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A broader look at today’s business Tuesday, March 22, 2016 Vol. 11 No. 166
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Above-6.5% growth seen in Q1 on polls, infra binge D B C U. O
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LIFE
ESPITE El Niño and weak global demand that can affect agriculture and the country’s export earnings, a local think tank believes that first-quarter GDP growth will still be above 6.5 percent this year. D1
VIETNAM ECONOMY AT RISK SANS REFORMS—IMF AseanTuesday BusinessMirror
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Editor: Max V. de Leon • Tuesday, March 22, 2016 A5
Vietnam economy at risk sans reforms–IMF
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IETNAM risks being vulnerable to external shocks if it doesn’t push through with reforms to strengthen its banking system and restructure state businesses, according to International Monetary Fund (IMF) chief Christine Lagarde. The Southeast Asian nation isn’t in a position to withstand economic blows from tightening of monetary policies elsewhere, a deep and prolonged drop in commodity prices and a slowing China without reforms, she said in a March 18 interview in Ho Chi Minh City. “The risk is that from being slightly vulnerable, Vietnam could become very vulnerable to external shocks,” she said. “It would expose the Vietnamese economy, and that would not be good for the Vietnamese population.” Vietnam’s integration with the global economy has driven growth and reduced poverty. The economy is forecast to grow at 6.6 percent this year, according to Bloomberg surveys, while Prime Minister Nguyen Tan Dung has proposed raising the country’s 2016 economic expansion target to 7 percent, from 6.7 percent. The nation’s poverty rate has dropped to 13.5 percent, from 60 percent in 1993, and its economic growth is expected to be “solid” at more than 6 percent this year, Lagarde said in a visit to the country last week, during which she met with the country’s top leaders. Vietnam, which is in the process of a once-in-five-years political transition, now has one of the world’s most open economies, she said.
on dismissing President Truong Tan Sang and National Assembly Chairman Nguyen Sinh Hung during meetings to be held from March 31 to April 12, Nguyen Hanh Phuc, general secretary of National Assembly, said at a briefing in Hanoi. The move, being characterized as procedural by legislators, is unusual. “It’s pretty rare, but did happen twice in the past, when the time period between the Party Congress and the election to form the new National Assembly was too long,” Cao Sy Kiem, a National Assembly member, said by telephone from Hanoi. “This is to make sure the process of handing over the jobs will be smoothly done. It also make more sense as the prime minister is no longer a Politburo member now.”
The risk is that from being slightly vulnerable, Vietnam could become very vulnerable to external shocks.” —L Remarkable potential “VIETNAM has done very well—to have the ability to maintain macroeconomic stability in an environment, which is challenging, because the rest of the world is not growing at the pace, and the potential we would like to see is quite remarkable,” Lagarde said in the interview. “It has done very well in terms of reducing poverty and it has not increased inequality, which often comes with growth.” Still, the nation’s economic expansion since 2008 has been slower than the two preceding decades and it has failed to match per-capita-income growth that the region’s most successful economies experienced similar stages in
‘Lame duck’
VIETNAMESE Communist Party General Secretary Nguyen Phu Trong (left, front), President Truong Tan Sang (right, front), Prime Minister Nguyen Tan Dung (center, second row) and Chairman of the National Assembly Nguyen Sinh Hung (right, second row) pay tribute to late President Ho Chi Minh at his mausoleum in Hanoi on Monday. The National Assembly is expected to vote early next month to remove Sang, Dung and Hung after they were not elected to the all-powerful Politburo in the party’s congress in January. The assembly is also expected to elect the country’s new leaders. AP
development, she said. Vietnam also needs to make greater use of exchange-rate flexibility to soften the blows of overseas economic shocks and build external reserves, she said. Reforming the nation’s state-owned companies and resolving bad debt at banks will offset the aging of its working-age population that could be a future drag on growth, according to Lagarde.
Corporate governance
“WE believe the banking system needs to be made stronger, better and more capitalized with less stressed
Indonesia’s Lippo Group partners with GrabTaxi to speed up distribution
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IPPO Group, the Indonesian conglomerate founded by billionaire tycoon Mochtar Riady, will partner with GrabTaxi Holdings Pte. for e-commerce deliveries in Southeast Asia’s largest economy. The founder’s grandson, John Riady, is spearheading Lippo Group’s foray into e-commerce with a $500 million investment in MatahariMall, an online version of its Matahari department store chain. Grab, a regional ride-hailing company, will help transport and deliver goods to bolster MahatariMall’s services, the companies said in a statement on Monday. The partnership shows how local companies, familiar with consumer preferences, regulations and infrastructure challenges, are trying to tailor services to stay ahead of
$70B
Estimated online sales across Asean by 2010, from the current $6 billion, according to a Bain & Co. and Google Inc. report foreign rivals as competition heats up. Japanese e-commerce company Rakuten Inc. closed down its Indonesian unit as of March 1, while China’s JD.com Inc. has recently set up shop in Indonesia. “Speed is really important in
this business,” said Ridzki Kramadibrata, managing director of Grab Indonesia. “You need to be able to do multiple things at the same time, because if you can’t do that, the market will outgrow you and you will lose your opportunity.”
Rising incomes
MATAHARIMALL’S site allows customers to buy on the Web and pick up items from Lippo’s stores. Its rival Tokopedia, which is backed by Japan’s SoftBank Group Corp. and Sequoia Capital, has already formed a similar alliance with Go-Jek, a motorcycle-taxi-booking company, to deliver purchased items to customers. “Our combined knowledge of the Indonesian market will help us build the most effective onlineto-offline experience—to ensure that online shoppers anywhere in Indonesia can receive or collect their purchases easily,” John Riady, a Lippo Group director, said in the statement. Grab’s alliance with Lippo also underscores its aggressive marketshare acquisition strategy in Indonesia, where it competes with Uber Technologies Inc. and Go-Jek. Grab’s private car-hailing service grew 30 percent in Indonesia in February, according to the statement. It has more than 50 percent of the country’s motorcycle taxi market in March, it said. Technology startups are trying to capitalize on rising incomes and growing mobile-phone use in Southeast Asia, where 250 million consumers are now connected via smartphone and 100 million engage in online transactions, according to a report by Bain & Co. and Google Inc. released last week. The report predicts online sales across Southeast Asia to surge to $70 billion by 2020, from $6 billion now. Bloomberg News
assets in its balance sheets, so the banks can actually fuel the economy,” Lagarde said. State-owned enterprises need better governance and to refocus on their core businesses, she said. The country is also at risk with public debt at about 60 percent of GDP and with one of the world’s fastest-aging societies and a working-age population that is beginning to decline. “When you have the combination of high debt and slightly declining working-age population, you need to be very careful with your mac-
her Indonesian counterpart Retno Marsudi during their meeting in Jakarta on Monday. AP
EASY
PM’s fate hangs
VIETNAMESE legislators will vote in the coming weeks on whether to dismiss Dung two months after he failed in his bid to become the Communist Party’s chief. The National Assembly previously had been scheduled to meet during the summer to complete the nation’s once-in-five-year political transition. Lawmakers will also vote
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HE Tourism Authority of Thailand (TAT) has set a challenging new target for domestic tourism revenue of 900 billion baht this year, up from 790 billion baht in 2015. This goal is an increase from its 850-billion-baht forecast made earlier this year, in line with the government’s policy to promote domestic tourism and generate greater income for local communities. The additional revenue is expected to come from daily merchants crossing the border from Lao PDR, Cambodia and Myanmar for both business and leisure. Moreover, the TAT’s planned tourism campaigns will be more aggressive. TAT governor Yuthasak Supasorn called the new domestic tourism revenue goal “a tough target” at a time when the economy is slowing. The agency previously made 900 billion baht the goal for 2017. “The government is promoting service businesses among farming communities to help them generate income when crop prices are low and with a water shortage highly likely this summer,” Yuthasak said. The Interior Ministry recently approved a 60-billion-baht budget for local administration organizations to develop tourism infrastructures and products in their communities. “The budget will be used to develop the supply side of tourism,” he said. “The TAT will take a role in raising demand through aggressive campaigns the rest of the year.” Some major campaigns are Discover Thainess 2016, 12 Hidden Gems and Wan-Tam-Ma-Da-NaTiew (a weekday travel promotion), and Yuthasak urged further marketing of these campaigns. The TAT also plans to promote new tourism routes connecting popular destinations in Thailand
790B baht Thailand’s domestic tourism revenue in 2015
with neighboring countries, such as Lao PDR, Cambodia and Myanmar. It is awaiting government approval for the 780-million-baht special budget for its Quick Win tourism campaign and four big events to lift domestic tourism. For international markets, Yuthasak said the TAT is not worried about inbound tourism this year thanks to the sharp rise of foreign tourist arrivals. The Tourism and Sports Ministry projected foreign tourist arrivals to Thailand in the first quarter this year of 8.94 million, up 14.3 percent year-on-year. Revenue from inbound tourism is projected to grow 18.2 percent to 660 billion baht in the first quarter. Arrivals from China are expected to rise 25.4 percent to 2.51 million visitors, with arrivals from Europe gaining 8.3 percent to 2.09 million, and Asean visitors increasing 5.7 percent to 1.89 million. For domestic tourism, the ministry expected income to grow 6.9 percent to 210 billion baht in the first quarter. The government aims to expand the country’s total rail network to 7,000 kilometers by 2022 to reduce logistics costs and take advantage of the country’s geographic position. Prime Minister Prayut Chan-ocha said the expansion is needed as the country has failed to make headway in rail development for
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The Associated Press
NDIAN WELLS, California—Novak Djokovic and Victoria Azarenka rolled to easy victories in the BNP Paribas Open on Sunday, with the top-ranked Serb collecting his record fifth title and Azarenka winning for the second time to get back into the world’s top 10. Djokovic beat Milos Raonic, 6-2, 6-0, to improve his match record to 22-1 this year. It was the Serb’s third consecutive title in the California desert, breaking a tie with four-time champion Roger Federer, who lost to Djokovic the past two years in the final and skipped this year because of a knee injury. “I’m just glad to be able to raise the level of my game as the tournament progresses, and that’s something that I have been doing in the last two years, particularly on the big events,” Djokovic said. Azarenka defeated error-prone Serena Williams, 6-4, 6-4. Azarenka’s victory and Williams’s return to the final for the first time since 2001, when a hostile crowd triggered her 14-year boycott, was overshadowed by comments from tournament director Raymond Moore. Earlier Sunday, he criticized the Women’s Tennis Association (WTA) Tour and its players, saying they “ride on the coattails of the men” while describing the women as “physically attractive and competitively attractive.” Williams objected, saying, “Those remarks are very much mistaken and very, very, very inaccurate.” Azarenka also expressed disappointment. Djokovic and Azarenka each earned $1.02 million. Djokovic needed an hour and 17 minutes to dispatch Raonic, whose
big serve got broken five times. The 25-year-old Canadian served just four aces and had 27 unforced errors. His first serve averaged 128 mph—much faster than Djokovic’s 111 mph—but he connected on only 55 percent. The Serb landed 68 percent of his first serves and was never broken. “He’s the best returner probably of all time,” Raonic said. Raonic was bothered by an injury shortly after the match began, although afterward he wasn’t sure what was wrong. He was playing his first event since a thigh injury in the Australian Open semis in January. “I don’t think it affected my effort,” he said. “I thought he played much better than I did.” Clearly the crowd favorite, Williams gave fans little to cheer about on an unseasonable 91-degree (32 oC) day while making 33 unforced errors. After getting broken to trail 3-0 in the second set, Williams returned to her seat and smashed her racket. Trailing 5-1, Williams won three straight games and held two break points on Azarenka’s serve
years. The rail network currently stretches 4,070 km. He was speaking at a seminar and exhibition on rail component production at the Airport Rail Link’s Makkasan station on Wednesday. He said the government is trying to create a connectivity network for all modes of transportation. Transport Minister Arkhom Termpittayapaisith said the ministry has a plan to transform the country into a major transport hub for Asean and the Mekong subregion, as well as a transit route linking the Asia Pacific with South Asia, Africa and Europe. The move is included in the national transport investment plan from 2015 to 2022 and the national logistics strategic plan from 2013 to 2017. “The Transport Ministry wants a rail network offering a lowcost service. It is currently second in affordability after water transport,” said Arkhom, noting rail shipments account for only 2 percent of all transport volume and the ministry aims to push this up to 5 percent by 2022. The move would help reduce logistics costs from 14 percent of GDP to 10 percent to 12 percent within eight years, a similar level to other advanced nations. After the rail network increases to 7,000 km, factories could be set up to produce train components, signal systems and carriages, Arkhom said. He said the ministry will also work with the Science and Technology Ministry and the Industry Ministry to develop rail components, human resources and signal systems by adopting technologies from abroad. Land around the rail stations and on both sides of the rail tracks will be commercially developed to supplement income for financing the rail operations, the minister said. MCT
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Sports C1
| TUESDAY, MARCH 22, 2016
mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao Asst. Editor: Joel Orellana
NOVAK DJOKOVIC improves his match record to 22-1 this year. AP
in the last game. But Williams ended the match with three straight errors. “Just unexpected nerves maybe. I definitely didn’t expect to be on that stage again,” said Williams, who was back at Indian Wells after ending her 14-year boycott last year. It was Azarenka’s first victory over the top-ranked Williams since the Cincinnati final in August 2013. She will move up seven spots to No. 8 in the rankings released on Monday, her first time back in the top 10 since August 2014. Azarenka, who won here in 2012, hit just 10 winners and had 20 unforced errors in the two-hour match. She connected on 60 percent of her first serves and broke Williams’s serve three times. Williams converted just oneof-12 break chances. “I have to go for it,” Azarenka said. “She’s not a type of player that if you’re going to play safe she’s going to give it to you or she’s going to miss. You really have to go out there and take away because there is nothing coming easy.”
