares of stock of the sequestered corporations to the government. Philcomsat and POTC argued that pursuant to the said final and executory decision, there’s no longer any need for their continued sequestration based on the SC’s earlier pronouncement that “the writ of sequestration is merely provisional and temporary in character,” and that the final ruling of the Court which finally disposed [of ] the sequestered shares, rendered the writ unnecessary.”

The SC noted that the PCGG failed to properly implead POTC and Philcomsat as defendants in the sequestration case, which proved to be fatal to the case. It explained that the failure to properly implead POTC and Philcomsat violated their right to due process. “[F]ailure to implead these corporations as defendants and merely annexing a list of such corporations to the complaints is a violation of their right to due process for it would in effect be disregarding heir distinct and separate personality without a hearing. As already settled, a suit against individual stockholders is not a suit against the corporation,” the Court added.

Since, POTC and Philcomsat were not impleaded, the SC said there is no longer any existing sequestration on POTC and Philcomsat.

The court also pointed out that the sequestration order over the said corporations was automatically lifted six months after the ratification of the 1987 Constitution for failure to implead them as respondents in the sequestration case.

It noted that Section 26, Article XVIII of the Constitution states that “if no judicial action has been filed within six months after the ratification of the 1987 Constitution, the writ of sequestration shall automatically be lifted.”

Furthermore, the Court explained that 34.9 percent of the ownership of the sequestered property has been finally turned over to the government. Thus, the Court said, the ultimate purpose of sequestration was already accomplished.

Furthermore, the SC said, the said shares in the ownership of the sequestered properties have reverted to the government.

The government now owns 4,727 shares, or 34.9 percent, of the sequestered corporations. “As the sequestered property has already been disposed [of ], the ultimate purpose of sequestration has already been attained; the evil sought to be prevented is no longer present. Evidently, the sequestered property which was already returned to the government cannot anymore be dissipated or concealed,” the SC ruled.

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Caap set to hire 500 more air-traffic controllers

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B R L. M

HE Civil Aviation Authority of the Philippines (Caap) will hire at least 500 air-traffic controllers (ATCs) in the next five years, as the satellite-based Communication, Navigation, Surveillance-Air Traffic Management (CNS-ATM) system starts operations next year.

Caap said there would be a higher demand for ATCs, as soon as the P13.25-billion project is installed by December this year.

Full utilization of the next-generation air-traffic and communication system is expected by May 2017. Presently, Caap is un-

dermanned with a total countrywide complement of 736. Some 60 applicants who passed Caap’s highly technical and academic tests have undergone training.

The agency will continue hiring people to complete the ATC work force, Caap said.

This long-delayed project was initially envisioned to be operational in 2010, but was delayed owing to various constraints.

The satellite-based CNS-ATM technology, which has been in use for decades in some parts of the world, aims to provide a seamless, global air-traffic management system which will enable aircraft to meet their planned time of arrival and departure by adhering to preferred f light r o ut e s w it h m i n i mu m c o n straints and without compromising standard levels of safety.

The system it replaced was called Eurocat and had been operational since 1996. It was upgraded recently at a cost of P159.9 million.

This system was inaugurated at the airways facilities complex at Caap central office in Old Miaa Road, Pasay City, in the presence of Director General William K. Hotchkiss lll and Deputy Director

₧13.25B Project cost of the satellitebased Communication, Navigation, Surveillance-Air Traffic Management system

General for Operations Rodante Joya; Raymond Lions, branch manager of Thales Australia Ltd. Philippine office; Roger Ferrari of Pacific Hemisphere Development; and other officials.

The CNS-ATM employs digital technology, including satellite systems, together with various levels of automation.

It is expected that once fully operational, Philippine aviation would be able to provide airline companies improved levels of safety, overall efficiency and

capacity of airspace resulting in minimize fuel consumption.

Air-traffic congestion, now experienced regularly in Philippine skies, would be a thing of the past, Caap said.

It is also envisioned to increase the availability of user-preferred flight schedules.

“This system will put the country at par with the rest of the world,” Caap said in a press release.

The soon-to-be-completed facility is at the Caap compound in Pasay City.

On Tuesday Transportation Secretary Joseph Emilio A. Abaya, Hotchkiss and Japanese Ambassador to the Philippines Kazuhide Ishikawa toured the imposing building housing the CNS-ATM. The Japan International Cooperation Agency (Jica) said the ¥22.049-million project is expected to complete the installation of all associated facilities by May 2017.

Package 1 of the CNS-ATM project was awarded to a joint venture of Japan’s Sumitomo Corp. and Thales Australia Ltd. (formerly Thomson-CSF). The package involves the installation of the latest Eurocat system with an integrated Digital Voice Control System, Aeronautical Information System, Automated Message Handling System, Aeronautical Telecommunications Network Router, Global Navigation Satellite System monitoring and metrological systems.

Package 2 includes the installation of an Automatic Dependent Surveillance-Broadcast Ground Station, En-route Radar (Secondary Surveillance Radar Mode-S), Terminal Radar (Airport Surveillance Radar/Secondar y Sur veillance Radar), VHF Terminal and Remote Control Air-Ground Communications facility, Microwave link and Very Small Aperture Terminal.

PHL, India eye stronger ties in manufacturing

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RADE and investment relations between the Philippines and India hold great potentials for growth, especially in manufacturing, based on assessments made by officials of both countries who graced the Philippines and India: Partners in Progress business forum held in Makati City on Wednesday.

The event was staged at a time when both governments are embarking on national programs to boost their respective manufacturing productivity.

H.E. Ambassador L.D. Ralte, India’s top envoy to the Philippines, highlighted the manufacturing sector as a bright spot for cooperation given his country’s Made in India initiative.

Launched in September 2014, the Made in India initiative envisions India to be a global manufacturing hub, in the same way the Philippines’s Department of Trade and Industry (DTI) is implementing the Manufacturing Resurgence Program (MRP).

“It is a new national movement. Since the launch of the program, foreign direct investment inflow has surged by 48 percent, the highest ever in the country,” said Johnny Chotrani, chairman of the Philippine India Business Council.

The Philippines’s MRP, meanwhile, recently received a budgetary boost. The interagency program got an allocation of P289 billion, higher than the

₧289B Budget allocated for the Manufacturing Resurgence Program this year

P239-billion budget it received last year. Trade Secretary Adrian S. Cristobal Jr. said manufacturing growth since 2011 has been averaging at a rate of 8.2 percent, surpassing the national output growth for the first time in three decades.

The DTI chief earlier said the manufacturing sector will be instrumental in pushing up GDP growth to possibly 10 percent.

Other areas that have the potential for growth are in pharmaceuticals, said Philippine Economic Zone Authority Director General Lilia B. de Lima, while real estate holds promise, as well, according to Ralte.

Sixteen companies with Indian equity, whose businesses range from pharmaceuticals to businessprocess outsourcing, conducted company presentations to Philippine companies at the forum.

The event was organized by the Embassy of India in the Philippines and the Philippine-India Business Council, which operates under the auspices of the Philippine Chamber of Commerce and Industry.

Catherine N. Pillas

CVC said to explore sale of outsourcing provider SPi

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VC Capital Partners, Europe’s largest private-equity firm, is exploring a sale of its controlling stake in Philippine outsourcing provider SPi Global Holdings Inc., people with knowledge of the matter said.

The buyout firm is working with Bank of America Corp. to gauge interest in the 80-percent holding it acquired from Philippine Long Distance Telephone Co. (PLDT) in 2013, according to the people. A deal could value SPi Global at about $500 million, two of the people said, asking not to be identified as the information is private.

CVC has participated in about $1.5 billion of Southeast Asia deals over the past five years, including the saleof its stake in Singapore’s Interplex Holdings Ltd. to Baring Private Equity Asia last year, according to data compiled by Bloomberg. There were $6.5 billion of private-equity deals involving Southeast Asian targets last year, down from $8.6 billion in 2014, data show. PLDT, which owns the remaining 20 percent of SPi Global, intends to “tag along” with any potential sale

by CVC, Chairman Manuel Pangilinan said on

Tuesday in a mobile-phone text message. The country’s biggest phone company will make a decision depending on the price and terms, Pangilinan said.

The process is at an early stage, and details such as valuation could change, the people said. A London-based representative for CVC didn’t immediately respond to a phone call seeking comment outside regular business hours.

PLDT sold control of SPi Global to CVC for more than $300 million in 2013. Manilabased SPi Global has annual revenue of about $214 million, according to CVC’s web site. It employs more than 20,000 workers in the Philippines, India, the US, China, Vietnam and Nicaragua serving customers in the US and Europe.

The company, led by CEO Maulik Parekh, has helped German academic publisher Springer Science & Business Media GmbH digitize 70,000 books dating back to the 1840s, SPi’s web site shows. It also runs the call center for Singapore Airlines Ltd.’s low-cost carrier, Scoot Pte. Bloomberg News

ETERNAL GARDENS OPENS ST. MICHAEL CREMATORY AND COLUMBARY Branch managers and corporate officers of Eternal Gardens, led by D. Edgard A. Cabangon (in dark shirt, eighth from left), chairman of the board and CEO, are photographed with Fr. Dakila Ramos of the Holy Trinity Parish following the blessing and inauguration of the St. Michael Crematory and Columbary at the Eternal Gardens branch in Barangay Balagtas, Batangas City. The opening of the crematory and chapel is part of the ongoing expansion moves of Eternal Gardens. Others in the photo are (from left) Eternal Gardens Lipa Branch Manager Jocelyn Ann A. Buendia, Vice President for HRMD Victoria C. Nava, VP for Finance Marvin C. Timbol, Eternal Plans Inc. VP for Operations Jaime B. Bangalan, Eternal Gardens President and COO Numeriano B. Rodrin, VP for Sales and Marketing Jose Antonio V. Rivera, former Santa Teresita, Batangas, Mayor Bayani Andal, Eternal Gardens Vice Chairman of the Board Benjamin V. Ramos, Eternal Gardens Balagtas, Batangas City, Branch Manager Arlin G. Delos Reyes, Assistant Branch Manager Crisanta D. Villamor, Eternal Gardens Santa Rosa Branch Manager Alexander R. Atienza and Executive Secretary Rosario T. Lachica.

Japan to ink 5 new grants for Mindanao B C U. O

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HE Philippines will be signing several financia l-assistance agreements with the Japanese gover nment for education and agriculture-related projects in Mindanao next week.

In a statement, the Japanese embassy said Japanese Ambassador Kazuhide Ishikawa will sig n f ive g rant ag reements worth P20 million collectively on March 14. The grant from Tokyo will finance five projects, including three projects in education and two projects in agriculture.

“These projects are part of the Japan-Bangsamoro Initiatives for Reconstruction and Development [J-BIRD], the Japanese government’s package of

assistance in support of peace and development in conflictaffected areas in Mindanao,” the Japanese embassy said.

The three education projects to be financed by Tokyo i nc lude t he reconst r uc t ion of Classrooms for Al Azhaire Academy in Cotabato, Maguindanao, as well as the construction of classrooms for Bayugan National Comprehensive High School in Bayugan, Agusan del Sur. Japan will also finance the construction of a school building at Kalbugan Elementary School in Mindanao.

The agriculture projects included in the package are the procurement of equipment and construction of posthar vest facilities for farmers in Ampatuan, Maguindanao, and the provision of a tractor for small

and marginalized Bangsamoro farmers in Lanao del Norte.

The new package of assistance will be signed in Cotabato City on Monday. Secretary Senen Bacani, member of the Government Peace Negotiating Panel for Talks with Moro Islamic Liberation, is among those expected to attend the signing ceremony.

A lso expected are Commissioner Abdulla Camlian of the Bangsamoro Transition Commission and Dr. Safrullah Dipatuan, chairman of Bangsamoro Development Authority.

Since the launch of J-BIRD in 2006, Japan has supported 87 grant assistance, including the above-mentioned projects with a total amount of $7.67 million through Grant Assistance for Grassroots Human Security Projects under J-BIRD.

The country’s total official development assistance (ODA) portfolio as of December 2014 amounted to $14.37 billion, consisting of 76 loans worth $11.18 billion and 449 grants worth $3.19 billion.

The World Bank was the biggest source of loans with 39.8 percent, or $4.45 billion, of the total, followed by Japan International Cooperation Agency and Asian Development Bank with 28.3 percent, or $3.16 billion, and 20 percent, or $2.23 billion, respectively.

For ODA grants, the United States, the United Nations System and Australia were the three leading providers, with 36.1 percent, or $1.15 billion; 19.1 percent, or $608.5 million; and 18.4 percent, or $587.02 million, respectively.

Thursday, March 10, 2016

A4

Banking&Finance BusinessMirror

banking@businessmirror.com.ph

RCBC launches inquiry into alleged money-laundering activities at branch

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HE Yuchengco-led Rizal Commercial Banking Corp. (RCBC) issued a statement on Wednesday saying it has launched an inquiry into events allegedly involving one of its branches in Makati City to moneylaundering activities.

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The lender said it has come to their attention that some $81 million worth of deposits at its Jupiter Street branch in Makati City have ostensibly been linked to gambling-related money-laundering activities.

