BusinessMirror January 14, 2016

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A broader look at today’s business Monday 18,January 2014 Vol.14, 10 No. 40 Vol. 11 No. 98 Thursday, 2016

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OCAL millers are asking lawmakers to make sure the definition of raw sugar and raw cane sugar in a new law they are crafting will not lead to “misinterpretation” by the Bureau of Internal Revenue (BIR), and trigger the imposition of competitiveness-eroding value-added tax (VAT) on these products.

DAVID BOWIE D2

Show BusinessMirror

Thursday, January 14, 2016

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Five songs to prove David Bowie is impossible to capture in five songs carried by an arena-ready shout-along hook in “Wham, bam, thank you ma’am,” this song underscores in bold the line connecting Bowie to what years later would be called punk.

‘HEROES’ ASK five people for their pick of a song to play for someone who fell out of the sky and claimed to have never heard of David Bowie and odds are you’d get five different answers. But at least one of them will pick this song, which was cowritten by Brian Eno during Bowie’s “Berlin” period. Singing atop a swirling backdrop of synthesizer textures and a howl of feedback from King Crimson guitarist Robert Fripp, Bowie sounds defiant, hopeful and triumphant in his most anthemic six minutes.

B C B Los Angeles Times

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BELLA THORNE with Alvin, Theodore and Simon

AVID BOWIE didn’t necessarily have fans.

He had followers.

People could collect a few records, maybe grab on to his trilogy of albums from 1970s Berlin, or his spectacular early career as a glam rock Ziggy Stardust, but most people I knew who were into David Bowie were into David Bowie. He was the sort of artist who inspired tattoos, dissertations or— judging by social media in the moments since news of his death from cancer spread on Sunday night and early Monday morning—a career in music.

I’m the rare person who writes about music but never became a committed Bowie fan. I knew he was one of those artists who needed to be respected and explored.

At various points, I promised to dig deeper into Low, Aladdin Sane or Station to Station to find my Bowie album and what others heard to inspire such devotion.

Strangely, Bowie’s newest recording “Blackstar”— released just days before his death—may have been that album. Dark, strange and filled with a sense of invention and the unexpected from jazz, with the support of saxophonist Donny McCaslin and his band, “Blackstar” drew me in immediately. I was amazed in part that Bowie could not only sound so vital at 69 years old but so surprising, as well.

Even over dinner on Sunday evening, after marveling at how bizarre yet inviting, were the various tracks of his that KCRW pulled into their playlist, I felt ready to revisit Bowie’s catalog to see what other surprises awaited. And that’s the lesson.

With something like five or six careers packed into a one-of-a-kind, constantly shifting whole, David Bowie isn’t an artist who can be summarized in one album, much less some puny playlist. But each song, each unpredictable shift in his sound, image, or even persona,

z

Today’s Horoscope

By Eugenia Last

CELEBRITIES BORN ON THIS DAY: Dave Grohl,

47; Jason Bateman, 47; LL Cool J, 48; Holland Taylor, 73.

‘ASHES TO ASHES’ RELEASED in 1980 and quickly seized on by a fledgling MTV, this video showcases Bowie’s mastery of harnessing unconventional lyrics and imagery, and is exactly the sort of thing to keep a child up at night. At various points featuring Bowie in a padded cell, hanging on hooks and as some horrifying clown strolling in front of a bulldozer, the video is an operatic nightmare even with its by-now quaint visual effects. He even offers a grim update on one of the heroes from “Space Oddity” in the chorus: “We know Major Tom’s a junkie.”

WIDELY and wildly loved character and comedic actors Kaley Cuoco (Big Bang Theory), Anna Faris (Mom, Scary Movie franchise) and Christina Applegate (Vacation) reprise their roles voicing the charming Chipettes in the latest family road-adventure Alvin and The Chipmunks 4: The Road Chip.

In Alvin and the Chipmunks 4: The Road Chip, the boys hit the road for a coming-of-age journey across the US. During their storied misadventures, Alvin (voiced

by Justin Long), Simon (Matthew Gray Gubler) and Theodore (Jesse McCartney) have always had to solve problems...they created themselves. But during their road chip, and for the first time, they find themselves on a mission to keep their family together.

Alvin and the Chipmunks 4: The Road Chip shakes things up, musically. Each stop on the “Munks’ and Miles” quest has its own special character and different musical influence—from the modern, hip-hop/country vibe of an Austin, Texas bar, to the great jazz, blues and funk of New Orleans, and finally to the Latin flair of Miami. Continuing a soundtrack tradition for the series, Alvin and the Chipmunks put their own delightful new spin on smashes including “Uptown Funk,” “Turn Down for What,” and more.

