Businessmirror september 07, 2015

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Monday, September 7, 2015 E 1

OF THE SINGLE METRIC B G K

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ANAGERS and boards are often pushed by investors, fund managers and analysts to focus on a single measure of success, such as shareholder value or profit, and then they do everything they can to maximize it. Ass a result, they tend to overlook other important measures— for instance, customer satisfaction, employee motivation and supplier support—and their narrow view of the organization can do long-term damage.

Companies should be managed much more holistically. Certainly, some enlightened CEOs and boards understand this. When Paul Polman became the CEO of Unilever, for example, he stopped giving analysts earnings guidance, dispensed with quarterly profit reports and said there’d be no special treatment for hedge funds. Instead, he focused his metrics on the long-term needs of a full range of stakeholders.

Initially, the market took a dim view of this shift, punishing the stock price. But it rebounded months later, after analysts accepted Polman’s wider lens.

Think of it this way: Organizations are a lot like individuals. To live a full, satisfying life, you probably wouldn’t focus exclusively on wealth, sacrificing every bit of joy so you can have a large bank balance on your deathbed. Nor, most likely, would you concentrate only on your

health, wrapping yourself in cotton wool to take zero risks with your well-being. Maximizing one thing would mean giving up too much in other areas. Most of us have found that it’s better to work on a combination of things—to look after the whole self’s best interests.

Similarly, business leaders and governance teams must look after the whole company. Their mandate is to improve the probability of their organizations’ long-term survival and growth. To gauge their success, they need a composite scorecard with both objective and subjective targets for key stakeholders. For instance, they may want to gauge employees’ productivity, innovation and contentment, and customers’ profitable revenue and satisfaction. And so it goes, stakeholder by stakeholder.

But even if a metric is classed as objective, someone ultimately has to apply the “good enough” test, which is subjective. This requires continual judgment and adjustment—it’s much messier than using a single metric—but it’s what executives and boards get paid for.

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HOULD you act dominantly or deferentially when you negotiate? Some past studies have shown that when negotiators act dominantly by raising their voices, expanding their body postures to appear larger and moving themselves to physical positions associated with power, they can often claim more of the value available in a negotiation.

But there are instances when negotiators should act deferentially—maintain a constrictive body posture, adopt a softer tone of voice, and ta ke other steps to ensure that their negotiation partner feels respected and unthreatened. In especially complex negotiations, negotiators need to find a conversational dynamic that allows them to exchange information effectively, unravel areas of dispute and ensure that all the nuances of a potential deal are fully explored. This is best achieved

when two parties attain “dominance complementarity,” wherein one person in an interaction behaves relatively deferentially and the other behaves relatively dominantly. In a set of two experiments, colleagues and I had people participate in simulated complex negotiations over either a job offer or the merger of two companies.

We gave participants payoff grids indicating, through a point system, how valuable each issue was to them.

We instructed some participants to act dominantly by using expansive body posture and taking charge of the conversation, and some to act deferentially by using constrictive posture and making sure that the other person felt respected. The control group wasn’t instructed one way or the other.

We found that pairs consisting of one negotiator behaving dominantly and the other behaving deferentially reached better deals than pairs consisting of two dominant negotiators, pairs consisting of two deferential

Graham Kenny is the managing director of Strategic Factors, a consultancy based in Sydney, Australia. He is the author of Crack Strategy’s Code and Strategic Performance Measurement.

negotiators, or pairs in which neither negotiator received behavioral instructions. We judged the success of each deal by calculating the number of points negotiators accumulated from the payoff grid. They reached these superior deals because they more successfully exchanged information about their preferences and the priorities they placed on different issues. In short, they communicated more effectively—with the dominant negotiators stating preferences and the deferential negotiator asking questions.

It’s important to note that the study participants who performed well by behaving deferentially did not sacrifice their own preferences or ignore their own desires. Instead, they used a subtler, more respectful conversational approach to satisfy those desires and achieve their goals.

Scott Wiltermuth is an associate professor of management and organization at the University of Southern California’s Marshall School of Business.

IS DESIGN THINKING STILL A COMPETITIVE ADVANTAGE?

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OW that design thinking is everywhere, it’s tempting to simply declare it dead—to ordain something new in its place. It’s a methodology always in pursuit of unforeseen innovation, so reinventing itself might seem like the smart way forward. But in practice, design thinking is a set of tools that can grow old with us. And in order to create sustained competitive advantage, businesses must be not just practitioners, but masters of the art.

The future of design thinking is here; it just isn’t evenly distributed. Some complex and large-scale systems are adopting the practice in holistic ways. The Innova School System, for example, with 23 schools thus far, is applying design thinking across its platform, from how the classrooms are built to the curriculum.

But I can count such examples on one hand, and that unevenness in distribution is due to a lack of creative mastery. For organizations that haven’t invested in a sustained way, the end results can be incremental and short-lived. Customer satisfaction and sales might see a bump, but incremental ideas are easy to copy. True competitive advantage requires nonobvious solutions executed in elegant ways.

One company that’s going for creative mastery is Umpqua. When the bank acquired Sterling Financial Corp. over a year ago, doubling its size and creating the West Coast’s largest community bank overnight, CEO Ray Davis seized the moment to reinvest in design thinking across the organization.

Umpqua created and set up an exhibition at its headquarters in Portland, Oregon, focused on designing human-centered experiences,

products and technological tools. Teams large and small, from executives to associates, walked through the exhibit, and Davis invited them to sign their names at the end only if they sincerely believed in the approach. Company evangelists handed out Moleskines with tips on “how to be better-makers,” and an internal tool helps teams master design thinking through open-platform challenges. Design thinking even shows up in the questions asked during reviews, when employees are evaluated on how successfully they’re building its principles into everyday work.Getting to that kind of mastery is our challenge for the next decade. How might organizations build deep design thinking skills and creative leadership at all levels?

How to handle a stress episode B M V

feeling one’s mouth go dry, and so on—provides us with an opportunity to forestall the escalation of stress. Instead of trying to ignore these symptoms, the counterintuitive yet highly effective approach is to pay attention to them.

The acronym RAIN is a simple yet powerful tool for handling a stress episode. It allows us to shift our perspective of the stressor from threat to manageable challenge, and to activate our own resources to meet the challenge with equanimity.

Recognition: Consciously take notice of what is occurring in your body and mind. For example, “My mouth feels dry and there is a pit in my stomach. I feel like an idiot.”

Acceptance: Acknowledge that the stress response is present and allow it to be here. This doesn’t mean that you’re happy about it, but giving up the effort to resist it is, paradoxically, the quickest way to help it subside.

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VERYONE encounters challenging conditions that can induce stress. But how well we continue to function has a great deal to do with how we assess the situation and how we respond.

When we view the conditions as a challenge for which we have the resources needed to respond, stress can actually give us an edge in performance, as when a well-trained athlete gets butterflies in her stomach right before a competition.

When we view the stressful conditions as a threat, something for which we are not equipped, our performance is likely to deteriorate.

Recognizing what’s happening in the body when we’re stressed is the first step to shifting what’s happening in the mind. Any one of the classic physiological stress responses—breathing hard, feeling one’s heart race, perspiring,

Investigation: Ask yourself calmly what thoughts and emotions are present. A person feeling stressed before a job interview might answer: “I can’t believe I sound so lame. I’m afraid that I will lose this opportunity and will feel like a failure.”

Nonidentification: Having recognized, accepted and explored the implications of your stress symptoms, the final step is to realize that although you are experiencing them, they do not define you. “I am having the thought that I may feel like a failure” is very different from and much more manageable than “I am a failure.”

Using this tool helps you regain your strength and sense of control, and proceed in a calm, rational manner.

MONDAY MORNING Tim Brown is the CEO and president of the international design consulting firm IDEO and the author of Change by Design.

“The agriculture sector will be under great competitive pressure. We need to execute better on production, because it’s hard to compete in food manufacturing and processing if we don’t have a production base. Otherwise, we have to import everything,” he said.

Monique Valcour is an executive coach, keynote speaker and professor of management at EDHEC Business School.

© 2013 Harvard Business School Publishing Corp. (Distributed by The New York Times Syndicate)

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Have faith and be thankful

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EAR God, we are fully aware that You are working out things even we don’t feel it sometimes. You keep reminding us to have faith and be thankful because we believe that with faith, hope and love, miracles grow and bloom. Being anchored with You in all matters of any circumstances, we know by heart You will never let us down. Amen.

FB, INSPIRATIONS, YETTA CRUZ AND LOUIE M. LACSON Word&Life Publications • teacherlouie1965@yahoo.com

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MARILYN MONROE

ALL ACCESS:

ON SECOND CHANCES

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JACQUELINE KENNEDY

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CHERYL TIEGS

’VE been reading Time even before I ever knew about my other favorite magazine, Vogue. My father, an incredibly voracious reader, bought it religiously along with Reader’s Digest. » D

LIFE

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HERITAGE ALWAYS A TARGET IN WAR Perspective BusinessMirror

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HERITAGE ALWAYS A TARGET

IN this August 24, 2005, file photo, villagers gather to watch a theater play in front of the empty seat of the Buddha that was destroyed by the Taliban in Bamyan, central Afghanistan. AP/TOMAS MUNITA

B L K | The Associated Press

his looting of marbles from Greece’s Parthenon—it took 3,500 troops three days to burn down and tear apart the palace.

AIRO—A nearly 2,000-year-old temple in the Syrian city of Palmyra was the latest victim in the Islamic State group’s campaign of destruction of historic sites across the territory it controls in Iraq and Syria.

The group has destroyed ancient buildings and artifacts, as well as shrines to Shiite and Sunni Muslim saints—looting some sites for profit—all in the name of purging what it considers symbols of idolatry to create a society dedicated solely to its extreme and violent interpretation of Islam. The IS campaign has horrified many around the world with a scope of destruction that hasn’t been seen for decades.

Still, it isn’t unprecedented.

Throughout the centuries, invaders, religious fanatics and colonizers have targeted works of art, houses of worship and other pieces of heritage. The goal is often to uproot, eliminate, replace or impose control over the culture and heritage of their opponents.

Nearly every ethnic or religious conflict across history has seen at least some cultural destruction, along with genocides like the Nazi Holocaust against the Jews.

Below is a look at some examples:

Wahhabism

THE Islamic State group’s rabid ideology against shrines and historical sites is rooted in Wahhabism, the ultraconservative Sunni Muslim interpretation preached by Sheikh Mohammed Abdul-Wahhab, who lived in the 1700s in what is now Saudi Arabia. Allied with the powerful Saud family, Abdul-Wahhab’s followers destroyed anything they saw as promoting idolatry or polytheism, including shrines of Shiite and Sufi saints, and the destruction of a ma-

Spain

DURING the Muslim invasion of Spain in the 8th century, churches were often destroyed or turned into mosques. Conversely, when Christians took back the peninsula in the centuries-long Reconquista, completed in the 15th century, they destroyed mosques or turned them into churches. Also, after King Ferdinand II and Queen Isabella ordered the expulsion of Jews from the peninsula in 1492, synagogues were turned into churches.

Second Jewish Temple in Jerusalem

ROMAN armies destroyed the Jewish Temple in Jerusalem in 70 A.D. after a revolt against

First of three parts

Babri Mosque

HINDU extremists tore down the 16th-century Babri Mosque in northern India in 1992, sparking riots across the country that left at least 2,000 people dead. Hindu groups claim the mosque was built after a temple dedicated to the Hindu god King Rama was destroyed

by Muslim invaders, though that claim is disputed by some historians. Still, it’s undisputed that over the centuries, Muslim invaders of South Asia did destroy Hindu holy sites.

For example, the Somnath Temple in western India was destroyed multiple times by Muslim rulers, the first time in the 11th century.

jor Shiite shrine at Karbala in what is now Iraq. Today, the alliance with Wahhabism remains one of the foundations of rule by the Al Saud royal family.

Protestant Reformation

DURING the Reformation in 16th-century Europe, Protestant preachers railed in sermons against Catholic statues of saints and other religious relics as forms of idolatry.

Mobs of Protestants attacked hundreds of Catholic churches, particularly in France, Germany and the Netherlands, destroying statues and images—and in England under King Henry VIII, churches were stripped of their relics and riches. The result erased from Europe’s cultural landscape untold numbers of works of art.

B C U. O

HE Philippines is embarking on another journey this month with its expected adoption of the 17 Sustainable Development Goals (SDGs) of the United Nations (UN). From the eight Millennium Development Goals (MDGs), the Philippines will join other countries in setting more targets to improve the lives of their citizens.

IN ISLAMIC STATE WAR, LIKE OTHERS,

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IN this August 7, 2015, file photo, a worker, standing in front of ongoing excavations at the Templo Mayor archaeological site, directs people into the adjoining museum, in central Mexico City. AP/REBECCA BLACKWELL

Roman rule. The temple, built 500 years earlier to replace the first temple destroyed by the Babylonians, was the heart of Judaism.

The first temple had held the Ark of the Covenant, which vanished after the Babylonian conquest. All that remains of the second temple is its Western Wall, which is today the holiest site in Judaism, located at the base of Jerusalem’s Temple Mount.

The Aztecs’ Templo Mayor

SPANISH conquistador Hernan Cortes conquered the Aztec capital, Tenochtitlan, in 1521, bringing to an end the empire that ruled over much of what is now Mexico. To root out the local religion, Cortes ordered temples destroyed, including the Templo Mayor, the giant step pyramid at the center of Aztec spiritual culture—and site of their human sacrifices. The temple was leveled, and a Catholic church built on its remains. Parts of the temple were uncovered in the 1970s during the digging of a metro in Mexico City.

Benin

S “A,” A

The country’s full-year poverty incidence rate per population has remained above 25 percent since 2006. In terms of magnitude or actual number, data showed an increasing trend to around 23.75 million poor Filipinos, from only 22.64 million in 2006.

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TIME-LESS FASHION AND BEAUTY ICONS

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The Philippines is considered as a net importer of food. The Philippine Statistics Authority (PSA) reported that last year, the country’s agricultural trade deficit expanded by 78.72 percent to $2.73 billion, from $1.53 billion recorded in 2013.

The PSA said the country’s farm deficit widened last year, as the growth in imports of farm products outpaced that of exports.

PHL TO ADOPT NEW DEVELOPMENT TARGETS DESPITE DIFFICULTIES IN ACHIEVING MDGs

TIMELESS FASHION AND BEAUTY ICONS

in modern-day Nigeria—was one of the grandest capitals in Africa. In the late 19th century, negotiations with the British trying to dominate the area and its trade turned bloody, with Benin’s troops killing a British expeditionary force. In retaliation, British troops captured the city and burned it to the ground, destroying its palaces and religious sites. They also carted off some 2,500 works of art, including bronze and ivory sculptures and plaques and the palace’s carved wooden gate.

Beijing’s Old Summer Palace

DURING the Second Opium War, waged by Britain and France against China to force it to open up markets and legalize the opium trade, British troops in 1860 destroyed the sprawling Old Summer Palace in retaliation after the Chinese tortured and executed members of a British diplomatic mission.

Built some 100 years earlier, the palace was a sprawling complex of palaces, pavilions and gardens filled with works of art. After orders came from Britain’s High Commissioner in China, Lord Elgin—notorious for

Modern-day Islamic militants

FOR decades in the 20th century, Islamic militant groups in the Middle East, including al-Qaeda, put little emphasis on destroying shrines or historical sites. But alQaeda’s ally the Taliban brought back the tactic in dramatic fashion in 2001 when they blew up the two towering 1,500-yearold statues of Buddha carved into a mountain in the Afghan region of Bamiyan, stunning the world.

Since then, the tactic has gained prominence among Islamic extremists as a way to tout their claim to “purify” society and create their vision of an Islamic state. Sunni hard-liners have increasingly attacked shrines across the Middle East.

In the West African nation of Mali, Islamic radicals in 2012 overran Timbuktu, the historic city of Islamic culture. The militants destroyed 14 of the city’s 16 tombs of prominent figures and thinkers and also targeted the library of camel-skin-bound manuscripts dating back to the 13th century that included ancient learning in astronomy, law, history and philosophy. They set fire to the institute where many of the manuscripts were stored, destroying an estimated 4,000—though the majority were successfully spirited out of the city by the library’s custodians.

PERSPECTIVE

FROM the 15th to 17th centuries, Benin—

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The 17 SDGs will replace the MDGs, which were adopted in 2000. The SDGs represent not only the post-2015 agenda but also a new hope for the world. According to the UN, the goals represent 17 of humankind’s hope for an inclusive, sustainable and prosperous future.

Millennium goals

FIFTEEN years ago, the Philippines was one of 189 countries that adopted the eight MDGs. The MDGs aimed to eradicate extreme poverty and hunger; achieve universal primary education; promote gender equality and empower

MVP URGES GOVT TO CRAFT STUDY ON LNG PANGILINAN said one particular concern the government should focus on is offtakers of liquefied natural gas.

SPECIAL REPORT

Don’t try to dominate a negotiation

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At the signing of the media partnership agreement between the BM and the Apec CEO Summit held recently, Luz said the integration of Association of Southeast Asian Nations (Asean) countries will exert a “great competitive pressure” upon the country’s farm sector.

THE FALSE PROMISE

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

Higher farm output to make PHL competitive in Asean

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THE FALSE PROMISE OF THE SINGLE METRIC BusinessMirror

Thursday 18, 2014 Vol.7,102015 No. 40 Vol. 10 No. 333 Monday, September

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HE dismal state of the country’s agriculture sector must be addressed immediately, as higher farm output is key to ensuring that the Philippines would remain competitive in an integrated Asean, according to Asia-Pacific Economic Cooperation (Apec) CEO Summit COO Guillermo M. Luz.