In a statement sent to financial reporters on Wednesday, former Finance Minister and RCBC Corporate Vice Chairman Cesar E.A. Virata gave assurance the lender is cognizant of its deposit secrecy obligations and will, at all times, honor the confidential nature of all deposit accounts.

“The bank has timely submitted the required reports to the Anti-Money Laundering Council (AMLC) and will cooperate with government regulators. The bank investigation will involve a committee appointed by the board, assisted

by SGV and external counsel,” RCBC said, following a report that one of

THRIFT LENDING UNITS KEY TO RURAL DEVELOPMENT

A

LTHOUGH the industry harbors fears of desruption as consequence of the ongoing integration of financial systems in the region, thrift banks remain optimistic and reported sustained growth in terms of assets and loans in 2015.

Chamber of Thrift Banks (CTB) President Rommel Latinaza on Thursday said that as of 2015, total thrift banks assets and loans expanded in double digits.

In particular, thrift banks’ assets grew 13 percent to P880 billion in 2015. Loans, meanwhile, grew 20 percent to reach P572 billion, while deposits grew by 14 percent to P700 billion in 2015.

“We remain steadfast primarily because we operate in market niches, where we believe that we have a

strong foothold as far as the countryside is concerned, as far as the market that we address—primarily the MSMEs [micro, small and medium enterprises.] That is basically the growth potential as far as the economy is concerned,” he said.

Latinazo also called for continued government support for the sector.

“The presence of thrift banks, especially in the countryside, provides that support even with high competition brought about by the new entrants,” Latinazo said.

“But we believe because of the long-standing presence that we’ve had in the market, we will be able to sustain the business that we’ve been doing the past years,” he added.

Bianca Cuaresma

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more easy-access financing.

The upcoming May elections, however, may have raised questions on the sustainability of the country’s economic achievements.

Taking a proactive stance of making foreign-portfolio investors well informed of the positive economic outlook for the Philippines and the factors supporting this, officials from the Bangko Sentral ng Pilipinas (BSP), the Department of Finance and the Investor Relations Office visited the US-based asset managers.

Finance Secretary Cesar V. Purisima led the team in the New York leg, while National Treasurer Roberto Tan took the lead in the Boston and Los Angeles legs.

BSP Deputy Governor Nestor A. Espenilla Jr. joined the team in New York and Boston.

The US is one of the key markets for Philippine debt securities.

Purisima said, “Restoring confidence in the Philippines is a large part of why we are riding this virtuous cycle today. As we work toward sustaining reforms to continue being Asia’s resilient bright spot, the work endures.”

“With 24 positive credit-rating actions behind us—the most among any sovereign in the past five years, we’re all hands on deck in strengthening confidence in our country,” Purisima added.

Tan said, “In the fiscal sector, including the area of liability management, both legislative and administrative reforms instituted over the years, will help see to it that the Philippines stays on the path of a declining debt burden.”

RCBC Plaza in Makati City JEREMAE JUMAO-AS

“In turn, the continually widening fiscal space will allow the government to invest even more in infrastructure and social services, for a sustainable and inclusive growth,” Tan added.

Espenilla remarked: “The Bangko Sentral ng Pilipinas, which enjoys policy independence and fiscal autonomy under the law to pursue its mandates, is one source of policy continuity that bridges transition in political leadership.”

“Key structural reforms implemented in the areas of monetary policy and bank regulation will help the economy continue to enjoy price and financial-system stability, which are both crucial in helping maintain a robust and stable economic growth for the long term,” Espenilla added.

The Philippine delegation cited efforts to institutionalize economic and governance reforms, such as through administrative measures and legislation. These reforms will help ensure sustainability of the country’s economic gains, despite changes in political leadership.

Among the major legislative reforms are the sin-tax reform law, the Foreign Banking Liberalization Act, amendments to the Cabotage law, the Tax Incentives Management and Transparency Act, amendments to the charter of Philippine Deposit Insurance Corporation and the Philippine Competition Act. Among the administrative measures are rules rationalizing and making more transparent the budget process, strengthening of the Public-Private Partnership Program, enhancement

Bianca Cuaresma

Japan spins wheels as wary consumers stash their cash B E K

Manila trumpets economic gains before T global portfolio investment managers

ENTRAL bank and finance officials at an ongoing economic roadshow in the United States gave assurance the country’s economic gains are sustainable not just for now but for the long haul.

In a nondeal roadshow (NDR) set in New York, Boston and Los Angeles from March 4 to 9, the officials were scheduled to meet with executives from 18 assetmanagement companies with the aim of sharing the Philippines’s positive economic narrative.

The Philippines used to suffer from stubborn speculative credit ratings. But under President Aquino, the economy in 2013 finally secured investment-grade sovereign credit ratings from the three major international credit rating agencies—Fitch, Standard & Poor’s (S&P) and Moody’s— which cited significant improvement in its macroeconomic fundamentals and governance standards.

This was followed by another upgrade in 2014 by S&P and Moody’s to “BBB” and “Baa2”, respectively, which are both a notch above the minimum-investment grade. These ratings are assigned a “stable” outlook.

The turnaround in the Philippines credit story has led to lower interest rates on debt papers of the Philippine government, thereby reducing its borrowing cost.

The investment-grade ratings also have influenced a decline in commercial-lending rates, allowing businesses and consumers in the country to

its branches was allegedly involved in outlawed transactions.

“I condemn as malicious and actionable insinuations that the top management of the bank knew of and tolerated alleged money-laundering activities in one branch. I will fully cooperate with all ongoing inquiries and believe that I and consequently the bank’s management will be fully vindicated,” RCBC President and CEO Lorenzo Tan also said in a statement on Wednesday.

These were made in reaction to allegations that millions worth of funds stolen from the Bangladeshi central bank by computer hackers illegally entered the country and subsequently laundered with the help of RCBC branch personnel.

Virata vowed to issue updated reports and statements as the investigation progresses.

and modernization of the procurement processes for better transparency, regulations that expand the taxpayer base for improved revenue collection and regulations that make credit more accessible to micro, small and medium enterprises and to low-income households.

The roadshow in the US was part of an overall effort to help maintain investor confidence in the Philippines, which has become one of the fastest-growing emerging markets in the world.

Its GDP grew by an average of 6.2 percent from 2010 to 2015.

For this year, the government has set a GDP growth target in the range of 6.8 percent to 7.8 percent. The International Monetary Fund estimates that the Philippines’s GDP growth potential for this year is at 6.5 percent.

The Philippines annually conducts NDRs in key financial centers globally to touch base with existing and potential foreign investors. NDRs are considered an international best practice for investor relations.

The Institute of International Finance includes the conduct of roadshows as one criteria in assessing a country’s investor relations program, as these provide opportunity for investors to directly ask government economic officials pressing questions related to a country’s credit and macroeconomy.

The latest roadshow was arranged by Citi, Credit Suisse, Deutsche Bank, HSBC, JP Morgan, Morgan Stanley, Standard Chartered Bank and UBS.

AP Business Writer

OKYO—The world’s third-largest economy is stuck in neutral, as wary Japanese consumers and corporations opt to hold onto their cash rather than spend it.

The latest data, released on Tuesday, showed Japan’s GDP contracted at a 1.1-percent annualized pace in the last quarter in further evidence the economy is failing to gain traction despite unprecedented efforts by the central bank to spur more growth.

The revised figures compared with a 1.4-percent expansion in the Julyto-September quarter. They showed a modest improvement over the previous estimate of a 1.4-percent contraction in October to December.

A monthly consumer survey for February, meanwhile, showed families were likely to cut spending further following the recent spate of turmoil in financial markets.

But more recent data suggest Japan’s growth has remained tepid in early 2016, raising the likelihood of further government moves to help boost growth. That could include further moves by the Bank of Japan (BOJ) to encourage lending, extra government spending and possibly a second delay in a sales tax hike scheduled for April 2017.

“Companies have not been as downbeat about production in the month ahead since the 2008 recession.

What’s more, consumer spending fell further in January as indicated by dips in ‘core’ household spending and retail sales,” Marcel Thieliant of Capital Economics said in a commentary.

Prime Minister Shinzo Abe faces pressure, both at home and abroad, to deliver faster results three years after launching a recovery strategy, dubbed “Abenomics” that helped boost share prices and corporate profits but has not rekindled growth as quickly as hoped.

Abe will be hosting a summit of the Group of Seven industrial nations in central Japan’s Mie prefecture in May. His economy minister, Nobuteru Ishihara, said on Tuesday that ahead of that meeting, the government would

convene several seminars with top economic experts to study the global economy and how to cope with slowing growth.

Japan’s economy grew 0.5 percent in 2015 after flatlining in 2014.

In quarterly terms, the economy shrank 0.3 percent in the last quarter, compared with a preliminary estimate of a 0.4-percent contraction.

Business investment climbed 1.5 percent, helping to offset a decline in spending on housing. Overall public investment dropped 3.4 percent.

Economists are divided on whether the BOJ, which holds a policy meeting next week, will expand asset purchases that are pumping trillions of yen (hundreds of billions of dollars) into the economy to help combat deflation.

Last month the central bank began charging a fee on some commercial banks’ deposits, imposing a “negative interest rate” policy that has driven bond yields and interest rates on mortgages and savings deposits lower.

Stuck with diminishing returns on their savings and resistant to a newly implemented official identification system known as “My Number,” many Japanese households are shifting investments overseas or just stashing cash at home: sales of safes have soared so quickly that retailers say manufacturers cannot keep up with demand.

BOJ Governor Haruhiko Kuroda defended the central bank’s strategy in a speech Monday. Companies and consumers will eventually begin spending more, he said, enabling Japan to reach a 2-percent inflation target and vanquish deflation.

“Japan’s economy has improved significantly from three years ago,” Kuroda said, pointing to low unemployment and record-high corporate profits that mostly reflect a weakening of Japan’s currency thanks to the BOJ’s monetary easing.

Since banks’ profit margins are being squeezed, “there is a strong concern that the introduction of a negative interest rate will make the situation even worse,” Kuroda said. But he said he was confident that ending deflation would lead to higher interest rates in the long run.

Asean

BusinessMirror Editor: Max V. de Leon • Thursday, March 10, 2016 A5

www.businessmirror.com.ph

A view from Thailand Asean-EU Perspective

HENRY J. SCHUMACHER

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HE European Chamber of Commerce of the Philippines (ECCP), being a member of the important European Union (EU)-Asean Business Council located in Singapore, participated in meetings with Asean and EU trade officials (including Trade Secretary Adrian S. Cristobal Jr.) in Chiang Mai. Prior to the meeting with the trade officials, we had an interactive exchange with EU Trade Commissioner Cecilia Malmström. Main messages from the series of meetings: n Asean and the EU are looking forward to an expansion of the already fast-growing trade between to the two regions; n Both regions are interested in pursuing the free-trade agreement (FTA) negotiations: After the EU-Vietnam FTA has been agreed upon, the Philippines is next on the agenda with negotiations starting in May; the scoping exercise with Indonesia is ongoing; Malaysia is also on the list. The FTA with Singapore was finished some time ago already. Eventually, a region-to-region FTA should be achieved; but that seems to be a few years away. n We also agreed that Asean-EU relations and business opportunities need to be more effectively demonstrated; We suggested major events both in the EU (Brussels) and in Asean (the Philippines in 2017, when the Philippines chairs Asean). n With regard to 2017 in the Philippines, we are looking at an EU-Asean business summit, attended by Asean and EU government officials and CEOs from the EU and Asean. n Energy efficiency—The Federation of Thai Industries has launched a survey on factories’ energy management nationwide to seek ways to help the industrial sector consume energy efficiently and cut costs. The Thai industrial sector consumes 38 percent of the country’s energy of 27,000 megawatts per annum. Reducing energy consumption in factories will benefit both national energy security and company profits. This is exactly mirroring the efforts of the ECCP/EnergySmart program developed with the Philippine Economic Zone Authority (Peza). We are looking forward to deepen the cooperation in March with the involvement of Peza Director General Lilia B. de Lima and Deputy Director General Tereso O. Panga. n How to attract foreign companies—The Thai Board of Investments (BOI) has formed a public-private partnership (PPP) involving government officials and private-sector representatives to develop strategies on pursuing and attracting select foreign companies to invest in targeted industries. Targeted industries are those that create high value and have strong growth potential; they will be classified into four groups: 1. Food, agriculture and biotechnology; 2. Digital economy; 3. High-tech industry (including petrochemicals, medical supply and robotics); 4. Creative economy (including film, animation and other entertainment).

I suggest that this approach be copied by the BOI in the Philippines. n Water: The finite resource—Thailand is suffering from a severe water shortage in many provinces, affecting agriculture, business and society. Hospitals are reporting water problems, and the government warned residents in Bangkok that there will be enough tap water only up to July.

This demonstrates clearly that the ECCP advocacy on water, water treatment and water conservation is timely and needs to be highlighted in many parts of the country. The ECCP is planning major water forums in Manila, Cebu and Davao. Also in this area, it would make sense to establish a PPP to constructively look at the issues involved, the solutions available and the implementation environment needed. n Tourism for inclusive growth—The Tourism Council of Thailand is on track to draft a five-year tourism plan to offer new attractions under eight clusters to international markets. The council will focus on promoting attractions in the clusters under a Mekong region scheme: Lanna culture, south Isan, the Thai culture, the Chao Phraya River, the east of the Golf, the west of the Golf and the Andaman coast. The basic idea is to have more products to lure repeat visitors to the country and attract first-time travelers.