In addition, Redfoo and the boys trade verses on “Juicy Wiggle [Munk Remix].” The soundtrack also features Sheppard’s platinum-certified international hit “Geronimo” and The Score’s “Oh My Love.”

Alvin and the Chipmunks 4: The Road Chip opens January 20 in cinemas from 20th Century.

‘I’M AFRAID OF AMERICANS’ IN one of many examples of Bowie’s reach across generations, this song with Nine Inch Nails’s Trent Reznor places him amid the harsh electronic effects of industrial rock (Reznor also remixed the track). Again cowritten by Brian Eno, this track released in 1997 is laced with a claustrophobic paranoia that Bowie said in an interview was a reflection of American culture’s global reach.

‘LAZARUS’ AT just four minutes, “Lazarus” isn’t the most unexpected track on Bowie’s excellent Blackstar (that would be its haunting, nine-minute-plus title track). But it is it most poignant in hindsight. “Look up here, I’m in heaven,” Bowie says to open the song amid sighing horns and a downcast rhythm that still leaves room for hope. Looking at the song’s striking video it’s hard not to think of Bowie’s illness as he floats above his bed and sings of freedom before asking, “Ain’t that just like me?”

Can this song be seen as an autobiographical glimpse?

As always, there’s no way of knowing. But we can only hope David Bowie is looking back at us now. ■

might bring you one step closer.

Here are five songs that capture how difficult Bowie was to capture. But it was always so interesting to try.

‘SUFFRAGETTE CITY’ AN already frantic track from 1972’s The Rise and Fall of Ziggy Stardust and the Spiders from Mars is downright manic in this live clip from London’s Hammersmith Odeon in 1973. In addition to being

ARIES (March 21-April 19): Work behind the scenes to get as much done as possible. Now is not the time to spar with one of your colleagues or someone in an authoritative position. Take care of your responsibilities and keep moving forward.

Romance will ease your stress. ★★★

a

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CANCER (June 21-July 22): A chance to try something new or do something different will improve your outlook and get you moving in an interesting direction that allows you to show off talents you didn’t know you had. Embrace the future with optimism. ★★★★★

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LIBRA (Sept. 23-Oct. 22): Your attention should be on yourself, your loved ones and making personal changes that will improve your life. Don’t let situations at home escalate because someone is being forceful. Back away and let things settle down. ★★★

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TAURUS (April 20-May 20): Listen to any advice offered and put your own personal touch on the way you move forward. It’s OK to be different or to explore new possibilities. What you engage in today will bring rewards far beyond your expectations. ★★★★

b

e

LEO (July 23-Aug. 22): You’ll have plenty to think about if you disagree with the people you deal with each day. Ask someone you trust for advice regarding a situation that has left you questioning your current status. A simple solution is likely eluding you. ★★★

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k

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VIRGO (Aug. 23-Sept. 22): Get out and about. See what’s going on in your neighborhood or plan a day trip. Doing things with children or friends will broaden your outlook and help you set better priorities. ★★★

f

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GEMINI (May 21-June 20): Don’t be too willing to put your responsibilities aside to help someone who is complaining. It’s important to live up to your promises. Do your best to take care of your personal needs and leave some time to rejuvenate. ★★

HAPPY BIRTHDAY: Good fortune will be yours if you don’t give in to emotional blackmail or manipulative tactics. Staying focused on what will bring you the most in return and negotiating on your own behalf will be your ticket to success. Opportunities are apparent, but so are poor choices regarding money, health and legal matters. Be responsible for your own happiness and please yourself. Your numbers are 5, 14, 23, 31, 33, 46, 48.

CHIPETTES TO THE RESCUE IN ‘ALVIN AND THE CHIPMUNKS 4: THE ROAD CHIP’

SCORPIO (Oct. 23-Nov. 21): Share your ideas and emotional feelings. It’s important to clear up any concerns before moving forward or making changes that will affect your life. A money matter, settlement or contract will escalate if you don’t deal with it quickly. ★★★★★

SAGITTARIUS (Nov. 22-Dec. 21): Don’t engage in something you can’t finish. It’s important to bring about alterations to the way you live if you want to avoid complaints and interference from someone who disagrees with your choices. ★★

CAPRICORN (Dec. 22-Jan. 19): An unusual or unexpected financial opportunity will develop. Use your experience and knowledge to orchestrate what you want to see unfold. You can raise your standard of living or change the way you invest in the future. ★★★★ AQUARIUS (Jan. 20-Feb. 18): Put your efforts and attention toward your physical wellbeing, and do whatever it takes to improve your health. What you achieve will bring a positive response from someone you love. ★★★

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PISCES (Feb. 19-March 20): Be careful how you handle others. If you are too serious or negative, you will face the same in return. An honest but diplomatic approach when dealing with friends, relatives or your lover will help you avoid trouble.