The crowd, including Queen Latifah, was eager to support Williams. One fan held up a sign reading, “Go Serena. We straight outta Compton,” in a nod to the gang-infested Los Angeles suburb where the Williams sisters learned to play tennis. Williams was bidding to become the first woman to win three titles at Indian Wells, where she won in 1999 and 2001. After getting booed heavily while beating Kim Clijsters for her last title here, she vowed never to return. That year the Williams sisters were supposed to meet in a semifinal, but Venus withdrew shortly before the match with a knee injury. The crowd reacted harshly and their father Richard said he heard racial taunts. “Obviously the last time I was there was probably the worst moment of my whole career. Not probably. Sure,” Williams said. “To be back out there, which I never thought I would be, was really different and special. I was overwhelmed with emotions and nerves.” Williams’s low-key persona was in direct contrast to her usual fist-pumping and screams of “Come on!” She hit just 22 winners. Azarenka and Williams met for the 21st time in their careers, with Williams owning a 17-4 edge. The only player she has faced more in her career is her older sister, who watched grim-faced from a box after losing early in her return to Indian Wells for the first time since 2001. “It was so great for our sport to see them both here,” Azarenka said. Williams was warmly welcomed back last year only to withdraw with a knee injury before her semifinal. She got emotional while accepting the runner-up trophy, tears welling in her eyes, after tournament officials thanked her and Venus for ending their boycotts. “Thank you so much for the cheers,” Williams said. “I can’t tell you how much it means to me.” Williams playfully stuck out her tongue as she walked past Azarenka posing with the winner’s crystal trophy on her way off the court.
CHAMPIONS!
The National University (NU) Pep Squad retains the National Cheerleading Championship on Sunday at the MOA Arena in Pasay City. NU garnered a total of 340.5 points to bag its third NCC title.
SPORTS
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We are expecting a third consecutive quarter of above-6 percent GDP growth.” —M C
ANNUAL EXODUS Passengers who will spend the Holy Week in the provinces wait for their ride at the Araneta Bus Terminal in Cubao, Quezon City. ALYSA SALEN
Additional LGU fund now ready B D C
BusinessMirror
VICTORIES
Victoria Azarenka’s victory and Serena Williams’s return to the final for the first time since 2001, when a hostile crowd triggered her 14-year boycott, was overshadowed by comments from tournament director Raymond Moore.
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Bloomberg News
Thailand crafting aggressive domestic tourism campaign
EASY VICTORIES BISHOP IN JAKARTA Australian Foreign Minister Julie Bishop (right) is greeted by
roeconomic stability,” she said in the interview. “You need to be very careful with the revenue you generate and how you spend it.”
A DISMISSAL will allow Dung, who wielded significant power, to move on to the next stage in his career and allow the government to avoid an extended period of inaction before the new prime minister and other leaders are appointed. “For a Vietnamese leader, respect is very important and you can only govern if you have respect,” said Vu Tu Thanh, chief Vietnam representative of the US-Asean Business Council. “If you feel people have their deference and respect divided between you and the incoming guy, you want to get out of there and focus on your future. He is a lame duck.” Current Communist Party General Secretary Nguyen Phu Trong was chosen by delegates to a second term in January over Dung. The parliament will also vote to elect new leaders to take the country’s three top positions, Phuc said.
In the latest Market Call report, First Metro Investment Corp. (FMIC) and University of Asia and the Pacific (UA&P) Capital Markets Research said growth will be driven by election spending and the government’s infrastructure expenditures. “With the dreaded El Niño appearing to be fairly moderated in January to February, agricultural output may yet turn slightly positive, which, together with robust
UDGET Secretary Florencio B. Abad has issued the guidelines on the utilization of the P19.07-billion Local Government Support Fund (LGSF). Local government units (LGUs) can tap this financial assistance from the national government for their projects, including health, social services and infrastructure. Under Local Budget Circular 109, LGUs can now propose to get funding for their projects, which will be approved by the Department of Budget and Management and funded by the
₧19.07B
Funds that local governments can tap under the 2016 LGSF
LGSF in the 2016 General Appropriations Act. Abad’s circular also enumerated the projects that may be proposed for funding under the LGSF. For projects relating to health, financial assistance may be given to indigent patients, either confined or outpatients, and may
also include professional fees. For social services, financial assistance may also be given to indigent families through assistance in medical bills, burial assistance, transportation subsidies, food subsidies, cash-for-work programs and educational subsidies. For climate-change adaptation programs, an LGU may propose to buy heavy-duty rescue vehicles. Public infrastructure projects may also be proposed to construct or repair local roads and bridges, public markets, slaughterhouse s , mu lt i - pu r p o s e bu i l d i n g s , C A
Indonesia detains Chinese fishermen after SCS chase
It is very crystal clear that Natuna belongs to Indonesia.” —M
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NDONESIA detained the crew of a Chinese boat suspected of illegally fishing in its waters, after a chase involving a Chinese coast guard vessel. The government submitted a protest to China’s Chargé d’Affaires Sun Weide in Jakarta over the incident in Indonesia’s economic zone near the Natuna islands, Foreign Minister Retno Marsudi said, according
PESO EXCHANGE RATES n US 46.2700
to state news agency Antara. Earlier, Ministr y Spokesman Arrmanatha Nasir said a Chinese coast guard vessel had entered the melee, colliding with the fishing boat as it was being towed by an Indonesian patrol ship. It was unclear how many fishermen were on the boat and are now being held. “We are concerned, but I can’t say much more before all the facts are
verified,” Nasir said. Under President Joko Widodo, the government has taken a more assertive approach to foreign policy; stepping up control of the borders of the world’s largest archipelago; developing its coast guard; and blowing up vessels found illegally fishing in its waters. Indonesia is also deploying warships in the gas-rich waters
U.S. RIG COUNT RISES AFTER 3 MOS OF DROP AMID GLUT
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IL fell for a second day, extending declines from a three-month high, as the number of drill rigs active in the US rose for the first time in three months amid a global glut. Futures slid as much as 1.5 percent in New York, after decreasing 1.9 percent on Friday. Drillers put one rig back to work last week, marking the first addition since late last year, according to data from Baker Hughes Inc. Ecuador will propose a cut to output at a meeting next month of producers from within and outside the Organization of the Petroleum Exporting Countries (Opec) to help boost prices, according to President Rafael Correa. Energy companies led declines on the MSCI Asia Pacific Index. “There is a bit of a correction after the spike above
$40, because the market is still oversupplied and demand is sluggish, although it’s better than what it was,” Evan Lucas, a market strategist at IG Ltd. in Melbourne, said by phone. “An average of around $35 a barrel is likely in the second quarter. There are signs that the supply side is feeling the pinch and have been forced to act.” Oil has recouped its losses this year, after slumping to a 12-year low last mont h on spec u l at ion stronger demand and falling US output will ease a surplus. Hedge funds and other speculators increased their net-long position in West Texas Intermediate (WTI) futures and options by 17 percent in the week ended March 15 to the highest since June, US Commodity Futures S “U.S. ,” A
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n JAPAN 0.4148 n UK 66.9110 n HK 5.9661 n CHINA 7.1482 n SINGAPORE 34.0973 n AUSTRALIA 35.1328 n EU 52.1555 n SAUDI ARABIA 12.3387
Source: BSP (21 March 2016 )
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Above-6.5% growth seen in Q1 on polls, infra binge C A
industrial production and services output, we are expecting a third consecutive quarter of above-6 percent GDP growth. It should challenge the 6.5-percent mark, especially if agriculture and exports do not pull down the two other major sectors,” the think tank said. The think tank added that government spending can increase by over 15 percent, since the government “has released most of the budget to the different agencies.” It added LGU’s spending is also bound to increase, as local politicians increase their election budget. “Our constructive view of the Philippine economy in 2016 finds some support in early-January data. In addition, we expect private election spending and public infrastructure expenditures prior to and a little beyond the May presidential
elections to provide the additional boost to the economy,” the think tank said. Private election and government spending will get a boost from a low inflation regime, which is expected to average 1.3 percent in the January-to-March period. Inflation was at 1.3 percent in January, and further slowed to 0.9 percent in February, putting year-to-date inflation average at 1.1 percent. The 0.9-percent inflation rate posted in February was the slowest since October 2015, when inflation averaged 0.4 percent. “Pressured by even more depressed crude oil prices, headline inflation rates should average 1.3 percent in Q1 [first quarter] and should support consumer spending that already has election spending as a main driver. However, rates may start inching up in Q2 [second
quarter] but still to hover below 2 percent,” the think tank said. In January the National Economic and Development Authority said GDP growth averaged 6.2 percent from 2010 to 2015, the highest in 40 years. However, the economy merely posted a full-year growth of 5.8 percent in 2015, the slowest since 2011 when the GDP grew 3.7 percent. In the four th quar ter the economy grew 6.3 percent, preventing the government from meeting its revised 6 percent-to-7 percent growth target for 2015. Government underspending in the first half of the year, weak export earnings and lackluster performance of the agriculture sector dampened the country’s GDP growth in 2015. The first-quarter GDP growth will be released in May 2016 by the Philippine Statistics Authority.
Additional LGU fund now ready… f lood- cont rol f a c i l it ie s a nd water-supply systems. “Local governments confront rising public expectations regarding the delivery of services. Despite two decades of implementation of the Local Government Code, however, local gov-
ernments still face the various challenges in the exercise of their devolved service delivery functions. Foremost among these is the raising of sufficient funds for local development,” Abad said in his circular. The funds to be released un-
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der the LGSF may not be used for any other purpose than the projects for which such funds were r e l e a s e d , a n d f o r p a y m e nt of person a l ser v ices e x pe nditures, such as salaries, allowances, bonuses and other forms of compensation.
SECOND DEBATE Presidential candidates Davao City Mayor Rodrigo R. Duterte and Sen. Grace Poe chat during the second of the scheduled three presidential debates on Sunday in Cebu City. Story on A3. KJ ROSALES/PHILIPPINE STAR POOL PHOTO VIA AP
US rig. . .
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Trad i ng Com m i ssion (C F TC ) data show. WTI for April delivery, which expires on Monday, fell as much as 58 cents to $38.86 a barrel on the New York Mercantile Exchange and was at $38.95 at 11:52 a.m. Hong Kong time. Prices lost 76 cents to $39.44 a barrel on Friday, a day after rising to $40.20, the highest level since December 3. Total volume traded was about 31 percent below the 100-day average. The more-active May
futures were 40 cents lower at $40.74 a barrel. Brent for May set t lement dropped as much as 36 cents, or 0.9 percent, to $40.84 a barrel on the London-based ICE Futures Europe exchange. The contract fell 34 cents to $41.20 on Friday. The global benchmark crude was at a premium of 22 cents to WTI for May. The US drill rig count rose to 387, climbing from the lowest level since on December 2009, according to
data on Friday from Baker Hughes. The nation’s crude stockpiles have increased to 523.2 million barrels, the most in more than eight decades, according to the Energy Information Administration. Speculators increased their netlong positions WTI futures and options combined by 29,602 to 204,551 lots, according to CFTC data. Ecuador will propose an output cut for all producers, except Iran, at the April 17 meeting, Correa told reporters. Bloomberg News
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FiT-All adjustment likely to raise April bills
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ONSUMERS will pay an additional P0.0834 per kilowatthour (kWh) in electricity rates, representing the provisionally approved feed-in tariff allowance (FiTAll) of P0.1240 per kWh by the Energy Regulatory Commission (ERC).