Myanmar transition set, but president may not be Suu Kyi

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AYPYITAW, Myanmar—Nobel laureate Aung San Suu Kyi’s decades-long battle to bring democracy to Myanmar is likely to come to fruition on Thursday with a whimper, not a bang. Despite leading her party to a smashing election victory last year, she seems certain not to become her country’s leader.

After years of struggle and sacrifice

by Suu Kyi and her legions of followers, it will be as much an anticlimax as a historical watershed when her National League for Democracy party takes over the reins of government on April 1 from the military-backed party that’s been in power since 2011.

In practical terms, the new president will become known Thursday, when the upper and lower houses of parliament and the military bloc that holds a constitutionally mandated 25 percent of seats will nominate their presidential candidates. But until those nominations, virtually no one outside of Suu Kyi’s inner circle knows who will be the country’s next leader.

The new president is virtually certain to be from Suu Kyi’s party, since it holds majorities in both chambers of parliament, giving it not only the right to

make two nominations but the numbers to pick the winner. The two runners-up become the country’s vice presidents.

But Suu Kyi, 70, cannot be president because the constitution bars anyone with a foreign spouse or children from holding the executive office.

Suu Kyi’s two sons are British, as was her late husband.

No problem, Suu Kyi said after her party’s massive election victory last November assured her followers that she would be the one pulling the strings in the new government. The 1991 Nobel Peace Prize winner explained what she meant in an interview with the BBC two days after the election.

“Well, I’ll make all the decisions, it’s as simple as all that,” she said, dismissing constitutional requirements as a technicality “that won’t stop me from making all the decisions as the leader of the winning party.”

Elaborating that same day with Singapore’s Channel NewsAsia, she seemed even more dismissive of political etiquette, saying that the president picked by her party would “have to understand this perfectly well, that he will have no authority. That he will act in accordance with the positions of the party.” AP

Thailand takes sales pitch to investors to reverse slide

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HAILAND is taking its investment pitch straight to foreign companies to help lure them to an economy facing the threat of a prolonged slowdown amid political uncertainty.

The government will send “direct sales” teams out to meet targeted companies as early as next month to get them interested in investing in Thailand, instead of Cambodia, Lao PDR, Myanmar and Vietnam (CLMV), Finance Minister Apisak Tantivorawong said in an interview on Tuesday in Bangkok.

“We would like to go to see many corporates worldwide, all the big corporates, telling them to invest in Thailand,” he said. “If they would like to invest in CLMV, Thailand should be the place.”

Once a leading Southeast Asian manufacturing powerhouse, Thailand is at risk of losing out to its neighbors, after years of political turmoil undermined its allure as an investment destination. Prime Minister Prayuth Chan-Ocha’s government is seeking to revive confidence by stimulating domestic demand, approving measures to boost farmer incomes and pledging 1.7 trillion baht ($48 billion) of transport projects.

Neighboring Vietnam has overtaken the country as Southeast Asia’s biggest exporter to the US, and Thai growth has slowed in recent years to lag its largest peers in the region.

$48B

Value of transport projects pledged by Chan-Ocha

Since toppling the elected government in a May 2014 coup, the junta has struggled to restore confidence.

Applications for foreign direct investment slumped 89.6 percent to 106.5 billion baht in 2015 from a year earlier, while exports have fallen for three straight years.

GDP is projected to grow more than 3 percent this year, which is still too low for the country to escape the middle-income trap, according to Apisak. His growth forecasts exceed the World Bank’s projection of 2 percent for this year, and less than 3 percent through 2018.

“What we believe is that if we lay good fundamentals for Thailand, Thailand should be able to shift away

THAI Finance Minister Apisak Tantivorawong speaks during an interview in Bangkok, Thailand, on Tuesday. BLOOMBERG

from this low-growth scenario,” he said. The government is seeking to focus on industries “that are more high-tech, technology-driven, like robotics, aviation, medical hub,” he said.

With growth of 5 percent a year, the country could shorten its path to high-income status to 17 years from 27 years, he added.

Political risk

WHILE the political environment in Thailand is more stable than two years ago, uncertainty over what will happen next is still weighing on investor confidence, Apisak said.

“If you look at the newspaper, you see a lot of this kind of thing: What’s going to happen with the constitution? What’s going to happen after the election?” he said. “They don’t know what the future is going to be without this government. So that’s one of the worries that they have.”

He said he was confident the government was working to implement reforms across the country that would “keep this country stable and growth at a reasonable rate.”

While delays in infrastructure projects had hurt confidence, work is now on track, with the government expecting to inject more than 60 billion baht in infrastructure in the second half of this year, Apisak said. That should spur private investment, as well, he said. “When the private sector looks at the government investment like this, they start to invest,” he said. “Government investment is just like a catalyst.”

Apisak said he didn’t agree that Thailand was losing competitiveness to its neighbors or that it should be growing as fast as them.

“They are at a lower level,” he said.

“They are just like Thailand 20 years ago.” Bloomberg News

As Malaysia central bank chief exits, successor remains mystery

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ALAYSIA’S central bank Governor Zeti Akhtar Aziz will oversee her last interest-rate decision on Wednesday before she exits from an institution she’s led for 16 years. Investors are still in the dark about who will replace her in May. Zeti’s leadership began in turmoil, when she briefly acted as governor in the midst of the Asian financial crisis, and will be ending with the nation gripped by what may be the biggest political impasse since independence in 1957.

The rate decision itself is an easier call: all 20 economists surveyed by Bloomberg News forecast no change to the benchmark, now at 3.25 percent. Zeti has kept the rate there for nine meetings.

A no-nonsense central banker with a doctorate in economics from the University of Pennsylvania, Zeti, 68, has proven one of the monetary policy-makers least likely to surprise markets—she has changed the key rate just twice in five years, compared with 10 times by her Australian counterpart.

Known to strike fear into her staff with a stern look, Zeti emerged as a thorn in the side of Prime Minister Najib Razak, as the central bank urged criminal charges against a troubled state-owned fund he partly oversees. The attorney general rejected those recommendations, and both the premier and the fund have consistently denied wrongdoing. Najib has given no indication who he will pick to replace Zeti when her term ends in April, threatening investor confidence in Malaysia, economists say.

“The fear now is that it’s going to be someone from outside who doesn’t have the same kind of central banking experience,” said Chua Hak Bin,

a Singapore-based economist at Bank of America Merrill Lynch, who hails from Malaysia. “It’s not a process that really builds up confidence.”

Aides to Najib said earlier this month there is no indication when the announcement on the next governor would be made. The central bank didn’t reply to an e-mail seeking comment on updates to the succession planning process.

Zeti is one of Asia’s longest-serving central bank heads, having taken office in 2000, two years after her stint as acting governor in 1998 amid a then-controversial move to peg the ringgit to deal with capital outflows.

A governance committee under the auspices of Bank Negara Malaysia has the responsibility of vetting internal and external candidates before Najib’s government picks one to be endorsed by the king.

Zeti has said there is a succession plan within the central bank, where there are capable people to replace her, and that her successor shouldn’t be a politician. She had hoped the committee would conclude its assessment at least three months before she was scheduled to leave to allow for a proper transition.

Apart from the three deputy governors at the bank who could potentially be promoted, people familiar with the matter said late last year candidates mooted to replace Zeti included Mohd Irwan Serigar Abdullah, secretary-general of the Treasury; Awang Adek Hussin, the ambassador to the US and bankerturned- government minister Abdul Wahid Omar.

For all the political angst, Malaysia’s economy continues to chug along with growth in excess of 4 percent, handsomely outpacing countries with similar levels of per-capita output, such as Russia or Argentina.

The fear now is that it’s going to be someone from outside who doesn’t have the same kind of central-banking experience.”

—B  B  A M L The uncertainty over Zeti’s replacement risks distracting the central bank from its focus on managing the economy as a recent rebound in oil prices and the ringgit provides Malaysia with an opportunity to replenish foreign reserves, said Weiwen Ng, an economist at Australia & New Zealand Banking Group Ltd. in Singapore.

“Bank Negara Malaysia is one of the better central banks in this region, so it has to actually maintain this kind of perception and aura,” Ng said. “Otherwise, it could risk some confidence deficiency, especially if the reserves” are among the lowest in the region, he said.

Money market slumps

THE cost for banks to borrow in Malaysia’s money market slumped to a six-month low on speculation the central bank will cut the amount of cash lenders must set aside as reserves.

The ringgit retreated for a second day, tracking declines in Brent crude

and global equities. Malayan Banking Bhd. and Scotiabank predictBank Negara Malaysia will reduce the statutory reserve-requirement ratio by 50 basis points at Wednesday’s meeting after a similar reduction last month. The authority is turning to other tools to ease monetary conditions as quickening inflation limits its ability to lower benchmark rates.

The three-month Kuala Lumpur interbank offered rate at which lenders charge each other for short-term loans has declined to 3.71 percent, the lowest since August. It has fallen 11 basis points from January 21, when the central bank unexpectedly cut the reserve-requirement ratio while keeping the benchmark interest rate unchanged.

“Clearly, the SRR cut helps a lot,” said Lawrence Lai, an interest-rate strategist at Standard Chartered Plc. in Singapore. “Bank Negara needs to watch the moves by the Federal Open Market Committee and other major central banks, and May should be a better timing to do more easing.”

Ringgit drops

GOVERNOR Zeti Akhtar Aziz will keep Malaysia’s benchmark rate at 3.25 percent for a 10th straight meeting, according to all 20 economists in a Bloomberg survey. The central bank has pumped 40 billion ringgit ($9.7 billion) into the banking system via monetary operations since early 2015, including the reverse- repurchase facility, it said in a statement accompanying January’s policy decision.

The ringgit weakened 0.5 percent to 4.1390 a dollar as of 11:01 a.m. in Kuala Lumpur, according to prices from local banks compiled by Bloomberg. The currency has risen 3.7 percent this year. Bloomberg News

TheBroa

Business

A6 Thursday, March 10, 2016

A SURVEY: ELECTION I

B T B L J.

ASKED for, and got some, questions from you to answer. Let’s jump right in. What are the implications of this election? Most important has to do with the conduct of the third automated election. Will it be clean or dirty? And to what extent. There were questions about the first one and more questions about the next when the count was stopped at 80 percent. But the winner in the first was the most likely; so one could not care less about dodgy local elections then nor the outcome of midterm elections, likewise marked by fraud. As always with us Filipinos, we moved on. We do that a lot; can’t undo what’s done. But we keep an eye out for an unpleasant repetition.

If the question is: Is the Philippines a good place to invest?

Your analysts are better paid to tell you that. We cannot explain what our vaunted 6.5-percent GDP growth rate consists of. I sit on the board of an international shipping company and we are puzzled. Exports are down and imports are lower. John Mangun, a colleague in the paper I write for, answered my distress call by saying: it is a diverse economy; 40 percent or more depending on the industry is underground.

So if something’s growing big in our trousers—maybe we’re just happy to see you. One explanation is smuggling; and while its off-books, it must turn up in consumer spending and in expanded value-added tax (E-VAT) revenue.

Be all that as it may, the Philippines will always be inviting—though equally Filipinos will always be suspicious of those who turn up.

You’ll hear talk of sweeping reforms of society and business from those who don’t count for anything in either sector. Pay it no heed. Even our Marxists have a shallow understanding of what they profess. And our capitalists do not read. They just make money hand over fist, in the very environment you are in now. The Philippines is one of the most profitable countries on Earth, Mangun says. “The average net before-tax profit margins of our top 100 stock exchange listed companies is 12 percent.”

And we pay our debts. Even when we had the moral standing to do something right about a huge and anomalous foreign debt, we did not repudiate but repaid every dollar—largely by more borrowings, which, in turn, we are paying down to the last dollar.

The previous administration was addicted to paying down foreign debt with any money at hand. It was a substitute for bold but uncertain policies and programs.

As the writer of the first president’s stirring speeches committing to pay back every dollar that was lent by foreign bankers with malice aforethought, we, in her Cabinet, thought it was too much of a bother to dispute the debt.

But because of that experience, we hardly borrowed again internationally. Mangun assures me that our fiscal position is as good as it gets. We are not and never

will be Greece by any means, nor Italy and Spain for that matter.

“The Philippine banking system, by any stress test, is the strongest in the world.

The undercapitalization of some major banks is being answered through Asean integration investment,” Mangun says. Whatever weaknesses may have revealed themselves in the 25 years since democracy came back, they were addressed by the previous president’s fiscal reforms; which this president has respected.

After the revolution, and without skipping a beat, we adhered to the World Bank-International Monetary Fund programs imposed on the Marcos regime for its profligacy. We swallow the consequences even of malfeasance committed in our name and at our expense—but we remember.

Thus, I was in Congress when US Treasur y pressured us to adopt new fa ngled f ina nc i a l schemes, like Secur itization.