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women; reduce child mortality; improve maternal health; combat HIV/AIDS, malaria and other diseases; ensure environmental sustainability; and global partnership for development.

In the beginning, some critics believed the goals were very ambitious, and that these targets did not consider the circumstance of poor or less-developed countries, whose levels of development were significantly lower than high-income countries.

However, Philippine Institute for Development Studies (PIDS) senior research fellow Celia M. Reyes said this was addressed by the kind of targets that were specified in the MDGs. Most targets did not recommend absolute numbers, rather, these targets focused on percentages.

“Some might argue that the targets may be very hard to achieve for some of the countries but, I think, they tried to address that by C  A

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USINESSMAN Manuel V. Pangilinan stressed the need for the government to provide a well-crafted study on liquefied natural gas (LNG), particularly on a plan to bid out the construction of a 105-kilometer gas pipeline that will run from Batangas City to Manila, in a bid to boost gas-related investments in the country.

The project, more known as the “Bat-Man” gas pipeline, was proposed in previous administrations, but failed to kick off primarily on concerns involving the supply of gas and sufficient demand.

One particular concern the government should focus on is offtakers of LNG, according to Pangilinan.

“Who will be the consumers?

Why will you build it when there is no sure market. It could be the industrial customers and the power plants, but then you have got to import the gas eventually,” Pangilinan said, when asked if his group is interested to join the auction should it finally happen this year.

Another concern raised by the chairman of the Manila Electric Co. (Meralco), a unit of which is engaged in power generation, is on the infrastructure that will convert the gas into liquid.

LNG is natural gas converted into liquid state for easier storage and transportation. Upon reaching its destination, the LNG is regasified so it can be distributed through pipelines.

“You have to build a regas facility somewhere in Bataan, Batangas, Cavite or wherever. You will import LNG so you have to regas it and push it through the pipeline, and then, of course, who buys the gas?

“As I said, it could be industrial customers, but then eventually when you satisfy the demand, who else? Also, you have to pipe the gas.

That’s expensive,” Pangilinan said.

All these factors, according to him, must be thoroughly planned.

“So, we really need to plan everything. Why build something, in the first place, if there is no market. Importation of gas is also another factor.

S “P,” A

PESO EXCHANGE RATES n US 46.7660

n JAPAN 0.3901 n UK 71.3509 n HK 6.0342 n CHINA 7.3480 n SINGAPORE 33.0105 n AUSTRALIA 32.8344 n EU 52.0739 n SAUDI ARABIA 12.4702 Source: BSP (4 September 2015)

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A2 Monday, September 7, 2015

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PHL to adopt new development targets despite difficulties in achieving MDGs Continued from A1

setting targets based on where you are, rather than setting absolute levels. [That’s why the targets aimed to] reduce by half so wherever you are, you still have to reduce by half. In fact, some might say that if you’re already up there, almost 100 percent, its even more difficult to achieve the 100-percent target.

“So I think the way that they constructed it somehow addressed that problem of different starting points for countries,” Reyes explained.

Reyes said the MDGs represented a major shift in how countries viewed development. While some countries were focused on addressing poverty or reducing their indebtedness, Reyes said the MDGs provided a framework by which these development concerns can be viewed from a wider perspective.

T he mu ltid imensiona l ap proach to development presented by the MDGs helped countries give attention to other development concerns that may have been neglected through the years or may have been put aside because of globalization.

In the Millennium Declaration, which contained the MDGs, the 189 countries recognized that “while globalization offered great opportunities” it also caused uneven progress, particularly for developing countries.

Prior to the MDGs, the Philippines was among the countries that struggled significantly in terms of high poverty and hunger. In 1991 the base year used for setting the MDG targets, the country’s poverty incidence rate was at 34.4 percent,

while the proportion of the population that were living below the country’s food threshold was at 17.6 percent.

“The biggest contribution of the MDG is making politicians, the leaders, the general public aware of the importance of looking at these [development] areas,” Reyes said.

Meeting the MDGs

In order to meet the country’s international commitments, the National Economic and Development Authority (Neda) said the government launched various interventions to meet the goals.

These interventions included emergency employment programs during crises; relief assistance for individuals affected by natural and man-made calamities; and community-based employment programs.

The government also embarked on extending social pension for senior citizens; housing assistance for calamity victims; housing programs for informal settler families; and community-mortgage programs.

There were also specific projects launched, such as the Conditional Cash Transfer, or Pantawid Pamilyang Pilipino Program; Kapit-Bisig Laban sa Kahirapan Comprehensive and Integrated Delivery of Social Services-National Community-Driven Development Program; Universal Health Care, or Kalusugan Pangkalahatan; and the K to 12 Program.

Based on the implementation of these projects, the Neda said the factors that helped make these interventions successful were putting in place multisectoral partnerships

Children carrying bowls jostle each other to get free porridge in Manila’s depressed area of Baseco, in this October 2, 2010, file photo. After 15 years, the government still has not met its poverty-alleviation goals. AP/Pat Roque

and cooperation between government line agencies.

The Neda said that while it was in charge of overall MDG monitoring, the National Anti-Poverty Commission was focused on poverty alleviation and the Department of Health was in charge of monitoring health concerns.

Similarly, the Department of Education was focused on primary and secondary education; the Department of the Interior and Local Government was focused on localizing MDGs. The Neda recognized

that the participation in planning, resource mobilization and monitoring of various civil-society organizations also worked to the country’s advantage in terms of meeting the goals.

The Neda also said policy support for the MDGs, particularly through the Philippine Development Plan and Investment Plan, helped channel government financing and budgeting toward the MDGs. These efforts yielded, however, mixed results. Based on the fifth MDG report of the Philippines, not

all MDGs will be met by the country by the end of this year.

Data showed that the country still had a low probability of meeting the indicators on cohort survival for education; gender disparity, particularly on political participation and education; maternal mortality; access to reproductive health; and HIV/AIDS. The report, which was done by the Neda, also stated that the country only has a medium probability of meeting the indicators on income poverty and nutrition, particularly

in reducing the number of underweight children.

Data showed the country only has a high probability of meeting the indicators on food poverty; school participation; empowering women; infant and under-5 mortality; malaria morbidity; tuberculosis; and access to safe water.

Further, the Neda said progress has also been unequal between and among regions nationwide.

Balisacan said regions in Luzon tend to fare better than those in the Visayas and Mindanao.

The Neda chief said regions, such as the Autonomous Region in Muslim Mindanao, the Bicol region, Regions 8 in Eastern Visayas, and 4B in Mimaropa, are lagging behind in many indicators and would need greater attention to catch up with other regions.

Balisacan said given the results of the country’s performance, one of the goals of halving poverty to 17.2 percent by the end of the year may also not be met.

Data from the Philippine Statistics Authority showed that the country’s full-year povertyincidence rate per population has remained above 25 percent since 2006. In terms of magnitude or actual number, data showed an increasing trend to around 23.75 million poor Filipinos from only 22.64 million in 2006.

Balisacan already said the government can only reduce poverty incidence to around 20 percent to 23 percent by 2015. The Aquino administration’s main target on poverty is to reduce incidence to around 18 percent by 2016. To be continued

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The Nation

150 police to man Edsa to ease traffic

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HE Philippine National Police (PNP)-Highway Patrol Group (HPG) will deploy at least 150 policemen along Edsa, as it starts taking over traffic-enforcement operations along the highway dubbed as the symbol of the country’s traffic problem.

Chief Supt. Arnold Gunnacao, HPG director, said that HPG elements will be deployed in Pasay Rotunda, Guadalupe in Makati City, Shaw Boulevard in Mandaluyong City, Ortigas Avenue in Pasig City, and Cubao and Balintawak in Quezon City.

Earlier, the HPG had planned to assign only less than 96 personnel for its new traffic task, but Gunnacao said they decided to increase the number following the dry run that was held over the weekend.

The deployment of HPG personnel to Edsa to man traffic raised hopes that the perennial traffic would be eased, if not addressed, which Gunnacao said is their objective.

Malacañang had tasked the HPG to enforce traffic rules and discipline along the country’s busiest highway, replacing the Metropolitan Manila Development Authority due to worsening traffic.

“The HPG was directed by the President to enforce traffic rules along six chokepoints which cause heavy traffic…we were instructed to deploy HPG there to discipline drivers.... We see this [lack of discipline] as one of the causes of heavy traffic,” Gunnacao earlier said.

He said they would focus initially in educating drivers and enforcing traffic rules.

Gunnacao said that the 150 traffic personnel will be send off by no less than PNP chief Director General Ricardo Marquez, who had earlier ordered the HPG to just do its job.

“At 4 a.m., we will make formation in front of the National Headquarters for the chief PNP to talk with our men and send them off,” Gunnacao said.

“The PNP chief will emphasize his ‘no kotong’ policy,” he added.

Aside from the organic HPG personnel, Gunnacao said the National Capital Region Police Office and the various police districts have committed to augment the HPG with their own members. Rene Acosta

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Editor: Dionisio L. Pelayo • Monday, September 7, 2015 A3

Comelec sticks to voter registration deadline E

Anti-Canadian waste group hails South Cotabato’s Galing Pook win

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HE Commission on Elections (Comelec) is unlikely to extend the deadline for the registration of voters for the 2016 polls.

Comelec Chairman Andres D. Bautista told reporters last week they “believe that we have given enough time for our voters to register, so, right now, no more extension.”

“The Comelec has to adhere to the October 31 deadline, because there are other preparations we have to attend to,” according to Bautista. “We still have a lot of other things to prepare for the automated elections.”

Bautista noted that the Comelec would need enough time to finalize the list of candidates, since their names will still be printed in the official ballots.

It can be recalled that the continuing voter-registration program of the Comelec

started in May last year.

Bautista advised those who intend to vote next year to take advantage of the remaining weeks to register.

“The deadline is fast approaching. Filipinos love to wait for the last minute. But we are reminding them to register or have their biometrics taken as early as now.”

The Comelec said there are still 3.8 million voters who have yet to submit their biometrics data to the poll body and stand to be disenfranchised in the next elections.

The poll body said it expects that registered voters would reach 53 million before the May 2016 elections. Joel R. San Juan

NVIRONMENTAL activists under Ban Toxics (BT) said it hailed the 2015 Galing Pook Award conferred to the province of South Cotabato for the province’s program on small-scale mining.

South Cotabato earned the nods of Galing Pook evaluators for its program “Minahang Bayanihan: A small-scale mining program” that helped address various issues and concerns confronting the province’s small-scale mining sector, as well as promote responsible mining practices, according to BT’s statement.

“South Cotabato’s win is a testament that positive reinforcement can lead to a responsible small-scale mining industry. The province is a shining example of a government that is responsive to the needs of its constituents,” BT Program Manager Eve Cubelo was quoted in the statement as saying.

The program promotes sustainable small-scale mining by responding to the needs and issues of the sector, integrating convergence and good governance. Among the best practices initiated under the said program is the issuance of a Miner’s Identification (ID) to all small-scale miners and workers after they have undergone a series of seminars and trainings. These trainings include basic first aid and safety, disaster-risk reduction and climate-change adaptations, solid-waste management and other relevant trainings.

A key component to the training the miners undergo is the mercury-free mining course. South Cotabato works with BT in the elimination of mercury pollution in T’boli artisanal and small-scale mining (ASGM) area and the latter administers the mercury-training course for miners.

BT advocates for a life-cycle approach in ASGM, facilitating and providing technical support to ASGM areas and building capacity of local partners to fully assess its viability to venture into small-scale mining, including identification of adverse impacts, in all stages.

“Local government units and ASGM communities need this kind of support, and we hope that South Cotabato’s ways will be replicated in many provinces in the Philippines and the world. We are very happy that we have them as partners and they are trailblazing the path to a responsible and responsive small-scale mining industry,” Cubelo added.

Economy

A4 Monday, September 7, 2015 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

news@businessmirror.com.ph

PHL economy remains stable despite China’s slowdown–Coloma

M

By Butch Fernandez

alacañang said over the weekend that the record-low inflation posted in August is yet another indication of the country’s sound macroeconomic fundamentals, which serve as the Philippines’s “buffer” against China’s economic slowdown.

“Our economy is not heavily dependent on the People’s Republic of China, so we are not being unduly affected by external shocks from that country,” Communications Secretary Herminio B. Coloma Jr. said in a radio interview.

When asked to comment on reports indicating that Philippine inflation was “down to another alltime low” in August, Coloma said this was a “crucial” element to maintaining economic stability.

“Mahalagang elemento ’yan sa pagpapatatag ng ating ekonomiya. ’Yung inflation kasi, sa simpleng salita, ’yun ’yung pagtaas ng presyo ng mga bilihin.

At kung mataas ang inflation nababa-

COLOMA: “Halimbawa, kung 10 percent ang inflation rate natin, ’yung datihang P100, P90 na lang ang mabibiling halaga dahil nga tumaas na ng 10 porsyento ’yung halaga ng mga bilihin.”

wasan ’yung purchasing power ng piso natin,” he said.

“Halimbawa, kung 10 percent ang inflation rate natin, ’yung datihang P100, P90 na lang ang mabibiling halaga dahil nga tumaas na ng 10

porsyento ’yung halaga ng mga bilihin,” Coloma added.

He said a low-inflation rate also means that the purchasing power of the Philippine peso remains strong.

When inflation is down, Coloma said the balance between demand and supply is being “efficiently managed” to avert artificial shortage and inflationary pressures.

“Kaya’t ang mababang inflation ay masasabi nating magandang epekto ng overall sound macroeconomic management ng ating pamahalaan, at pwede nating ipagmalaki na sa buong rehiyon—maaaring sa buong mundo pa nga—tayo ay mayroong pinakamababang inflation rate,” Coloma said.

Last week world markets were concerned as the official Chinese manufacturing survey was released, with anemic data feeding worries of investors that there’s more bad news ahead for China’s slowing economy.

The Chinese economy grew 7.0 percent in the first and second quarters of 2015, from a 7.4-percent growth last year.

For next week analysts are awaiting the release of more data: mainly, the monthly trade and inflation figures, as well as reports on retail sales and fixed-asset investments.

TOBACCO-FARM INSPECTION

A farmer on a carabao inspects tobacco plants in a farm in Bayombong, Nueva Vizcaya. Around 1.93 million Filipinos, including 43,960 farmers and 1.56 million workers, depend on the local tobacco industry. KEVIN DE LA CRUZ

Structural reforms to make PHL ‘investment-friendly’–Neda

By Cai U. Ordinario

C

EBU CITY—Reducing the number of days to open a business and improving Filipinos’ access to job opportunities are some of the benefits of pursuing deeper structural reform in the country, according to the National Economic and Development Authority (Neda).

Economic Planning Secretary Arsenio M. Balisacan said creating a new five-year road map on structural reform will make Asia Pacific Economic Cooperation (Apec) economies more investment-friendly and their citizens more productive.

“Discouraged individuals often get stuck in low-productivity jobs, earning low incomes. Many businesses remain small and informal, while even those in the mainstream are constrained from expanding their markets,” Balisacan said.

Balisacan explained that some professionals often experience employment barriers through licenses that are not recognized in other countries or expired birth certificates.

He added that firms wanting to put up businesses in other countries

also face legal impediments and problems in obtaining additional licenses and permits.

Addressing these issues will not only improve the growth and development of the Apec region as a whole, but also that of individual countries.

Balisacan said the Philippines, which is a consumption-driven economy, is one of the countries that would greatly benefit from structural reforms.

In 2014 Philippine Statistics Authority data showed that investment pledges from foreign and Filipino nationals was flat at 0.2 percent.

Data showed that while approved investments from Filipino nationals went up by 18.5 percent during the year, amount of committed foreign investments decreased by 31.8 percent.

These investments are often the ones that are allocated to finance new or existing companies. Investments made by Filipino firms may also include those that are used for public-private partnerships, one of the major infrastructure initiatives of the government.

“The domestic capital is no lon-

ger sufficient to bankroll so many projects, particularly big ones. More important, as the Apec theme would suggest, trade is not just about capital or foreign investments are not just capital coming to build factories, but somehow technologies, new ways of doing things, innovations that would come with foreign investments, and we would like to capitalize on that. If we can anchor our pursuit of inclusive growth, innovations, technologies, improved processes with our neighbors, we don’t have to start from scratch,” Balisacan explained.

The five-year road map is the Apec’s post-2015 agenda for the region, proposed to be named Renewed Apec Agenda on Structural Reform.

The road map is anchored on three pil lars—open markets; deepening participation in markets among members of the society; and social policies.

The Structural Reform Ministerial Meeting (SRMM) in Cebu is the second to be held in Apec after 2008. In the SRMM in Australia, the Ministers agreed on a structural reform agenda.

Senate committee OKs 2016 budget of DTI

T

By Catherine N. Pillas

he Senate Finance Committee chaired by Sen. Loren Legarda has approved the Department of Trade and Industry’s (DTI) proposed budget of P6.3 billion for 2016.

The DTI’s proposed budget for next year is 56- percent higher than the P4.05 billion given to the department for this year. The 2016 budget of DTI includes a P2-billion power support fund for the Philippine Economic Zone Authority (Peza).

“There is a big increase in Peza but this is the result of the Executive Order (EO) of the President on the support for the power that was provisioned by the government,” Trade Secretary Gregory L. Domingo said during a budget hearing at the Senate last week.

A significant chunk of the increase, or P2.1

billion, will be set aside for the Industry Competitiveness Fund (ICF), mandated by an EO issued by former President Gloria Macapagal-Arroyo in 2009. The order was aimed at supporting and incentivizing power-intensive industries, through special power rates.

The ICF, according to the EO, will be utilized to recover any financial impact that Power Sector Assets, Liabilities and Management Corp., National Power Corp. (Napocor), National Transmission Corp. (Transco) and Peza have incurred in the grant of special power rates through a reimbursement mechanism.