The rate will be collected from electricity end-users next month, as
this will be reflected in their electricity bills as a separate item, as man-
dated by the Renewable Energy Act of 2008, or Repucblic Act 9513. The FiT-All serves as an incentive to renewable-energy (RE) developers to ensure the viability of their projects. RE includes wind, run-ofriver hydro, solar, geothermal and biomass. Consumers are the ones who shoulder the FiT-All, a separate line component in the power bills. The P0.1240-per-kWh FiT-All is lower than the current FiT-All rate of P0.0406 per kWh, but higher than what National Transmission Corp. (Transco) applied for. The distribution utilities (DUs) are the ones that collect the FiTAll from end-consumers. They will
₧0.0834/kWh Represents the provisionally approved FiT-All of P0.1240 per kWh by the ERC
remit this to Transco, which was tasked by the ERC to administer the FiT-All fund. The FiT-All fund, in turn, will be used to pay the FiT rates of RE projects. “As per ERC record, Transco received the order today [Monday]. The new FiT-All will be reflected in the April bill to consumers,” ERC Spokesman Floresinda Digal said in
Marcelo del Pilar statue now sanctuary of Manila vagrants B R L. M
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HE statue of Marcelo H. del Pilar, the country’s symbol of the freedom of speech and of the press, now provides a sleeping area for Manila’s vagrants. The statue was transferred by the city government of Manila from its location on Remedios Circle, where it stood since 2009. It now stands at the corner of M.H. del Pilar Street and President Quirino Avenue. The city’s fathers found it the appropriate location, because it is near the street that bears his name. Samahang Plaridel, the association of veteran journalists and communicators which sponsored the statue’s construction, assailed the manner in which the statue was removed in January this year. “They pulled out the statue without any of the [Samahang Plaridel] members getting a by-your-leave from the city government. We came
to know of the statue’s plight only now,” Samahang Plaridel President Rolando Estabillo said. “Isa itong pambabastos sa ating bayan,” Estabillo said in a statement. Del Pilar, also known as Plaridel, fought the Spaniards with the might of his pen, along with Jose Rizal and the other Filipino expatriates in Europe when the country was a colony of Spain. Asked to comment about the statue’s transfer, Mayor Joseph Estrada’s spokesman, Diego Cagahastian, said: “It is [by virtue of] a city council resolution that transferred it to the corner of M.H. del Pilar and Quirino.” The P1.3-million statue was originally erected in 2005 at the Paraiso ng Batang Maynila, the children’s park in front of Manila Zoo, which was eventually renamed Plaza Plaridel. Former Manila Mayor Alfredo Lim caused the transfer of the statue to Remedios Circle, where it was
placed on top of a 6-foot pedestal. In 2004 a fund-raising campaign was launched to cover the cost of the sculpture, with generous help from then-Manila Mayor Lito Atienza.
Public markets
THE Manila City government, meanwhile, said it would prioritize the rehabilitation of public markets, considered to be fire traps and unsanitary to consumers, after a fire hit an old market in the city and claimed the lives of four people. The fire broke out at the New Oriental Market on Carmen Planas Street in Tondo at around 11 p.m. of Sunday and spread to an adjacent commercial-residential building, according to the Manila Fire District. A woman, identified as Evelyn Veloso, who had rented a stall in the market, and her three children aged 4, 5 and 7, were trapped in their burning room atop the market. City Engineer Robert Bernardo said the residential-commercial
building had been classified as “condemned” by the Department of Public Works and Highways (DPWH) many years ago. Estrada said the incident only justified his plans to rehabilitate the city’s public markets through joint-venture agreements with private developers. “All of these old public markets are virtual fire traps. It would be devastating if there would be more lives to be lost if we don’t act now and modernize our markets,” Estrada said, adding that no stall owners and vendors will be displaced by the project. Under City Ordinance 8346, or the Manila Joint Venture Ordinance, several of the city’s 17 public markets will be demolished to pave the way for their rehabilitation through a public-private sector partnership. Those eyed for immediate rehabilitation are the city-run public markets in Quinta, Santa Ana, Sampaloc, San Andres, Trabajo, Pritil, Dagonoy and Paco. With Joel R. San Juan
Presidential hopefuls trade attacks as race tightens
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HE tightening battle for the Philippine presidency is taking a personal turn, with candidates accusing each other of everything from corruption to being unpatriotic. Four contenders for the Southeast A sia nation’s top of f ice clashed in a fiery debate in the central province of Cebu on Sunday, with some of the most pointed exchanges coming between Vice President Jejomar C. Binay and Sen. Grace Poe. The event started with a dispute—as Binay challenged rules proh ibit i ng c a nd id ates f rom bringing documents to the podium—and quickly turned personal as the Vice President questioned Poe’s patriotism, because she once renounced her Philippine citizenship to live in the US. “You’re not a true Filipino, because you were ashamed of it,” Binay said. “When you took your oath of allegiance to be naturalized as an American citizen, I abjure, you were ashamed of where you came from.” Poe, 47, responded by saying it’s “love of country that matters.” Working honestly overseas is better compared to those who “may be here, but stealing money from the people,” she said. Binay, who felt alluded to, denied corruption allegations, and said he already signed a waiver allowing authorities to scrutinize his bank accounts. T he clash comes less than two months before the Philippines will choose a successor to President Aquino, 56, who can’t run again because of the nation’s
I’d like to be very, very brutally frank to the Vice President. Sir, you have so many cases...that’s public knowledge.”—D
six-year term limit. Opinion polls show the race tightening as the May 9 vote approaches. At stake is Mr. Aquino’s record in curbing corruption, boosting growth and trimming the budget, which helped the nation secure an investment-grade debt rating for the first time in 2013.
Tight race
FOR M ER I nte r ior S e c ret a r y Manuel A. Roxas II, who’s backed by Mr. Aquino, and Rodrigo R. Duterte, the firebrand mayor of Davao City, also participated in the debate. A fifth candidate, Sen. Miriam Defensor-Santiago, was absent because she said she would undergo a cancer-treatment trial. A Pulse Asia poll conducted between March 1 and 6 found Poe with 28 percent of support, followed by Duterte, with 24 percent; Binay, with 21 percent; and Roxas, with 20 percent. A Social Weather Stations’ poll around the same time put Poe’s support at 27 percent; Binay at 24 percent; Roxas, at 22 percent; and Duterte, at 21 percent. The Supreme Court on March 8 overturned a ruling by the election commission that had earlier disqualified Poe from the May
presidential race over her citizenship status. If she wins, Poe pledged to cut taxes on companies and lift restrictions on foreign ownership set by the Constitution to encourage more investors into the country. Binay said he would exempt workers earning P30,000 a month or less from paying income taxes and vowed to embark on a massive infrastructure program. Roxas said he’s also open to review taxes but not during an election period. All four candidates reiterated their opposition to making divorce legal. The Philippines is Asia’s most C at hol ic n at ion, a nd one of the few countries in the world that still bars divorce. Binay and Duterte said they would support having hero’s burial for late dictator Ferdinand Marcos, whose remains are still on display in Ilocos Norte province, more than a quarter century after his death. The second of three debates, held in the central Philippines’s vote-rich Cebu province, aimed to shift the public’s focus toward policy debate and programs to confront social ills. The four main contenders in the May 9 elections,
however, often used the nationally televised debate to exchange personal attacks. President Aquino ends his six-year term in June. Under Mr. Aquino, the economy has been growing steadily, but daunting challenges remain, including corruption and poverty, issues that figured prominently in Sunday’s three-hour debate. Duterte of southern Davao city, who is known for his tough stance against criminality and corruption, challenged Binay to withdraw from the presidential race with him if the Vice President can prove that Duterte has been charged with graft. “I’d like to be very, very brutally frank to the Vice President. Sir, you have so many cases...that’s public knowledge,” Duterte said. Duterte accused Roxas of a lackluster response to the massive deaths and devastation wrought by Supertyphoon Yolanda (international code name Haiyan), which ravaged the central Philippines in 2013. Duterte called Roxas “a weak leader,” adding that the former interior secretary appeared “lost, like a zombie” amid the supertyphoon devastation. Roxas said Duterte would be a dangerous leader, because he has a tendency to spring into action based solely on his own suspicions, alluding to Duterte’s repeated threats to have criminals and drug pushers killed across the country if he wins the presidency. The final debate will be held next month. Bloomberg News, AP
a text message. Manila Electric Co. (Meralco) Spokesman Joe Zaldarriaga confirmed that the FiT-All rate will be collected from its millions of customers. “Yes, we will implement based on the ERC order,” he said. He added that Meralco’s first remittance of collections to Transco was made in March 2015, when the first FiT-All rates were collected in the February bills, covering the January consumption of Meralco customers. While the FIT system does spell out an extra few centavos in additional power rates, it, nonetheless, encourages more RE plants to be built. Industry experts pointed out
that RE plants help temper prices in the Wholesale Electricity Spot Market as it pushes out the more expensive plants, like diesel, since RE prices are not subject to the volatility of the market. Moreover, they pointed out that “for a few centavos, it will help improve or, at least, stop the worsening air quality, which has led to different ailments, like asthma, for those living in the metropolis.” RE power plants, they stressed, allow the displacement of other more polluting sources of electricity, such as coal and oil. This, in effect, lessens the carbon emissions from these plants.
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A4 Tuesday, March 22, 2016
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CA affirms ERC order allowing Meralco to raise electricity rates by ₧0.0168/kWh
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B J R. S J
HE Court of Appeals (CA) has affirmed the decision issued by the Energy Regulatory Commission (ERC) in 2011 allowing the Manila Electric Co. (Meralco) to increase its rates by P0.0168 per kilowatt-hour (kWh), despite earlier findings by the Commission on Audit (COA) that it overcharged its customers by as much as P7 billion in 2004 and 2007.
In a 16-page ruling penned by Associate Justice Victoria Isabel Paredes, the CA’s Seventh Division denied the petition filed by National Association of Electricity Consumers for Reforms Inc. (Nasecore) seeking the nullification of the ERC’s order, issued on June 21, 2011, which upheld its earlier decision on May 30, 2003. The ERC, in its ruling in 2003, granted Meralco’s application for
the approval of its unbundled rates and appraisal of its properties and proposed increase in rates. Meralco argued before the ERC that the rate increase was to augment its growing operation and maintenance expenses, which include leased properties on customer premises, construction work in progress, and building plants for future use. It will be recalled that the Su-
preme Court (SC) affirmed the ERC’s May 30, 2003, order granting the petition of Meralco for an increase in rates while, at the same time, directing the ERC to seek the assistance of the COA in conducting a complete audit of Meralco’s books, records and accounts to see to it that the rate increases are reasonable and justified. Pursuant to the SC ruling, the ERC requested the COA to conduct an audit of Meralco’s books, accounts and records to determine whether the implementation of Meralco’s approved distribution rates resulted in a fair return, and whether the recovery of generation costs had been revenue-neutral to Meralco. In November 12, 2009, the COA transmitted to the ERC its audit report revealing the unbundling of Meralco rates effectively resulted in over-recoveries of revenues in excess of the required revenue by P1.682 billion in 2004 and by P5.327 billion in 2007. The COA report said the overrecoveries were determined after it discovered certain factors or items, which should not have been included in the computation of Meralco’s revenue requirements. However, the ERC ignored the COA report and instead upheld its May 30, 2003, decision, prompting
Nasecore to file a petition before the CA seeking to stop the ERC’s order. In denying Nasecore’s petition, the appellate court stressed that even if the SC directed the ERC to request the COA to undertake a complete audit on the books, records and accounts of Meralco, it recognized that the power to fix the rates of electric distribution utilities primarily belongs with the ERC. “After an examination of the assailed orders, we find that the ERC had dutifully complied with the order of the Supreme Court. Just because the ERC did not adopt the findings in the COA report does not mean that the ERC failed to follow the directive in the Lualhati case,” the CA said. It also stressed that the COA audit is not a prerequisite to rate fixing, and that the ERC is not bound to accept and adopt any finding that a COA audit may come up with. The CA did not give weight to the claim of Nasecore that the ERC erred in disregarding the COA’s finding that Meralco’s operating expenses, which include employees pension and other benefits, amounting to P3.479 billion in 2004 and P2. 916 billion in 2007, were not recoverable from consumers as they were not reasonable and necessary in the distribution services.