We were lectured on what it entailed, which wasn’t clear even to the American lecturer. So instead of opposing it, which would have put pressure on us and being Filipinos, we warmly adopted the measure and proceeded to doctor it—to a degree of complexity that made it unusable.

That spared us the fate of the US in the global financial crisis that broke out a year or so later. “Further, our banks believe that ‘ if we don’t understand it, we don’t invest in it.’ With the collapse of Lehman Brothers, total Philippine bank exposure was $50 million,” Mangun says.

The international assessment then was that the Philippines was the least worst off. And just to make sure, Congress readily passed an onerous E-VAT to create a buffer for the Wall Street debacle, whose ruinous ripples continue to roll around the world.

Then US Treasury insisted on a stringent antimoney laundering law. The Bankers Association of the Philippines strongly opposed it as designed to drive good money and bad equally deeper underground, only to resurface in the banks of the very countries pressing us to adopt it. But the candor of the US Treasury people, who came over, won us over completely.

The Federal Reserve official

said, “If you want a law full of loopholes, adopt the US law because it was one of the first. But you Filipinos listened to Robert Rubin who opposed antimoney laundering as violating free enterprise in all things. Since now we know better, we are proposing the latest version with the loopholes plugged and screws tightened further. We, in Congress, made t wo exceptions, purely gratuitously; no one asked us to, no one bribed us—or the House leadership pocketed it all. McKinsey made a presentation for the casinos promising to build a Disneyland here. That won us over. While Chinatown brazenly warned the committee that if we include tax evasion among the predicate crimes, they’d take all their money to Hong Kong and transact their smallest business here with letters of credit. I am not sure that can be done, but we are lawyers in Congress, we couldn’t take the chance.

We are a rational, sober, tolerant and a not-at-all demanding people. I can’t speak for government officials, with whom investors must deal. But a lot of the delay and obstruction that potential investors experience comes from strong local and foreign players already in place; thus, Telstar’s DOA. But there is no regulatory capture. A strong player can get preferential treatment for itself and discriminatory treatment of potential competitors but only on a case-to-case basis. Every path smoothed, and every path blocked, is a one-night stand, then left on the dresser when the client leaves the room he paid for.

Nobody gets to sleepover. An official can be in someone’s pocket for one transaction, but he has not taken up residence there.

Among Filipinos, there is no popular identification of business with progress as there is among Americans of all classes.

There is suspicion. Don’t get me wrong, Filipinos really are as welcoming of guests as they appear to be; but after their experience with foreign finance in the martial law years, they tend to count the silverware after the party. In summary, let me say, if you like the business environment today, and if you have made money out of it, that environment will stay.

Nothing about it will change. We are just like that.

Back to automated elections, of which I was a main author and sponsor in the Lower House, as chairman of suffrage. If it turns out to be dodgy there will be some unrest. But it will be strictly politics. Business will be unaffected.

We toppled a president elected with the biggest percentage of votes in the history of our democracy—without a hiccup. He left; life went on as usual; he went to jail and seemed to take well to it.

One thing about Filipinos, whatever happens, our people lose hope but they never lose it.

Maybe because nothing really bad has happened to us, like Argentine defaults that wipe out savings. At any rate, we don’t off half million Chinese because our generals are quarreling over succession; or go berserk, as the Economist reports the natives doing in Malaysian plantations. We are a calm, circumspect and patient race, but we are not fools. We are too polite to turn away unexpected guests with uncertain credentials. But a serious investor must be big enough to push his own investment if there are strong players in place. He will meet delays but no overt resistance—just delay.

The public-private partnerships’

failure to take off is partly due to competitors or indecision among them as to who takes what, when and for how much. But I credit, as well, an idiosyncratic but honest president, who’d rather not spend at all, than see public money stolen or wasted. Call it paralysis but it is not robbery of which we had some in foreign ventures.

As for electoral mandates, the notion of it was invented by halfeducated journalists attempting an anachronistic comparison with Chinese emperors. Elections do not confer mandates on winners.

All that elections confer is the job that was up for grabs.

Electoral victories don’t sharpen minds or effect a sudden increase in learning on the part of the victors; bad habits persist and worsen with the greater opportunities to indulge them. So again, there will be no surprises as you see the candidates today, so you will find them in office: with the same crimes and misdemeanors, the same inadequacies and qualifications, and the effects on them of their experiences such as those have been. All that is common knowledge and accurate.

But this must be said, the president i a l of f ice does i mbue the holder with a sense of

t ra n scendent res pon sibi l it y.

W hen the prev ious president was pressured to adopt highly unpopular fiscal reforms, which made her safe retirement even more parlous, I suggested she repeal those onerous reforms before departing. That would leave the succeeding gover nment scrambling for funds and unable to harass her. She said, “Oh, Teddy, Teddy, that’s such a smart idea—and so irresponsible. I am a president.” She is under detention by a government that has claimed all the credit for her reforms. So, in sum, you might say ever yone is for sale but not all the time; they don’t stay bought; ever yone is a free agent; and, of course, some things are outside the commerce of man. This president couldn’t buy congressional support for a law devised by Western diplomats to give away part of our countr y to Muslim terrorists.

Why are the candidates running for president?

Grace Poe because she is popular and I told her that when she topped the senatorial race, “Do not h i ng ; st a r t c a mpa ig n i ng ; take no hard line on any issue; press f lesh.” She has a problem w ith citizenship because she

was a foundling, but a foundling by definition cannot prove a nationality determined by unknown parents.

Jejomar C. Binay is running because he was far and away the leading candidate for the first four years after his unexpected victory as vice president. Now he is running for his liberty because of the accusations against him.

Rodrigo R. Duterte came out of left field and he’s still pitching from there. He made a big splash at the start—great foreplay you might say but he seems to be fading in the main act.

Mar Roxas is my friend. And t hat ’s t hat. He tra i ls in t he polls but his stoutest supporters say, “So long as we are ahead of Miriam, in spite of our lousy yet overfunded campaign, that’s good enough for now.” They find it funny; I don’t. I hope I never have friends like that. Mar Roxas is the only candidate whose platform of government you must study because this guy means what he says—but sad ly few like what he is saying. On the Trans-Pacific Partnership, you’d expect he’d be for this piece of elitist policy because of his New York connections, yet he came right out and said, “No way.”

aderLook TALK TO INVESTORS

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www.businessmirror.com.ph | Thursday, March 10, 2016

BM GRAPHICS: JEREMAE JUMAO-AS It will make the lives of most people miserable. He knows his stuff—the other candidates do not pretend to. But the worst part is that when he knows or rather thinks he’s right, he won’t change his mind, almost as if he cannot. And, of course, his decision won’t change either. Ideas take hold of his actions and don’t let go. This is good in theory and says something good about a man who takes ideas seriously; but for practical businessmen it is mostly bad. Mar doesn’t know, worse, yet, he doesn’t want to know how to deal.

Miriam Defensor-Santiago is ill.

The only concrete program is simple and came from Binay.

He told the Chinese Chamber of Commerce that he would fire Kim Jacinto-Henares within 30 minutes of taking his oath. The response was nothing short of epic; old hands with liver spots fairly bled from the clapping and crippled businessmen stamped their feet repeatedly in rapture.

Some issues will be immediately addressed by all the candidates: the Metro Rail Transit (MRT) breakdown for sure—it is a catastrophe tantamount to a human-rights crisis. Hundreds of thousands have lined up for

hours in the past two years for rides that don’t arrive, and when they do cannot move on. These are the people who really work for their pay. The idea of stopping the subsidy for the MRT was something out of the Washington Consensus. It was ignorant, cruel and a savage attack on Philippine productivity. The only important issue is China. What it does and what happens will severely impact business ever y where.

Should the Philippines let itself be drawn into a deep hostility with China—the richest country in the world going by the money it spends on friends? And all for the sake of protecting freedom of navigation when we have nothing navigable to speak of.

T he US has stated clearly.

It will take no side in any territorial dispute. What if China claims the Philippines? The US insists it will take no side. As for the reefs, there’s nothing under it. I was with an oil exploration company combing that area for years. Nothing.

It doesn’t hurt to lodge a protest with The Hague regarding China’s odd program of making new islands out of seawater to which they lay the most ancient claims. It is sort of like making

the claims come true; or staking the claims when there isn’t anything yet to claim.

If we win, China will ignore the decision and the West will accept its disregard. But we will be treated more carefully in the bilateral talks that China believes is alone consistent with its new sense of self-importance after a century of humiliation and depredation at the hands of Japan and the rest of the West. Why is China suddenly so assertive? The leading expert on Deterrence explains that it is nothing personal, or national if you wish: it is just the unstoppable logic of growing national wealth. The richer a countr y gets, the bigger the military it will build—to address the basic insecurity of all nations. And that always looks aggressive.

There is nothing malicious about it; either wealth creates power or just more wealth—wealth that another nation can take from it.

It is not true that in war everyone is a loser. War has winners and the prizes are real and big.

Conquests pay. Just because the world’s premier superpower has only come to grief in Vietnam, Central America, Afghanistan and Iraq doesn’t mean wars are losing propositions. United Fruit won

while the conflict lasted; Lockheed; and the sons of the American rich who were appointed to run down the economy of Iraq and take a lot of the money the US taxpayer poured into it.

It is not just natural resources but industry, commerce, infrastructure, financial services (as the shift of Hong Kong from Britain to China shows), even ways of doing business successfully, and, of course, the subject population—humans are still smarter and cheaper than robotics all told; all these are seamlessly incorporated by the country that conquers and added without a hitch to its wealth. Japan became richer from wide swathes of China and its major cities; Germany even more when it owned most of Europe; and Britain is still living off the dividends of Empire. Quibble all you like about the cost of it to the common Englishman, but the English elite enjoyed the dividends.

A recent study by Edward Luttwak argues that China has adopted a counter productive strategy in translating increasing amounts of its still growing wealth to more militar y purposes. This is self-defeating, he argues, because the more you arm the more your apprehensive

neighbors arm, as well; and that cancels some of the advantage of militarizing. Striking the balance of power, you discover that, as much as military power as you acquired, is as much military security you lost when neighbors answer your buildup with their own. But that’s not true. There’s military buildup and there’s military buildup. What China can afford with money, technology, population and industrial wherewithal, perhaps, only Japan and South Korea can begin to match.

But only begin. The Himalayan height of the wealth of the Indian elite rises on a sea of destitution without sight of land. Asean is a military joke.

A Southeast Asian countr y that never fought war, not even its own insurgency, and had the British do all the fighting for them, can place an order for a submarine and a thousand howitzers—but t hey won’t k now how to u se t hem u nder t he stress. A 200 -man Sulu royal army of sorts landed in Borneo and achieved a radius of control of 150 kilometers within a week of landfall, in the teeth of 10,000 soldiers with artillery before a news blackout went into effect. The last report was that

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the 10,000 were being hit by their own artiller y. And the US is too far away and China too close.

When it comes to power projection, the stopping power of water, says Mearsheimer, is like wading in drying concrete at that distance.

What Luttwak is suggesting is that the richer China gets, and the more it is in an economic position to translate riches into power, the more weak and powerless it should appear to the world, so it will be taken for granted rather than suspected and subjected to economic sanctions. Really? Then say good-bye to Wallmart and Apple.

Luttwak suggests to China, “Why fight when you can grovel while making more money and spending it on making even more money after that?”

But no big country in the world has ever been like that; even Switzerland has built up a credible defense. Mearsheimer argues, to the contrary, that countries grow rich to be strong enough to take what they want from other countries, rather than suffer what they must at their hands.

This is wisdom from Thucydides, who wrote it 2,500 years ago, about the war between Athens and Sparta: still the template of international studies now as when it was dogma in the Cold War, which ended in 1998. But it is autumn and it will soon be winter again.

W hat is the role of the Philippines in all this? Nothing but to keep away from fights not its own. It is all well and good to call a reef by a local name, but is it worth inviting Chinese animosity when there is nothing between China and us, but the ambivalence of America and the self-interest of the other Southeast Asian countries and Japan, who will strike their own deals with China after using us up as a bargaining chip?

The only American interest is the unrestrained freedom to navigate in the South China Sea. But this is perfectly congruent with China’s interest to allow that freedom w ithout exception— but only out of courtesy to foreign guests in what established cartography has long called the south Chinese sea. “Please help yourselves to the water,” China is saying, pretty much as sheiks allowed desert travelers at Bedouin wells. “You are welcome to the water as guests.”

Should the Philippines join a regional group against Chinese pretensions in the South China Sea? No. We don’t need a group hug with the powerless. We enjoy what countries on the Asian mainland do not: the stopping power of water that kept even England free across a narrow channel.

Should the Philippines deal with the Chinese problem in tandem with another great power?

The answer is no. We can do that more competently by ourselves because as much as another power can help us in dealing with our powerful nextdoor neighbor, it can also sell us up river to China.

This neutrality may annoy the US but is the posture that all future Philippine governments will take.

TEDDY LOCSIN JR.    BM .