Elmer San Pascual, public relations and promotions group head for Peza, clarified that the P2 billion under the DTI fund will be used to pay the Transco and Napocor for their government-subsidized rates to “mega investors” in economic zones.

The preferential electricity rates have been offered to entice big power-consuming manufacturing firms, such as Texas Instruments, Hanjin Heavy Industries Corp. and Phoenix Semiconductors, to locate in special economic zones during the Arroyo administration.

Of the proposed budget, some P139 million will go to the Board of Investments to allow the agency to hire a technical team for the Comprehensive Automotive Resurgence Strategy Program and the restructruring of the Cottage Industry Technology Center (CITC).

Domingo said the CITC will be closed and its personnel will be transferred to the DTI. CITC’s facilities will be turned into a Regional Shared Services Facility.

“This will be our model Shared Services Facility and will become our testing facility for equipment that will be sent to the province,” he said.

Parañaque, Busan cities forge ‘sisterhood’ pact

V

isiting South Korean delegates expressed confidence yesterday that Parañaque City will become a world-renown tourism city with the rise of numerous worldclass hotel resorts and leisure facilities in the “Pagcor Entertainment City,” along Manila Bay. The delegates, led by Haeundae-gu, Busan City Mayor Baek Sun-ki, also said that with the huge development in the Entertainment City, Parañaque’s growth will surge within 10 years as it will attract more investors from both international and domestic.

Parañaque Mayor Edwin Olivarez and Baek have entered into a sisterhood agreement to boost and strengthen

economic and cultural ties between the two cities last Friday.

“I am sure that the ‘entertainment city’ will be a successful project that will promote the city of Parañaque as a world-renown tourism city,” said Baek, who was accompanied by his vice mayor, eight city councilors and several prominent businessmen.

He said the Philippine government project, by aiming to build a large-scale resort complex along the coastline on reclaimed land, is a “very positive development” as it will encourage thousands of local and foreign tourists yearly.

In Haeundae-gu, he said, Marine City and Centum City, new town projects created on reclaimed coast-

line, has resulted and now popularly known worldwide as “Manhattan in Korea,” where ultra-modern skyscrapers stand currently.

With several major infrastructure projects being implemented by the national government in Parañaque and nearby cities combined with the strong leadership of Olivarez, the South Korean delegates are confident that it will complement in attracting more tourists and investors.

Baek said Haeundae-gu is an international city attracting 30 million tourists a year by hosting the exciting cultural festivals, such as the Busan International Film Festival and the Fireworks Festival, every season.

Economy BusinessMirror

Monday, September 7, 2015 A5

Saudis, Americans are biggest spenders in PHL

A

By Ma. Stella F. Arnaldo | Special to the BusinessMirror

S if to silence critics who have pointed out the apparent failure of the government to reach its annual foreign visitor arrival goals, Department of Tourism (DOT) officials boasted that under the Aquino administration, tourists are actually “spending more and staying longer” in the Philippines.

In his presentation on “The State of Philippine tourism 2011-2014” at the Third Philippines Tourism Forum (PTF) at the SMX Convention Center on Friday, Tourism Secretary Ramon Jimenez Jr. told participants that foreign visitors stayed an average of 10.6 nights in 2014 from 9.6 nights in 2013. In 2010, the first year of the Aquino administration, the average length of stay of tourists in the Philippines was just 8.2 nights.

He added that the foreign visitors also spent an average of $104 (P4,784) per day in the country in 2014, compared to $101 (P4,646) daily in 2013. This was a big improvement as well from 2010, when foreign visitors spent an average of $83.59 (P3,845) per day.

But Jimenez stressed that more foreign tourists are expected to visit the country with the massive increase in seat capacity available to Philippine carriers.

This developed as the DOT released its latest data on visitor receipts and tourist arrivals for July 2015. The data indicated that, among visitor markets, tourists from Saudi Arabia spent the most during their holiday in the Philippines at an average of 74,290.62 per person.

Visitors from the US registered the second biggest per-capita spend of P64,038.10. Other top markets with high per-capita expenditures were Australia at P53,497.05; Canada, P50,089.53; and South Korea, P46,269.67.

Earnings generated by the tourism industry from January to July 2015 grew by 3.08 percent to P130.22 billion, the same data showed.

For July 2015 alone, foreign visitors spent P19.2 billion, up a staggering 15.8 percent from the same month in July 2014.

Jimenez said “spending patterns for July 2015 showed that a visitor had an average daily expenditure of P4,863.71, higher by 16.73 percent than the P4,166.70 average daily spent recorded in July 2014, while the average per-capita expenditure of visitors for the month in review was P45,329.81.” He noted that average length of stay for July 2015 was 9.32 nights.

Taken as a whole, top spending markets in July 2015 alone were: South Korea at P5.52 billion; the US P4.18 billion; China, P1.33 billion; Japan, P1 billion; and Australia, P969 million.

In terms of visitor arrivals, Jimenez was pleased that visitors arrivals from China in the first seven months of 2015 “was only negative 4.11.” The Chinese market, which had been touted by the DOT as a “high-growth market” in the past, had grown sluggish due to diplomatic differences between the Philippines and China,

as well as the Beijing government’s own crackdown on corruption and opulent lifestyles.

Still, visitors from China accounted for an 8.3-percent share of foreign tourists in the first seven months of 2015. On a month-on-month basis, visitors from mainland China jumped over 100 percent to 66,689 in July 2015, from 32,495 in June.

From January to July 2015, foreign visitor arrivals grew by 9.03 percent to 2.98 million. Including overseas Filipinos (Philippine passport holders permanently residing abroad and excludes overseas Filipino workers), total visitor arrivals in the first seven months of the year was up 8.7 percent to 3.1 million.

Top 12 visitor markets were South Korea at 762,277 (up 15.11 percent); followed by the US at 481,167 (up 6.98 percent); Japan, 278,884 (up 7.64 percent); China, 257,014 (down 4.11 percent); Australia, 137,242 (up 8.28 percent); Singapore, 107,402 (up 1.96 percent); Taiwan, 104,233 (up 25.91 percent); Canada, 93,403 (up 8.32 percent); the United Kingdom, 91,239 (up 12.3 percent); Malaysia, 90,947 (up 16.38 percent); Hong Kong, 73,446 (up 9.57 percent); and Germany, 43,308 (down 0.58 percent).

Jimenez said further improvements in visitor arrivals are expected as the Philippines has signed more aviation services agreements with other nations.

“There has been a 150-percent increase in seat capacity due to 42 air talks done by the Aquino administration,” he said on Friday before participants of the PTF. This raises total seat capacity of Philippine carriers to 60.43 million as against the 24.12 million under the Aquino administration.

International air passenger traffic rose to 38.3 million in 2014, up 24 percent from 30.85 million at the beginning of the Aquino administration. In the first quarter of 2015, international air traffic was at 9.94 million. No data was available for the first quarter of 2014.

He added that the cruise tourism business has also expanded, enabling more foreign tourists to visit the country. This year, the DOT expects 66 cruise ships to make port calls in several destinations in the country, compared to only 10 in 2011. This will raise the number of cruise passengers to 34,161 this year, from 9,770 in 2011.

Among the priority ports for cruise lines are the Manila South Harbor, Subic Bay Freeport Zone, Puerto Princesa and Boracay. Other destinations are Aparri, Cebu, Coron and El Nido in Palawan, Tagbilaran, Hundred Islands, La Union, Limasawa, Romblon, Siargao and Sibuyan.

House, Senate to reconcile Timta versions

By Jovee Marie N. dela Cruz

T

he House of Representatives and the Senate will reconcile their versions of the proposed Tax Incentives Management and Transparency Act (Timta) during their bicameral conference committee on Wednesday.

House Committee on Ways and Means Chairman and Liberal Party Rep. Romero Quimbo of Marikina City, in a recent interview with reporters, said there are some “conflicting” provisions that need to be resolved during the congressional bicameral committee meeting, which will start this Wednesday.

“We will start our bicameral conference on Timta on September 9 to reconcile our [two chambers] versions,” he said.

According to Quimbo, one of the conflicting provisions is the insertion of a “deemed approved” provision, which provides that the proposed tax incentives is deemed granted if the

Bureau of Internal Revenue (BIR) fails to inform the Board of Investments (BOI) or the concerned investmentpromotion agency (IPA) of its findings on whether such tax incentives should be given.

Under the House version of the proposed law, the BIR is given only 180 days, instead of the original three-year period, within which to inform the BOI or the concerned IPA and the taxpayer of the BIR’s findings on whether the tax incentive should be granted.

Earlier, the departments of Finance and Trade and Industry, citing the “deemed approved” provision, said the shortened time within which the BIR may audit an entity proposed to be given tax incentives is not enough for the BIR to examine its books for purposes of whether the proposed tax incentive should be approved.

Moreover, Quimbo said the bicameral committee will also reconcile the provision on forfeiture of incentives for failing to timely file an application for incentive claim,

“the Senate only wants a fine for this while we want forfeiture.”

Quimbo said the proposed Timta, which was included in the priority bills of the 16th Congress, seeks to promote transparency and accountability in the grant and administration of tax incentives to business entities, and private individuals and corporations.

For his part, Sen. Juan Edgardo Angara, chairman of the Senate Committee on Ways and Means, said the proposed measure sought to provide a solution for the lack of empirical data on fiscal incentives.

One of the authors of the bill, Senate President Franklin Drilon said the main purpose of the bill is to “make public and let the sun shine on the tax incentives which companies enjoy.”

“There should be transparency on the taxes that we are not collecting and waiving in the form of incentives granted to the private sector, so that we will see whether indeed, the public is best served by these incentives being granted to them,” Drilon said.

Malacañang awaits COA verdict on $2.9-B tax exemption of Malampaya contractors

By Butch Fernandez

M

alacañang said it is pinning its hopes on the Commission on Audit’s (COA) “favorable” decision on the Department of Energy’s (DOE) appeal to reverse the imposition of $2.9 billion in taxes on the foreign consortium running the Malampaya natural-gas field project in Palawan.

“The DOE has filed a motion for reconsideration with COA, and will await its ruling on this matter,” Communications Secretary Herminio B. Coloma Jr. said in a text message over the weekend.

Coloma issued the statement when

asked if President Aquino will act on a letter to Malacañang sent by an officer of Royal Dutch Shell Plc. the foreign contractor heading the consortium running Malampaya. The letter from Shell lamented the COA’s ruling to bill the consortium $2.9 billion in addition to the 60-percent share of the Philippine government from net proceeds of the gas-field operation.

Simon Henry, finance officer of Royal Dutch Shell, was reported to have voiced concerns over the billing, claiming that this runs counter to the service contract they signed with the Philippine government to operate the Malampaya gas field.

It was reported that state auditors earlier issued a ruling directing the DOE to collect unpaid taxes from Malampaya’s foreign contractors, but the DOE—apparently sharing Shell’s view that the contract included the income-tax payment exemption—sought to reverse the verdict.

Reports said the DOE motion was denied by the COA, prompting Royal Dutch Shell to consider seeking international arbitration. However, per Coloma’s advisory on Sunday, the DOE has made a final request for reconsideration by the COA, the outcome of which the Palace awaits.

Competition law to boost manufacturing, logistics industry–Neda

By Cai U. Ordinario

C

EBU CITY—The passage of the Competition Act can spur innovations in manufacturing and the logistics industry, according to the National Economic and Development Authority (Neda).

Neda Deputy Director General Emmanuel F. Esguerra, who is also the head of the Philippine delegation to the Asia-Pacific Economic Cooperation (Apec) Third Senior Officials’ Meeting, said the measure levels the playing field for local businesses.

“The competition law pushes firms to be innovative in improving goods and services, which, in turn, makes them more productive and efficient,” Esguerra said.

He also urged firms to invest in innovation to sustain productivity and growth. Esguerra said this is important, especially in a highly competitive-market environment.

Innovative firms, Esguerra added, usually adopt improved technology, designs, marketing and organizational approaches to enhance competitiveness in their industries.

“The development of ICT [information and communications technology], for example, makes it easier for micro, small and medium enterprises [MSMEs] to access global markets by use of online facilities, making them more competitive,” Esguerra said.

The Philippines joins more than 130 economies around the world that have implemented competition laws in one form

or another, according to a study presented by the Apec Policy Support Unit during the EC meeting.

The Structural Reform Ministerial Meeting (SRMM), set on September 7 and 8, will discuss, among others, reforms that seek to remove barriers to growth and open more and better local and global opportunities for industries, particularly MSMEs. These reforms are deemed critical for ensuring inclusivity of growth, the goal of Apec.

A side from competition policies, ministers will also discuss ease of doing business programs and public-governance matters.

Esguerra said that, while the competition policy, in general, can provide a framework in implementing related regulations, economies still need to tailor their policy reforms according to their respective circumstances and local challenges.

“Governments need to identify and recognize the effects that their policies have on innovation, so that they can make informed decisions about these policies and, if possible, mitigate or remove impediments to firm-level innovation,” said Esguerra, who will serve as the head of delegation for the Philippines at the SRMM, which will be chaired by Socioeconomic Planning Secretary Arsenio M. Balisacan.

The Apec Economic Policy Report 2015, with the theme “Structural Reform and Innovation,” will have a chapter on Competition Policy and Innovation authored by the Philippines.

CHRISTMAS DÉCOR FOR SALE

The Pioneer Street Market in Mandaluyong City, which opened on September 5, also sells Christmas decorations. The street market allows visitors to eat and buy food, shop and get discounts on a wide array of products. STEPHANIE TUMAMPOS

Tourism&En DESTINATIO MORE THAN JUST A6 Monday, September 7, 2015 • Editor: Carla Mortel-Baricaua

HORSE leg-shaped rock formation in Bucas Grande.

E

B J B | Photos by Jeffrey Riles

VERY time I hear the place Siargao I always associate it with surfing at the world-famous Cloud 9 waves. For the nonsurfers, this tropical island has other noteworthy attractions that made me want to return even before I left.

The pristine beaches of Siargao

THE boat docked on the port of Barangay Dapa in Siargao. The bucolic, unassuming town had all the features of a provincial municipality—small houses lining the streets, partially paved roads, and markets selling fish, pastries and raw meat.

As soon as I left the gates of the port, several motorcycle drivers asked where I wanted to go. It was obvious to them that I was a stranger; it’s funny how people in small towns know everyone and can smell a visitor from a mile away. I told them I wasn’t interested in their services and looked for a place to stay. The exhaustion of zipping through cities, long van rides, and boat rides took its toll on my body.

Exploring Siargao had to wait until the next day.

The ride to General Luna, the jump-off point for the three nearby island, took approximately 30 minutes. The verdant countryside along the way made the trip go by quickly.

General Luna was far less developed than Barangay Dapa. There were only a few spots of paved road, there were mostly dirt roads going into parts of the town and the beach. Its lack of development, the towering coconut trees and the nearby beach had its own charm. If you’re looking to get away from the concrete jungle of the city, this is the perfect place to do so.

Getting a boat to get to the three islands is easy, as they are a popular destination for visitors. The boat rent to the islands for half a day return trip costs P800, a solo traveler discount. The boat rent normally costs upward of P1,000 for the day.

Naked island

THE placid waters contrast the 9-shaped waves Siargao is famous for. It only took a few minutes before we landed on Naked Island.

This small island off Siargao’s coast has no vegetation, no structures, not even huts. It’s completely naked, as its moniker depicts. There were a handful of locals bumming around the beach, but there were less than 10 of us enjoying the island.

The fine, white sand slipped between the spaces between my toes, taking on the form of shoes as I walked along the beach. The calm and emerald waters gave a faint glow as the sun began to peek out of the skies.

Daku island

AFTER enjoying Naked Island for almost an hour, the boatmen and I headed for the biggest island of the three, with its own small town, Daku.

The idyllic charms of the island immediately won me over as soon as our boat docked. I thought Naked Island’s fine, white sand would be difficult to top, but Daku’s pearly sand beach beat it handily.

The small town on the island did not affect its natural beauty. The cerulean waters glimmered, mirrorlike, as if I was staring right into the depths of my soul, with its clarity and honesty.

The glass-like waters of the island invited me to swim in it, I did not resist, I couldn’t. There was no point fighting it.

I walked in, slowly at first, then with a jog, break-

VISITORS enjoy sev

ing the glassy body, dousing The earlylife. The locals work, fixing t they have to b I was one o tine island, w the height of s I wish the time stood st most basic of

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BEING the las did not disap rounding this What the i it made up wi locals mainta visitors. The s ideal for swim

BICOL’S EPIC LEGEND RELIVED IN

R

EGARDED as Bicol’s biggest nonreligious festival, Ibalong Festival is based on indigenous folklore and is, perhaps, the only cultural event in the country which relives an epic.

Now in its 24th edition, it is a popular recreation of a mid-19th-century fragments of 60-stanza epic poem penned by Franciscan friar Bernardino de Melendreras about the ancient civilization of Ibalong or present-day Bicol.

He was inspired by the accounts of Kadunung, a wandering minstrel in Albay, regarded as the bard of Ibalong for being a fountainhead of indigenous folklore.

Cast in the mold of classic mythologies, Ibalong tells about its three legendary heroes—Baltog, Handyong and Bantong—who, with their supernatural strengths, rid the land of beasts and helped it attain its golden era.

Another prominent character is the villain-turnedheroine Oryol, a beautiful half woman-half serpent, who

had a change of heart as she fell in love with Handiong and joined his forces to defeat the other monsters of the land.

After recounting their heroic exploits, Kadunung suddenly stopped and promised to continue telling the story some other time, but never had the chance.

Scholars noted that while the epic appears to be unfinished story, it is a living legend where the readers can freely continue the saga with their own interpretations of modern-day heroism.