Focus on financial gains. ★★★

BIRTHDAY BABY: You are insightful, inspirational and sensitive. You are persuasive and tactical.

‘shapeliness’ BY ROB LEE The Universal Crossword/Edited by Timothy E. Parker

ACROSS 1 Modeling wood 6 Not quite decided 10 Cooking meas.

14 From the Far East 15 Imaginary narrative 16 Cold coating 17 Begin anew, (with “Go”) 20 Maintenance cost 21 Seeking relief from a pitcher?

22 Mall occupant 25 They’re not final releases 26 One voice singing 30 Do some snacking 32 Valentine figure 35 Napoleon relative?

41 Close social group 43 Barbecue offerings 44 Fathers and Sons author 45 Trade requirement?

47 Talk laryngitically 48 Midshipman’s counterpart 53 Sloppy-landing sound

13 18 19 23 24 26 27 28 29 31 33 34 36 37 38 39 40 42 46 48 49 50 51 52

56 Language in The Passion of the Christ 58 End a computer session 63 Mysterious Atlantic Ocean locale 66 Frank in a diary 67 Lead-in for “go bragh” 68 Retail markdowns 69 Third out of three 70 Traversing the deep 71 Sound from the birdcage DOWN 1 Hindu “sir” 2 “Quickly!”

3 Salt deposit 4 “For goodness’ ___!”

5 Poker-pot starters 6 “___ a Small World” 7 Online help page 8 Piccolo cousins 9 Opposite of nah 10 When repeated, a calming expression 11 Push from beneath 12 Saint Nick

Hunts (with “on”) ___ out (withdraw) Genesis bone Catch ___ (start to get) Yuletide landing site Cul-de-___ (dead-end roads) Skip over Traditional teaching Whale type Frau’s partner Source of a bugle call Student’s trial One of 20 in a pack, for short Look from a creep Noted tutor 13th of April, e.g.

Party thrower’s request House of cards?

Academy Awards Group of plotters Boxing site Mends, as socks Pismire Letter-shaped cross

54 “I am the greatest” boxer 55 Melba or French 57 It’s better than a mere thought 59 Chew, beaver-style 60 See 37-Down 61 Run away 62 “Gab” or “slug” follower 64 No-win situation?

65 Molecular biologist’s study

SHOW Solution to yesterday’s puzzle:

D2

VIETNAM BECKONS

Asean

BusinessMirror Editor: Max V. de Leon • Thursday, January 14, 2016 A5

www.businessmirror.com.ph

The AEC journey begins Asean-EU Perspective

HENRY J. SCHUMACHER

A

FTER decades of preparation, the Asean Economic Community (AEC) came into being with the prospect of great changes in society and business in the years ahead. With their commitment to integration, the 10 economies in Southeast Asia now aim to take the next step in their rise of prominence on the global stage. From a European perspective, it can be confirmed that the interest in Asean integration is high both among European companies operating in Asean and European small and medium enterprises in Europe, trying to find the right strategy into the Asean market and choosing the right Asean country to use as “entrance” to the integrating market. The European Union (EU)-Philippine Business Network (EPBN), in its missions to Europe and in the response from EUbased business, feels the changed dynamics.

However, we all have to be realistic also; no one involved in the lengthy process of creating the AEC will claim that everything they hoped for has been achieved. One need only look at the experience of the EU, a far more ambitious project, to understand how difficult such attempts at integration are.

If Asean has learned one lesson from the EU, it is to avoid even thinking about a single currency, given the stark differences in levels of economic development in the region. But the other lesson Asean has to learn from the EU is that the economic integration was driven by business leaders and not by politicians. Asean integration is still driven by bureaucrats—that needs to be changed. More stakeholders need to be involved in creating the Asean vision and the Asean Secretariat has to be strengthened so it can drive that common vision.