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Thursday, March 10, 2016 | Editor: Lyn Resurreccion

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Australia hopes to return Iranian asylum-seekers under agreement

LOCKHEED MARTIN SEEKS TO LAY OFF 1,000 WORKERS

LOCKHEED Martin Corp. says its aeronautics division is seeking to part with up to 1,000 workers, as it works to stay competitive and keep its staff aligned with orders. The company is offering the voluntary program to midlevel employees in seven locations: Fort Worth, Texas; Marietta, Georgia; Palmdale, California; Meridian, Mississippi; Clarksburg, West Virginia; Patuxent River, Maryland; and Edwards Air Force Base, California. Lockheed Martin Aeronautics, based in Fort Worth, makes fighter jets including the F-35 and the F-22. The parent company, based in Bethesda, Maryland, employs roughly 126,000 workers globally. AP

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EXCATHOLIC PRIEST PLEADS GUILTY TO GIVING EXPLOSIVES TO JUVENILE

HARTFORD, Connecticut—A suspended Roman Catholic priest in Connecticut has pleaded guilty to helping a teenager buy thousands of rounds of handgun ammunition and giving the juvenile 1 kilo of explosives powder. Authorities say 58-year-old Paul Gotta, a former administrator of two East Windsor churches, pleaded guilty on Tuesday in federal court in Hartford to distributing explosive material to a person under 21. He faces up to 10 years in prison at his May 19 sentencing. Prosecutors say Gotta helped the 17-year-old purchase the ammunition in 2012, bought and then gave the explosives powder to the teen. AP

JURY RECEIVES CASE OF VETERAN ACCUSED OF BEING I.S.I.S. SYMPATHIZER

NEW YORK—A jury has begun deliberating the fate of a US Air Force veteran charged with trying to join the Islamic State (IS) group.

Jurors deliberated more than an hour on Tuesday in federal court in New York City, before going home for the day. The jury is to decide whether Tairod Pugh wanted to join the militant group during a trip to Turkey a year ago. Defense lawyers say the New Jersey resident didn’t intend to go to Syria to join the IS, a month after he lost his job as an aviation mechanic.

But prosecutors say Pugh was preparing to reject the country he had served in the Air Force from 1986 to 1990. AP

ROSEN HOTELS SAYS SOME GUEST DATA MAY HAVE BEEN BREACHED

ORLANDO, Florida—An Orlando-based hotel chain is reporting that some of its guests’ credit-card information may have been breached. Rosen Hotels & Resorts Inc. said on its web site that malware was installed on its payment card network and, in some instances, it may have identified the name, credit-card number, expiration date and verification code on the credit cards of its guests. The company said on its web site last week that it’s still trying to identify which guests may have had their data breached. Cards used at the hotel chain between September 2014 and February 2016 may have been affected. AP

PEMEX SAYS IT HAS LINES OF CREDIT TO PAY VENDORS

MEXICO CITY—Mexican staterun oil company Petroleos Mexicanos (Pemex) says it has obtained lines of credit allowing it to pay 85 percent of its vendors, more than 1,300 businesses. Pemex said in a statement on Tuesday that, at the close of 2015, it had debt of $8.4 billion of which it has paid about $1.1 billion. Company Director Jose Antonio Gonzalez Anaya met with the heads of business organizations on Monday, explaining that Pemex was experiencing a liquidity problem but was solvent. In February Pemex announced it would slash spending 22 percent and cut unprofitable production 100,000 barrels per day. AP

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IN this March 20, 2013, file photo, a sign marks the location of an oil pipeline in Irasburg, Vermont. AP

75-year-old oil pipeline shuts down

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ORTLAND, Maine—A pipeline buried under three New England states that carried foreign crude oil from the Port of Portland to refineries in Montreal for 75 years has been mothballed. The oil has stopped flowing.

The 236-mile-long pipeline was built to provide for the safe transport of crude oil to Quebec at a time when German U-boats that could sink oil tankers were patrolling the western Atlantic.

But the flow dropped to zero in January, according to state data, and a ship chandler in Portland says the pipeline had no tanker

deliveries in February. The amount of oil flowing through the pipeline has been dwindling for years, and the completion last fall of a major pipeline reversal project in Canada has left the pipeline of no use. The refineries in Quebec now get their oil from the vast oil sands reserves in Alberta.

“There is no need to move crude

oil from Portland to Montreal. That is a permanent change,” said John Auers, executive vice president of Turner, Mason & Co., a Dallas petroleum industry consulting firm.

If oil ever again moves through the pipeline, Auers said, it probably will be going the other way, bringing tar sands oil from western Canada and North Dakota to Portland Harbor for delivery to refineries on the East Coast and overseas.

While the pipeline could be repurposed to carry other petroleum products, such as natural gas, the most obvious use is to deliver crude oil to a seaport, said Sandy Fielden, director of energy analytics with RBN Energy, a Texas consulting firm.

The decision last December by Congress to lift the 40-year ban on

exports of domestic oil has made reversing the flow of the pipeline more likely, he said.

The city of South Portland, where the pipeline ends, has banned the export of oil through the city because of environmental concerns. Environmentalists say tar sands oil has greater greenhouse-gas emissions and is more corrosive, so it could leak from the pipeline.

The Portland Pipeline Corp. has sued the city in federal court. The lawsuit is still pending.

The company declined to comment. “Nothing is going to flow until this court case is resolved,” said Mark Usinger, a Portland ship chandler who, for years, has delivered supplies to the oil tankers.

“The demand is gone.” AP

Five dead in new Tunisia fighting near Libyan border T T

ANBERRA, Australia—Australia hopes to send thousands of Iranian asylum-seekers back to their homeland under a new deal with Tehran, an Australian official said on Wednesday. Foreign Minister Julie Bishop’s negotiations with her Iranian counterpart Javad Zarif were well advanced on a deal expected to be signed next week that would lift Tehran’s long-standing refusal to accept Iranian asylum seekers who don’t want to come home, The West Australian newspaper reported.

Bishop’s Spokesman Rachel Obradovic confirmed that the newspaper report was accurate. Under the repatriation agreement expected to be signed by Zarif when he visits the Australian capital Canberra on Tuesday, Australia would demand guarantees from Iran that Iranians, who returned home, would not be persecuted or punished.

The Iranian policy change could cover almost 9,000 Iranian asylum-seekers. About 400 were in Australian-funded immigration centers on the Pacific island nations of Nauru and Papua New Guinea. But most live in the Australian community. It is not clear how many of them are genuine refugees who could not be sent back to Iran, but Australia regards the majority of asylum seekers from Iran to be economic migrants rather than refugees.

They have been left with uncertain futures, with Australia refusing to resettle them and Iran refusing to take them back.

An Iranian refugee couple, who resettled in Cambodia under an expensive program funded by Australia to keep asylum-seekers from its soil, returned to their homeland in February, Cambodian and Australian officials said. Gen. Tan Sovichea, head of the refugee office in Cambodia’s Interior Ministry, said five bona fide refugees had resettled in Cambodia from Nauru under a four-year, A$55-million ($41-million) program financed

by Australia. “The Iranian couple told us that they decided to go back to Iran after they felt homesick,” Tan Sovichea said.

Last October one of two ethnic Rohingya men resettled under the deal went home to Myanmar, leaving only an Iranian and another Rohingya in Cambodia. Tan Sovichea said they appeared to be happy with their new lives. The new Australian deal with Iran would reflect Tehran’s determination to improve its economic and diplomatic relations with the West in the wake of last year’s landmark international nuclear agreement which removed sanctions. AP

Iran launches several ballistic missiles during military exercise

UNIS, Tunisia—Tunisian security forces killed five gunmen in new clashes on Tuesday near the border with Libya and are hunting violent jihadists hiding out in the area, the Interior Ministry said.

The renewed fighting came after about 50 extremists attacked the town of Ben Guerdane on Monday, promoting fighting that left 55 people dead. The exceptionally deadly incident highlighted fears about the Islamic State (IS) group’s growth in neighboring Libya.

On Tuesday night, after a tense but relatively calm day, security forces searching the area killed five suspected terrorists in the Benniri district, the ministry said in a statement.

Prime Minister Habib Essid said on Tuesday the death toll from Monday’s clashes in the city of Ben Guerdane rose to 55, including 36 attackers. Seven civilians and 12 members of Tunisia’s security forces also died, and 17 others were wounded.

“The attack that happened yesterday [March 7] showed that our military and security forces were ready,” he told a news conference.

“We won a battle, but we haven’t yet won the war on terror, and that war continues.”

No group immediately claimed responsibility for the attack, but web sites affiliated with the IS group said IS militants were handed a tough blow by Tunisian security forces. One web site published

more than 30 pictures showing militants’ bodies, as well as weapons and munitions seized.

Essid said that about 50 gunmen most of them Tunisians— took part in the attack. Only four out of the 36 attackers killed have been formally identified. Essid did not give more details about the attackers’ background, but said some came from Libya.

According to local journalist Raoudha Bouttar, there was sporadic gunfire on Tuesday in the outskirts of Ben Guerdane, as Tunisian forces searched for attackers still at large.

Tunisian forces have repeatedly clashed with extremists on the borders of Libya and Algeria in recent years, but Monday’s fighting was unusually bloody.

Tunisia has been a model of relative stability for the region since an uprising five years ago ushered in democracy and inspired Arab Spring protests against dictatorships across the region. An uprising in neighboring Libya led to the ouster and killing of longtime autocrat Moammar Gadhafi in 2011, but since then, the country has fallen into chaos, allowing the IS group to take control of several cities. The divided country is ruled by two parliaments: an internationally recognized body based in the eastern city of Tobruk, and a rival government, backed by Islamist-allied militias, that controls the capital, Tripoli.

Libyan Foreig n Minister A li

A b u -Z a k o u k , o f t he Tr i p o l i gover nment, told T he A ssoc iated Press t hat t he at t ac kers aimed at “gaining g rounds and cont rol l ing ter r itor y.”

He said his government has asked the Tunisian authorities to activate the bilateral security agreement and joint security committees, “so we can control the border and build solidarity to fight this malignant cancerous organization, which is planning to spread chaos across Tunisia.” Essid said the gunmen targeted a police station and military facilities in Ben Guerdane after launching their attack from a nearby mosque. He said attackers were arrested and gave information that led to the discovery of a weapons cache.

The prime minister also confirmed that the chief of the antiterrorism brigade in Ben Guerdane was among those killed. He was killed in his house when he was preparing to go to work, at the beginning of the attack.

According to Essid, security and military forces in the city were not caught off guard.

“We were not passive spectators because we had received info, hence our reaction and the positive results we had,” he said.

Without elaborating, Essid insisted cooperation with “brother and friend countries,” including the United States, will help Tunisia in its fight against extremism, but excluded the possibility of a foreign military intervention. AP

EHRAN, Iran—Iran’s Revolutionary Guard launched several medium-range and short-range ballistic missiles in recent days as part of a military exercise, the Guard announced on Tuesday. The missiles had ranges of between 300 and 2,000 kilometers, Gen. Amir Ali Hajizadeh, head of the Guard’s aerospace division, said, according to the state news agency Irna.

The longer ends of that range appear to exceed limits that the UN Security Council has imposed, in connection to resolutions, banning Iran from developing missiles capable of carrying nuclear warheads.

Iran says none of its missiles are designed to carry nuclear weapons.

Obama administration spokesmen said it was aware of reports of the launch but could not confirm.

They said that if the launches did occur, they would seek redress at the UN Security Council.

UN Spokesman Stephane Dujarric, asked whether the secretarygeneral condemned the latest missile launches, said the UN was looking into the reports and it was up to the Security Council to determine whether there were any violation.

“It’s important that Iran live up to its obligations under the [nuclear] deal,” he said.

The UN experts panel said last year that a missile with a range of at least 300 kilometers and a payload of at least 500 kilograms is considered by expert guidelines to be capable of delivering weapons of mass destruction The Revolutionary Guard web site said the missiles launched

during the exercises included the mid-range Shahab-1 and -2, and the multiple warhead Qiam, with a range of 800 kilometers, and the liquid-fueled Qadr F, which reportedly has a range of nearly 2,000 kilometers. It did not give the rockets’ payload capacity. The missiles have been in service in the Guard over the past years. Irna said the missiles, launched from silos in several locations across the country, demonstrated Iran’s “deterrence power” and its readiness to confront threats. State TV ran what it said was video footage of the operation, showing missiles in underground silos and flashes of light from nighttime launches.

“Israel is afraid of the missile launch since it is in range of most of our missiles. Naturally, whoever has hostility towards Iran is in fear,” said Guard chief Gen. Mohammad Ali Jafari, according to the Guard’s web site. “Our enemies have learned that increasing sanctions and security pressures have no [negative] impact on boosting of our capabilities.”

State media said the exercise was in its final phase on Tuesday.

Last October Iran successfully test-fired a new guided long-range ballistic surface-to-surface missile.

It was the first such test since Iran and world powers reached a landmark nuclear deal last summer.

UN experts said the launch used ballistic missile technology banned under a Security Council resolution. In January the US imposed new sanctions on individuals and entities linked to the ballistic missile program. AP

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Thursday, March 10, 2016

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Errors cited in investigation into killing of Honduran activist

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EXICO CITY—Humanrights defender Amnesty International said officials have made mistakes in the investigation into the killing of a Honduran indigenous leader and environmentalist.