It also found no merit to Nasecore’s argument that the ERC erred when it ignored the COA finding that certain properties and equipment, amounting to P3.701 in 2004 and P3.586 billion in 2007, should not be considered as part of the rate base as they were not used and useful in the distribution operation. The CA explained that it would be unlikely for the COA report to come up with a conclusion similar to that used by the ERC when it approved the application for rate increase sought by Meralco given the use of different factors. “The findings in the COA report cannot overshadow the initial conclusion of the ERC, which led to the approval of the rate increase, moreso, considering the fact that the
methodologies used appear to be inconsistent...,” the CA explained. Likewise, the CA found no merit to Nasecore’s claim that the distribution revenues of Meralco, being over and above the ERC-approved distribution revenues, should be treated as over-recovery and subject to refund. “Instead of auditing the records of Meralco to determine if it was justified in asking for a rate increase, the COA used data…after the implementation of the rate increase,” the CA pointed out. “Simply, the COA relied on the impact of the rate increase on the revenues of Meralco, which we find proper,” it added. Concurring with the ruling were Associate Justices Magdangal M. de Leon and Elihu Ybañez.
After an examination of the assailed orders, we find that the ERC had dutifully complied with the order of the Supreme Court. Just because the ERC did not adopt the findings in the COA report does not mean that the ERC failed to follow the directive in the Lualhati case.”—C A
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AseanTuesday BusinessMirror
Editor: Max V. de Leon • Tuesday, March 22, 2016 A5
Vietnam economy at risk sans reforms–IMF
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IETNAM risks being vulnerable to external shocks if it doesn’t push through with reforms to strengthen its banking system and restructure state businesses, according to International Monetary Fund (IMF) chief Christine Lagarde. The Southeast Asian nation isn’t in a position to withstand economic blows from tightening of monetary policies elsewhere, a deep and prolonged drop in commodity prices and a slowing China without reforms, she said in a March 18 interview in Ho Chi Minh City. “The risk is that from being slightly vulnerable, Vietnam could become very vulnerable to external shocks,” she said. “It would expose the Vietnamese economy, and that would not be good for the Vietnamese population.” Vietnam’s integration with the global economy has driven growth and reduced poverty. The economy is forecast to grow at 6.6 percent this year, according to Bloomberg surveys, while Prime Minister Nguyen Tan Dung has proposed raising the country’s 2016 economic expansion target to 7 percent, from 6.7 percent. The nation’s poverty rate has dropped to 13.5 percent, from 60 percent in 1993, and its economic growth is expected to be “solid” at more than 6 percent this year, Lagarde said in a visit to the country last week, during which she met with the country’s top leaders. Vietnam, which is in the process of a once-in-five-years political transition, now has one of the world’s most open economies, she said.
on dismissing President Truong Tan Sang and National Assembly Chairman Nguyen Sinh Hung during meetings to be held from March 31 to April 12, Nguyen Hanh Phuc, general secretary of National Assembly, said at a briefing in Hanoi. The move, being characterized as procedural by legislators, is unusual. “It’s pretty rare, but did happen twice in the past, when the time period between the Party Congress and the election to form the new National Assembly was too long,” Cao Sy Kiem, a National Assembly member, said by telephone from Hanoi. “This is to make sure the process of handing over the jobs will be smoothly done. It also make more sense as the prime minister is no longer a Politburo member now.”
The risk is that from being slightly vulnerable, Vietnam could become very vulnerable to external shocks.” —L Remarkable potential “VIETNAM has done very well—to have the ability to maintain macroeconomic stability in an environment, which is challenging, because the rest of the world is not growing at the pace, and the potential we would like to see is quite remarkable,” Lagarde said in the interview. “It has done very well in terms of reducing poverty and it has not increased inequality, which often comes with growth.” Still, the nation’s economic expansion since 2008 has been slower than the two preceding decades and it has failed to match per-capita-income growth that the region’s most successful economies experienced similar stages in
‘Lame duck’
VIETNAMESE Communist Party General Secretary Nguyen Phu Trong (left, front), President Truong Tan Sang (right, front), Prime Minister Nguyen Tan Dung (center, second row) and Chairman of the National Assembly Nguyen Sinh Hung (right, second row) pay tribute to late President Ho Chi Minh at his mausoleum in Hanoi on Monday. The National Assembly is expected to vote early next month to remove Sang, Dung and Hung after they were not elected to the all-powerful Politburo in the party’s congress in January. The assembly is also expected to elect the country’s new leaders. AP
development, she said. Vietnam also needs to make greater use of exchange-rate flexibility to soften the blows of overseas economic shocks and build external reserves, she said. Reforming the nation’s state-owned companies and resolving bad debt at banks will offset the aging of its working-age population that could be a future drag on growth, according to Lagarde.
Corporate governance
“WE believe the banking system needs to be made stronger, better and more capitalized with less stressed
Indonesia’s Lippo Group partners with GrabTaxi to speed up distribution
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IPPO Group, the Indonesian conglomerate founded by billionaire tycoon Mochtar Riady, will partner with GrabTaxi Holdings Pte. for e-commerce deliveries in Southeast Asia’s largest economy. The founder’s grandson, John Riady, is spearheading Lippo Group’s foray into e-commerce with a $500 million investment in MatahariMall, an online version of its Matahari department store chain. Grab, a regional ride-hailing company, will help transport and deliver goods to bolster MahatariMall’s services, the companies said in a statement on Monday. The partnership shows how local companies, familiar with consumer preferences, regulations and infrastructure challenges, are trying to tailor services to stay ahead of
BISHOP IN JAKARTA
$70B
Estimated online sales across Asean by 2010, from the current $6 billion, according to a Bain & Co. and Google Inc. report foreign rivals as competition heats up. Japanese e-commerce company Rakuten Inc. closed down its Indonesian unit as of March 1, while China’s JD.com Inc. has recently set up shop in Indonesia. “Speed is really important in
Australian Foreign Minister Julie Bishop (right) is greeted by her Indonesian counterpart Retno Marsudi during their meeting in Jakarta on Monday. AP
this business,” said Ridzki Kramadibrata, managing director of Grab Indonesia. “You need to be able to do multiple things at the same time, because if you can’t do that, the market will outgrow you and you will lose your opportunity.”
Rising incomes
MATAHARIMALL’S site allows customers to buy on the Web and pick up items from Lippo’s stores. Its rival Tokopedia, which is backed by Japan’s SoftBank Group Corp. and Sequoia Capital, has already formed a similar alliance with Go-Jek, a motorcycle-taxi-booking company, to deliver purchased items to customers. “Our combined knowledge of the Indonesian market will help us build the most effective onlineto-offline experience—to ensure that online shoppers anywhere in Indonesia can receive or collect their purchases easily,” John Riady, a Lippo Group director, said in the statement. Grab’s alliance with Lippo also underscores its aggressive marketshare acquisition strategy in Indonesia, where it competes with Uber Technologies Inc. and Go-Jek. Grab’s private car-hailing service grew 30 percent in Indonesia in February, according to the statement. It has more than 50 percent of the country’s motorcycle taxi market in March, it said. Technology startups are trying to capitalize on rising incomes and growing mobile-phone use in Southeast Asia, where 250 million consumers are now connected via smartphone and 100 million engage in online transactions, according to a report by Bain & Co. and Google Inc. released last week. The report predicts online sales across Southeast Asia to surge to $70 billion by 2020, from $6 billion now. Bloomberg News
assets in its balance sheets, so the banks can actually fuel the economy,” Lagarde said. State-owned enterprises need better governance and to refocus on their core businesses, she said. The country is also at risk with public debt at about 60 percent of GDP and with one of the world’s fastest-aging societies and a working-age population that is beginning to decline. “When you have the combination of high debt and slightly declining working-age population, you need to be very careful with your mac-
roeconomic stability,” she said in the interview. “You need to be very careful with the revenue you generate and how you spend it.”
PM’s fate hangs
VIETNAMESE legislators will vote in the coming weeks on whether to dismiss Dung two months after he failed in his bid to become the Communist Party’s chief. The National Assembly previously had been scheduled to meet during the summer to complete the nation’s once-in-five-year political transition. Lawmakers will also vote
A DISMISSAL will allow Dung, who wielded significant power, to move on to the next stage in his career and allow the government to avoid an extended period of inaction before the new prime minister and other leaders are appointed. “For a Vietnamese leader, respect is very important and you can only govern if you have respect,” said Vu Tu Thanh, chief Vietnam representative of the US-Asean Business Council. “If you feel people have their deference and respect divided between you and the incoming guy, you want to get out of there and focus on your future. He is a lame duck.” Current Communist Party General Secretary Nguyen Phu Trong was chosen by delegates to a second term in January over Dung. The parliament will also vote to elect new leaders to take the country’s three top positions, Phuc said. Bloomberg News
Thailand crafting aggressive domestic tourism campaign
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HE Tourism Authority of Thailand (TAT) has set a challenging new target for domestic tourism revenue of 900 billion baht this year, up from 790 billion baht in 2015. This goal is an increase from its 850-billion-baht forecast made earlier this year, in line with the government’s policy to promote domestic tourism and generate greater income for local communities. The additional revenue is expected to come from daily merchants crossing the border from Lao PDR, Cambodia and Myanmar for both business and leisure. Moreover, the TAT’s planned tourism campaigns will be more aggressive. TAT governor Yuthasak Supasorn called the new domestic tourism revenue goal “a tough target” at a time when the economy is slowing. The agency previously made 900 billion baht the goal for 2017. “The government is promoting service businesses among farming communities to help them generate income when crop prices are low and with a water shortage highly likely this summer,” Yuthasak said. The Interior Ministry recently approved a 60-billion-baht budget for local administration organizations to develop tourism infrastructures and products in their communities. “The budget will be used to develop the supply side of tourism,” he said. “The TAT will take a role in raising demand through aggressive campaigns the rest of the year.” Some major campaigns are Discover Thainess 2016, 12 Hidden Gems and Wan-Tam-Ma-Da-NaTiew (a weekday travel promotion), and Yuthasak urged further marketing of these campaigns. The TAT also plans to promote new tourism routes connecting popular destinations in Thailand
790B baht Thailand’s domestic tourism revenue in 2015
with neighboring countries, such as Lao PDR, Cambodia and Myanmar. It is awaiting government approval for the 780-million-baht special budget for its Quick Win tourism campaign and four big events to lift domestic tourism. For international markets, Yuthasak said the TAT is not worried about inbound tourism this year thanks to the sharp rise of foreign tourist arrivals. The Tourism and Sports Ministry projected foreign tourist arrivals to Thailand in the first quarter this year of 8.94 million, up 14.3 percent year-on-year. Revenue from inbound tourism is projected to grow 18.2 percent to 660 billion baht in the first quarter. Arrivals from China are expected to rise 25.4 percent to 2.51 million visitors, with arrivals from Europe gaining 8.3 percent to 2.09 million, and Asean visitors increasing 5.7 percent to 1.89 million. For domestic tourism, the ministry expected income to grow 6.9 percent to 210 billion baht in the first quarter. The government aims to expand the country’s total rail network to 7,000 kilometers by 2022 to reduce logistics costs and take advantage of the country’s geographic position. Prime Minister Prayut Chan-ocha said the expansion is needed as the country has failed to make headway in rail development for
years. The rail network currently stretches 4,070 km. He was speaking at a seminar and exhibition on rail component production at the Airport Rail Link’s Makkasan station on Wednesday. He said the government is trying to create a connectivity network for all modes of transportation. Transport Minister Arkhom Termpittayapaisith said the ministry has a plan to transform the country into a major transport hub for Asean and the Mekong subregion, as well as a transit route linking the Asia Pacific with South Asia, Africa and Europe. The move is included in the national transport investment plan from 2015 to 2022 and the national logistics strategic plan from 2013 to 2017. “The Transport Ministry wants a rail network offering a lowcost service. It is currently second in affordability after water transport,” said Arkhom, noting rail shipments account for only 2 percent of all transport volume and the ministry aims to push this up to 5 percent by 2022. The move would help reduce logistics costs from 14 percent of GDP to 10 percent to 12 percent within eight years, a similar level to other advanced nations. After the rail network increases to 7,000 km, factories could be set up to produce train components, signal systems and carriages, Arkhom said. He said the ministry will also work with the Science and Technology Ministry and the Industry Ministry to develop rail components, human resources and signal systems by adopting technologies from abroad. Land around the rail stations and on both sides of the rail tracks will be commercially developed to supplement income for financing the rail operations, the minister said. MCT
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Tuesday, March 22, 2016 | Editor: Lyn Resurreccion
Trump’s immigration stance resonates at tense rallies