As the region heads toward a greater glow of people and trade, some of the basics of greater cooperation need to be strengthened. And while the EU is not the best example for a single monetary union, as mentioned above, it has many other virtues when it comes to setting high standards and regulating the way things are done in the member-states. Many of the positive things that have happened in the EU have come about because the European Commission has a mandate to streamline regulations and processes, enforce good governance and break down the barriers nations are always trying to put up. The European Commission also does a great service to consumers in many diverse areas, from food safety to data roaming.

We are looking at a very different game in Asean; many countries in the region continue to have tons of nontariff barriers and try to extract as much as possible from other Asean member-nation’s citizens. This is something that needs to be tackled. This is part of the work the EPBN (described above) does: we are strong in advocacy to create win-win solutions in improving the regulatory environment with the aim to achieve a level-playing field for local and foreign business, driving competition that is good for Juan de la Cruz, as he will benefit by getting better products and services at a better price.

Vietnam’s consumer promise beckons as state eases rules

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IETNAMESE mergers and acquisitions (M&A) are forecast to hit a fresh record again this year, spurred by foreign buyers’ interest in the country’s fastgrowing consumer sector.

Announced acquisitions involving Vietnamese companies rose 40 percent last year to $4.3 billion, beating the previous record of $4.2 billion from 2012, data from the Vienna-based Institute of Mergers, Acquisitions and Alliances show. The financial sector had $1.6 billion in deals, followed by consumer, with $1.2 billion.

Deal-making could rise further in 2016 after free-trade agreements (FTAs) came into effect and the government passed streamlined investment rules, according to Baker & McKenzie and Duane Morris Llp. Overseas buyers are attracted by an economy forecast to expand 6.7 percent in 2016, the fastest pace in nine years, and a consumer market where 60 percent of the population is under age 35. Boon Rawd Brewery Co., Thailand’s oldest beer producer, agreed last month to invest $1.1 billion in units of Vietnam’s Masan Group Corp. that make Phu Yen beer and Nam Ngu fermented fish sauce.

“There is a clearer path for people interested in M&A in Vietnam,”

$4.3B Value of announced acquisitions involving Vietnamese firms last year

said Baker & McKenzie (Vietnam) Ltd. Managing Partner Fred Burke, who advised Boon Rawd on the deal, which was the biggest overseas purchase in the country in more than three years. “The way things are going, M&A activity could be even bigger this year.”

Vinamilk divestment

THE country revised its investment legislation over the past several months, in part to make the process of buying local companies quicker and more transparent. An amended

law, enacted last July, cut the time needed to acquire an investment license by two-thirds to 15 days.

Vietnam last December specified 18 industries where foreign investment is allowed, including consumer, property, transport, construction and manufacturing. A June decree said foreigners could—for the first time—buy majority stakes in some kinds of publicly listed companies including brokerages.

ANA Holdings Inc., operator of Japan’s biggest airline, agreed this week to buy a $108-million stake in state-owned Vietnam Airlines Corp.

The government said last March that France’s Aeroports De Paris was interested in acquiring a stake in Airports Corp. of Vietnam, which is overseeing a construction boom.

Vietnam said in October it plans to sell its entire 45.1-percent stake in Vietnam Dairy Products JSC, the nation’s largest listed company, valued at about $3 billion.

Consumer spending

“AS long as the government stays true to its course, inflow of foreign capital should continue to increase, especially in 2016 and 2017,” Ralf Matthaes, managing director of consultancy Infocus Mekong Research in Ho Chi Minh City, said in an e-mail.

Such deals are being driven by an expanding middle class in Vietnam, where consumer spending is forecast to grow 47 percent in the four years through 2019 to $184.9 billion, data from Euromonitor International show. Beer intake alone is set to rise

33 percent over the period to 4.8 billion liters, while consumption in Thailand will fall over the same period, according to Euromonitor.

There is still work to be done. Vietnam’s customs and tax procedures are “torturous” and access to loans needs to be improved, said Oliver Massmann, partner and general director of Duane Morris Vietnam Llc.

Deeper integration

OVERSEAS companies also need to do extensive due diligence on acquisition targets in Vietnam to ensure they are well managed, according to Baker & McKenzie’s Burke. Any worsening of the Chinese market rout could also cause investors to pull capital out of other emerging markets like Vietnam, said Chris Freund, a partner at Ho Chi Minh City-based Mekong Capital Ltd. To live up to its promise, Vietnam will need to keep its commitments made in recent trade pacts, Duane Morris’s Massmann said. A FTA with South Korea took effect at the end of December, while Vietnam and the European Union approved a new FTA last month.