Erika Guevara, America’s director for the organization, said on Tuesday that investigators have not tried to get statements from people the 45-year-old Berta Caceres had accused of threatening her. She also said authorities had not agreed to

Caceres’s family’s request to use independent forensic experts.

Guevara added that the only witness to the March 3 attack, Mexican activist Gustavo Caceres, was in danger because authorities won’t let him return to Mexico. He was wounded, but survived by playing dead. Caceres, who was awarded the 2015 Goldman Environmental Prize for her role in fighting a dam project, had complained of death threats from police, the army and landowners’ groups. AP

Australian leader dismisses concerns about Chinese firm

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A NBER R A , Australia— Australia’s prime minister on Wednesday dismissed public concerns revealed by a United States opinion poll about a Chinese company leasing a strategically important port. The Australian newspaper reported on Wednesday that the US State Department had polled Australians via test message about their opinions about Chinese company Landbridge securing a 99year lease over the Port of Darwin.

Almost half those surveyed said allowing a Chinese company to manage the port posed “a lot of risk” to national security and nine in 10 said it posed at least some risk, according to US government research obtained by the newspaper.

Prime Minister Malcolm Turnbull said Australian defense and security officials had determined the 506 million Australian dollar ($375 million) deal struck last year did not threaten national interests.

“That’s how we determine security issues, not—with all due respect— by text message opinion polls,” Turnbull told reporters.

The newspaper said two polls were commissioned in February, each involving more than 1,000 respondents nationwide. The polls were conducted on behalf of the Office of Opinion Research, which is part of the Bureau of Intelligence Research. US Ambassador to Australia John Berry said the State

Department “conducts publicopinion polls in countries around the world to supplement available polling and help us understand international perspectives.”

“Such low-level polls do not reflect US government views, policy or position,” Berry said in a statement. Darwin is a major military base where US Marines have established a rotational presence.

Gen. Lori Robinson, the commander of the US Pacific Air Forces, is currently in Australia discussing plans to rotate US bombers through northern Australian air force bases at Darwin and Tindal as part of an increased US military presence in the Pacific.

An opinion analysis document, dated March 2 and marked for official use only, warned that Landbridge’s “reported ties” to the Chinese armed forces “raise concerns port access could facilitate intelligence collection on US and Australia military forces stationed nearby,” the newspaper reported.

Landbridge says it is a private company with no links to the Chinese military. President Barack Obama asked Turnbull about the port deal when they meet in Manila last November. “The United States government is satisfied that the security issues relating to the lease of the port were examined carefully and professionally and appropriately,” Turnbull said. AP

Minnesota man pleads guilty to lesser charge in threats case

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INNEAPOLIS—A man accused of t weet ing threats to kill a federal judge and FBI agents pleaded guilty on Tuesday to a lesser count and was sentenced to three years of probation by a judge who advised him to think before he posts.

Khaalid Adam Abdulkadir, 19, admitted to a misdemeanor count of impeding a federal officer or employee. He had been scheduled to go on trial on Tuesday on three felony charges that included threatening to murder a federal judge and threatening to murder a federal law-enforcement officer—counts that each carried maximum penalties of 10 years in prison.

“I’m sorry for everything I did wrong,” Abdulkadir told US District Judge Karen Schreier.

Hours later, Abdulkadir greeted supporters with hugs and a huge smile, as he was released from custody. Prosecutors say Abdulkadir made the threats last December after one of his friends, Abdirizak Mohamed Warsame, was arrested for conspiring to provide support to the Islamic State (IS) group.

Warsame pleaded g u i lt y last month to conspiring to provide material support and resources to the militant organization.

A ccord i n g to cou r t do c u ments, Abdulkadir posted one tweet that included the words “ k i l l them FBI” and another saying, “I’m kill them FEDS for take my brothers.” He deleted the tweets about 20 minutes later after friends warned him he could get into trouble.

He told reporters on Tuesday that he was happy to be free and he didn’t mean what he said on Twitter. “I had no meaning behind it. It just happened,” he said.

Prosecutors said the targets were US District Judge Michael Davis, who has been overseeing Minnesota’s terrorism cases, and the FBI agents and task force officers who are investigating the travel of young men from Minnesota to Syria to join the IS group.

Defense attorney Chris Madel told Schreier that Abdulkadir was attending college to become a nurse, while also working. He said Abdulkadir, one of 10 children, gave his paychecks to his mother to help provide for their family.

But Madel acknowledged Abdulkadir had also smoked marijuana, abused the prescription drugs Xanax and Adderall, and hung out with the wrong crowd. He said the tweets were Abdulkadir’s way of “acting out.”

Prosecutor Charles Kovats told the judge that the plea agreement attempted to strike a balance between the seriousness of the threats and Abdulkadir’s youth.

As part of his plea agreement, Abdulkadir’s probation includes two years of electronic monitoring, during which he’ll have to stay at home, except for work, school and other approved activities.

More than 22 young men have left Minnesota since 2007 to join al-Shabab in Somalia; about a dozen Minnesota residents have traveled to Syria to join militant groups there in recent years. AP

IN this November 25 file photo provided by Save the Children, two children walk through the corridors of a destroyed school in Eastern Ghouta, Syria. A report published on March 8 by Save the Children paints a grim picture in Syria’s besieged cities, where young people have lost any hope for the future, living in constant fear of aerial bombardment and lacking access to food and proper medical care. AP

UN group reports grim life of children in Syria

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NITED NATIONS—An international children’s group painted a grim picture of life in Syria’s besieged cities, where young people have lost any hope for the future, living in constant fear of aerial bombardment and lacking access to food and proper medical care.

Save the Children said in a report published on Tuesday that access to besieged areas by humanitarian organizations is virtually nonexistent, and only about 1 percent of food aid from the UN reached Syrians in besieged areas in 2015. About 250,000 children live in besieged areas, according to the report.

“Children have really lost any sense of the future,” Sonia Khush, the organization’s regional director for Syria told a news conference at

the UN headquarters on Monday.

She described a life in which parents and their children are surrounded by warring groups and access to medicine or physicians is limited, or nonexistent.

Children “barely know what fresh fruits and vegetables are” because the government or other combatants have blocked access to them, Khush said.

For the report, Save the Children, working with partners in Syria, interviewed 126 people in

eight besieged areas, including children aged 10 to 16, parents and professionals, such as doctors and teachers, living in areas that have effectively become “open air prisons.” Syria’s five-year war has killed at least a quarter million people and displaced half the country’s population.

The conflict, which erupted in March 2011 as a popular uprising against President Bashar alAssad’s authoritarian rule, quickly descended into an all-out civil war that allowed militants such as the Islamic State group to seize large swaths of land. Violence has eased in the country since the government and opposition agreed to a partial cease-fire 10 days ago. According to diplomats, humanitarian aid has begun reaching some besieged areas, thanks to a partial cease-fire, and a spokesman for UN envoy for Syria staffan de Mistura said on Tuesday that peace talks with Syrian government officials and opposition representatives will begin no later than next Monday.

The resumption of talks has

been expected ever since the USRussia-engineered truce, which has sharply reduced the bloodshed, took effect on February 27.

The cease-fire—though limited and tentative—has mostly held, even as sporadic violence has continued. An aid worker living in Syria who attended Monday’s news conference, but asked that her name not be used for fear of reprisals, said food, medicine and other vital supplies are removed by combatants at checkpoints long before reaching the besieged areas.

The situation is so precarious, she said, children routinely run to freshly bombed buildings to salvage wood from the wreckage to provide heat to stay warm, the aid worker said. Michael Klosson, vice president for policy and humanitarian response for Save the Children, said the only real way to get supplies to the people who need them is to end the siege of these areas and ensure sustained access.

After five years of war, he said, “Enough is enough.” AP

App helps in Brazil’s fight vs Zika-spreading mosquito N N

Chinese man gets 16 years in prison in deadly ricin plot

ITEROI, Brazil—For Luciana Santos, doing her part in Brazil’s fight to control the mosquito that spreads the Zika virus, dengue and other diseases is as easy as a couple of clicks on her smartphone.

Sa ntos l ives i n Niteroi, a beachfront city near Rio de Janeiro, where authorities recently launched an app called “Sem Dengue,” or “Without Dengue.” It allows residents to report stagnant water that can serve as a breeding ground for the Aedes aegypti mosquito. Bra zi l has stepped up its fight against Aedes since researchers here linked an outbreak of Zika virus with a surge in cases of microcephaly, a rare birth defect that leaves babies with unusually small heads and brain damage that can cause mental retardation and a host of long-term problems.

So when Santos recently came

across several puddles swimming with mosquito larvae, while strolling on Jurujuba Beach with her parents and son, she snapped a photo and sent the shot through the app. The app’s geo-locator function automatically tagged the picture with the exact spot it was made and sent a detailed alert to City Hall. Within 72 hours, officials had deployed a team to deal with the puddles.

“It’s a way for us to help our city, [which] is our role as citizens,” said Santos, a manager of an oncology clinic who says she has seen many friends and relatives catch both Zika and dengue.

“They [City Hall] have no way of seeing everything, but the population’s help contributes a lot” to rooting out mosquitoes, Santos added.

Dotted with washed-up trash and debris and lined with small wooden fishing boats, Jurujuba

Beach is rife with potential mosquito-breeding spots. When it rains, everything from the hulls of boats to plastic ice-cream tubs and bottle caps fill with water, creating places where the insect can lay its eggs. The beach has become a regular stop for Niteroi’s around half-dozen mosquito inspectors, who, thanks to the app, are now responding to ever-increasing numbers of complaints.

Since its launch earlier this year, the app has generated hundreds of complaints, Mayor Rodrigo Neves said. He added that many of the reports pinpoint sites inside residential complexes or other private buildings that would be hard for the inspectors to find on their own.

It’s had the added benefit of increasing people’s awareness of their surroundings and their own habits in this city of 490,000 people, Neves said. AP

EW YORK—A New York City student from China, who prosecutors say plunged into the dark side of the Internet, was sentenced on Tuesday to 16 years in prison for trying to acquire ricin so he could sell “simple and easy death pills.”

Cheng Le, 22, was sentenced in Manhattan federal court after his conviction by a Manhattan jury last August on charges he tried to acquire ricin as a weapon, postal fraud and identity theft. Ricin is a fatal toxin with no known antidote. The sentence was within the range suggested by federal sentencing guidelines.

Judge Alison Nathan said the “horrible, serious and quite terrifying offense” required a severe sentence, but she added that no one was harmed by the plot because Le’s communications were intercepted online by investigators who found him in an area of the Internet, where criminal marketplaces thrive. Among evidence introduced at trial were statements Le made in writing about getting ricin from an FBI covert employee, including: “If you can make them into simple and easy death pills, they’d become bestsellers.” AP

A10 Thursday, March 10, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

We can make it happen

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HE forthcoming presidential election inevitably puts the Philippines at a crossroads as far as the entry of foreign investments is concerned. Understandably, investors would not rush to make big decisions now. They need to scan the political landscape, and look for signs of stability. Investors want to be assured the electoral outcome will not roll back the successful reforms and gains made in the last five years.

This could be a good reason for the stewards of the country’s economy to slow down and just wait for a couple of months, since most of them serve at the pleasure of a president about to step down. To their credit, our economic managers have done a good job. They steered the Philippine economy to be among the region’s stellar performers, lauded by international investors and analysts as one of the most promising countries for future growth and investment. Case in point: Three years ago, three major international credit-rating agencies—Standard & Poor’s, Moody’s and Fitch—raised the Philippines’s sovereign debt to an investment-grade rating, the first time it has achieved such status.

Their attitude and strong work ethic make us feel lucky to have great economic managers. Given the current situation, good managers would tend to procrastinate. The great ones have entirely different tendencies: They continue to work hard as ever. Great economic managers know that the country can only realize its potential through investment-led growth. Although last year’s foreign investment was the highest figure ever, more international investment is needed in strategic areas, such as infrastructure, manufacturing, energy, agriculture, health care and education.

Thus, big-ticket programs must proceed as planned. That’s why they staged the Philippine Business and Investment Forum in New York on March 3 to showcase the opportunities the country holds for global investors. The Philippine economic narrative consists of record-level macroeconomic performances; credit-ratings upgrades; improvements in competitiveness rankings; high levels of foreign direct investments; increased tax collection efficiency; level playing field; and growing demand for world-class Filipino talent.

Finance Secretary Cesar V. Purisima, who led the Philippine delegation, profoundly described our offering: “The Philippines has a great economic story to tell. Our turnaround from ‘the sick man of Asia’ to the region’s resilient, bright spot is something that the Filipino people can be proud of. It is a product of painstaking discipline and good governance. We want to go out there and share the fact that, despite strong external headwinds, the Philippines is here to stay as a place for growth.”

An inclusive economic growth is fundamental to helping 100 million Filipinos achieve financial security. But the economy is far from the only issue that plays a role in determining election outcomes. And the importance of other issues, such as graft and corruption, to name one, can make a difference. However, Filipino voters would do well to choose a leader who can ensure good governance. Like Ceasar’s wife, the next president must be above suspicion. A leader perceived by the people as clean and honest can substantially influence the direction and overall competitiveness of the Philippines. We, the voters, can make this happen.