The epic first got into mass exposure in 1895 when editor Wenceslao Retana compiled and annotated the fragments of the poem in the book Archivo del Bibliofilo Filipino.

While the original Spanish manuscripts were lost, what exists is the portion copied by Fray Jose Castaño in Breve Noticia and included in the Bibliofilo of Retana published in Madrid, Spain.

Because the original 60 quatrains had no title, the title “Ibalong” was supplied by noted Bicolano essayist

Jose Ma. Pa Propaganda In Octob the maiden the dustbin people of th Legazpi tival puts t character d as can be g He said legend into touch into people. The on August out in a stre festivity sho ment, infras

Entertainment ION SIARGAO T RIDING THE WAVES tourism@businessmirror.com.ph • Monday, September 7, 2015 A7

KTO PUSHES CORPORATE INCENTIVE TOURS

I

THE cerulean, glass-like waters of Daku Island are perfect for swimming.

IT’S a normal occurrence to see local kids paddling boats in Siargao.

The habal-habal I rode to get to the rock pool cost me P550 round trip, there is also an entrance fee of P50.

Nature’s Spectacle: Bucas Grande

veral rounds of jumping into the pool atop one of the rocks in Magpupungko.

y waters with my feet. I sank into its cool g the heat of summer with its fingers.

-morning bustle on the island gave it s, with their docked boats, prepared for their fishing gear, or readying the things bring to the bigger towns. of only a handful of visitors on this priswhich I find surprising, especially during summer in May. ere were more places like this. Where till and nothing else mattered, but the needs.

nd

ast stop and the smallest, Guyam Island ppoint. The emerald, clear waters surs tiny patch of land were picturesque. island lacked in fine, pearly white sand ith its photogenic beauty. The friendly aining the island were all smiles for shallow waters surrounding it made it mming and relaxing. There isn’t much

to do on the island aside from enjoying the beach.

Through the countryside: Magpupungko Rock Pool

After exploring the three islands of the coast of Siargao, I journeyed to the renowned Magpupungko Rock Pool, which is approximately 30 to 45 minutes from Barangay Dapa. The dirt roads, lush countryside, and the fresh air made the trip worthwhile.

The turquoise waters and sprawling rock formations of Magpupungko greeted me as soon as I walked past the beach.

The rugged yet picturesque rock formations brought out nature’s rawness. There was already a crowd swimming in the nearby pools. Siargao has been good to me, just a handful of people in each place, but the trip to Magpupungko was the exception. I didn’t mind sharing this piece of paradise with others, like a shared secret with close friends.

People climbed up the rocks and jumped into the emerald waters, while others were content with swimming and taking photos.

Sohoton National Park and Bucas Grande’s azure-blue waters, intricate limestone formations and stingless jellyfish are prime attractions that are slowly making this park a tourist magnet.

There is only one way to enter the main cove, through a low-ceilinged cave. Once inside, different shaped rock formations greet visitors. Two noteworthy formations are a horse leg-shaped rock protruding downward and the Dagongdong Rock Cliff, which locals believe to be the home of engkantos.

The park has beautiful caves, many of which remain unexplored. The Magkukuob Cave is the most popular with visitors. Its impressive stalactites and stalagmites elicit praise from travelers. But the most fun part of visiting this cave is the 20-foot jump out into the lagoon, the only exit back to your boat.

Bucas Grande’s main draw is the stingless jellyfish that swim its waters. There are also beautiful corals in varying hues, yellow, red, green, and blue, beneath its emerald waters.

The untouched beaches of Naked, Daku and Guyam islands are more than enough to satiate beach lovers’ desire to get some sun and sand. Their cerulean, glass-like waters are enticing to swim in to douse summer’s heat. Seeing and touching stingless jellyfish and swimming the azure waters of Sohoton National Park will keep you wanting more.

There is more to Siargao than its 9-shaped waves.

Visit this tear-shaped island to discover and to explore its natural wonders.

N FESTIVAL

anganiban, a colleague of Dr. Jose Rizal in the a Movement. ber 1992 the late mayor Imelda Roces staged n edition of the festival to rescue the epic from ns of history and make it a source of pride for the he city and the entire Bicolandia. i City Mayor Noel Rosal said that Ibalong Festo the fore Bicol’s rich heritage and resilient despite the adversities they encounter in life gleaned from the epic’s unfolding story. d that in transforming an almost-forgotten o a colorful festival, the city has put a visual the epic to make it more understood by the e highlight of the weeklong festivity was held 29 where the scenes of the legend are acted eet theater competition. He also noted that the owcases the city’s strides in economic developstructure, governance and tourism.

N an effort to promote Korea MICE (Meetings, Incentives, Conference and Exhibitions) tourism to Philippine corporations and travel agents, the Korea Tourism Organization (KTO) recently held the Korea Incentive Road show in Manila.

The special two-part event gave way to the Korea Incentive Mini Mart that provided a venue for meetings with Korea’s top corporate travel suppliers with airlines, Korean land operators, convention and visitors bureaus, and regional tourism organization from Korea.

The evening event, dubbed as Korea Night, gathered corporate businessmen, travel agents, airlines and members of the media for an exclusive presentation of the latest corporate incentive travel trends in Korea. His Excellency Republic of Korean Ambassador Jae-Shin Kim and Tourism Undersecretary Benito Bengzon Jr. graced the event.

Over the years, Korea has developed various tour programs to support incentive tours at the national level, based on its well-established MICE infrastructure, its varied tourism and historical resources that have been designated as United Nations Educational, Scientific and Cultural Organization World Cultural

BOHOL’S GRANDEST RESORT UNVEILED

W

BALTOG, Ibalong’s first legendary hero

PEOPLE of Ibalong celebrate its golden age

and Natural Heritages. To foster the MICE industry, the KTO and local governments are providing comprehensive support to bring in more incentive groups.

For large-scale incentive groups visiting Korea, KTO’s support programs offer a choice of souvenirs, welcome events, free performances, admission to tourist attractions, team building and experience programs, and assistance to preliminary survey.

Last year 3,400 Filipinos involved with the incentive tour program came to Korea and rate their experience as very satisfactory especially with shopping and team-building activities. Most Filipino tourists choose to visit Seoul but Jeju, and Busan are becoming popular incentive tour destinations as well.

“We hope the incentive market bound to Korea will increase. We are targeting 10,000 Filipino incentive tour programs until 2018,” said Kee-hun Kim, executive director of the Korea MICE Bureau.

The corporate market identified for the Korean incentive tours includes local banks, insurance companies, pharmaceuticals, and multilevel selling companies. The Business-process outsourcing industry is also being taped as a growing market, as well.

ITH 400 rooms, Henann Resort Alona Beach is now the largest resort in the province of Bohol. The Henann Group of Resorts formally opened its centerpiece project on August 22, their most ambitious project to date.

“We consider Henann Resort Alona Beach a milestone in our company’s 17-year history as this is our first property outside Boracay.

We had our soft opening in May and we have been getting positive feedback since,” said Dr. Henry O. Chusuey, chairman of the Henann Group of Resorts.

Henann Resort Alona Beach is situated in the longest and widest beachfront along Alona Beach, a one and a half kilometer tropical paradise famous for its pristine, white sand and overlooking, rocky cliffs. The resort has room types ranging from deluxe, premier, and suites to family, premier with direct pool access,

presidential and pool villas. Its convention center can accommodate up to 1,000 participants.

“The architecture and design of our resorts in Boracay served as inspiration for Henann Resort Alona Beach’s overall look and feel. We also utilized local materials, like laminated shells and coconuts, to showcase the natural beauty of the Philippines,” Chusuey said.

Henann Resort Alona Beach has three massive pools with sunken bars and other amenities, including an open air venue for weddings, fitness and business centers, and a mini shop.

“We build resorts with our clients first in our minds. We make it worth their stay whether they are with us for short or longterm. We always give our guests the best possible service as the goal is to make them happy from the moment they check in until they leave,” Chusuey said.

OurTime BusinessMirror

A8 Monday, September 7, 2015 • Editor: Efleda P. Campos

news@businessmirror.com.ph

ComChest touches lives, spreads positive change

T

By Rea Cu

he Community Chest Foundation Inc. (ComChest) lives by its doctrine of caring and sharing— caring for the needy and sharing responsibilities. In celebration of its 66 years of spreading social responsibility, the organization urged leaders of different sectors to come together and assess how to better serve their respective constituencies.

The foundation held an interfaith breakfast forum on August 28 at the Diamond Hotel in Manila with the theme: “The Social Responsibility of the Church.” Bishop Teodoro Cruz Bacani Jr. was the guest speaker.

Most of the attendees were from organizations under the Red Feath-

er agency group, ComChest’s social welfare partner agencies with 18 organizations, including Asocacion de Damas de Filipinas Inc., Young Men’s Christian Association of Manila and Goodwill Industries of the Philippines Inc., to name a few.

Bacani is currently the bishop

BACANI

emeritus of Novaliches. He studied at Instituto de Mujeres, which later became Roseville College in Manila. He realized at a young age how priesthood beckons. As he grew up, the call to serve God became stronger. Eventually, he decided to become a priest. He has answered God’s call.

Bacani has been a diocese and

catechetical director in Zambales, a professor of theology at San Carlos Seminary and University of Santo Tomas, and former auxiliary bishop of Manila.

“When you become a priest, you will take care of many souls,” that’s how Bacani started his talk. He recalled that when he was assigned to do priestly work in San Antonio,

Zambales, he saw children who wanted to go to school but could not because they are poor. That prompted him to start his mission of taking care of souls. However, never in his life did he imagine that, as a priest, he would be going to the wet market to buy piglets for the families of these children. But he did.

He distributed the piglets so that the families can raise them to be able to earn money for their children’s tuition. He was surprised that his plan to help the poor children became so successful that the families even gave back his capital and added 10 percent more without being asked.

After that, the simple plan became a social program. And the beneficiary families responded by multiplying and spreading his kindness to them by also helping out others. The rest was history. That was the starting point of his calling to spread social responsibility and development with the help of the church. Being a priest and doing services for the glory of

God for almost 50 years now, it is safe to say that Bacani has touched and changed so many lives. No wonder his social development and civic action continues to snowball.

Dr. Cindy Ang, executive director of ComChest, also shared a few things with regards to Bacani, as they are childhood friends. She recalled that in grade school they would always spend their free time after school playing games like patintero, luksong tinik, tumbang preso, piko and luksong lubid with some of their friends.

Today, every time she sees the bishop on television or hear him on the radio, she would always tell friends: “Kababata ko ’yan.” She is very proud of him.

Bacani’s passion to create positive change and his willingness to work hard have paid great dividends.

People have responded to his kindness by multiplying and sharing their blessings with other people, especially the needy.

New leadership steering Meals on Wheels program

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exas—When Susan Baer’s aging mother became more and more frail before she died, Baer became more of an advocate for seniors. To take care of her mother, Baer had to move her from Abilene to Weatherford.

Like approximately two-fifths of American adults, according to Pew Research Center, Baer found herself taking care of an aging parent. Such care involves everything from basic needs—food, shelter, clothing—to finances and health care.

One resource Baer found to assist her mother was Meals on Wheels. Her mother’s decline and eventual passing also moved Baer to work with various organizations that provide people with assistance, including becoming the executive director for the Parker County Committee on Aging. She has continued her involvement with senior care recently, joining Meals on Wheels of Palo Pinto County as its executive director. “I love Meals on Wheels,” she said. “It makes a huge difference. Sometimes [Meals on Wheels volunteers] are the only people [seniors] see, and for some it’s the only real meal of the day.” In existence since the 1950s, the national organization is the oldest in the nation, according to the group’s web site, which supports “more than 5,000 community-based senior nutrition programs across the country that are dedicated to addressing senior hunger and isolation.” One challenge the Palo Pinto County chapter has is finding volunteers, Baer said.

“We have wonderful volunteers, but need more,” she said. While most of the volunteers deliver meals to clients five days per week at lunchtime, Meals on Wheels also needs people in the office packing the meals, she said. Each driver hauls ice chests full of hot meals to the seniors on their routes and those meals are packed around 10:30 a.m. to go out at 11 a.m. Deliveries of frozen meals are also made twice a month throughout the county, Baer said. Volunteers don’t necessarily have to come in to help, Baer said.

They have a telephone reassurance program in which volunteers receive a list of clients to call and check on once a week. To volunteer, apply at the office at 1410 S.E. Martin Luther King Jr. Street, she said. All that is required is to pass a driver’s license check. More information on volunteering is available from Bill Smith at 940-325-7919. People volunteer for a variety of reasons.

“We just want to help,” said volunteer Jennifer Naylor one recent Thursday. She and her mother, Brenda Mahaney, deliver meals weekly. In the summers they are often accompanied by Naylor’s 6-year-old son, Brayden Mahaney, who said he likes going out to help people. Mahaney said she worked in elderly care and understands the needs of seniors, especially their need to maintain a sense of independence. Often, Meals on Wheels deliveries are a way to help people maintain independence, who otherwise might require moving to a nursing facility, Baer said. Funding is also a major challenge for Meals on Wheels, she said. While government funding comes in, she said private donations, whether from individuals or through corporate grants, provide for a significant amount of monies.

She was working on early planning for a fundraiser in November that she hopes will serve the organization well. She is also hoping to get the word out to the community more and hopes to market the organization at such events as the Crazy Water Festival. Meals on Wheels serves approximately 170 meals on 12 delivery routes each day, she said. This is in addition to the approximately 400 frozen meals delivered each month out in the county. Those eligible for delivery must be 60 or older and unable to prepare meals themselves, she said.

They also serve people under 60 with disabilities. The group is also working with area churches to start serving meals for seniors who aren’t homebound, she said. Baer said she hopes to see Meals on Wheels continue to grow in this area. “There’s a great need here,” she said. “We want to continue to grow in order to serve.” TNS

MOVING AROUND Eighty-year-old Egnacia Palangdao walk around the city of Baguio for her exercise. Mau Victa

Seniors become tech savvy in SM’s Oldies but Techies program

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everal months ago, Sandy Kerr, a 76-year-old retired office staff of Tarlac City, was gifted by one of her Manila-based daughters with a smartphone. But she could not use it to call them because she did not know how to operate it.

It was a good thing Kerr was recently invited to SM’s Oldies but Techies program, which aims to help senior citizens like her become tech savvy to keep them attuned to the changing times.

SM Cares, the corporate social responsibility arm of SM Prime Holdings Inc., played host to Kerr and more than 200 senior citizens in SM City Tarlac to teach them how to use modern gadgets such as desktops and laptop computers, smartphones, motionsensitive televisions, and a whole lot more.

They were even taught to verify their biometrics election registration at the Commission on Elections (Comelec) web site in line with the government’s efforts for voter’s registration for the 2016 elections.

Danny Chavez, director of the SM Cares

Program for Senior Citizens, said the Oldies but Techies program is aimed at teaching the elderly basic computer operations, Internet surfing, cellular phone usage and other modern gadgets.

“This project is consistent with our thrust of being a mall for all. We want our senior citizens to feel at home whenever they go to the mall. This project also keeps them in touch with their loved ones using modern technology available now,” he said.

He stated that the elderly usually shun modern technology because they think they are difficult to learn. “This notion is what we want to change in this program because many of today’s technology are userfriendly so they are easy to learn,” he said.

He further added that the new knowledge they get from using the computers and accessing the Internet will help them a great deal in communicating with their loved ones and gaining information on things important to them like cures for

illnesses and other health tips.

After the program, Kerr said she finally learned how to use her smartphone. “Masaya po ako. Hindi talaga ako marunong gumamit ng computer at mga bagong cell phone kaya hindi ko sila ginagamit. Pero ngayon, pwede ko na itong magamit para makausap ko ang aking mga anak at apo na nasa Maynila [I couldn’t be happier. I personally do not know how to use the computer and the new cell phones that is why I don’t use them. But with this, I can start to use them and communicate with my daughters and grandchildren who are in Manila],” Kerr said.

Felipe de la Cruz, 69, a retired carpenter of Maliwalo, Tarlac City, another senior present at the event, said aside from the Oldies but Techies program, SM City Tarlac has given senior citizens like him new meaning in life. “May mga bagong activities na alok ang SM para sa mga senior citizens bawat buwan kaya ito ay aming inaabangan [SM offers numerous activities for us every month that is why we always have some-

thing to look forward to]”, he said.

SM Cares Senior Citizens program also gives senior citizens a chance to sell their homemade products at the SM malls during the Elderly Filipino Week Celebration held every October through its Elderpreneurship program. All sales go to the senior citizens.

SM malls also host regular fitness programs for the elderly where they are taught age-appropriate exercises and diet regimens to keep them in the best of health.

Chavez also said that their Casual Employment for Senior Citizens program will also be expanded so that they could take in more senior citizens at any given time.

“We want our senior citizens to be happy and still be productive members of our community. We have received really positive feedbacks on our programs and we will continue to find more ways to be able to give our senior citizens the attention and importance they deserve,” he said.

Air China’s Conditions of Carriage for international flights Effective 01 January 2012 Article 1 - Definition

Article 10 - Refunds

Article 2 - Applicability

Article 11 - Conduct Aboard Aircraft

Article 3 - Tickets

Article 12 - Arrangements for Additional Services

Article 4 - Fares, Taxes, Fees and Charges

Article 13 - Administrative Formalities

Article 5 - Reservations

Article 14 - Successive Carriers

Article 6 - Check-in and Boarding

Article 15 - Liability for Damage

Article 7 - Refusal and Limitation of Carriage

Article 16 - Time Limits for Complaints

Article 8 - Baggage

Article17 - Miscellaneous Conditions

Article 9 - Schedules, Delays and Cancellation of Flights Article18 - Effectiveness and Modification

Article 1 Definition As you read these conditions, please note that: “We”, “our”, “ourselves” and “us” means Air China Limited.