That could help further boost overseas companies’ participation in Vietnam, where disbursed foreign direct investment jumped 17 percent last year to a record $14.5 billion, according to government data.

“The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities,” Massmann said.

“The trend will continue.”

Bloomberg News

Test flights rattling region

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ENSIONS broke out anew in the South China Sea after Beijing announced on January 4 that it had sent a civilian plane to test a 3-kilometer runway it had built on Fiery Cross Reef, one of the sites of China’s island-building activities. This was followed by a statement released by Xinhua on January 6 on new flights carried out by China Southern Airlines and Hainan Airlines.

Vietnam immediately filed a formal protest against the move, saying China’s actions are causing anxiety and could endanger freedom of overflight. The United States and Japan both expressed concerns, with Tokyo saying that China’s unilateral actions are an attempt to change realities on the ground and create a fait accompli.

Foreign Secretary Albert F. del Rosario said last week that Manila would protest the flights and raised concerns on the repercussions of the Chinese provocative activities “if they are not challenged.”

Del Rosario’s British counterpart, Foreign Secretary Philip Hammond, who was in Manila last week for a visit, said the freedom of navigation and overflights were“nonnegotiable”and constitute “red lines” for the United Kingdom.

China has transformed Fiery Cross Reef, a low-tide elevation that generates no maritime entitlements under the 1982 UN Convention on the Law of the Sea (Unclos), into an artificial island with an airstrip and other facilities.

While analysts said China could have been trying to alter the Fiery Cross Reef and other low-tide elevations to gain maritime entitlements, experts said this is not allowed under the Unclos. Scientists and environmental groups worldwide have also scored the island-building as damaging to the Spratly’s well-documented rich marine environment.

Prior to the test flights, Beijing has come under intense scrutiny because of its attempts to restrict freedom of navigation and overflight in the Spratlys. Beijing challenged Freedom of

Navigation operations and patrols from the US and Australia.

Last December China reportedly used audio warnings, flashing lights and flare warnings against Philippine Air Force overflights over several features in the South China Sea under the Kalayaan Group of Islands. The flights are a standard part of the Philippines’s usual maritime patrol in the area, which Manila had been regularly conducting sans Chinese protest for the past decades.

China likewise used audio warnings against other civilian flights in the area.

These recent developments have worsened the situation in the South China Sea, where China has carried out its massive and ecologically destructive island-building amid calls from the international community for Beijing to exercise self-restraint and adhere to relevant regional agreements and international law.

China’s neighbors have collectively criticized China’s show of force amid new realities on the ground, even as Beijing’s spokesmen continue to affirm publicly its commitment to the AseanChina Declaration on the Conduct of Parties in the South China Sea. Asean, composed of 10 Southeast Asian nations, including four claimantstates the Philippines, Vietnam, Malaysia and Brunei Darussalam, have made clear their concerns on China’s islandbuilding activities at the Joint Communiqué issued by the Ministers following a meeting on August 4, 2015, in Kuala Lumpur, Malaysia. They bewailed that these activities have worsened the situation as they have eroded trust and brought tensions to new highs.

Beijing’s relations with its neighbors have soured since 2012, after China took increasingly assertive actions in the disputed South China Sea. A standoff between China and the Philippines broke out that year after Beijing prevented Manila from arresting illegal Chinese fishermen caught poaching in waters off Scarborough Shoal. PNA

WORST-PERFORMING PROPERTY MARKET

Residential and commercial buildings stand in the Boat Quay area of Singapore on Tuesday. A further slide in residential home prices in 2016 may finally persuade the Singapore government to take its foot off the brakes in Asia’s worst-performing property market. BLOOMBERG

ASEAN

Thailand hoping rise in visitors can offset export decline

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HAILAND expects to generate 2.41 trillion baht in tourism revenue this year, a 4.7-percent increase from an earlier target, in a bid to offset the export slowdown.

The higher revenue projection was concluded after Deputy Prime Minister Somkid Jatusripitak met with high-ranking officials of the Tourism Authority of Thailand (TAT).

TAT Gov. Yuthasak Supasorn and his team are confident the tourism industry will continue to grow and generate revenue of 2.41 trillion baht this year, up from an earlier forecast of 2.3 trillion.

At the meeting they said domestic

tourism would be crucial to stimulating the sector, with the revenue target increased to 850 billion baht from 802 billion.

The revenue projection from foreign tourists remains unchanged at 1.56 trillion baht. Somkid said to boost domestic tourism, investment in the sector should rise to sustain long-term growth.