The rules have changed John Mangun

OUTSIDE THE BOX

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ISTENING to the supporters of the presidential candidates is probably less enjoyable than jamming a sharpened pencil into your ear. The barely controllable emotion that they exhibit borders on obsessiveness and hysteria. This is true not only in the Philippines but across the globe.

But this behavior is not limited to politics, as it also finds root in government, religion and economics.

Traditionally—while there may have been “passion” on a personal level—believe it or not, there was a time that people, in general, did not go crazy when discussing these subjects. Government, the economy and business, religion and politics were part of life, but not the arenas of the battle between “good and evil” for most people.

But now, the lines between the powers of government, business and religion are completely blurred. “Big business,” as embodied by the banks, provides all the money necessary for the politicians in government. Government responds by providing laws to support business.

Government has taken religion’s traditional role—for better or worse —of providing society’s moral authority. Religion has always been a big business and a political force, but

is now less of a political force.

Caught in the middle are the people who have seen a breakdown in these institutions. Is government acting on behalf of the people or was the last war—not to protect the nation—but to further the interests of its business supporters?

Is a business making a reasonable profit to thrive and prosper to provide economic growth, or is business simply exploiting the advantages given to it by its minions in government? Is religion’s moral authority an attempt to better the human race or simply a way to hold on to power?

Here’s the point. When these institutions are seen as betraying the people, the people become confused about what and whom to trust, and then rely on gut instinct and passion.

When the clarity about the objectives of these institutions disappears, the people lose confidence.

Are stock markets rising and falling based on economic fundamentals and corporate performance? Is

The crime you have not yet committed

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B F F | Bloomberg View

OMPUTERS are getting pretty good at predicting the future. In many cases, they do it better than people. That’s why Amazon uses them to figure out what you’re likely to buy, how Netflix knows what you might want to watch, the way meteorologists come up with accurate 10-day forecasts.

Now a team of scientists has demonstrated that a computer can outperform human judges in predicting who will commit a violent crime. In a paper published last month, they described how they built a system that started with people already arrested for domestic violence, then figured out which of them would be most likely to commit the same crime again.

The technology could potentially spare victims from being injured, or even killed. It could also keep the least dangerous offenders from going to jail unnecessarily. And yet, there’s something unnerving about using machines to decide what should happen to people. If targeted advertising misfires, nobody’s liberty is at stake.

For two decades, police departments have used computers to identify times and places where crimes are more likely to occur, guiding the deployment of officers and detectives. Now they’re going another step: using vast data sets to identify individuals who are criminally inclined. They’re doing this with varying levels of transparency and scientific testing. A system called Beware, for example, is capable of rating citizens of Fresno, California, as posing a high, medium or low level of threat. Press accounts say the system amasses data not only on past crimes but on Web searches, property records and social-networking posts.

Critics are warning that the new technology had been rushed into use without enough public discussion. One question is precisely how the software works—it’s the manufacturer’s trade secret. Another is whether there’s scientific evidence that such technology works as advertised.

By contrast, the recent paper on the system that forecasts domestic violence lays out what it can do and how well it can do it.

One of the creators of that system, University of Pennsylvania statistician Richard Berk, said he only works with publicly available data on people who have already been arrested. The system isn’t scooping up and crunching data on ordinary citizens, he said, but is making the same forecasts that judges or police officers previously had to make when it came time to decide whether to detain or release a suspect.

He started working on crime forecasting more than a decade ago, and by 2008 had created a computerized system that beat the experts in picking which parolees were most likely to reoffend. He used a machine-learning system—feeding a computer lots of different kinds of data until it discovered patterns that it could use to make predictions, which then can be tested against known data.

Machine learning doesn’t necessarily yield an algorithm that people can

understand. Users know which parameters get considered but not how the machine uses them to get its answers.

In the domestic violence paper, published in February in the Journal of Empirical Legal Studies, Berk and Penn psychologist Susan Sorenson looked at data from about 100,000 cases, all occurring between 2009 and 2013. Here, too, they used a machine-learning system, feeding a computer data on age, sex, zip code, age at first arrest, and a long list of possible previous charges for such things as drunk driving, animal mistreatment and firearms crimes. They did not use race, though Berk said the system isn’t completely race blind, because some inferences about race can be drawn from a person’s zip code.

The researchers used about twothirds of the data to “train” the system, giving the machine access to the input data as well as the outcome— whether these people were arrested a second time for domestic violence.

The other third of the data they used to test the system, giving the computer only the information that a judge could know at arraignment, and seeing how well the system predicted who would be arrested for domestic violence again.

It would be easy to reduce the number of repeat offenses to zero by simply locking up everyone accused of domestic violence, but there’s a cost to jailing people who aren’t going to be dangerous, Berk said. Currently, about half of those arrested for domestic violence are released, he said. The challenge he and Sorenson faced was to continue to release half but pick a less dangerous half. The result: About 20 percent of those released by judges

the price of gasoline based on supply and demand or speculators pushing buy-and-sell buttons on computers?

Is your favorite politician interested in solving your concerns, or is merely trying to get elected to gain power to serve special interests of one sort or another?

If the rules of the game have changed, then the tactics to win the game must change also, whether it is in the markets or in the election.

These are dangerous times for the innocent and naïve. The “best” candidate will lose the election. The “worst” stock will go up in price. The commodity that no one is using will suddenly double in price.

This is what happens when people lose confidence in the basic institutions of society. This trend is just beginning.

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.

were later arrested for the same crime.

Of the computer’s choices, it was only 10 percent.

Berk and Sorensen are currently working with the Philadelphia police, he said, to adapt the machine -learning system to predict which households are most at risk of domestic violence.

Those, he said, can be targeted with extra supervision.

The parole system has already been implemented in Philadelphia. Parolees in the city are assigned to high-, medium- and low-risk groups by a machinelearning system, allowing parole officers to focus most of their attention on the high-risk cases.

One downside might be a more onedimensional decision-making process.

Several years ago, when I wrote an article on the parole system for the Philadelphia Inquirer, I learned that some parole officers found the system constraining. They said that they could have a bigger impact by spending more time with low-risk offenders who were open to accepting help in getting their lives together—getting off drugs, applying for jobs, or getting a high-school degree.

Their concern was that their bosses would put too much faith in the system and too little in them. This echoes the problem Berk says worries him: That people will put too much trust in the technology. If a system hasn’t been through scientific testing, then skepticism is in order. And even those that have been shown to beat human judgment are far from perfect.

Machine learning could give crime fighters a source of information in making decisions, but at this stage it would be a mistake for them to let it make the decisions for them.

Opinion BusinessMirror

opinion@businessmirror.com.ph

VAT on service fees billed at cost vs cost reimbursement Fulvio D. Dawilan

TAX LAW FOR BUSINESS

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HE 2000 case of Commissioner of Internal Revenue v.

Court of Appeals and Commonwealth Management and Services Corp., GR 125355, March 30, 2000, set the rule that service fees billed at cost are subject to value-added tax (VAT).

In that case, the Court noted that it is immaterial whether the primary purpose of a corporation indicates that it receives payments for services rendered to its affiliates on a reimbursement-on-cost basis only, without realizing profit, for purposes of determining liability for VAT on services rendered. As long as the entity provides service for a fee, remuneration or consideration, then the service rendered is subject to VAT. In essence, an entity that provides services and is paid for such services is subject to VAT. The VAT is imposed even if payment is based merely on cost, that is, without any mark-up or profit.

Compare this with receipts for reimbursement of actual expenses not arising from the performance of services. This is usual in cases where one taxpayer pays for the costs of another taxpayer and bills the other party who should actually bear the costs. This is also usual in cost-sharing arrangement schemes where common expenses are paid by one taxpayer but shares the costs with other taxpayers. For instance, affiliated companies located in one area incur common expenses, such as utility expenses, rental of the premises and other common purchases.

Only one of the entities pay the common costs and seeks reimbursement from the other occupants.

There are a number of rulings holding that reimbursements of expense, by its nature, is not income but return of capital. As a return of capital, it is not income and therefore not subject to tax, such as VAT. It may also be inferred in a number of decisions of the Court of Tax Appeals that receipts for reimbursements of costs are not income and therefore not subject to tax. However, such receipts should be proven to be mere reimbursements. In CTA Case 8551, October 2, 2015, it was held that a reimbursement should be shown to be based on actual cost and without any mark-up or profit element.

Likewise, in CTA EB Case 1035, February 9, 2016, the Court did not agree with the position taken by the taxpayer that the receipt is not subject to VAT, for failure of the taxpayer to prove that the receipt was a mere reimbursement and that no additional amount of profit had been charged. Also, the taxpayer was not able to show that it did not claim

input taxes related to the share of the others in the common expense.

The Court emphasized the relevance of this, considering that if the taxpayer claimed the entire input taxes on the shared expenses, then the reimbursement should also be subject to output VAT. Further, the taxpayer issued VAT invoices and official receipts for the supposed reimbursements. The VAT invoices and official receipts included the VAT, which is an output tax on the part of the payee and an input tax of the entities to whom the VAT invoices and official receipts were issued. This makes the payee liable to pay the output VAT. In sum, receipts for services rendered are subject to VAT even if the billings are based on costs, that is, without any mark-up. On the other hand, receipts for reimbursement of shared costs or costs paid in behalf of another, may not be subject to VAT. However, to pass the test of a non-VATable reimbursement, the recipient must prove that the receipt is indeed purely reimbursement—no mark-up, input tax pertaining to the share of the others on the shared cost was not claimed, VAT is not passed on to the others and reimbursement is not covered by VAT billings/official receipts. This discussion does not intend to cover the taxation of the deposits and advances contemplated in RMC 089-12 and RMC 016-13.

Those will be covered in subsequent issues in this column.

The author is a senior partner of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of World Tax Services (WTS).

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at fulvio.dawilan@bdblaw.com.ph or call 4032001 local 310.

Divine compassion brings joy Msgr. Sabino A. Vengco Jr.

ALÁLAONG BAGÁ

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OD’S people are filled with joy, because the Lord has done great things for them and will again surely help them (Psalm 126:1-2, 2-3, 4-5, 6). The woman guilty of adultery and brought before Jesus for sentencing receives the unexpected inner joy of being treated with respect and compassion (John 8:1-11).

We are filled with joy THE memory of God’s past interventions on behalf of His people give them hope and confidence that God will again come to their assistance.

He cared for them before, as seen in their fantastic return to Zion from exile, when those banished unbelievably found themselves on the way back to their land of origin.

As if in a daze in total amazement, they were filled with laughter and were overflowing with joy at their incredibly good fortune. And other nations could not but take note of God’s saving power, awestruck at the wonderful things He has done for His

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kinds of unconventional programs even further is far from ideal.

Market analysts are expecting the ECB to announce more quantitative easing (an additional €10 billion a month, say, while extending the policy to the middle of next year or beyond) and another cut in the central bank’s deposit rate (of 10 basis points or more). How much real stimulus either step would deliver is debatable—and each has to be measured against the risk of further distorting asset prices and destabilizing a still-fragile banking system.

The risk to banks from pushing the ECB’s deposit rate further below zero has become apparent. European bank stocks have been hammered lately.

One reason is the banks’ reluctance to pass the negative rate on to their own depositors, who might revolt; the banks’ profits get squeezed as a result. To get around this problem, the ECB might follow the Bank of Japan’s lead and adopt tiered rates to confine the impact—but this makes the negative interest-rate approach less

people. The people themselves knew that their God has preferential love for the poor and the oppressed, the homeless and refugees.

So, now in their present predicament the people of God pray for deliverance. They know their situation to be impossible and only God can help them. It would be like having flood in the southern desert, a very arid place where having torrents of water is unthinkable. The contradiction and the implausibility of what is asked for is tantamount to a reversal of fortune like “sowing in tears and reaping in joy” and setting forth with only a hope of harvest and returning

home with abundant fruits, replacing their tragedy with good fortune. It is their prayer, it is what they hope for.

They are confident because God has always been merciful to them.

I do not condemn you.

Go, sin no more.

THE story of Jesus and the woman caught in adultery is the concrete continuation of the history of God’s forgiving mercy to His people. Jesus is the living icon of God who is wise and compassionate, and concerned with forgiveness and rehabilitation, not with punishment and death.

For Jesus, it was not a case of laxly ignoring the woman’s sin, but going beyond it and opening for her the possibility of refraining from sin and moving on and living in integrity and with dignity.

On the part of the self-righteous critics of Jesus who brought the woman to Him to force His hands, it was actually an instance of attempted extrajudicial killing. Those who seized the woman must have been fanatics who tried to take the law into their own hands, since such cases must ordinarily be handled by the Sanhedrin and, if involving capital

punishment, by the Roman authorities. Adultery then was by law the sin of an unfaithful wife, which must be testified to by two men. Making the woman stand in full view of everyone gave the appearance of an official legal interrogation. The self-appointed judges and wouldbe executioners of the woman were blind in their consciences to their own sinfulness. That is, until Jesus told them, “Let the one among you who is without sin be the first to throw a stone at her.”