“You”, “your” and “yourself” means any person, except members of the crew, carried or to be carried in an aircraft pursuant to a Ticket. (See also the definition for “Passenger”).

“Agreed Stopping Places” means those places, except the place of departure and the place of destination, set out in the Ticket or shown in our timetables as scheduled stopping places on your route.

“Airline Designator Code” means the two-characters or three letters which identify particular air carriers.

“Authorized Agent” means a passenger sales agent who has been appointed by us to represent us in the sale of air transportation on our services.

“Baggage” means your personal property accompanying you in connection with your trip. Unless otherwise specified, it consists of both your Checked and Unchecked Baggage.

“Baggage Check” means those portions of the Ticket which relate to the carriage of your Checked Baggage.

“Baggage Identification Tag” means a document issued solely for identification of Checked Baggage.

“Carrier” means an air carrier other than ourselves, whose Airline Designator Code appears on your Ticket or on a Conjunction Ticket.

“Checked Baggage” means Baggage of which we take custody and for which we have issued a Baggage Check.

“Check-in Deadline” means the time limit specified by the airline by which you must have completed check-in formalities and received your boarding pass.

“Conjunction Ticket” means a Ticket issued to you with relation to another Ticket which together constitute a single contract of carriage.

“Convention” means whichever of the following instruments are applicable: The Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw, 12 October 1929 (hereinafter referred to as the Warsaw Convention); The Warsaw Convention as amended at The Hague on 28 September 1955 (hereinafter referred to as the Hague Protocol); The Convention for the Unification of Certain Rules for International Carriage by Air, done at Montreal on 28 May 1999 (hereinafter referred to as the Montreal Convention).

“Coupon” means both a paper Flight Coupon and an Electronic Coupon, each of which entitle the named passenger to travel on the particular flight identified on the coupon.

“Damage” means: (1) In the case of Passenger bodily injury or death, damage sustained and caused by an accident occurring on board the aircraft or in the course of any of the operations of embarking or disembarking; (2) In the case of loss, damage to or destruction of Checked Baggage, damage sustained while the Checked Baggage is on board the aircraft or at any time that the Checked Baggage is in charge of the carrier; (3) In the case of Unchecked Baggage of which the Passenger takes charge, damage caused by the fault of the carrier or the agents of the carrier.

“Days” means calendar days, including all seven days of the week; provided that, for the purpose of notification, the day upon which notice is dispatched shall not be counted; and provided further that for purposes of determining duration of validity of a Ticket, the day upon which the Ticket is issued, or the day upon which the flight commenced, shall not be counted.

“Electronic Coupon” means an electronic flight coupon or other valued document held in our computer database.

“Electronic Ticket” means the Itinerary/Receipt issued by us or on our behalf, the Electronic Coupons and, if applicable, a boarding document.

“Flight Coupon” means that portion of the Ticket that bears the notation “good for passage”, or in the case of an Electronic Ticket, the Electronic Coupon, and indicates the particular places between which you are entitled to be carried.

“Force Majeure” means an unusual and unforeseeable circumstance beyond control, the consequences of which could not have been avoided even if all due care had been exercised.

“International Carriage” means, unless otherwise stated in the Convention, transportation in which, according to the contract of carriage, either the place of departure or the destination or an Agreed Stopping Place, whether or not there is a break in the transportation, is not situated in the People’s Republic of China.

“Itinerary/Receipt” means a document or documents we issue to Passengers traveling on Electronic Tickets that contains the Passenger’s name, flight information, etc.

“Notice of Contract Terms Incorporated by Reference” means those statements contained in or delivered with your Ticket or Itinerary/ Receipt, identified as such and which incorporate by reference, these Conditions of Carriage and notices.

“Passenger” means any person, except members of the crew, carried or to be carried in an aircraft pursuant to a Ticket. (See also the definition for”you”,”your”and”yourself”)?

“Passenger Coupon” or “Passenger Receipt” means that portion of the Ticket issued by us or on our behalf, which is so marked and which ultimately is to be retained by you.

“SDR” means a Special Drawing Right as defined by the International Monetary Fund.

“Stopover” means a scheduled stop on your journey at a point between the place of departure and the place of destination.

“Tariff” means the published fares, charges and/or related Conditions of Carriage of an airline filed, where required, with the appropriate authorities.

“Ticket” means either the document entitled “Passenger Ticket and Baggage Check” or the Electronic Ticket, in each case issued by us or on our behalf, and includes the Conditions of Contract, notices and Coupons.

“Unchecked Baggage” means any of your Baggage other than Checked Baggage.

Article 2 Applicability 2.1 General Provisions Except as provided in Articles 2.2 2.4 and 2.5, our Conditions of Carriage apply only on those flights, or flight segments, where our name or Airline Designator Code is indicated in the carrier box of the Ticket for that flight or flight segments.

2.2 Charter Operations If carriage is performed pursuant to a charter agreement, these Conditions of Carriage apply only to the extent they are incorporated by reference or otherwise, in the charter agreement or the Ticket.

2.3 Code Shares On some services we have arrangements with other carriers known as “Code Shares”. This means that, even if you have a reservation with us and hold a Ticket where our name or Airline Designator Code is indicated as the carrier, another carrier may operate the aircraft on which you travel. If such arrangements apply, we will advise you of the carrier operating the aircraft at the time you make a reservation.

2.4 Overriding Law These Conditions of Carriage apply to International Carriage provided by us unless they are inconsistent with our Tariffs or applicable laws in which event such Tariffs or laws shall prevail.

If any provision of these Conditions of Carriage is invalid under any applicable law, the other provisions of these Conditions of Carriage shall nevertheless remain valid.

2.5 Conditions Prevail over Regulations Except as provided in these Conditions of Carriage, in the event of inconsistency between these Conditions of Carriage and any other regulations we may have, dealing with particular subjects, these Conditions of Carriage shall prevail.

Article 3 Tickets 3.1 General Provisions 3.1.1 We will provide carriage only to the Passenger named in the Ticket, and you may be required to produce appropriate identification as the Passenger named in the Ticket.

3.1.2 A Ticket is not transferable.

3.1.3 Some Tickets are sold at discounted fares which may be partially or completely non-refundable. You should choose the fare that best suits to your needs.

3.1.4 If you have a Ticket, as described in 3.1.3 above, which is completely unused, and you are prevented from traveling due to Force Majeure, we will provide you with a credit of the non-refundable amount

of the fare, for future travel on us, subject to deduction of a reasonable administration fee, provided that you promptly advise us and furnish evidence of such Force Majeure.

3.1.5 The Ticket is and remains at all times the property of the issuing carrier.

3.1.6 Except in the case of an Electronic Ticket, you shall not be entitled to be carried on a flight unless you present a valid Ticket containing the Flight Coupon for that flight and all other unused Flight Coupons and the Passenger Coupon. In addition, you shall not be entitled to be carried if the Ticket presented is mutilated or if it has been altered, other than by us or our Authorized Agent. In the case of an Electronic Ticket, you shall not be entitled to be carried on a flight unless you provide positive identification and a valid Electronic Ticket that has been duly issued in your name.

3.1.7(a) In case of loss or mutilation of a Ticket (or part of it) by you or non-presentation of a Ticket containing the Passenger Coupon and all unused Flight Coupons, upon your request and after our validation, we will replace such Ticket (or part of it) by issuing a new Ticket, provided there is evidence, readily ascertainable at the time, that a Ticket valid for the flight(s) in question was duly issued and you sign an agreement to reimburse us for any costs and losses, up to the value of the original Ticket, which are necessarily and reasonably incurred by us or another carrier for misuse of the Ticket. We will not claim reimbursement from you for any such losses which result from our own negligence. The issuing carrier may charge a reasonable administration fee for this service, unless the loss or mutilation was due to the negligence of the issuing carrier, or its agent.

3.1.7(b) Where such evidence is not available or you do not sign such an agreement, the carrier issuing the new Ticket may require you to pay up to the full Ticket price for a replacement Ticket, subject to refund if and when the original issuing carrier is satisfied that the lost or mutilated Ticket has not been used within one year after the ticket issuing date or the travel commencement date. 3.1.8 A ticket is valuable and you should take appropriate measures to safeguard it and ensure that it is not lost or stolen.

3.2 Period of Validity 3.2.1 Except as otherwise provided in the Ticket, these Conditions of Carriage, or in applicable Tariffs which may limit the validity of a ticket, in which case the limitation will be shown on the Ticket, a Ticket is valid for: 3.2.1 (a) Subject to the first travel occurring within one year from the date of issue, one year from the date of first travel under the Ticket; or 3.2.1 (b)If no portion of the Ticket is used, one year from the date of issue.

3.2.2 When you are prevented from traveling within the period of validity of the Ticket, because we are unable to confirm a reservation at the time you request , the validity of the Ticket will be extended, or you may be entitled to a refund in accordance with Article10.

3.2.3 If after having commenced your journey, you are prevented from continuing your travel within the period of validity of the Ticket by reason of illness, we may extend the period of validity of your Ticket until the date when you become fit for travel or until our first flight after such date, from the point where the journey was interrupted on which space is available in the class of service for which the fare has been paid. Such illness must be attested to by a medical certificate.

When the flight coupons remaining in the Ticket, or in the case of an Electronic Ticket, the Electronic Coupon, involve one or more Stopovers, the validity of such Ticket may be extended for not more than three months from the date when you become fit for travel which is shown on the medical certificate. In these circumstances, we will similarly extend the period of validity of Tickets of other members of your immediate family accompanying you.

3.2.4 In the event of the death of a Passenger enroute, the Tickets of persons accompanying the Passenger may be modified by waiving the minimum stay or extending the period of validity. In the event of a death in the immediate family of a Passenger who has commenced travel, the validity of the Passenger’s Ticket and those of his or her immediate family who are accompanying the Passenger, may likewise be modified. Any such modification shall be made upon receipt of a valid death certificate and any such extension of validity shall not be for a period longer than forty-five (45) Days from the date of the death shown on the death certificate.

3.3 Coupons Sequence and Use 3.3.1 The Ticket you have purchased is valid only for the transportation shown on the Ticket，from the place of departure via any Agreed Stopping Places to the final place of destination. The fare you have paid is based upon our Tariff and is for the transportation as shown on the Ticket. The Tariff for your fare forms an essential part of our contract with you. The Ticket will not be honored and will lose its validity if all the Coupons are not used in the sequence provided in the Ticket when issued.

3.3.2 Should you wish to change any aspect of your transportation, you must contact us in advance. The fare for your new transportation will be calculated and you will be given the option of accepting the new price or maintaining your original transportation as ticketed. Should you be required to change any aspect of your transportation due to Force Majeure, you must contact us as soon as practicable and we will use reasonable efforts to transport you to your next Stopover or final destination, without recalculation of the fare.

3.3.3 Should you change your transportation without our agreement, we will assess the correct price for your actual travel. You will have to pay any difference between the price you have paid and the total price applicable for your revised transportation. The unused Coupons of your Ticket will have no value.

3.3.4 While some types of changes will not result in a change of fare, others, such as changing the place of departure or reversing the direction you travel, can result in an increase in price. Many fares are valid only on the dates and for the flights shown on the Ticket and may not be changed at all, or only upon payment of an additional fee.

3.3.5 Each Flight Coupon contained in your Ticket will be accepted for transportation in the class of service on the date and flight for which space has been reserved, as shown in the Flight Coupon. When a Ticket is originally issued without a reservation being specified, space may be later reserved subject to our Tariff and the availability of space on the flight requested.

3.3.6 In the event you do not show up for any flight, for which you are holding a reservation, without advising us in advance, we may cancel your return or onward reservations as shown in your Ticket. However, if you do advise us in advance, we will not cancel your subsequent flight reservations.

3.4 Name and Address of Carrier Our name may be abbreviated to our Airline Designator Code, or otherwise, in the Ticket. Our address shall be deemed to be the airport of departure shown opposite the first abbreviation of our name in the “carrier” box in the Ticket, or ,in the case of an Electronic Ticket, as indicated for our first flight segment in the Itinerary/ Receipt.

Return to Top Article 4 Fares, Taxes, Fees and Charges 4.1 Fares Fares apply only for carriage from the airport at the point of origin to the airport at the point of destination, unless otherwise expressly stated. Fares do not include ground transport service between airports or between airports and town terminals. Your fare will be calculated in accordance with our Tariff in effect on the date of payment of your ticket for travel on the specific dates and itinerary shown on the Ticket.

Should you change your itinerary or dates of travel, this may affect the fare required to be paid.

4.2 Taxes, Fees and Charges Applicable taxes, fees and charges imposed by government or other authorities, or by the operator of an airport, shall be payable by you. At the time you purchase your Ticket, you will be advised of taxes, fees and charges not included in the fare, most of which will normally be shown separately on the Ticket.

4.3 Currency Fares, taxes, fees and charges are payable in the currency of the country in which the Ticket is issued, unless another currency is indicated by us or our Authorized Agent, at or before the time payment is made. We may at our discretion, accept payment in another currency due to, for example, the non-convertibility of local currency .

Article 5 Reservations 5.1 Reservation Requirements 5.1.1 We or our Authorized Agent will record your flight reservation.

Upon request we will provide you with written confirmation of your reservation.

5.1.2 Certain fares have conditions which limit or exclude your right to change or cancel your reservations. For the individual terms of our fares, please refer to our respective tariff conditions.

5.2 Ticketing Time Limits If you have not paid for the Ticket prior to the specified ticketing time limit, as advised by us or our Authorized Agent, we may cancel your reservation.

5.3 Personal Data You recognize that personal data has been given to us in connection with your travel for the purposes of: making a reservation, purchasing a Ticket, obtaining ancillary services, developing and providing services, facilitating immigration and entry procedures, and making available such data to government agencies. For these purposes, you authorize us to retain and use such data and to transmit it to our offices, Authorized Agents, government agencies, other Carriers or the providers of the above-mentioned services.

5.4 No Particular Seat Requested or Assigned is Guaranteed We will endeavor to honor advance seating requests however, we cannot guarantee any particular seat. We reserve the right to assign or reassign seats at any time, even after boarding of the aircraft.

This may be necessary for operational, safety or security reasons.

5.5 Reconfirmation of Reservations 5.5.1 We do not require reconfirmation of existing reservations

for onward or return Air China flights. However, if other Carriers require the Passenger to reconfirm onward or return reservations, a failure to comply with any such requirement will entitle the concerned carriers to cancel the onward or return reservation.

5.5.2 You should check the reconfirmation requirements of any other Carriers involved in your journey. Where reconfirmation is required, you must reconfirm with the Carrier whose designator code appears for the flight in question on the Ticket.

Article 6 Check-in and Boarding 6.1 Check-in Deadlines are different at every airport and we recommend that you inform yourself about these Check-in Deadlines and comply with them. Your journey will be smoother if you allow yourself ample time to comply with the Check-in Deadlines. We reserve the right to cancel your reservation if you do not comply with the Check-in Deadlines. We or our Authorized Agents will advise you of the Check-in Deadline for your first flight with us. For any subsequent flights on your journey, you should inform yourself of the Check-in Deadlines. Check-in Deadlines for our flights can be obtained from us or our Authorized Agents.

6.2 You must be present at the boarding gate not later than the time specified by us when you check-in.

6.3 We may cancel the space reserved for you if you fail to arrive at the boarding gate by the time specified.

6.4 We will not be liable to you for any loss or expense incurred due to your failure to comply with the provisions of this Article.

Article 7 Refusal and Limitation of Carriage 7.1 Right to Refuse Carriage In the exercise of our discretion, we may refuse to carry you or your Baggage if we have notified you that we would not at any time after the date of such notice carry you on our flights. In this circumstance you will be entitled to a refund. We may also refuse to carry you or your Baggage for any one or more of the following reasons: 7.1.1 Such action is necessary to prevent a violation of any applicable laws, regulations, or orders of any State to be flown from, to or over; 7.1.2 The carriage of you or your Baggage may endanger or affect the safety, health, convenience, comfort of other passengers or crew members; 7.1.3 Your mental or physical state, including your impairment from alcohol or drugs, presents a hazard or risk to yourself, passengers, crew members, or property; 7.1.4 You have committed misconduct on a previous flight, and we have reason to believe that such conduct may be repeated; 7.1.5 You have refused to submit to a security check; 7.1.6 You have not paid the applicable fare, taxes, fees or charges; 7.1.7 You do not appear to have valid travel documents or you may seek to enter a country through which you may be in transit and for which you do not have valid travel documents, or you destroy your travel documents during flight, or you refuse to surrender your travel documents to the flight crew, against receipt, when requested; 7.1.8 You present a Ticket that has been acquired unlawfully, has been purchased from an entity other than us or our Authorized Agent, or has been reported as being lost or stolen, is a counterfeit, or you cannot prove that you are the person named in the Ticket; 7.1.9 You have failed to comply with the requirements set forth in Article 3.3 above concerning coupon sequence and use, or you present a Ticket which has been issued or altered in any way, other than by us or our Authorized Agent, or the Ticket is mutilated; 7.1.10 You fail to observe our instructions with respect to safety or security; 7.1.11 You fail to observe the rules for non-smoking on board our aircraft or the use of electronic equipment on board our aircraft; 7.1.12 You fail or refuse to obey the instructions of our crew members.

7.2 Special Assistance 7.2.1 Acceptance for carriage of unaccompanied children, incapacitated persons, pregnant women, persons with illness or other people requiring special assistance, is subject to prior arrangement with us. ?

7.2.2 Carriage of Children Children who have not yet reached their 5th birthday may only travel in the company of an adult of at least 18 years of age and not suffering from any physical or mental incapacity or ailment.? Children accompanied by an adult shall buy Tickets for the same class of service as the accompanying adult. The carriage of unaccompanied minors between the ages of 5 and 12 requires our prior consent, together with payment of the ticket fare and service fee required by us. Regulations governing the carriage of unaccompanied minors can be obtained from us.