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UCSON, Arizona—Donald Trump’s campaign in Arizona is centered on his hard-line against illegal immigration, a stand that supporters embraced in a series of tense rallies ahead of Tuesday’s presidential primary in the border state. “Illegal immigration is gonna stop,” Trump said on Saturday night in Tucson. “It’s dangerous,” he said. “Terrible.” Both in Phoenix and Tucson, Trump was introduced by former Arizona Gov. Jan Brewer, who pushed tough immigration laws in office, and Joe Arpaio, the Maricopa County sheriff who made his name by chasing down people who are in the country illegally. The county includes Phoenix and nearly two-thirds of Arizona’s population. Protesters showed up at every event. In Phoenix they blocked the main road into his outdoor rally for several hours before it started. In Tucson they interrupted him and some were tossed from the event. Police said on Sunday that about half a dozen people were arrested at the Arizona rallies, including two on misdemeanor charges of assault. It was not clear how many were protesters or Trump supporters. Trump was campaigning in Arizona ahead of Tuesday’s primary in which the winner will take all 58 delegates at stake. Trump’s main rivals, Texas Sen. Ted Cruz and Ohio Gov. John Kasich, are desperately trying to prevent the real-estate mogul from accumulating the 1,237 delegates needed to secure the nomination at the party’s national convention in July. They are hoping for a contested convention in which delegates would be free to turn from Trump if he fails to win a majority on the first ballot. Trump has won 678 delegates in contests held thus far, according to a count by The Associated Press. Cruz is in second place with 423 delegates, and Kasich is in third with 143. His rivals hope to offset a likely Trump win in Arizona on Tuesday with a strong showing in the Utah caucuses. Limited polling shows Cruz leading in the state, where Mormons account for two-thirds of the state’s 3 million residents. Mitt Romney, the 2012 Republican presidential nominee and the Mormon faith’s most visible member, said he intends to vote for Cruz in the caucuses, but stopped short of endorsing the Texas senator, an uncompromising conservative. However, Utah’s delegates will be distributed proportionally based on the percentage of votes—unless a candidate gets more than 50 percent, which would give that person all 40 delegates. In Arizona Trump treated the latest protests with a mix of pacifist rhetoric and a mocking tone. “We love our protesters, don’t we?” he asked. As security removed one or more, he said: “We want to do it with love,” then added bitingly, “Get ‘em outta here.” In Tucson one protester carried a sign with an image of a Confederate flag over an image of Trump; another wore a Ku Klux Klan-style white sheet. A man in the crowd attacked the protester with the Confederate sign, kicking and punching him before being arrested. The protesters were led out by security. “It was a tough thing to watch,” Trump said on Sunday on ABC’s This Week, adding, “But why would a protester walk into a room with a Ku Klux Klan outfit on?” Trump made clear, though, “We don’t condone violence.” The chairman of the Republican National Committee, Reince Priebus, told ABC television that “as far as everyone getting involved in the crowds, leave it to the professionals” in law enforcement. As the rally attendees later streamed out of the hall, protesters hurled two water bottles at them and called them racists. Arizona Democrats also vote on Tuesday, and contender Bernie Sanders campaigned on Saturday at the US-Mexico border in Nogales. Standing in front of a tall, steel fence that divides the two countries, the Vermont senator promised to keep immigrant families together by taking more steps than President Barack Obama has done to protect many from deportation. Sanders called Arpaio a bully and he bemoaned the “divisive, bigoted and xenophobic comments of people like Donald Trump.” Late Saturday he held his fourth Arizona rally in the past five days, this time just outside of downtown Phoenix. Sanders is hoping for a win in Tuesday’s Arizona primary to propel him through the next month when several states more favorable for him are due to vote. Sanders is looking to rebound from his defeat last Tuesday in five state contests to Hillary Clinton, which gave the former secretary of state a nearly insurmountable lead of more than 300 pledged delegates. AP
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Obama in Cuba: Historic Castro summit a key test for détente
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AVANA—Brushing past profound differences, President Barack Obama and Cuban President Raul Castro will sit down on Monday at Havana’s Palace of the Revolution for a historic meeting, offering critical clues about whether Obama’s sharp U-turn in policy will be fully reciprocated.
For Obama, there’s no better place than Havana to show that engagement can do more than isolation to bring about tangible change in the tiny communist nation. Yet, for the Cubans, the glaring question is whether their own government is ready to prove the ambitious diplomatic opening is more than just talk. Obama opened the first presidential visit to Cuba in nearly 90 years on Sunday when Air Force One touched down in Havana. St rol l i ng t h rough t he g ra nd cobblestoned plazas of Old Havana with his wife, Michelle, and daughters Sasha and Malia, Obama created an indelible image for both Cubans and Americans of the peacemaking that he and Castro have cautiously but doggedly pursued. “That’s the future that we hope for: young American children, young Cuban children, by the time they’re adults, our hope is that they think it’s natural that a US president should be visiting Cuba,” Obama told American diplomats assigned to the newly reopened US Embassy. “They think it’s natural that the two peoples are working together.” Indeed, the US and Cuba are working more closely together now than at any time, since relations took a nose dive amid Cuba’s 1959 revolution. Yet, while Americans are now flocking to Cuba in greater numbers, closer ties have to bring about the degree of change that many Cubans hoped would follow after Obama and Castro moved to normalize relations 15 months ago. Since taking power in 2008, R aul Castro has orchestrated economic and social reforms with lasting and broad-based impact, though, to many Cubans and foreigners, they appear slow to materialize. Not only are hundreds of thousands of Cubans now able to pursue free enterprise, but restrictions on cellphones and Internet have been eased and citizens feel more comfortable d iscussing Cuba’s prob lems. Yet, Castro has given little
90 The number years that no American president set foot on Cuban soil until the Obama visit
ground when it comes to changing Cuba’s single-party system or easing strict limits on the media, assembly and political dissent. His government has also repeatedly chided Obama for saying he wanted to empower Cubans. None of that has dissuaded Obama, who insists that any intransigence by Cuba’s government only proves why Cubans will be better off when they’re intimately exposed to American values. “Let God will that this is good for all Cubans,” said Odilia Collazo, a 79-year-old Havana resident, as she watched Obama’s arrival on state television. “It seems to me that Obama wants to do something good before he leaves.” To that end, Obama came to Havana hoping his visit would spur Castro to offer gestures of good faith and meaningful change, which would undermine cr itics who accuse Obama of kowtowing to an authoritarian government. Though Cuba approved US hotel chains Starwood and Marriott to operate here and moved to lift fees on converting US dollars, those steps pale in comparison to sweeping changes Obama has enacted to lift decades-old US restrictions. On his first full day in Cuba, Obama was to lay a wreath on Monday at the memorial to Jose Marti, a Cuban independence hero, before heading to Castro’s presidential offices. After a series of meetings, the two leaders planned to address reporters. The W hite House’s attempts to get Castro to agree to a joint
U.S. President Barack Obama holds an umbrella for first lady Michelle Obama as they walk across the tarmac upon their arrival at Jose Marti International Airport in Havana, Cuba, on Sunday. Obama and his family traveled to Cuba on Sunday, becoming the first US president to visit the island in nearly 90 years. AP
news conference appeared unsuccessful, and it was unclear w he t he r t he y ’ d a n s w e r a ny questions. Castro appears to be closely and intensely managing what constitutes the most important change in Cuban foreign policy since the Cold War. Though Obama’s aides have downplayed expectations for the meeting, Castro’s remarks alongside Obama will be closely parsed for indications of whether he’ll respond to Obama’s opening with major new domestic changes. Obama also planned an event with US and Cuban entrepreneurs aimed at championing Cuba’s f ledgling private sector. He was to be feted in the evening
at a state dinner, an honor illustrating just how far the US and Cuba have come despite their deep ideological differences. His visit was to continue on Tuesday with a major speech that Cuban officials said would be carried on T V. Before departing for Argentina, Obama planned to meet with political dissidents and attend a game between Major League Baseball’s Tampa Bay Rays and Cuba’s beloved national team. In his first few hours on the island, Obama created indelible images of a new US-Cuba relationship as he walked the rain-soaked streets of Havana and dined at a privately owned restaurant in a bustling,
work ing- c l ass neighborhood. Jubilant crowds surged toward his heavily fortified motorcade, reminders of the Cuban people’s deep affection for Americans, despite decades of enmity between their governments. Yet, in a pointed reminder that Obama’s aspirations for improved human rights in Cuba have yet to be fulfilled, a group of anti-government protesters were arrested while Air Force One was flying to Cuba, a scene that plays out weekly in Havana. Members of the Ladies in White group, one of Cuba’s most prominent opposition groups, were expected to attend Obama’s meeting with Cuban dissidents. AP
Seoul: North Korea fires 4 short-range projectiles
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A MAN watches a TV news program showing a file footage of the missile launch conducted by North Korea, at Seoul Railway Station in Seoul, South Korea on March 3. North Korea fired several short-range projectiles into the sea off its east coast Thursday, Seoul officials said, just hours after the U.N. Security Council approved the toughest sanctions on Pyongyang in two decades for its recent nuclear test and long-range rocket launch. The screen reads “ North Korea launched missiles.” AP
EOUL, South Korea—North Korea on Monday fired four short-range projectiles into the sea, Seoul officials said, in a continuation of weapon launches the country has carried out in an apparent response to ongoing South Korea-US military drills it sees as a provocation. The projectiles launched from the northeastern city of Hamhung flew about 200 kilometers (125 miles) before landing in waters off North Korea’s east coast, South Korean defense officials said on condition of anonymity, citing department rules. Monday’s launches came three days after Seoul said
North Korea launched its first medium-range missile into the sea since early 2014. South Korea’s Yonhap news agency earlier reported that a missile had been fired, but later changed that to say that projectiles had been fired. The firings appear to be North Korea’s response to the annual springtime military exercises that it says are an invasion rehearsal. Earlier this month, Nor th Korea fired several short-range missiles and artillery shells into t he sea a nd t hreatened pre emptive nuclear strikes against Washington and Seoul. AP
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Brazil poll shows strong support for president’s impeachment
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IO DE JANEIRO—A new poll published on Sunday suggested strong support for the impeachment of embattled Brazilian President Dilma Rousseff in a politically polarized country, mired in an economic recession and a corruption probe that has ensnared much of the county’s political brass. The poll by the respected Datafolha agency, published in the Folha de S. Paulo newspaper, said 68 percent of people surveyed want to see lawmakers vote to impeach Rousseff. That’s up 8 percentage points since February, with the jump was highest among the rich, who supported Rousseff’s impeachment by 74 percent. Just 10 percent rated Rousseff’s goverment good or excellent, with 69 percent calling it bad or terrible. The ratings of her predecessor, former President Luiz Inacio Lula da Silva, were also down— possibly dented by controversy over his appointment as Rousseff’s chief of staff, a move critics said was a bid to shield him from corruption allegations. Fifty-seven percent said they disapprove of him—a dramatic drop from the near-90-percent approval rating he had when leaving office in 2010. But in a sign of the depth of Brazilians’ disgust with the entire political establishment, Silva held onto his ranking as the best president Brazil ever had, with 35 percent of the survey’s respondents picking him, compared with the 16 percent who chose his predecessor, President Fernando Henrique Cardoso. A Supreme Court justice on Friday suspended Silva’s nomination to the Cabinet post, and the full Supreme Court will have to decide whether he can take office. Under Brazilian law, Cabinet members cannot be investigated, charged or imprisoned unless authorized by the Supreme Court. The Datafolha survey was carried out on March 17 and 18, with face-to-face interviews with 2,794 people in171 cities and towns. The margin of error is plus or minus 2 percentage points. The effort to impeach Rousseff over allegations of fiscal mismanagement moved forward last week when the lower house created a special commission on the matter. Rousseff backers say impeachment is a power grab by opponents who themselves have been sullied by an unrelated probe into kickbacks and bribery at the state-run oil company Petrobras. Eight of the 65 members of impeachment commission are currently facing charges, as is the speaker of the lower house, Eduardo Cunha, who opened the impeachment proceedings. Former President Cardozo, meanwhile, said in an interview published Sunday by O Estado de S. Paulo that impeachment is a way out of the country’s problems. “With the government’s incapacity to function that one sees today, her (Rousseff’s) ability to hold firm and make the government work, I think the path is impeachment,” said Cardozo, who governed the country from 1995-2002. The political turmoil comes as Brazil prepares to host the Summer Olympics in August while struggling with an economic crisis and an outbreak of the Zika virus, which health experts believe may cause a devastating birth defect in newborns. AP
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Editor: Lyn Resurreccion •
Fears in Iraqi govt, army over Shiite militias’ power
IN this February 7, 2016, photo, Shiite fighters clash with the Islamic State (IS) group at the frontline in Tikrit, Iraq, 80 miles (130 kilometers) north of Baghdad. Iraq’s Shiite militias, mobilized in 2014 to fight the IS group, are now showing they have no intention to stand down once the fight against the Sunni extremists is over. AP