Alálaong bagá, Lent draws to its end on a note of wonder at the goodness of God, not in confusion over the sinfulness of humankind. We rejoice and are thrilled by God’s mercy and power. We are filled with joy at the abundance of divine blessings bestowed on us, and we are grateful to be loved and forgiven our sins. It is about God’s graciousness and our response of joy and faith. Lent is meeting Jesus telling us, “I do not condemn you. Go, sin no more.”

Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on DWIZ 882, or by audio-streaming on www.dwiz882.com.

UK decision on EU will be felt everywhere, but Northern Ireland in particular B T S | TNS Forum

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RITISH Prime Minister David Cameron has set June 23 as the date for a referendum to decide whether the United Kingdom will remain in the European Union (EU). If Britain chooses to exit the EU (the so-called Brexit option), the ramifications will be felt across Europe, but perhaps nowhere as sharply and dangerously as Northern Ireland.

For more than 40 years, the EU has provided the benign and neutral political framework that has helped foster and preserve the peace between Protestant unionists and Catholic nationalists in Northern Ireland. But now it is English nationalists—an increasingly strident faction of Cameron’s Conservative Party and the vociferous rightwing UK Independence Party—who threaten to undo that progress.

Their movement taps into some of the same populist sentiments that motivate supporters of Marine Le Pen in France and Donald Trump in the United States: They are tired of austerity policies, angry about low wages or lack of jobs and are fearful of losing the jobs they do have to immigrants and refugees in an open-border Europe.

The stakes are high. A vote to leave the EU might destroy the United Kingdom: Scotland might revisit secession from the UK so that it could stay part of Europe. Where

Draghi doesn’t have what Europe needs ARIO DRAGHI’S job isn’t getting any easier. The president of the European Central Bank (ECB) has led investors to expect something big after Thursday’s policy meeting—but his ability to do anything substantial is limited, and his choices are far from appealing.

So the best option for Draghi this week may be simply to deliver a message to Europe’s governments. More to the point, he needs to send a warning: Monetary stimulus is nearing the end of its usefulness. Fiscal policy must play a larger part. The need for additional stimulus shouldn’t be controversial.

Much of the euro area is stuck in a prolonged recession, and the threat of deflation isn’t subsiding. This week the central bank will probably announce downward revisions to its forecasts for both growth and inflation.

The question is, what kind of stimulus? Monetary policy has already been aggressively deployed. Europe has a huge bond-buying program, and the ECB has cut its interest rate on deposits to less than zero. Expanding these

Thursday, March 10, 2016 A11

effective as stimulus.

Attention needs to shift to fiscal policy. Draghi can’t direct Europe’s governments to act, and it would be rash of him to flatly say monetary stimulus has done all it can. But his hithertogentle hints that governments need to develop an adequate fiscal response can and should be dialed up.

A useful fiscal initiative needn’t involve outright fiscal union—an enormous undertaking that would take years. But it should be possible to recast the existing European Stability Mechanism so that it could act as a rudimentary fiscal stabilizer. Various proposals for this have been put forward. The crucial elements are an ability to issue bonds that are jointly guaranteed, and a mechanism for disbursing the proceeds in a way that cushions the budgets of countries under severe cyclical stress.

Draghi once saved the EU from an even worse slump by promising to do “whatever it takes.” This time, saving Europe will take more than the ECB. Bloomberg View

would that leave Northern Ireland?

In Northern Ireland the Brexit debate is opening up old sectarian divisions. The Irish nationalist parties, the Social Democratic and Labor Party and Sinn Fein, want to remain in the EU; pro-British unionists mostly want to leave. The latter have always been suspicious of Europe diluting their British identity, including enforcing legal changes around social and moral matters such as homosexuality. Unionist farmers and businesses, however, may vote to remain in Europe because they enjoy massive subsidies from Brussels, equal to more than 4 percent of Northern Ireland’s output and more than 80 percent of its farm revenue.

The Northern Ireland economy is still shaky. Being detached from Europe would not only mean losing those subsidies, but also its attractiveness to global companies looking to invest in a low-tax corner of the EU. John Hume, who shared the 1998 Nobel Peace Prize for his role as architect of the Good Friday agreement, brilliantly saw that a shared European identity could reduce the hostility and suspicion between Catholic nationalists and Protestant unionists. Instead of a zero-sum debate over spoils within Northern Ireland, the two sides would together fight for more subsidies from Europe and investment from abroad. It worked. For years,

former political enemies made common cause, in Hume’s words, “spilling their sweat and not their blood.”

EU membership, likewise, improved relations between the Republic of Ireland and Britain. The constant contact between government officials at weekly EU meetings created common bonds and reduced the sense of Ireland being a small neighbor of Britain, an island behind an island.

If Britain votes to leave, however, the border between Northern Ireland and Ireland would become the EU’s external border. How long before British police roadblocks are rolled out to keep Middle Eastern refugees from coming in via Ireland, which would presumably become part of border-free Europe? (To date, Ireland has opted out of the Schengen Agreement.) The Irish government has made clear its interest in having Britain stay in Europe, but only UK voters will decide, based on local issues.

The larger danger, of course, is that Brexit could upset the delicate balance in Northern Ireland.

Disappointed nationalists might seek some form of a united Ireland, triggering a negative reaction by unionists. Whatever way one looks at it, reopening these identity issues gives extremists issues to exploit and risks destabilizing the region.

It’s worth recalling that the momentum for building a “United States of Europe” after World War II

Root for Google’s robot

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HIS week in Seoul, in what has been dubbed the “ultimate challenge” for artificial intelligence (AI), a man will face off against a computer in the ancient game of go. If you’re reading this, you may be tempted to cheer for the man. But this is the rare battle of wits in which you should actually root for the robot.

AI is the next frontier in applying intelligent machines to the solution of human problems. Go is a revealing test because it has long bedeviled AI programs. Computer algorithms can’t easily replicate the intuition and creativity that top players bring to the game. And the immense number of potential positions in a given match means that brute-force calculation—of the kind that computers rely on in games like chess—isn’t a practical strategy.

AlphaGo, a project of Google DeepMind, uses a different approach. It fuses two methods of artificial intelligence. One, called a deep neural network, helps the AI recognize patterns by imitating the structure of the human brain. The other, called reinforcement learning, helps it improve decision-

making through trial and error.

Combined, they present a powerful problem-solving tool. In a study published last year, DeepMind researchers described how an AI program learned to play dozens of old-school video games, beating humans in many of them. In a subsequent study, the group revealed that AlphaGo had beaten the European go champion in October.

Now it will face Lee Se-dol, with 18 world titles to his name. He’s confident that he can win (“at least this time”), and it’s hard not to wish him well.

But an AI victory would be a stirring achievement. It would further validate the approach that DeepMind’s team is taking. It could provide substantial insight into the nature of human intelligence. And it would be a milestone for the problem-solving ability of computers, in a world with no shortage of problems to solve.

Google hopes its AI project will be a boon for health care, helping doctors and clinicians sort through the huge amount of data now at their fingertips. Financial firms, unsurprisingly, also find it alluring. It might one day work wonders in

was propelled in large part by a determination to avoid further devastating violence. The hope was that being part of Europe would tame nationalist fervor and make everyone more secure, prosperous and tolerant. That stayed true for the initial years, but recently Europe has failed important tests, such as the widespread unemployment crisis, the Russian challenge to Ukraine and the debt crisis in Greece.

The EU may be too large and diverse to progress any further toward a “United States of Europe.” It is very hard for 28 European states with different languages, histories, economies and domestic pressures to agree on what will solve their problems. Member-states already are losing trust in the collective European border-free policy, with some closing their shared borders in response to the refugee crisis.

The Brexit debate is causing people across Europe to ask: What does Europe mean for them? Recently, the Czech government hinted that it, too, would consider leaving if Britain did.

It may well be that EU leaders will have to delay their push for an “ever closer union” until Europe delivers on its original mission of more security, jobs and prosperity.

But, regardless of how Britain votes on June 23, one thing is sure: Those with any interest in peace in Northern Ireland will be hoping that the British stick with Europe.

education, climate modeling, resource conservation and more.

The most thrilling possibility, though, is that AI will have uses no one’s thought of yet. Silicon Valley’s behemoths are investing huge sums in the technology. Many are offering opensource versions of their research and inventions, allowing developers to improve on them or come up with new uses for them. Start-ups in the field are proliferating. After decades of disappointment, the machines are starting to live up to the hype.

Is that something to fear rather than celebrate? There’s no denying it presents challenges. Some of them are already familiar, such as adapting the economy to new patterns of work and ensuring that the gains from technological progress are widely shared. Others are still in the realm of science fiction, such as keeping humans in charge of their machines and not the other way around. Without making light of those concerns, one should also keep in mind the enormous potential that artificial intelligence—a human enterprise, after all—has for solving human problems. Bloomberg View

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A12 Thursday, March 10, 2016

Comelec asked to exempt Cebu BRT from election ban

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B L S. M

EBU CITY—The local transport department here has asked the Commission on Elections (Comelec) to exempt the P10.62-billion bus rapid transit (BRT) deal from the pollrelated procurement ban.

Once approved, the government may start the tender process for the project, which is aimed at addressing the growing traffic congestion in Metro Cebu.

“We are currently in the final phase of the design review. We want to begin procurement by early second quarter,” Cebu BRT Project Manager Rafael Christopher L. Yap said in an interview.

“We have already requested for the exemption of the project from the election ban.”

The Comelec prohibits agencies from pursuing actions for infrastructure deals 45 days before and after a local election.

“We hope to begin construction of the BRT by the third or fourth quarter of the year,” he said. “It is estimated to be completed by the fourth quarter of 2018.”

Yap noted that the government will put prime importance to get the project started, as traffic congestion in Metro Cebu continues to rise with the growth of the local economy.

“There will be a significant amount of attention paid. We initially wanted to award it prior to the elections, but it will be too early to say whether it will be awarded before or after the end of the current administration,” he said.

330,000 Number of passengers the Cebu BRT expects to service daily

Funding for the 23-kilometer transportation project has already been secured. The World Bank approved in 2014 a financing package for first-of-its kind transportation systems in the Philippines.

The bus line, which is expected to carry 330,000 passengers daily, will span from Bulacao to Talamban. It will include transit ways, stations, terminals, a depot and other facilities.

The BRT is an integrated system of facilities, equipment, services and amenities that collectively provide high-quality, high-performance rapid transit. It is capable of producing a high level of performance and quality of service comparable to, or even better than a much costlier surface tram or light-rail transit system. Part of the reason for the BRT’s cost-effectiveness is

EASTERLIES AFFECTING EASTERN SECTION OF THE COUNTRY (MARCH 9 5:00 PM)

that it can be built quickly using local labor and materials.

Like trains, the transport system runs on its own dedicated lanes, carrying large number of travelers through buses, which makes the system simpler and cheaper to construct, operate and maintain.

Initially, the system will have 33 stations, and will run with 176 high-quality buses.

With a population of 2.5 million, Metro Cebu serves as the regional, financial and administrative center of the Central Visayas region. The metropolitan area is home to an increasing number of high-technology firms, and supports a thriving tourism industry in the region.

Aside from Cebu, the government is also planning to bid out a multibillion-peso deal to construct a BRT system in Metro Manila to address the growing demand for connectivity within the capital and its nearby cities.

The P4.9-billion Quezon Avenue BRT will run from Commonwealth in Quezon City to Manila City Hall, passing through España Boulevard. Another BRT system is eyed to be constructed on C-5 Road. It is currently being studied by the World Bank.

www.businessmirror.com.ph

GRABBIKE COULD COST GRAB’S PHL LICENSE

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RANSPORT network company Grab may lose its franchise if it will not stop its motorcycle operations soon, Transportation Secretary Joseph Emilio A. Abaya warned.

Despite offering the service for free, the motorcycle operation of Grab is still considered illegal, violating the transport department’s order on Internetenabled transport services in the Philippines.

“Technically, they are in violation of the department order, so they should stop it. Otherwise, we will cancel the operation of the Grab as a transport network company,” Abaya said in a spot interview.

The Land Transportation Franchising and Regulatory Board (LTFRB), due to the lack of transport guidelines on the app-based ridehailing service, stopped the paid operations of GrabBike on February 5. However, several GrabBike riders “volunteered” to offer the service for free. This, according to Abaya, is still a violation of the department order.

“We need to talk to them, so they could lay out their plan to us. The fact that it is free does not exempt them from the order,” the transport chief said.

Under a department order released in April last year, the transportation department cre-

ated new categories of publictransport conveyances to allow app-based services to operate in the country.

To date, there is no department order that covers the operation of a motorcycle or bike services through the use of an Internet-based platform to facilitate a prearranged transportation for passengers. “Personally, I think a motorcycle is not safe,” Abaya noted.

While motorcycles are considered the most economical and easiest means of transportation to beat traffic congestion in the city, they are also involved in alarming statistics on motorcycle accidents in the world, citing a report by the World Health Organization (WHO). It a study, the organization found that 1.25 million people have died globally due to road accidents, with motorcyclists comprising 23 percent of the figure.

The WHO report also said that more than half—or 53 percent— of those who die in road accidents in the Philippines are motorcycle riders. There are about 3.4 million motorcycle users in the Philippines, and most of them are beginners.

Studies showed that an average of 16,208 motorcycle accidents are recorded in the country every year.

Lorenz S. Marasigan