7.3 Refund when Carriage Refused A refund can be made to any person refused carriage or whose reservation is cancelled for any reason specified in the preceding paragraphs of Article 7 in accordance with Article 10.3.

Article 8 Baggage 8.1 Free Baggage Allowance You may carry some Baggage, free of charge, subject to our conditions and limitations, which are available upon request from us or our Authorized Agents.

8.2 Excess Baggage You will be required to pay a charge for the carriage of Baggage in excess of the free allowance. These rates are available from us upon request.

8.3 Items Unacceptable as Baggage 8.3.1 You must not include in your Baggage, whether as Checked Baggage or Unchecked Baggage: 8.3.1.1 Items which are likely to endanger the aircraft or persons or property on board the aircraft, such as those specified in the International Civil Aviation Organization (ICAO) Technical Instructions for the Safe Transport of Dangerous Goods by Air and the International Air Transport Association (IATA) Dangerous Goods Regulations, and in our regulations.

The following items expressly are unacceptable as Baggage: explosives, compressed gases, corrosives, oxidizing, radioactive or magnetized materials, materials that are easily ignited, poisonous, offensive or irritating substances, and similar items as to which further information is available from us on request.

8.3.1.2 Items the carriage of which is prohibited by the applicable laws, regulations or orders of any State to be flown from, through or to; 8.3.1.3 Items which are reasonably considered by us to be unsuitable for carriage because they are dangerous, unsafe, or by reason of their weight, size, shape or character, or which are fragile or perishable having regard to, among other things, the type of aircraft being used. Information about unacceptable items is available upon request.

8.3.2 Firearms and ammunition, other than for hunting and sporting purposes, are prohibited from carriage as Baggage. Firearms and ammunition for hunting and sporting purposes may be accepted as Checked Baggage. Firearms must be unloaded with the safety catch on, and suitably packed as determined by us. Carriage of ammunition is subject to ICAO and IATA regulations as specified in 8.3.1.1 and also to the applicable laws, regulations or orders of any State to be flown from through or to.

8.3.3 It is not advisable for you to include in your Checked Baggage money, jewellery, precious metals, computers, personal electronic devices, negotiable papers, securities or other valuables, prescribed medicine to be taken regularly, business documents, passports and other identification documents or samples.

8.3.4 If, despite being prohibited, any items referred to in 8.3.1 or 8.3.2 are included in your Baggage, we shall not be responsible for any loss damage or confiscation of any such item by the authorities.

8.4 Right to Refuse Carriage 8.4.1 We will refuse to carry as Baggage the items described in 8.3, and we may refuse further carriage of any such items upon discovery.

8.4.2 We may refuse to carry as Baggage any item considered by us to be unsuitable for carriage because of its size, shape, weight, content, character, or for safety or operational reasons, or for the comfort and convenience of other passengers. Information about such unacceptable items is available upon request.

8.4.3 We may refuse to accept Baggage for carriage unless it is in our opinion, properly and securely packed in suitable containers.

Information about packing and suitable containers acceptable to us is available upon request.

8.5 Right of Search For reasons of safety and security we may request that you permit a search and scan of your person and a search, scan or x-ray of your Baggage. If you are not available, your Baggage may be searched in your absence for the purpose of determining whether you are in possession of or whether your Baggage contains any item described in 8.3.1 or any firearms, ammunition or weapons, which have not been presented to us in accordance with 8.3.2. If you are unwilling to comply with such request we may refuse to carry you and your Baggage. In the event a search or scan causes Damage to you, or an x-ray or scan causes damage to your Baggage, we shall not be liable for such Damage unless due to our fault or negligence.

8.6 Checked Baggage 8.6.1 Upon delivery to us of your Baggage which you wish to check we will take custody of and issue a Baggage Identification Tag for each piece of your Checked Baggage.

8.6.2 You should mark your name or other personal identification on the inside and outside of the Checked Baggage.

8.6.3 Checked Baggage will, whenever possible, be carried on the same aircraft as you, unless we decide for safety, security or operational reasons to carry it on alternative flight. If your Checked Baggage is carried on a subsequent flight we will deliver it to you, unless applicable law requires you to be present for customs clearance.

8.7 Unchecked Baggage 8.7.1 We may specify maximum dimensions and/or weight for Baggage which you carry on to the aircraft. If we have not done so, Baggage which you carry onto the aircraft must fit under the seat in front of you or in an enclosed over head storage compartment in the cabin of the aircraft. If your Baggage cannot be stored in this manner, or is of excessive weight, or is considered unsafe for any reason, it must

be carried as Checked Baggage.

8.7.2 Objects not suitable for carriage in the cargo compartment of the aircraft, for example, delicate musical instruments, and which do not meet the requirements in 8.7.1 above, will only be accepted for carriage in the cabin of the aircraft if you have given us notice in advance and permission has been granted by us. You may have to pay a separate charge for this service.

8.8 Collection and Delivery of Checked Baggage 8.8.1 Subject to Article 8.6.3, you are required to collect your Checked Baggage as soon as it is made available at your destination or Stopover.

Should you not collect it within a reasonable time, we may charge you a storage fee. Should your Checked Baggage not be claimed within three (3) months of the time it is made available, we may dispose of it without further notice or any liability to you.

8.8.2 Only the bearer of the Baggage Check and Baggage Identification Tag is entitled to delivery of the Checked Baggage.

8.8.3 If the person claiming Checked Baggage is unable to produce the Baggage Check and identify the Baggage by means of a Baggage Identification Tag, we will deliver the Baggage to such person only on condition that he or she establishes to our satisfaction his or her right to the Baggage.

8.9 Animals If we agree to carry your animals they will be carried subject to the following conditions: 8.9.1 You must ensure that animals such as dogs, cats, household birds and other pets, are properly crated and accompanied by valid health and vaccination certificates, entry permits, and other documents required by countries of entry or transit, failing which they will not be accepted for carriage. We reserve the right to determine the manner of carriage and to limit the number of animals which may be carried on a flight. Such carriage may be subject to additional conditions specified by us, which are available on request.

8.9.2 If accepted as Baggage, the animal, together with its container and food, shall not be included in your free Baggage allowance, but shall constitute excess baggage, for which you will be obliged to pay the applicable charges.

8.9.3 Guide dogs accompanying Passengers with disabilities will be carried free of charge in addition to the normal free baggage allowance, subject to conditions specified by us, which are available on request.?

8.9.4 We are not responsible for injury to or loss, sickness or death of an animal which we have agreed to carry unless we have been negligent.

8.9.5 We will have no liability in respect of any such animal not having all the necessary exit, entry, health and other documents with respect to the animal’s entry into or passage through any country, state or territory and the person carrying the animal must reimburse us for any fines, costs, losses or liabilities imposed or incurred by us as a result of the absence or insufficiency of required documents for such animal.

8.9.6 The Passenger is liable for all damages or injuries which a pet might cause to other passengers or crew members.

Article 9 Schedules, Delays and Cancellation of Flights 9.1 Schedules 9.1.1 The flight times and aircraft types shown in timetables may change between the date of publication and the date you actually travel. We do not guarantee them to you and they do not form part of your contract with us.

9.1.2 Before we accept your reservation for a flight, we will notify you of the scheduled flight time in effect as of that time, and it will be shown on your Ticket. It is possible we may need to change the scheduled flight time subsequent to the issuance of your Ticket. If you provide us with contact information, we will endeavor to notify you of any such changes. If, after you purchase your Ticket, we make a significant change to the schedule flight time, which is not acceptable to you, and we are unable to book you on an alternate flight which is acceptable to you, you will be entitled to a refund in accordance with Article 10.2.

9.2 Cancellation, Rerouting, Delays, Etc. 9.2.1 We will take all measures that could reasonably be required to avoid delay in carrying you and your baggage. We shall not be liable if it proves that we took all measures that could reasonably be required to avoid the damage or that it was impossible for us to take such measures.

9.2.2 Except as otherwise provided by the Convention, if we cancel a flight, fail to operate a flight reasonably according to the schedule, fail to stop at your destination or Stopover, or cause you to miss a connecting flight on which you hold a confirmed reservation, we shall, at your option, either: 9.2.2.1 Carry you at the earliest opportunity on another of our scheduled services on which space is available without additional charge and, where necessary, extend the validity of your Ticket; or 9.2.2.2 Within a reasonable period of time re-route you to the destination shown on your Ticket by our own services or those of another carrier, or by other mutually agreed means and class of transportation without additional charge. If the fare and charges for the revised routing are lower than what you have paid, we shall refund the difference; or 9.2.2.3 Make a refund in accordance with the provisions of Article 10.2.

9.2.3 Upon the occurrence of any of the events set out in Article 9.2.2 , except as otherwise provided by the Convention, the options outlined in Article 9.2.2.1 through 9.2.2.3 are the sole and exclusive remedies available to you and we shall have no further liability to you.

9.2.4 If we are unable to provide previously confirmed space, we shall provide compensation to the affected Passengers in accordance with applicable law and our policy.

Article 10 Refunds 10.1 We will refund a Ticket or any unused portion of a Ticket, in accordance with our applicable fare rules or Tariff, as follows: 10.1.1 Except as otherwise provided in this Article, we shall be entitled to make a refund either to the person named in the Ticket or to the person who has paid for the Ticket, upon presentation of satisfactory proof of such payment and satisfactory identification.

10.1.2 If a Ticket has been paid for by a person other than the Passenger named in the Ticket, and the Ticket indicates that there is a restriction on refund, we shall make a refund only to the person who paid for the Ticket or to that person’s order.

10.1.3 Except in the case of lost Tickets, refunds will only be made on surrender to us of the Passenger Coupon, Passenger Receipt and surrender of all unused Flight Coupons.

10.2 Involuntary Refunds 10.2.1 If we cancel a flight, fail to operate a flight reasonably according to schedule, fail to stop at your destination or Stopover, or cause you to miss a connecting flight on which you hold a reservation, the amount of the refund shall be: 10.2.1.1 If no portion of the Ticket has been used, an amount equal to the fare paid; 10.2.1.2 If a portion of the Ticket has been used, the refund will be not less than the difference between the fare paid and the applicable fare for travel between the points for which the Ticket has been used, provided that the refund shall not exceed the total fare paid.

10.3 Voluntary Refunds 10.3.1 If you are entitled to a refund of your Ticket for reasons other than those set out in 10.2, the amount of the refund shall be: 10.3.1.1 If no portion of the Ticket has been used, an amount equal to the fare paid, less any reasonable service charges or cancellation fees; 10.3.1.2 If a portion of the Ticket has been used, the refund will be an amount equal to the difference between the fare paid and the applicable fare for travel between the points for which the Ticket has been used, less any reasonable service charges or cancellation fees.

10.4 Refund on Lost Ticket 10.4.1 If you lose your Ticket or portion of it, upon furnishing us with satisfactory proof of the loss, and payment of a reasonable administration charge, refund will be made one year after the ticket issuing date or the travel commencement date, on condition: 10.4.1.1That the lost Ticket, or portion of it, has not been used, previously refunded or replaced, (except where the use, refund or replacement by or to a third party resulted from our own negligence); 10.4.1.2 That the person to whom the refund is made undertakes, in such form as may be prescribed by us, to repay to us the amount refunded in the event of fraud and/or to the extent that the lost Ticket or portion of it is used by a third party (except where any fraud or use by a third party resulted from our own negligence).

10.4.2 If we or our Authorized Agent lose the Ticket or a portion of the Ticket, the loss shall be our responsibility.

10.5 Right to Refuse Refund 10.5.1 We may refuse a refund where application is made after the expiry of the validity of the Ticket.

10.5.2 We may refuse a refund on a Ticket which has been presented to us, or to Government officials, as evidence of intention to depart from a country, unless you establish to our satisfaction that you have permission to remain in the country or that you will depart from that country by another carrier or another means of transport.

10.6 Currency We reserve the right to make a refund in the same manner and in the same currency as was used to pay for the Ticket.

10.7 By whom Ticket Refundable Voluntary refunds will be made only by the carrier which originally issued the Ticket or by its agent if so authorized.

10.8 Refund to Credit Card or Debit Card Accounts Refund for Tickets paid with credit cards or debit cards can only be credited to the card account originally used for the Ticket purchase.

The refundable amount to be paid by us will be in accordance with the rules within this article only, on the basis of the amount originally paid by you and the currency entered in the Ticket. The refundable amount to be credited to the credit card or debit card account of the card owner can vary from the originally debited amount by the card company for the Ticket due to differences in currency conversion. Such variances do not entitle the recipient of the refund to a claim against us.

Article 11 Conduct Aboard Aircraft 11.1 General. If, in our judgment, you conduct yourself aboard the aircraft so as to endanger the aircraft or any person or property on board, or obstruct the crew in the performance of their duties, or fail to comply with any instructions of the crew including but not limited to those with respect to smoking, alcohol or drug consumption, or behave in a manner which causes or threatens to cause discomfort, inconvenience, damage or injury to other passengers or the crew,we may take such measures as we deem reasonably necessary to prevent continuation of such conduct, including restraint. You may be disembarked and refused onward carriage at any point and you may be prosecuted for offences committed on board the aircraft.

11.2 Electronic Devices. For safety reasons, we may forbid or limit operation aboard the aircraft of any electronic equipment, including, but not limited to, cellular telephones, laptop computers, portable recorders, portable radios, CD players, electronic games or transmitting devices, including radio controlled toys and walkie-talkies. Operation of hearing aids and heart pacemakers is permitted.

11.3 Non-Smoking Flights. All our flights are non-smoking flights.

Smoking is prohibited in all areas of the aircraft.

11.4 Seat Belts Compulsory. While in your seat on board the aircraft, you have the obligation to fasten your seat belt during the entire flight.

Article 12 Arrangements for Additional Services 12.1 If we make arrangements for you with any third party to provide any services other than carriage by air, or if we issue a ticket or voucher relating to transportation or services (other than carriage by air) provided by a third party, such as ground transportation, hotel reservations or car rental, we do so only as your agent and we take no responsibility for the availability or the quality of such services. The terms and conditions of the third party service provider will apply.

12.2 If we provide ground transportation for you, these Conditions of Carriage shall not apply to such ground transportation.

Article 13 Administrative Formalities 13.1 General 13.1.1 You are responsible for obtaining all required travel documents and visas and for complying with all laws, regulations, orders, demands and travel requirements of countries to be flown from, into or through which you transit.

13.1.2 We shall not be liable for the consequences to any Passenger resulting from his or her failure to obtain such documents or visas or to comply with such laws, regulations, orders, demands, requirements, rules or instructions.

13.2 Travel Documents Prior to travel, you must present all exit, entry, health and other documents required by law, regulation, order, demand or other requirement of the countries concerned, and permit us to take and retain copies thereof. We reserve the right to refuse carriage if you have not complied with these requirements, or your travel documents do not appear to be in order.

13.3 Refusal of Entry If you are denied entry into any country, you will be responsible to pay any fine or charge assessed against us by the Government concerned and for the cost of transporting you from that country. The fare collected for carriage to the point of refusal or denied entry will not be refunded by us.

13.4 Passenger Responsible for Fines, Detention Costs, Etc. If we are required to pay any fine or penalty or to incur any expenditure by reason of your failure to comply with laws, regulations, orders, demands or other travel requirements of the countries concerned or to produce the required documents, you shall reimburse us on demand any amount so paid or expenditure so incurred. We may apply towards such payment or expenditure the value of any unused portion of your Ticket, or any of your funds in our possession. In your own interests, be aware to observe the regulations of each country you intend to travel to, from or through.

13.5 Customs Inspection If required, you shall attend inspection of your Baggage by customs or other Government officials. We are not liable to you for any loss or damage sustained by you in the course of such inspection or through your failure to comply with this requirement.

13.6 Security Inspection You shall submit to any security checks required or requested by Governments, airport officials, Carriers or by us. We are not responsible for any injury caused to you during or as a result of such security checks or for any loss or damage to any of your personal property as a result of such security checks, unless caused by our fault.

Article 14 Successive Carriers Carriage to be performed by us and other Carriers under one Ticket, or a Conjunction Ticket is regarded as a single operation for the purposes of the Convention. However, your attention is drawn to Article 15.1.

Article 15 Liability for Damage 15.1 These Conditions of Carriage govern our liability to you. The Conditions of Carriage of each other Carrier involved in your journey govern its liability to you.

15.2 We will be liable only for Damage occurring during carriage on flights or flight segments where our Airline Designator Code appears in the carrier box of the Ticket for that flight or flight segment. If we issue a Ticket or if we check Baggage for carriage on another carrier, we do so only as agent for the other carrier. Nevertheless, with respect to Checked Baggage, you may make a claim against the first or last carrier shown on the Ticket or Baggage Check.

15.3 We are not liable for any Damage caused to you and arising from our compliance with applicable laws or Government rules and regulations, or from your failure to comply with the same.

15.4 Except where specific provision otherwise is made in these Conditions, we shall be liable to you only for recoverable compensatory Damage for proven losses and costs in accordance with the Convention.

15.5 Any liability we have for Damage will be reduced or exempted by any negligence on your part which causes or contributes to the Damage in accordance with applicable law.

15.6 The contract of carriage, including these Conditions of Carriage and exclusions or limits of liability, applies to our Authorized Agents, servants, employees and representatives to the same extent as they apply to us. The aggregate amount recoverable from us and from our Authorized Agents, employees, representatives and persons, shall not exceed the amount of our own liability, if any.

15.7 Nothing in these Conditions of Carriage shall waive any exclusion or limitation of our liability under the Convention or applicable law unless expressly so stated.