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AGHDAD—It was a tense confrontation between two forces supposed to be on the same side in Iraq. First, heavily armed police led by the interior minister, waded into a Shiite militia base south of Baghdad and arrested its deputy commander, accused of organizing attacks on Sunni mosques. They loaded the man, Ali Reda, into an armored sport utility vehicle (SUV). Then militia reinforcements descended, surrounded the police and demanded Reda be freed. Weapons were drawn. The minister, Mohammed al-Ghabban, the highest figure in Iraq’s police force, frantically called Baghdad from inside his SUV. In the end, al-Ghabban surrendered his prisoner and left emptyhanded, angry and humiliated. The standoff in mid-January, described to The Associated Press (AP) by six different officials and militia leaders, was a stark example of the power that Shiite militias have accrued in Iraq and their boldness in wielding it. These militias, many of them backed by Iran, mobilized in 2014 to fight Sunni extremists from the Islamic State (IS) group. However, they are now showing no intention of standing down after the battle, demanding instead to be a major force shaping Iraq. That prospect worries not only Iraq’s Sunni minority but also officials in the military and the Shiite-led government, who fear the militias will dominate Iraq the way the Revolutionary Guard does in Iran and the guerrilla group Hezbollah does in Lebanon. Two top generals warned that the army could eventually come to blows with the militias, known collectively as the “Hashd,” Arabic for “mobilization.” “They [the militias] have now infiltrated the government and are meddling in politics,” said Ali Omran, commander of the army’s fifth Infantry Division and a veteran of numerous battles against IS. “I told the Hashd people that one day I and my men may fight them.” The more than 50 Shiite militias in Iraq have between 60,000 and 140,000 fighters, according to estimates from the government and the Hashd itself. They are backed by tanks and weapons, and have their own intelligence agency, operations rooms and court of law. The larger militias, like Asaib Ahl al-Haq, the Hezbollah Brigades, Badr
and the Peace Brigades, have been in place since soon after the 2003 ouster of Saddam Hussein. They are linked to political parties, effectively forming armed branches for politicians. But the ranks of the militias swelled dramatically after IS overran nearly a third of Iraq in the summer of 2014 and Grand Ayatollah Ali al-Sistani, Iraq’s top Shiite cleric, called on able-bodied males to fight IS. At the time, tens of thousands turned out. Those same militias now want to remain a permanent, independent armed force and are resisting attempts to integrate them into the military or police, the AP found from interviews with more than 15 government officials, army generals and militia leaders and visits to Tikrit and Samarra, Sunni-majority areas where the militias now hold power. The militias insist they have earned a special status, pointing to the 5,000 militiamen killed and 16,000 wounded fighting IS. “Those who sacrificed more are entitled to more,” said Hamed alJazaeery, head of the al-Khorasani Brigades militia. “What is written with blood cannot be removed. It is not ink on paper.” Al-Jazaeery wears the black turban of a cleric and the camouflage fatigues of a fighter. The walls of his office are adorned with photos of the leader of Iran’s Islamic Revolution, Ayatollah Ruhollah Khomeini, and its current supreme leader Ayatollah Ali Khamenei. Other photos show al-Jazaeery posing with Iranian Gen. Qassem Suleimani, the powerful Revolutionary Guard figure who helped organize the Iraqi militias against IS. “We want to be a third power in Iraq,” al-Jazaeery alongside the army and police, said. “Why can’t the Hashd be like the Revolutionary Guard in Iran?” The model of the Revolutionary Guard, often cited by militia leaders, would be a dramatic change for Iraq’s militias. In Iran the Guard is an elite force independent of—and better armed than—the military, tasked with “protecting” the Shiite cleric-led power structure. It is effectively a state within a state, rivaling the political strength of Iran’s supreme leader. Sunnis fear such militia power would enforce Shiite domination of
Iraq. Sunnis already accuse militias of targeting them with abuses. Hundreds of green and red Shiite banners and images of imams—historic religious leaders revered by the Shiites—are posted all over Sunni areas under militia control north and east of Baghdad, in a blatant challenge to sectarian sensitivities. The militias call themselves “holy” or “glorious,” and often talk of their battle as a fight for Shiism rather than Iraq. They give Shiite names to major offensives, only for the government to ban their use. “I joined the Hashd for the imams, not for the government,” said one militiaman, Mohammed al-Azghar, in the central city of Samarra. The official agency created to oversee the fighters, the Popular Mobilization Commission, has instead become the militias’ political lever in the machinery of power. The government now funds the militias, but some of them refuse to even give officials the names of their fighters, citing security concerns. “People fear and trust us more than they fear and trust the government,” boasted Ahmed al-Assady, a Shiite lawmaker and spokesman for the Mobilization Commission. “They fear us because we act, not just talk.” Advisers from Iran’s Revolutionary Guard and Lebanon’s Hezbollah have helped Iraq’s militias in the battle against IS. Billboards around Baghdad announce the “martyrdom” of fighters, alongside images of Iran’s Khamenei and Khomeini and Hezbollah leader Hassan Nasrallah. Militia TV channels and newspapers also accuse the government of corruption and cast the militias as the true protectors of Iraqis. In Tikrit, Saddam Hussein’s hometown north of Baghdad, the extent of the militias’ prestige is on display: The headquarters of a senior militiaman, Jassim al-Husseini, is at one of the late dictator’s opulent palaces along the Tigris River. The chain-smoking al-Husseini wears a military brown jacket and walks with a cane because of a leg injury sustained while fighting IS last year. He confidently spoke of the flaws of Iraq’s government and said the militias cannot be integrated into its security forces. “Integrating us in the security forces and the military is not an idea that will help build our nation,” he said. Now the militias demand to participate in a long-expected offensive to retake largely Sunni Mosul, Iraq’s second-largest city and the main stronghold of IS rule in Iraq—something the military and armed Sunni groups oppose. “The Hashd will take part in the
battle to liberate Mosul no matter what,” said senior Shiite politician Hadi al-Amry, who is also commander of the Iranian-backed Badr militia. “No one can stop us from entering Mosul.” In Samarra Sunnis say they already experience what is feared could happen if the militias enter Mosul. The city has a Sunni majority but is home to one of the most revered Shiite shrines, blown up by al-Qaeda 10 years ago. In 2014 Shiite militias successfully prevented IS from taking Samarra and have kept their grip on the city since. Local dignitaries and officials air a flood of grievances blamed on militias, including killings of Sunnis, takeovers of schools and the forcing of Sunnis to sell property in the prime real estate area close to the shrine. To the thud of artillery shelling in the distance, the city council’s deputy chairman, Muzher Fleih, said 650 Sunnis have disappeared, believed abducted and killed by the militias. Among them was his brother, who disappeared last year and was found dead soon after. “The city is oppressed,” he said. Militia leaders insist any abuses are isolated incidents. “We are not angels,” said al-Assady, the Mobilization spokesman. “It is only natural that we make mistakes.” Some in the government and military are beginning to see the militias as a danger to the state itself. In a sign of wariness over the militias’ autonomy, Shiite Prime Minister Haidar al-Abadi charged recently that government funds to the Hashd were being mismanaged. One of his close aides told the AP that the comments were directed at Abu Mahdi al-Mohandes, the Hashd’s most powerful figure, who is wanted by the US in connection with the 1983 bombing of the American and French embassies in Kuwait. There has also been friction with the military. Last month militiamen refused orders to vacate a building in a military base north of Baghdad, and the army sent troops to take it over. They found the militiamen ready for a fight, with snipers stationed on the roof and in sandbagged positions around it. The dispute was resolved when a substitute building was found for the militiamen. Since its 2014 collapse, the military has been slowly recovering. But Gen. Abdul-Wahab al-Saadi, deputy commander of the army’s elite counterterrorism force, said the militias don’t want the military to regain its strength. “They may be tempted to take on the army if they don’t have their way,” he said. AP
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SPAIN BUS CRASH KILLS 13 EXCHANGE STUDENTS; 34 INJURED
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ADRID—A bus carrying university exchange students back from Spain’s largest fireworks festival crashed on Sunday on a main highway in the northeast, killing at least 13 passengers and injuring 34 others, officials said. The passengers included Spaniards and foreign nationals from around 20 countries, authorities said. The bus, which was carrying 57 passengers, appeared to have hit a guardrail of the AP7 highway before cartwheeling across the road, slamming through a divider and landing on its side, said Jordi Jane, spokesman for Spain’s northeastern Catalonia province. The students, part of the Erasmus exchange program, had traveled to the eastern city of Valencia to take part in the renowned Fallas fireworks festival and were returning when the bus crashed, Jane said. Most were studying at two universities in Barcelona. The crash took place near Freginals, halfway between Valencia and Barcelona. Initially, Jane said 14 had died in the crash, but Spanish Interior Minister Jorge Fernandez Diaz later confirmed the death toll was 13. He said 28 passengers received medical treatment in local hospitals and others received first aid at the crash site. The regional government of Catalonia said in a statement in the early evening that “according to the latest data, the ill-fated bus had students from Hungary, Germany, Sweden, Norway, Switzerland, Czech Republic, the United Kingdom, Italy, Peru, Bulgaria, Poland, Ireland, Japan, Ukraine, Holland, Belgium, France, Palestine, Turkey and Greece.” It added that two countries— New Zealand and Finland—were still pending confirmation. The statement said autopsies had been completed on nine of the 13 dead and a judge would release the bodies to families once full identification was complete in all cases. Italy’s Foreign Ministry confirmed that Italian citizens were among the dead, but did not say how many. But the Italian news agency ANSA, reporting from Madrid, said as many as seven Italians died in the crash. Italian Premier Matteo Renzi said in a tweet that his heart is “broken for the Italian victims and for the other young lives destroyed.”. Five Italians were reported to be among the injured who were taken to hospitals in Spain. Poland’s Foreign Ministry said one Polish man was hospitalized after the bus crash and Swiss authorities said one young Swiss woman was injured, but had been discharged from a hospital. The bus that crashed was one of five that had traveled to the festival with students from Barcelona, the Catalan government said in a statement. Television images from state broadcaster TVE showed the bus also crashed into an oncoming car on the opposite side of the highway. The passengers in the car were injured, the Catalan government said. The bus driver was being held at a police station in the city of Tortosa, Jane said. Road conditions were good at the time of the crash and investigators were looking into the cause of the tragedy, he said. Fernandez Diaz said the driver passed alcohol and drug tests he was given. Jane said emergency rescue workers were working to clear the wreckage that had closed the major highway linking Spain with France along the Mediterranean coast in both directions. The Erasmus program provides foreign-exchange courses for students from counties within the 28-nation European Union and enables them to attend many of the continent’s best universities. AP
A10 Tuesday, March 22, 2016 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Yes, the PHL is green
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ANTING to always keep an open mind and learn from others, it is good to invite selfproclaimed experts to the Philippines. We might learn something that is beneficial.
Recently, former US Vice President and losing presidential candidate Al Gore came to talk about global warming and climate change. He spoke of the need for the Philippines to reduce, if not eliminate, as quickly as possible, our use of coal-fired power plants for electricity generation. We agree that our getting nearly 50 percent of our electricity from coal is not the best situation, and we need to move away from coal. Some people have equated the global warming and climate-change concept as almost a religion, and there is good reason to say that. Although on virtually constant tour of giving speeches around the globe, Gore refuses to entertain any questions from his audiences for several years. You might have noticed that is very similar to a parish priest who also does not answer questions after delivering a homily. There is good reason that Gore does not answer questions, because he might be asked about his previous statements. For example, in 2007 as Gore accepted the Nobel Peace Prize for his campaigning on climate change, he said, “The North Polar ice cap is falling off a cliff. It could be completely gone in summer in as little as seven years. Seven years from now.” The year 2014 came and went, and the polar ice cap is still there. We will give Gore the benefit of the doubt, since he did say “could” and not “would.” However, what is the factual reality of the Philippines and its energy use? Renewable energy (RE) is defined as “energy from a source that is not depleted when used, such as wind or solar power.” We should include nuclear power in that definition but “greenies” usually hate nuclear power, as it meets all their criteria, but without the tree-hugging. The facts are that the Philippines has a higher percentage of its total power generation (29.6 percent) from RE sources than Germany, China, Ireland, Russia, Mexico, France, India, Australia, the US, Japan, Indonesia, the United Kingdom, Malaysia, Thailand and South Korea. Overall, the Philippines is not doing too bad. We rank 81st out of 150 countries. But we are also told that a critical problem is a nation’s “carbon footprint,” the amount of carbon dioxide and other carbon compounds emitted due to the consumption of fossil fuels by a particular person.” Here, too, the Philippines has a lower per-person “carbon footprint” than Vietnam, Indonesia, Mexico, Iraq, Thailand, Switzerland, Hong Kong, China, Malaysia, the UK, the US, Australia and Japan, among 120 countries producing more carbon than Philippines. In fact, the average Filipino has a smaller carbon footprint than Gore, who lives in a 20-room house using an average of 22,619 kilowatts per hour of electricity a month, more than twice the electricity that an average American family uses in an entire year. We can hardly wait for Gore’s speech to the other industrialized nations that are not as clean and green as the Philippines. Since 2005
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THE ENTREPRENEUR
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HE outcry from pensioners of the Social Security System (SSS) following the veto by President Aquino of the proposed P2,000 increase in their monthly pension was understandable.