15.8 We are not responsible for any illness, injury or disability, including death, attributable to your physical condition or for the aggravation of any condition of yours.

15.9 We are not liable for any Damage caused by your Baggage or its contents. You shall be responsible for any Damage caused by your Baggage or its contents to other people and property, including other Baggage or contents and our property.

15.10 We shall have no liability whatsoever for Damage to articles not permitted to be contained in Checked Baggage under Article 8.3.1 and 8.3.2 of these Conditions of Carriage.

15.11 International Carriage as defined in the Convention, is subject to the liability rules of the Convention. Where International Carriage is not subject to the liability rules of the Convention, our liability for any Damage with respect to the carriage of Passengers and Baggage, shall be as set forth in the Montreal Convention.

Article 16 Time Limits for Complaints 16.1 Acceptance of Baggage by the bearer of the Baggage Check without complaint at the time of delivery is sufficient evidence that the Baggage has been delivered in good condition and in accordance with the contract of carriage, unless you prove otherwise.

16.2 If your Checked Baggage is damaged, you must complain in writing to us immediately upon your discovery of the Damage and at the latest, within seven Days from the date you received the Checked Baggage.

16.3 If your Checked Baggage is delayed, you must complain in writing to us within 21 Days at the latest of the Checked Baggage being made available to you.

16.4 If no complaint is made within the time specified in Article 16.2 and 16.3, no action shall lie against us.

Article17 Miscellaneous Conditions 17.1 Carriage of you and your Baggage is also provided in accordance with certain other regulations and conditions applying to or adopted by us.

These other regulations and conditions are varied from time to time and are important. They concern, among other things, the carriage of unaccompanied minors, pregnant women, sick passengers, restrictions on use of electronic devices, the on board consumption of alcoholic beverages, etc. These regulations and conditions are available from us upon request.

17.2 These Conditions of Carriage apply to transportation between Mainland China and Hong Kong/Macao SAR. 17.3 The title of each Article of these Conditions of Carriage is for convenience only and is not to be used for interpretation of the text.

17.4 These Conditions of Carriage are done in the Chinese and English languages, both texts being equally authentic.

Article18 Effectiveness and Modification 18.1 These Conditions of Carriage come into effect January 1, 2012.

18.2 We have the right to modify these Conditions of Carriage, regulations of carriage, Tariffs and charges without prior notice.

This kind of modification does not apply to carriage that has already begun prior to such modification. https://www.airchina.com.ph/PH/GB/conditions/international/

A10 Monday, September 7, 2015

Opinion BusinessMirror

editorial

Information is not free

S

weden was the first to do it in 1766, nearly 250 years ago. The newest country in the world, South Sudan, placed it at the top of its agenda, having it two years after independence. Thailand did it in 1997, and war-torn Afghanistan passed it in 2014.

One hundred and four nations around the world from such diverse countries as Ethiopia, Bangladesh and Mongolia are on the list of those that guarantee freedom of information. But not the Philippines.

Article III, Section 7 of the Philippine Constitution reads: “The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.”

But the Philippine legislature has never provided the law to fulfill this section of the Constitution by passing a Freedom of Information Act. The Aquino administration that wants its legacy to be one of honesty has continuously denied the people the one piece of legal framework to help guarantee government honesty.

The excuse propounded is that certain information could be so sensitive and serious that it would not be in the best interest of the country if that information were to be disclosed. That has always been the reason that governments have used to keep the people from knowing what is going on behind the scenes.

There are certainly legitimate reasons to keep certain information secret. The military has always argued—and in our opinion rightly so—that an abuse of the freedom to obtain information could put both operations and people in great jeopardy.

Yet, the unanswered questions that may be hiding in government documents about the Mamasapano deaths must also be taken into consideration. There absolutely must be a balance struck between the public’s right to know and the government’s right to information protection.

But 104 other countries have found ways to balance those rights.

Why is the Philippine government unable to fulfill both obligations?

The lack of transparency of information is not right. But, perhaps, even worse is the current administration’s unwillingness to proceed with the passage of the Freedom of Information law. Paraphrasing Customs Commissioner Alberto D. Lina, “If you have nothing to hide, you have nothing to fear.”

This is not about “digging up dirt” about the government or about politics. This is about giving the people a system and legal framework to obtain information that they have a right to know. The government equally has the right to withhold information. However, as the public does not have the right to free and unlimited access to information, neither does the government have the right to unilaterally restrict that access. That is what the courts are there to do.

It is time to move forward and pass a Freedom of Information Act.

Resilient growth of the Philippine economy enable us to help many of our kababayan around the country. nnn

Atty. Jose Ferdinand M. Rojas II

RISING SUN

D

espite the recent stock-market upheavals caused by external factors, the Philippine economy is still expected to be among the most resilient in the region, thanks to strong economic fundamentals and around $50 billion in annual foreign inflows.

This was the statement of Bangko Sentral ng Pilipinas Deputy Governor for the Monetary Stability Sector Diwa C. Gunigundo, who assured the public that the two mentioned factors would help protect the peso from further fluctuation.

Guinigundo said that the country receives $24 billion to $25 billion a year from remittances and about the same amount from business-process outsourcing revenues, with income from exports and tourism—which he called “quite resilient”—being added bonuses.

He cited the “ fundamental health of the Philippine economy,” pointing to its strong banking system, surplus in current account and balance of payments, and other factors that contribute to the stability of the system. nnn

The Philippine Charity Sweepstakes Office (PCSO) continues its national ambulance-donation activities this month, with visits scheduled to the provinces of

Batangas, Leyte, Ilocos Sur, Misamis Oriental and Zamboanga del Norte.

Under this particular program, the agency’s goal is to furnish each municipality, city and government hospital with an ambulance, upon request and compliance with the necessary documentary requirements.

It is heartwarming to visit different places around our country and hear testimonials as to how the PCSO’s emergency vehicles provide significant and vital support.

As Benguet Gov. Nestor B. Fongwan told us last week when we delivered 27 ambulances to three northern provinces, “…the mobile clinic that the PCSO donated to us before helped us save lives during the last calamity [Typhoon Ineng].”

The PCSO funds its medicaland healthcare-related programs through its Lotto and other game revenues. We thank the public for their continued strong support of our products, which

Another PCSO major endeavor this year is the expansion of its branch networks, now at 47 from the initial 25 when I and my fellow PCSO directors assumed office in 2010.

If all things go well, we will be opening two more branches this year, if not more, and double the number of branches that serve our countrymen nationwide.

The goal is to put up a branch office in every province, insofar that this is feasible. We are about halfway to reaching this goal, and we invite local government units that wish to host a PCSO branch office to partner with us by providing us a free space in a government building in their area, while we take care of personnel and everything else.

At present, all of PCSO’s branches are housed in free spaces donated or lent rent-free by LGUs, working together in “G to G” (government to government) synergy. This allows the agency to keep costs down; otherwise, our branch-expansion strategy would be made less feasible and affordable.

We thank our current LGU partners, and look forward to teaming up with others in the near future, as we continue to serve our kababayan right where they are. nnn

While in Baguio last week, we visited the BenCab Museum in Tuba, Benguet, one of Baguio’s most famed tourist attractions and a haven for the art aficionado.

Established by National Artist Benedicto Cabrera, the split-level building houses many of his important artworks, as well as exhibits of other artists.

The museum is currently showcasing until October 4 the exhibit Four Play II, with works of Virgilio Aviado, Justin Nuyda and Edwin Wilwayco, and four “interaction” pieces of the three artists along with BenCab himself.

The interaction pieces are interesting, because they combine visual elements from each of the artists in one painting.

BenCab Museum also keeps on permanent display important historical artifacts, such as antique Cordillera furniture, baskets, weapons, and other functional and ritual objects.

One of the most striking features of the place is the three-story wall of bulul, or carved wooden rice-granary guardians, their dark wood providing a stark contrast against the white walls.

Cap your visit to the museum with a cup of hot chocolate or mountaingrown coffee at the basement coffee shop, Café Sabel, while enjoying the view of the lush greenery that covers the hills.

Bring home souvenirs of art books, paper products, textiles and crafts from the museum gift shop, and remind yourself to return often, to refresh the spirit and renew the soul.

Atty. Rojas is vice chairman and general manager of the Philippine Charity Sweepstakes Office.

Trump’s foreign policy is all over the map

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By Josh Rogin | Bloomberg View

onald Trump’S shortcomings on foreign policy extend way beyond his inability to name terror group leaders on a radio interview. The entirety of his utterances reveal a potential president who would reshape US foreign policy into a mess of conflicting and often incoherent policies, and delegate the most important issues of national security to as-yet unnamed subordinates.

The press is jumping on Trump’s admission to conservative radio host Hugh Hewitt on Thursday that he didn’t know the names of the leaders of top terror groups and didn’t seem to care about the differences between those groups.

“Do you know the players without a scorecard, yet, Donald Trump?”

Hewitt asked.

“No, you know, I’ll tell you honestly, I think by the time we get to office, they’ll all be changed. They’ll be all gone,” Trump replied.

Trump called these “gotcha” questions, and said he would learn about national security and foreign policy later on. Trump said he would eventually find someone like Gen. Douglas MacArthur to handle national security.

That’s revealing, in as much as it shows that Trump doesn’t think of himself as a strategist or even a deep thinker when it comes to foreign policy.

Hewitt didn’t ask Trump if he would

have fired MacArthur for pushing to bomb China during the Korean War, as President Harry Truman did in 1951.

MacArthur is also the principal author of the constitution that Japan implemented after World War II, a document Trump has indirectly criticized for preventing Japan from fighting wars away from its shores. Trump lashed out at the US-Japan alliance treaty, which was signed in 1951, during his stadium speech last month in Alabama.

“You know, we have an agreement with Japan where if somebody attacks Japan we have to come to their rescue.

But if we get attacked, Japan doesn’t have to help us,” he said. “Do you think that’s a good deal?”

Trump’s willingness to lash out at long-standing US allies was also on display during the Hewitt interview.

He criticized the security alliance with South Korea and lashed out at the USSaudi relationship, suggesting that

if he were president, there might not be a rationale for helping the Saudis at all. “We get virtually nothing from Saudi Arabia,” he said, just as Saudi King Salman arrived in Washington.

“We’re probably, very soon, if we allow our people to get going, we’re probably not going to need them for the oil. So we don’t need Saudi Arabia nearly to the extent that we needed them in the past.”

Besides reworking or casting aside major US security alliances that have been in place for decades, Trump also suggested he would, as president, dismantle the system of deterrence that currently underpins our strategy toward potential major adversaries. When asked by Hewitt what he would do if China sunk a Japanese ship, Trump said it was a secret. “You don’t want to let people know what you’re going to do with respect to certain things that happen. You don’t want the other side to know,” he said. “I don’t want people to know my thinking.”

That answer is Trump’s go-to response whenever he seems to get into trouble answering foreign-policy questions. He has said he doesn’t want to telegraph his plan to defeat the Islamic State—which he nonetheless described as “very beautiful”—although at other times he has promised to surround its oil fields with American troops, or to

bomb the fields and later send in Exxon to rebuild them.

On the Iran deal, Trump has appeared downright thoughtful, stating that he would not trash the agreement on day one, as some of his competitors have promised. His pledge to rigorously enforce the deal has won praise from even liberals, who have suggested that Trump, unconstrained by the Republican foreign policy dogma machine, may be adding a fresh perspective to the primary debates on international affairs.

More likely, the truth is that Trump has no defined worldview, does not understand how diplomacy or warfare works, and has no real plans to solve the world’s problems. Other Republican candidates similarly have little foreignpolicy experience, but at least they are trying to study up. When Chuck Todd of Meet the Press asked who he consults on foreign policy, Trump replied that he watches “the shows.”

Now that polls show he is soundly the Republican front-runner, the free pass he has been given on these issues may be finally ending. His stumbling on foreign-policy questions, combined with his disdain for greater knowledge, are clear indications he is not up to the job as Leader of the Free World. It’s 3 a.m. in Donald Trump’s campaign, and he isn’t ready to answer the call.

Opinion BusinessMirror

opinion@businessmirror.com.ph

OFW remittances and the exemption from documentary stamp tax Atty. Lorna Patajo-Kapunan

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legally speaking

am tempted to go on a barrage of statements against the indiscriminate opening of balikbayan boxes, but I will not go there. Much has been said about the topic and the Bureau of Customs has got a serious beating from our overseas Filipino workers (OFWs), who also, by the way, happened to be their “bosses” according to PNoy. Much more compounding than the issue on balikbayan boxes is that of remittances, which comes to the country daily amounting to millions of dollars. According to the Bangko Sentral ng Pilipinas (BSP), OFWs around the world sent $26.92 billion (P1.20 trillion) to the Philippines last year, up 6.2 percent from $25.35 billion (P1.13 trillion) in 2013.

I came to know recently from a group of people with relatives working abroad that they are receiving remittances through money-transfer agencies. I was able to look at a very recent receipt and was surprised to actually see that the same is being subjected to documentary stamp tax (DST). The unsuspecting families of our OFWs think that this is still normal when it is certainly not.

A documentary stamp tax is a tax imposed on documents, instruments, loan agreements and papers evidencing the acceptance, assignment, sale or transfer of an obligation, rights, or property incident thereto. The amount of DST is fixed or based on the par or face value of the document or instrument. The bigger the amount, the bigger the DST. OFW remittances used to be subject of DST. However, under Section 35 of Republic Act (RA) 8042, as amended by Section 22 of RA. 10022, or the Migrant Workers and Overseas Filipinos Act of 1995, the remittances of all overseas Filipino workers, upon showing of the same proof of entitlement by the overseas Filipino worker’s beneficiary or recipient, shall be exempt from the payment of DST. What is surprising is that certain money-transfer agencies do not even inquire from the recipient if the same is coming from an OFW. Obviously, there appears to be very little information on the exemption to some money transfer agencies. There might also be very little information campaign to our OFWs or their families that the said remittances are already exempted from DST. Pursuant to the amendment introduced by Section 22 of RA 10022, the Department of Finance has issued Revenue Regulation 1-2011 (RR 1-2011) concerning the tax exemption of the remittances from the OFWs and overseas contract workers (OCW). In RR

The Migrant Workers and Overseas Filipinos Act of 1995 provides that remittances of all overseas Filipino workers shall be exempt from the payment of Documentary Stamp Tax. What is surprising is that certain money transfer agencies do not even inquire from the recipient if the money is coming from an OFW. Obviously, there appears to be very little information on the exemption to some money transfer agencies. There might also be very little information campaign to our OFWs that their remittances are exempted from DST. 1-2011, it was clearly reiterated that the remittances of all OFWs, upon showing of the Overseas Employment Certificate, or valid Overseas Workers Welfare Administration (Owwa) Membership Certificate by the OCWs or OFW beneficiary or recipient, shall be exempt from the payment of DST as imposed under Section 181 of the National Internal Revenue Code of 1997, as amended. For this purpose, in addition to the original copy, a duplicate copy or a certified true copy of the valid proof of entitlement referred to above shall be secured by the OCW or OFW from the Philippine Overseas Employment Administration or OWWA, which shall be held and used by his or her beneficiary in the availment of the DST exemption.

RR 1-2011 also provides that in case of OCWs or OFWs whose remittances are sent through the banking system, credited to beneficiaries or recipient’s account in the Philippines and withdrawn through an automatic teller machine, it shall be the responsibility of the OCW or OFW to show the valid proof of entitlement when making arrangement for his or her remittance transfers.

We are all in agreement in touting our OFWs as our modern day heroes. If we really view them as such, it becomes a moral and legal imperative that we accord them all their entitlements and exemptions provided under the laws.

China may never get rich

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By Noah Smith | Bloomberg View

hina is already the world’s largest economy by some measures, such as purchasing power parity. It’s clear, however, that the country’s growth is slowing. Growth dipped from roughly 10 percent to about 8 percent in 2012, and is falling again amid the current slowdown.

When the country recovers from its slump, how much more expansion can we expect before it settles down into a nice, slow, steady pace like every other fast-growing “miracle” country eventually does?

That leaves open the big question of how wealthy China will become relative to developed nations such as Japan, France or the US. These rich nations occupy what economists call the technological frontier. Economies at the frontier have already exhausted all the cheap and easy opportunities for catch-up growth. They can no longer readily absorb foreign technology, or move unproductive farmers into cities, or use high saving rates to accumulate capital (this latter opportunity disappears

because maintaining capital becomes more expensive as you get more of it).

Their growth rate is essentially limited to the pace at which the human race invents new technologies.

But not all countries at the frontier are equal. Even among rich, slowgrowing nations, substantial differences in living standards exist. Japan, South Korea, France, Germany and the UK, for example, have per-capita gross domestic product (GDP) of only about 75 percent to 85 percent of the US. Most economists believe that this gap is caused by differences in institutions, or the broad rules that govern the economy. For example, heavy regulation in Europe or implicit subsidies to unproductive corporations in East Asia, are often cited as holding these

Monday, September 7, 2015 A11

More people killed by traffic Teddy Locsin Jr.

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Free fire

y daughter texted me that a woman’s mother died on Edsa because the ambulance taking her to the emergency room could not make it through the traffic caused by the five-day people-power rally of the Iglesia Ni Cristo (INC) and not by Joseph Emilio A. Abaya and Francis N. Tolentino over the previous 900 days of equally horrid traffic when no ambulance could get through, as well. Sub specie aeternitatis, which is to say in the wider scheme of all things that each life is as valuable as everything else put together, be it the life of so famous a personage as GMA inhumanly denied expert treatment abroad by a sociopathetic government, or that of an ordinary person’s, like your parent or mine, delayed, and, thereby, denied the emergency care that might have saved her.