We can even say the rejection of House Bill 5842, which was passed by both houses of the administration-controlled Congress, was lamentable, when we consider that the 2 million or so retired workers from the private sector were receiving a minimum of only P1,200 a month. To make their situation all the more pitiful, many of the pensioners—who, during their productive years, ran the country’s factories, built homes and office towers, and constructed roads and bridges to push the economy forward—are now in their twilight years, requiring not only food for subsistence but medicines to maintain their fragile health. I can understand the pension fund’s, as well as the administration’s, concern about maintaining
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the viability of the SSS, which must always be prepared to compensate members who get sick; those who go on maternity leaves; those who need loans for education or other needs; and those who pass away, in addition to those who retire. The proposed increase of P2,000 for each of the more than 2 million pensioners, according to the government, will result in a total payout of P56 billion a year. On the other hand, the pension fund’s investment income (from which pension is paid) amounts to P30 billion to P40 billion a year, putting the SSS in deficit of P16 billion to P26 billion annually. To cover the deficit, the SSS would have to tap into its investment-reserve fund until it is depleted by 2029. I believe the pension fund’s
Why the sudden ringing of alarm bells about the fund’s collapse after the proposed increase in pension rates? The SSS should have looked for other sources, like improving efficiency. Rejecting the proposal outright seemed callous. There should have been a compromise, if P2,000 is too high, but definitely not a zero sum.
v iabi lit y problem can be addressed normally in several ways: by increasing premium contributions; by withholding any increase in benefits; and by improving efficiency in collections and investments. The SSS could have presented a positive public image, even before the lawmakers drafted the proposal to raise retirees’ pension, if it showed that it had become very efficient that it could increase benefits. Actually, the SSS had been issuing public statements to show its healthy finances. For instance, a newspaper, citing an SSS official, reported in February that the SSS was on track to meet, or even exceed, its
Are you too fragile for the stock market?
Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Frederick M. Alegre Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro
BusinessMirror is published daily by the Philippine Business Daily Mirror
HOM
SSS pension hike should not be a zero sum
John Mangun
OUTSIDE THE BOX
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NE of the most interesting people of the 21st century is turning out to be a man who is difficult to describe. Nassim Nicholas Taleb is an author, scholar, statistician, former financial-markets trader and does risk analysis. And he is a graduate of Wharton School, University of Pennsylvania, holding Masters in Business Administration degree as most, but not all (as we have been told countless times), Wharton graduates do. Taleb may be best known for his best-selling 2007 book The Black Swan, about unpredictable events, part of a four-part philosophical series on uncertainty titled The Incerto. His last book published in 2012 is for me the most enlightening, Antifragile: Things That Gain From Disorder. Although also a best-seller, Antifragile is the most difficult to read, opinionated and, for me, practical. Taleb’s introduction reads, “Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the
ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.” In one sense, you might easily summarize Antifragility as “that which does not kill us makes us stronger,” which is what Friedrich Nietzsche, the German philosopher, wrote. But notice the rest of the title— Things That Gain From Disorder. Taleb’s concept goes an important step farther. For example, older varieties of Jack pine trees cannot re-
The forest fire that allows the trees to thrive is a perfect example of volatility, randomness, disorder, stress, risk and uncertainty. Those same words might be used by an experienced stock-market investor to describe what he or she faces every trading day. The key is that all of those factors are what provides price fluctuations and subsequent trends that create the profitable opportunities.
produce without fire. The pine cones that hold the seeds are so hard that only intense heat can open the pods to let the seeds fall to the ground to be germinated. The forest fire that allows the trees to thrive is a perfect example of volatility, randomness, disorder, stress, risk and uncertainty. Those same words might be used by an experienced stock-market investor to describe what he or she faces every trading day. The key is that all of those factors are what provides price fluctuations and subsequent trends that create
target of 6-percent return on investments for 2015. The SSS earned more than P26.93 billion from investments and other income in the first 11 months of 2015, according to the report. This translates to a return of over 6 percent for the fund’s P423.8-billion total investments as of end-November last year. Added to contributions from the fund’s 33.5 million members and their employers, the SSS generated total revenues of P147.7 billion in the first 11 months of 2015. For 2016, the SSS is projecting an investment income of P30 billion and P141 billion from member contributions. So why the sudden ringing of alarm bells about the fund’s collapse after the proposed increase in pension rates? The SSS should have looked for other sources, like improving efficiency, but rejecting the proposal outright seemed callous. There should have been a compromise, if P2,000 is too high, but definitely not a zero sum. While we understand the need to maintain viability, the SSS cannot just continue being inefficient and tell its retirees to take it or leave it. For comments, e-mail mbv.secretariat@ gmail.com or visit www.mannyvillar.com.ph.
the profitable opportunities. If the stock market is “antifragile” —and it is—then must a successful investor also be antifragile? Artist Pablo Picasso once said, “Ah, good taste, what a dreadful thing! Taste is the enemy of creativeness.” In other words, artists and investors must step out beyond the conventional and linear way of thinking. Aren’t forest fires bad for the trees and the environment? Taleb’s Skin in the Game argument says that a business manager who does not own the business is at first antifragile, profiting from good decisions and safe from bad decisions as he is not an owner. But as time goes on, he becomes “fragile,” as bad decisions are hidden and become critical problems later. The stock-market “expert” follows the most “fragile” path trying to calm the inherent typhoon that is the stock market. The one who wins is the one who yells, “Hit me with your best shot,” because that is how you make money. 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.
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The untold stories of Aquino human rights violation Cecilio T. Arillo
DATABASE Conclusion
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N September 3, 1998, at least 120 delegates out of the 164 member-families of the Luisita Neighborhood Association had a dialogue with Tarlac Gov. Jose V. Yap at the Tarlac Provincial Capitol. The families were contesting efforts to evict them from a 3,290-hectare portion of the hacienda. The allowable usage of this portion had been reclassified in 1995 from agricultural to commercial, industrial and residential. A fraction of this portion was to be developed into an industrial estate, the Luisita Industrial Park. The families were complaining, not just about imminent eviction, but also harassment and bribery to make them sign quitclaims or waivers of their residency rights; that they were not being permitted to repair their homes; that most of them had been retrenched or terminated from their jobs in the hacienda; and that in the barangays of Balete, Central and Texas, electric power was cut off, garbage collection services were stopped and the construction of toilets suspended. The Comprehensive Agrarian Reform Program (CARP) not just brought bitterness to the families of the “workers” (formerly tenantfarmers) of Hacienda Luisita, but was also cleverly used as an excuse to generate popular pressure to strip the Marcoses and their associates of all assets under the generic category of “ill-gotten wealth.” President Corazon C. Aquino’s Proclamation 131 created a fiveyear agrarian-reform fund of P50 billion to be raised partly from illgotten wealth received through the Presidential Commission on Good Government. To get funding for and from the CARP, peasants were, thus, expected to support the regime in its hunt for the Marcos wealth. Worse, the Aquino administration used the CARP to justify a highly reprehensible deal. This was Mrs. Aquino’s attempt to dispose of certain prime properties in Tokyo and Kobe in Japan, which were acquired by the Philippines, as part of Japanese reparations for the death and injuries sustained by Filipinos during the Second World War. The foreign properties involved were a 3,179-square-meter lot on Roppongi Street in Tokyo, the 2,489.96-sq-m lot that was the site of the Philippine Chancery in Tokyo and two prime lots in Kobe. Reacting, Mrs. Aquino’s Vice President Doy Laurel said: “On the pretext of raising funds for the CARP, the Aquino administration, through the Asset Privatization Trust, decided to sell these properties through public bidding, starting with the Roppongi lot. This was accompanied by talks of a lot of money-changing hands. This was confirmed by an affidavit executed by lawyer Lupino Lazaro, which had been submitted to the Commission on Appointments. “I immediately filed with the Supreme Court a petition for prohibition…. In a precedent-setting decision promulgated on July 25, 1990, the Supreme Court sustained my petition….” No doubt, Mrs. Aquino had authorized the sale of the Roppongi lot to Japanese property developers through Executive Order 296. As a result of the uproar that the proposed sale generated, an option to lease was initiated. But the Supreme Court ruled that by herself and without the concurrence of Congress through the passage of a law, President Aquino had no authority to dispose of the reparations properties through sale or lease. The Court held the lots to be
The Aquino government used the CARP to justify a highly reprehensible deal. This was President Aquino’s attempt to dispose of certain prime properties in Tokyo and Kobe in Japan, which were acquired by the Philippines as part of Japanese reparations for the death and injuries sustained by Filipinos during the Second World War. property of the public domain and, thus inalienable, beyond the commerce of man, and not subject to contracts. Concurring with the majority, Justice Isagani Cruz wrote: “The respondents have failed to show the President’s legal authority to sell the Roppongi property…. The Solicitor General was at best ambiguous, although I must add in fairness that this was not his fault. The fact is that there is no such authority. Legal expertise alone cannot conjure that statutory permission out of thin air…. The sale of the said property may be authorized only by Congress through a duly enacted statute, and there is no such law.” “Cory had apparently become habitual in exercising dictatorial powers, while projecting herself all the time as a champion of democracy. In the Roppongi case, she presumed that she had the power to dispose of property of the public dominion. When that presumption was challenged in the parliament of public opinion, she remained unyielding until the Supreme Court overruled her,” Laurel lamented. This is the other side of the coin, the untold story of the “holier than thou” Cory Aquino administration “hailed as saint by the Filipino people.” A saint, whose soldiers opened fire on poor peasants and farmers fighting for genuine land reform, in broad daylight to also mention, then invoked the immunity of the state to be held liable to such atrocities. A saint who broke her promise to the Filipinos by deliberately refusing to distribute any parcel of land to farmers of her sprawling hacienda, which, aside from encompassing vast plantations tilled by the blood and sweat of peasant workers, also became home to numerous horrific killing sprees. A saint, who, due to her vindictiveness, prevented the return of her archnemesis to this country, whether the man is dead or alive. That same man, albeit demonized as a tyrant and oppressor, stood firm on his order to not attack the massive crowd during the Edsa revolt, and regarded the saint’s husband as a brother, even facilitating the latter’s trip to the United States to undergo a heart surgery. If this kind of person truly qualifies as a saint, heaven help us all. To reach the writer, e-mail cecilio.arillo@ gmail.com.
Water and rice Edgardo J. Angara
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UIMARAS province recently declared a state of calamity, after sustaining P91 million worth of agricultural damage, due to drought. With 60 percent of its rice fields parched, the island-province is the latest addition to the list of areas worst hit by El Niño—the fairly regular warming of the Pacific Ocean—considered to be the most severe in modern history.