I suggested at the height of the rally that INC consider massing, not on, but alongside Edsa, with five times the number that already terrified the government; leaving just enough room for ambulances to get through. Next time, do that. Indeed, in five days of INC traffic one person died, contrary to Abaya’s flippant remark that traffic is never fatal. Turning this data over to a statistician, if one died in five days of anticipated traffic, then over the past 900 days of unannounced, but equally horrid traffic on EDSA, 180 people perished albeit incognito

because it was in no one’s political interest to raise an outcry rather than do a cover-up for Abaya and Tolentino.

Now CNN Philippines reports that a commercial emergency medical service claims that it turned down 50 requests for ambulances that would have to pass through the INC rally without even attempting it, and that, in its estimate, as many as six died in those five days. Now if six died in just five days of the INC rally, then in 900 days, a small fraction more than 900 people died on Abaya’s and Tolentino’s watch. That, to me, is mass murder.

1.6 percent: The Chinese figure that matters most

First, and most important, China’s currency move has no impact on any other country, if Chinese exporters do not react to the move.

If Chinese exporters chose to keep the US dollar price of their exports unchanged, then there is no competitive advantage to China. Asian exporters to the US will face no greater Chinese competition.

Why would Chinese exporters choose to leave their US dollar prices unchanged after the renminbi weakened? Perhaps, because Chinese exporters never raised their overseas prices when the renminbi rose against the Euro this year. Europe is as important an export market as is the US. If China does not raise prices on a rising currency, why assume China will cut prices on a falling currency?

The important thing is not the level of the renminbi, but how Chinese exporters react to it. But let

us suppose there is a reaction. How important is Chinese trade to, say, US inflation? The answer is that 1.6 percent of the basket of goods and services that goes to make up US inflation result from Chinese economic activity. 98.4 percent of the basket of goods and services comes from elsewhere.

This takes a bit of explaining.

The weightings of consumer price inflation are an attempt to replicate the proportion in which consumers spend their income on various goods and services.

If we were to try and assess the impact of a change in the oil price on Consumer price index (CPI), we could look at the weightings of oil products in the CPI basket. Heating oil is around 0.1 percent of the US inflation basket, for instance.

However, this approach does not capture the fact that oil prices im-

pact electricity prices, which impact fertilizer prices, which impact food prices. To understand what a change in the price of oil means for the US, we have to think about oil and fertilizer and other prices.

Economists have a solution. Gross domestic product (GDP) measures the income of an economy. If (hypothetically) total oil consumption in the US, including the oil embedded in fertilizer is around 4 percent of GDP. That means US consumers spend 4 percent of their incomes on oil. Thus, oil is likely to impact 4 percent of the contents of the basket of goods and services that make up US CPI. What we do for oil, we can do for Chinese exports. We need to know how much of the US CPI basket is “made in China,” including all the indirect effects.

So how much does the US import from China? 2.8 percent of US GDP. 2.8 percent is clearly a larger number than 1.6 percent. So why is the impact lower?

The answer is reexports. I always use the Apple iPad as an example.

The US imports 2.8 percent of goods from China, but not all of that 2.8 percent is made in China.

An Apple iPad is “made in China” (it says so on the box), but only around 5 percent of the price paid for an Apple iPad is actually paid for Chinese economic activity. About 45 percent goes to Apple in the US, South Korea takes around 8 percent for components, and so forth. China has to import all those things, package them together,

economies back from full convergence with the US. So what about China? How good are its institutions? Brad DeLong, economic historian at the University of California-Berkeley, asks this question in a recent article. As is common, DeLong begins by assuming that China’s institutions are fundamentally similar to those of the rich countries around it—Japan, South Korea and Taiwan.

A great deal of China supergrowth always seemed to me to be just catchup to the norm one would expect, given East Asian societal-organizational capabilities. China had been far depressed below that norm…by the paranoid Mao Zedong.

But thanks to its communist past and its government’s resistance to westernization, China’s system of property rights looks nothing like the systems in Japan, South Korea, or Taiwan. It might be that China has invented a totally new system that will do just as well as—or even better than— the system that successful countries have been using for centuries now. But that’s an outside chance. The safe bet

is still that China’s strange system will hold it back. DeLong writes: [China] has had its own system of what we might call industrial neofeudalism.... Chinese entrepreneurs have protection via their fealty to connection groups within the party that others do not wish to cross.... Such a system should not work.... The evanescence of [property rights] should lead [elites] into the same shortsighted rent-extraction logic that we have seen played out over and over again in Eastern Europe, sub-Saharan Africa, Southeast Asia, South Asia and Latin America.”

Weighing these factors, DeLong comes to a stark conclusion—China has only five years of rapid growth left. Since China’s per-capita GDP is now only about a quarter of the US level, five years of 7-percent growth— with the US growing at 2 percent— would leave China at less than a third of America’s standard of living by the time it slows down.

That almost certainly seems too conservative. We need to take into account the effects of economic ag-

glomeration. Agglomeration means that companies invest where there are large markets, and workers move to where they have job opportunities.

This snowball effect, once started, is hard to stop. China’s poor property rights will probably hold it back—as will its large size and resource limitations—but 30 percent of US per-capita GDP is overly pessimistic. I’d look for China to do at least as well as Malaysia, which now is at about 45 percent of US GDP. That would mean China has more than a decade of 7-percent growth left, once it recovers from its recession.

That said, there are already signs that China’s institutions are beginning to hold it back. In the wake of the country’s dramatic stock-market crash and the slow deflation of its real-estate bubble, zombie companies are starting to appear across the landscape. Zombie is the term for companies that are not really profitable, but that survive on a continuous stream of cheap loans from banks that can’t afford to let the companies fail. Banks do this because if the companies fail, the banks fail, and the banks are both

Paul Donovan

C

hina’s decision to allow market forces to play a greater role in determining the value of its currency prompted an overreaction in financial markets and the media.

Concerns about currency wars, competitive devaluations and deflation were voiced. It is time to take a deep breath and start to consider the facts.

and then export the finished product.

We need to adjust China’s exports to the US and remove re exports to the US—the import to China then the export from China cancel each other out.

When we go through and make this adjustment, 1.6 percent of what the US spends its money on goes on economic activity from China. Hence, 1.6 percent of the US CPI basket will be affected by the things that affect economic activity in China.

If 1.6 percent seems small, remember that much of what Americans spend their money on can have no conceivable tie to economic activity in China. Housing is the largest part of US CPI (over 40 percent). Health care and education are huge chunks of the index. Food (China does not export food) is another big part. And, finally, even when an American buys something genuinely made in China, as consumers they still have to pay for the warehousing, distribution, retailer’s overheads, the shop assistants’ wages, etc.—and those are domestic costs (primarily domestic labor costs). US labor costs are around 60 percent of US CPI. So when it comes to the US interest rates, the economists of the Federal Reserve are going to be focused on domestic labor pressures.

China’s currency moves are barely noticeable background noise. This is why US rates are likely to increase in September.

systemically important and politically well-connected. The government provides the final link in the chain, by bailing out banks, by keeping interest rates low, and by providing subsidies to some of the zombies.

This kind of trap ensnared the Japanese economy after its own bubble burst in the early 1990s. It took more than a decade before the administration of Prime Minister Junichiro Koizumi finally forced the big banks to cut most of their zombies loose.

But when Japan was attacked by zombies, it was at a much higher level of income (relative to the US) than China enjoys today. In other words, China is hitting Japan-type institutional problems at a much earlier development level than Japan.

That is an early indicator that DeLong and other economists are probably right about China. The system of political-party-based property rights is better than nothing, but it isn’t going to make China rich. China is still so poor that it isn’t done growing for a while, but when it stops, it’s probably not going to be a rich country.

For a web version of the article, visit www.ubs.com/pauldonovan.

2nd Front Page BusinessMirror

A12 Monday, September 7, 2015

www.businessmirror.com.ph

House gives up bid to lower FACTORY OUTPUT DECLINED individual, corporate taxes LIKELY BY 3.3% IN JULY

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By Jovee Marie N. dela Cruz

fter the Palace rejected the measure lowering the individual and corporate income-tax rates, the House Committee on Ways and Means on Sunday abandoned the target approval of the tax-reform measure set for this week.

In a radio interview, House Committee on Ways and Means Chairman and Liberal Party Rep. Romero S. Quimbo of Marikina City said Congress cannot pass a measure it knows will be rejected

by Malacañang.

“We need to be constructive; we cannot pass it only to be rejected by the Executive. In the end, our tax-payers will not get the relief if we don’t get the cooperation of the [Executive, particularly the] Department of Finance [DOF],” Quimbo said, days after he said he is looking forward to having the bill finally approved this week.

Last week Malacañang, taking the cue from Finance Secretary Cesar V. Purisima, said it was not keen on endorsing a bill mandating adjustments in individual and

QUIMBO: “We need to be constructive; we cannot pass it only to be rejected by the Executive. In the end, our taxpayers will not get the relief if we don’t get the cooperation of the [Executive, particularly the] Department of Finance.”

corporate income-tax rates, saying that, the government cannot put its fiscal sustainability and credit rating at risk ‘by doing piecemeal revenuereducing legislation.”

The DOF has warned lawmakers that reducing the individual and corporate income-tax rates may cause the government to lose revenues totaling as much as 1.5 percent of the country’s gross domestic product, or

P30 billion. Quimbo, however, said the government should not forget the ordinary Filipino worker, who will benefit the most from the taxrate reduction, even as the government stands to lose P30 billion.

After all, he reasoned, the government has not been able to spend P500 billion in the current budget the legislators have appropriated.

Earlier, the BusinessMirror reported that President Aquino opposed the plan of the DOF to reduce the individual and corporate income-tax rates, and compensate for the revenue loss by increasing the value-added tax (VAT) to 14 percent, from the current 12 percent.

Quimbo said reconvening the Legislative-Executive Development Advisory Council (Ledac) immediately should help untangle the issues involved in the measure scaling back the individual and corporate income-tax rates.

The President chairs the Ledac, and is participated in by the Vice President, the Senate President, the House Speaker, seven Cabinet members, three senators, three House members and one representative each from the local governments, the youth and the private sector.

“We really need to sit down and

see what are the points of agreement, and what are the points of disagreements,” Quimbo said.

The Philippines owns the secondhighest individual income-tax rate in the region at 32 percent—next only to Thailand and Vietnam’s 35 percent—and the highest VAT rate of 12 percent; the country’s individual income tax bracket having been unchanged since 1997.

Quimbo, one of the authors of the bill, aims to recast the tax rate for compensation income earners, self-employed, and professionals and corporations through the simplification of tiers and rates, as well as link these to inflation.

The lawmaker said that, under the House version of the measure, public and private workers earning P180,000 and below will then be completely tax-exempt. In the current setup, those earning P10,000 or less a month pay a 5-percent income tax.

Quimbo added that the bill also reduces the income-tax rate of those earning above P180,000 to P500,000 and above P500,000 to P10 million from the current 30 percent to 9 percent and 17 percent, respectively.

He said the highest rate of 30 percent will be paid by those earning P10 million annually.

By Bianca Cuaresma

T

he country’s industrial sector likely contracted again in July, shrinking by 3.3 percent due, for the most part, to weak external demand, particularly from China.

In its latest Asia-Pacific Economic Data Preview, Moody’s Analytics—the research arm of the global credit watcher Moody’s Investors Service—said Philippine industrial production likely shrunk another time.

The forecast contraction of the manufacturing sector in July ran parallel to the decrease in industrial output by 3.6 percent reported the previous month.

“The Philippines’s industrial production likely continued struggling in annual terms in July, after falling by 3.6 percent year-on-year in June,” Moody’s Analytics said.

Moody’s research unit blamed the decrease to base effects and anemic global demand. “Base effects have exacerbated the slump from low oil prices and weakened global demand stemming from China,” the Moody’s unit said.

“Export-facing petroleum products and basic metals are strug-

Pangilinan. . .

Asean. . .

Continued from A1

Continued from A1

The country’s top agricultural imports include soybean oil/cake meal, wheat and meslin, milk and cream, rice, fertilizer, meat of bovine animals, palm kernel olein, coffee, urea and corn.

While the gross domestic product (GDP) of the Philippines has been expanding in recent years, data from the Philippine Statistics Authority (PSA) showed that agriculture’s contribution to GDP is the smallest and continues to shrink. This, despite the fact that many of the poor rely on the farm sector.

Experts said cuts in the tariffs of farm products traded among Asean countries would exacerbate problems confronting local farmers. Lower tariffs could discourage farmers from producing more as the entry of cheaper food from neighboring Southeast Asian countries could depress local prices.

The Apec CEO Summit will bring together in November hundreds of CEOs from the private sector and decisionmakers in the governments from the Asia-Pacific region to discuss and address opportunities and threats to the economies in the region. Luz outlined some of the measures that can allow the Philippines to increase food production and compete under an integrated Asean.

For one, he said the agrarian-reform program must be revisited. Luz said the program has not benefited the economy because small farmlands do not produce as much agricultural products as much as bigger ones.

“We need to take a serious hard look at agrarian reform on whether it has worked for us. Some of the big plantations in Mindanao have produced rather good volumes, but the smaller, not so much,” he said. In Vietnam, Luz said there smaller farmlands but its production per hectare is bigger than in the Philippines because farmers have access to better technology.

He said the Philippines must also cut logistics costs to make it easier to move goods within the country and to export products to other countries.

Under the old cabotage law, foreign ships can only have access to ports in Manila, thus making it necessary for goods for export to be shipped to Manila first before it can be shipped abroad.

But the amendments to the cabotage law enacted recently now allow foreign ships access to other ports throughout the country aside from Manila ports.

gling the most. Domestic-facing industries, such as food production, should improve in coming months, after earlier typhoon damage,” it added.

The Philippine Statistics Authority (PSA) reported in August that the volume-of-production decline seen in June this year was due to the contraction in major sectors across the board.

“Volume of Production Index [VoPI] slid down by 3.6 percent in June 2015, compared with the twodigit growth of 12.7 percent during the same month of last year. This was brought about by the decrements noted in 11 major sectors, led by basic metals [-34.4 percent],” the PSA reported.

The PSA further reported that five other sectors registered twodigit reduction in VoPI, namely, footwear and wearing apparel (-17.9 percent); petroleum products (-15.8 percent); furniture and fixtures (-14.5 percent); food manufacturing (-12.5 percent); and wood and wood products (-11.6 percent),” the PSA said.

The PSA will be reporting the July industrial production data on Thursday.

STREET MARKET Shopkeepers arrange fruits and vegetables sourced from Baguio and Rizal provinces to be sold at the recently opened Pioneer Street Market in Mandaluyong City. Stephanie Tumampos

G-20 finance ministers confident global recovery will gain speed A

NKARA, Turkey—Finance officials from the world’s leading economies said on Saturday that global growth has fallen short of their expectations but they remained confident that the global economic recovery would gain speed.

Ending a two-day summit in the Turkish capital Ankara, finance ministers and central bank governors from the Group of 20 leading economies promised to take “decisive action” to keep economic recovery on track.

The meeting was held at a time

of heightened uncertainty over the global economy triggered by slow growth in China; increased market volatility; and concern over a looming US interest-rate increase.

Turkey’s Deputy Prime Minister Cevdet Yilmaz told reporters at the end of the meeting that G-20 members were reassured China would continue to grow and achieve a 7percent rate.

“There is a general opinion that growth will continue with a rate of around 7 percent,” Yilmaz said. “This is something that will appease concerns to a certain ex-

tent.” However, the International Monetary Fund (IMF) said in a statement that it believes risks to growth have increased.

“Downside risks have increased, especially for emerging-market economies,” said Christine Lagarde, the IMF managing director. “Growth is still too moderate and uneven....

The only thing that is too high is unemployment.”

The G-20 members promised to “calibrate” their economic policies, and to “clearly” communicate actions they will be taking in a bid to increase transparency

and reduce uncertainty. A final statement said the members promised to move toward a “more market-determined exchangerate system” and to “refrain from competitive devaluations.”

It was an apparent reference to a Chinese move to weaken its currency, seen as a deliberate effort to boost exports. Earlier, a senior US Treasury official said China must improve “communication” of its economic policies and steer clear of competitive devaluation so that the value of its currency is determined by market forces. AP

The regas facility and the pipeline are also needed,” the businessman pointed out.

These were the same concerns earlier raised by Pilipinas Shell Petroleum Corp. Country Chairman Ed Chua, who said the gas-pipeline project should have offtakers or buyers of electricity.

“If you have a pipeline, you have a start and an end. So, where is your starting point? You should have an import facility or, if there is additional gas from Malampaya or, another Malampaya, you have a source. Now, who is the customer?” the Shell official asked rhetorically.

The Department of Energy (DOE) said the Bat-Man pipeline will be auctioned via the public-private partnership (PPP) scheme. However, this was seen unlikely happening this year.

“The DOE has several questions to the technical advisor of the PPP Center that they have to address. I am not sure if we can still do it this year,” said Melita Obillo, DOE director for Oil Industry Management Bureau.

The project was already approved by the Neda Investment Coordinating Council, albeit with questions.

The natural-gas pipeline was earlier estimated to cost between $100 million and $150 million.

DOE Officer in Charge Zenaida Monsada earlier said the project can be elevated for approval to the Cabinet once the questions raised by the Neda and the Department of Finance have been addressed.

“In principle, this is a government project. We don’t want it to be delayed but we want to be sure that once it’s tackled by the board, everything will go smoothly,” Monsada said.

PPP Center Executive Cosette V. Canilao said it was the DOE that pulled out the project from the Neda Board.

The PPP Center earlier tapped Rebel Group International BV to conduct the feasibility study for the project. One of the questions raised includes the specific location of the pipeline.

Former Energy Secretary Carlos Jericho L. Petilla earlier noted that the proposed study indicated the pipeline will be constructed from end to end, without customers in between. He wanted a revision of the study.