Government officials maintain the dry spell does not imperil the country’s food security and will most likely end by May or June 2016. But the damage is still considerable—up to P5.32 billion in agricultural losses since February 2015, around P1.9 billion of which (or 35.7 percent) were incurred only in the last two months. In a recent report, the United Nations Office for the Coordination of Humanitarian Affairs calculated that, while Mindanao
is the one most severely hit, accounting for up to half of the 194,000 hectares of affected farm areas, 87 percent of its crops have no chance of recovery. And in total, around 102,000 farmers have already been affected. The government, of course, has responded, allocating some P19 billion in the 2016 national budget to implement the road map President Aquino ordered last year for addressing the adverse impacts of El Niño. A portion will go to assisting
Poe and Cojuangco Ernesto M. Hilario
ABOUT TOWN
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IGHT after the Supreme Court’s (SC) 9-6 decision declared her qualified to run for the presidency, Sen. Grace Poe and her running mate Sen. Chiz G. Escudero hied off to Quezon province, the capital of the coconut industry in the country. There and then, the current survey frontrunner and daughter of the late action king Fernando Poe Jr. defended businessman Eduardo “Danding” Cojuangco from the allegation that he amassed a huge fortune from the imposition of the coco levy, a tax on every kilo of copra levied ostensibly for the benefit of the coconut planters, now numbering some 4 million throughout the country. She herself was “getting impatient that coconut farmers have yet to benefit from the coco-levy funds more than four decades after they paid it,” Poe said. “But the problem is that Danding Cojuangco doesn’t control it anymore, because all the shares are now with government,” she declared. In 2012 the Supreme Court issued a final ruling on the cocolevy assets, saying that 31 percent of the disputed San Miguel Corp. (SMC) shares should go to the government for the benefit of taxpayers, specifically the coconut farmers, while the retaining 20 percent
for Cojuangco. Last year President Aquino issued Executive Orders 179 and 180 privatizing the coco-levy funds, but his edicts were suspended by the SC. What this means is that after more than four decades of struggle for justice by millions of coconut farmers, they would have to wait some more, while those who amassed wealth from the blood, sweat and tears of coconut farmers are laughing all the way to the bank. During the martial-law years, Cojuangco, then-ambassador extraordinary and Plenipotentiary and the lone civilian member of the infamous “Rolex 12,” bought controlling stocks of the country’s largest corporation from the Soriano family and religious orders, using coconut-levy funds in a masterstroke of financial wizardry. Now, if we look closely at the timeline of the events of this election season, we see that days before the SC handed down its controversial decision, the Nationalist
Tuesday, March 22, 2016 A11
farmers who tide themselves over throughout the dry spell—a pressing need, especially when so many fall further into debt whenever they lose an entire harvest. The lion’s share (up to P12 billion) goes to building up the country’s ill-maintained irrigation system. A recent Joint Foreign Chambers of the Philippines policy note highlighted the country’s large irrigation gap. Despite billions already invested, only 1.7 million hectares—or 57 percent of the country’s 3 million hectares of available irrigable land—actually have irrigation today. To bridge that gap, the National Irrigation Administration said it will need P35 billion a year, from now to 2027—a massive outlay of P350 billion. Such a simplistic, traditional approach to irrigation exacerbates the country’s already fragmented water, governance framework. Up to 30 government agencies are involved in water supply and sanitation, with not a single one empowered to coordinate the activities of the others. This explains why up to 70 percent of the
rainwater the country receives every year goes to waste, instead of being impounded for use during crises like the ongoing El Niño. In 2011 I filed a Water Sector Reform Act that reorganizes the institutional setup and governance framework of the water sector. Debates on the measure and similar water-sector reform should be reopened, especially in light of World Water Day this March 22. But even now, there are new and more creative solutions on offer for use and deployment. For one, constructing water-catchment ponds for, say, every 50 hectares of riceland, will save us ample fresh water at less cost. The Philippine Rice Research Institute should be funded adequately to encourage farmers to use drought-resistant seeds. And there are more innovations. The next president should have the will and imagination to help our rural populations and develop our countr yside a nd coasta l communities.
People’s Coalition (NPC), which everybody knows was founded by Cojuangco, endorsed the still-uncertain presidential run of Poe. Isn’t this perfect timing, considering that one of the members of the SC, a recent appointee of President Aquino, was once corporate secretary of business behemoth SMC? The NPC president, Rep. Georgidi Aggabao, boomed, as if on cue, “Tapos na ang boksing.” Before noon of Tuesday, March 8, it was all over but the shouting at the SC. The next day, the PoeEscudero tandem was uncannily in the heartland of cocolandia, Quezon province, where farmers, many of whom had died while waiting for that precious katas ng niyog to be returned to them, were “consoled” by Poe, who openly defended the Cojuangco patriarch. Now, nobody would believe that Poe and Escudero flew to Quezon right after her SC victory without days of planning ahead. A sortie isn’t done at a moment’s notice. It takes days, if not weeks, of advance planning. Serendipitously, Poe was in Quezon, defending Cojuangco. Isn’t that quick payback? Shouldn’t all this now lead us to call Sen. Grace “Poejuangco”? This moniker is not something original. In the 2010 campaign, the Liberals tarred then-presidential candidate Manny Villar as the secret candidate of President Arroyo, giving him the moniker “Villarroyo.” History repeats itself, the first time as tragedy, and the second as farce, Marx said. Poe is no “secret”
candidate really. But then, Cojuangco is not the sitting president, unlike Arroyo in 2010, so what has he got to do with this? Well, the sitting president is Benigno Simeon Aquino y Cojuangco, son of Cory, who is the nephew of Tito Danding. It’s all in the family of hacienderos-turned-oligarchs controlling the nation’s economy.
How to rob a central bank
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S brazen heists go, it was a quiet one. Over a single weekend in February, hackers managed to extract tens of millions of dollars from Bangladesh’s central bank before anyone noticed. Now the bank is in turmoil, its governor has resigned, and much of the cash is missing. It’s one of the biggest holdups in history—and other central banks should be on notice. The scheme started when intruders inserted malware into Bangladesh Bank’s system in January. With information evidently gleaned from the attack, they were able to divert funds from the bank’s account at the New York Fed using the SWIFT messaging system. Officials only wised up when the thieves tried to move an additional $850 million to suspect accounts, and a routing bank noticed a comical spelling error in one request. By then, some $81 million was long gone. A few lessons from this strange tale suggest themselves. First, central banks make fat targets. Many are under constant attack. Those in the developing
world, with lots of new capital but not much digital security, are especially at risk. Bangladesh had amassed some $28 billion in foreigncurrency reserves, and its central bank had alarmingly lax defenses. It was a hacker’s dream. Second, fessing up quickly is crucial. Officials at Bangladesh Bank kept quiet for more than a month, and never quite got around to informing the country’s finance
minister. Meanwhile, the pilfered cash made its way across the globe. Asian governments and industries, in particular, would benefit from better information-sharing about intrusions. A more crucial lesson is that cybersecurity, though boring, is everyone’s responsibility—even the boss’s. (“I am not a technical person,” the now ex-governor of Bangladesh Bank said, by way of
E-mail: angara.ed@gmail.com.
Taiwan low-cost airline
V AIR, a Taiwan low-cost carrier, will start a new service between Taipei and Manila on March 27. The carrier becomes the first Taiwan low-cost carrier venturing into the Manila market. An Airbus A320 aircraft, with a seating capacity of 180, will mainly be used on the route. Fare prices start from $65. V Air’s Taipei-Manila service will operate four flights per week. The outbound flight ZV085 departs Taiwan Taoyuan International Airport at 5 p.m. every Tuesday, Thursday, Saturday and Sunday, and arrives at the Ninoy Aquino International Airport (Naia) at 7 p.m., local time. Then after a onehour turnaround time, the inbound flight ZV086 departs Manila at 8 p.m., local time and arrives at Taiwan Taoyuan at 1 p.m. (Taipei time). The inaugural flight will arrive on Sunday, March 27, at the Naia Terminal 1, with Dr. Gary Song-Huann Lin, Representative of the Taipei Economic and Cultural Office in the Philippines, to welcome the arrivals and invited guests. E-mail: ernhil@yahoo.com.
explanation.) All too often, malicious hacks come down to simple human error. Making better use of encryption, access controls and strong verification systems can help, but nothing can substitute for training and vigilance. Finally, preventing hackers from moving the money they’ve siphoned off requires global cooperation. The thieves in this case laundered much of the cash through casinos in the Philippines. Not coincidentally, Filipino lawmakers have exempted casinos from antimoney-laundering requirements. Tightening those restrictions would be wise. But there are still far too many places where lax laws, custom or generalized chaos provide a welcome home for dirty money. Changing those norms will only get more urgent. All told, this puzzling episode should be a wake-up call. Next time, the miscreants won’t be so flagrant, greedy or orthographically challenged. They’ll have plenty of enticing targets to choose from. And they’ll only have to get lucky once. Bloomberg View
2nd Front Page BusinessMirror
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www.businessmirror.com.ph
NTC to telcos: Ensure 99.99% network reliability
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B L S. M
HE National Telecommunications Commission (NTC) on Monday ordered local mobile operators to prepare for the expected surge in mobile traffic during Lent.
Also, to ensure the safety and reliability of various modes of transportation during the Holy Week, the government launched a program that mandates all its subagencies to implement heightened security measures and set up facilities to ensure traveler convenience. In a memorandum, NTC Commissioner Gamaliel A. Cordoba ordered telcos to continue offering their “unlimited” services even during the holidays, and “ensure uninterrupted telecommunications
services during the Lenten season.” The two largest telecommunications companies in the Philippines previously barred customers from availing themselves of the service, prompting a congressional hearing a few years ago. “All necessary network adjustments and maintenance should be undertaken to ensure that the networks are ready to accommodate the expected increase in traffic during the Lenten season,” he said. “Sufficient operations and
maintenance personnel shall be deployed to ensure 99.9999 network availability and reliability.” Meanwhile, under the Oplan Ligtas Biyahe: Semana Santa 2016, subagencies are required to deploy additional personnel in airports, sea ports, bus terminals and highways. They are also mandated to set up facilities, such as public-assistance desks, first-aid stations, additional seats and charging stations. “More frequent worthiness inspections on aircraft, ships and buses, and random drug and alcohol testing will be done to make sure that these means of transport are compliant with safety standards, and the personnel are not under the influence while conveying passengers,” the transport agency said in a statement. The Manila International Airport Authority has instructed airline companies to deploy more personnel at check-in counters for efficient processing and shortening of queues.
All necessary network adjustments and maintenance should be undertaken to ensure that the networks are ready to accommodate the expected increase in traffic during the Lenten season.” —C “Travelers are also reminded not to bring prohibited items to the airport, and to stow all belongings in one’s carry-on baggage for faster processing at the screening checkpoints,” the statement read. The Civil Aeronautics Board also reminds airlines to abide by the policies under the Air Passenger Bill of Rights, which sets out the minimum obligations of airlines to their passengers in case of any untoward incidents in relation to their flights.
T he L a nd Tr a n s p or t at ion Fr a nc h i si ng a nd R e g u l ator y Board, on the other hand, has issued special permits for 832 additional provincial buses in order to meet the expected boost in passenger demand. Meanwhile, the Toll Regulatory Board reminded expressway operators to strictly implement traffic rules and regulations to avoid any untoward incidents. Roving teams will be deployed in areas where stoning incidents and
vandalism of right-of-way fences occur, and for fast response to motorist emergencies. Point-to-point bus ser vices will be suspended from March 24 to 27 to give way to preventivemaintenance works, while airport bus services will continue to run during the Holy Week, with the exception of March 25. Likewise, the operations of Light Rail Transit Lines 1 and 2, and the Metro Rail Transit Line 3 will be suspended from March 24 to 27 to allow heavy maintenance works. Operations will resume on March 28. The Philippine National Railways will also suspend operations from March 24 to 26, but will resume on March 27. Maritime agencies will be conducting rigorous security checks at port facilities and passenger ships prior to their scheduled departures. “The Philippine Coast Guard will continue patrolling the seas and be on standby for rescue operations, if necessary,” the agency said.
Indonesia detains Chinese fishermen after SCS chase C A
around Natuna, in response to China’s growing military presence in the disputed South China Sea (SCS). So far, though Indonesia has largely avoided being caught up in the SCS tensions, which have seen China’s relations deteriorate with
the Philippines and Vietnam, even as economic ties remain strong. Indeed, Marsudi stressed in the statement to China that Indonesia is not a claimant in the waters, Antara reported.
Chinese passports
ON March 19, a Chinese fishing boat in the country’s conventional
fishing waters was attacked and harassed by armed Indonesian vessels, and a coast guard ship went to its aid, China’s Foreign Ministry said in a statement carried on the Global Times web site. “The Chinese side urges the Indonesian side to immediately release the fishermen being captured and to assure their safety,” it said.
China claims more than 80 percent of the SCS, one of the world’s busiest waterways, based on a socalled nine dash line for which it won’t give precise coordinates, and has undertaken large-scale land reclamation in the area to enable airstrips and other features to be built. In passports issued in 2012, China’s line encroached on the ex-
clusive economic zone that Indonesia derives from the Natuna islands. Indonesia hasn’t recognized the claim. “Natuna belongs to Indonesia, it is very crystal clear that Natuna belongs to Indonesia,” Marsudi told Bloomberg in an interview on Friday. “I would like to emphasize that Indonesian sovereignty over
Natuna is very clear and recognized by China, as well.” The Asean needs to press on with talks for a code of conduct for the SCS, she said. One of the Indonesian government’s main foreign policy objectives was to resolve maritime territorial disputes with its neighbors, Marsudi said. Bloomberg News