“The economic slowdown may be a good opportunity to develop the industry thanks to full government support that is focused on domestic tourism,” he said.

Somkid instructed the TAT and the Tourism and Sports Ministry to brainstorm with private tourism

operators and related agencies.

The “Quick Win” campaign is aimed at increasing the frequency of travel by offering a lucky draw worth 1 million baht each month for Thai tourists traveling within the country. It will also offer a big reward each quarter.

The TAT is collaborating with tourism-related bodies such as the Thai Hotels Association to offer special discounts on hotel rooms.

Yuthasak expects the campaign, set to be launched next month, will boost tourism revenue by at least 50 billion baht this year.

“We’ll also have big events each quarter to boost tourism sentiment

until year-end,” he said.

Somkid also has an idea to promote night-time tourism by lighting up temples and historic sites, as well as pedestrian street markets.

Tourism is another sales channel for farm products and can increase employment to boost the economy.

Somkid wants to attract more investment in tourism by offering special tax privileges for those investing in tourism and services. The Board of Investment is working on this plan.

Tourism and Sports Minister Kobkarn Wattanavrangkul said her ministry would promote sports along with community-based events and water tourism. MCT

A5

Europeans use EurAsia for Ryder Cup

E

UROPE captain Darren Clarke was keen to stress that the Ryder Cup in September wasn’t in his thoughts heading into the second edition of the EurAsia Cup this week.

“There’s no Ryder Cup stuff going on in the back of my mind,” Clarke said on Tuesday.

It seems his players see it differently.

“One of the main reasons I wanted to play the EurAsia Cup so much was to get invaluable team experience in a Ryder Cup year,” said Irish player Shane Lowry, making it clear where his priorities lay going into the match against Asia starting in Kuala Lumpur on Friday.

“A lot of the lads on our team next week are looking to qualify for the Ryder Cup this year and [this week] gives us a great chance to show Darren what we are capable of and hopefully impress him.”

Lowry is one of a number of Europe’s new breed looking to take their opportunity this week in the absence of the continent’s star names—Rory McIlroy, Henrik Stenson, Justin Rose, Sergio Garcia, Martin Kaymer and Graeme McDowell.

Jamie Donaldson, Victor Dubuisson and Stephen Gallacher all played in the first EurAsia Cup, which finished tied at 10-10 in 2014, and went on to make their Ryder Cup debuts later that year in Gleneagles.

For maybe half of the 2016 team, the same reward is there.

Three days of competition in the sweltering heat at Glenmarie Golf & Country Club— temperatures reached 39 degrees Celsius (102 oF) on Tuesday—will help Clarke discover if the likes of Andy Sullivan, Kristoffer Broberg, Danny Willett, Matt Fitzpatrick and Bernd Wiesberger can be relied on when the stakes are raised at Hazeltine from September 30 to October 2.

What helps Clarke and his European side is that Asia has put up an even stronger team this time round.

Anirban Lahiri and Byeong-Hun An, two rising stars in Asian golf, are in the team captained by Jeev Milkha Singh.

Thongchai Jaidee is also there, backing up his appearance for Team International in last year’s Presidents Cup against the United States in Incheon, South Korea.

That contest counted as Ryder Cup practice for the Americans, who will be looking to prevent an unprecedented fourth-straight victory for Europe in Hazeltine. Now it’s the Europeans’ turn.

It is also a shop window for Asia’s players.

“They know that they are playing on the big stage and the world stage, and from there, they can move on and follow their dream, whether it’s the European Tour or the US [Professional Golfers’ Association] Tour,” Singh said.

“Having an event like this, I think, it’s a big boost for golf worldwide.”

There will be six fourball matches on Friday, six foursomes on Saturday, and then 12 singles on Sunday.

In 2014 Asia came from 7-3 down to salvage an unlikely tie, and Clarke is predicting another close-run thing, which would be a good experience for the Europeans.

“Hopefully, it will be every bit as exciting,” Clarke said. “I don’t know how our nerves will be at the end of the week.”

The Queen of Malaysia, Tuanku Hajah Haminah, is set to play in Thursday’s pro-am. She will strike a ceremonial opening tee shot before joining the players on the course.

Lineups: Asia: Byeong-Hun An, Anirban Lahiri, Thongchai Jaidee, Wu Ashun, Kiradech Aphibarnrat, SSP Chawrasia, Danny Chia, Nicholas Fung, KT Kim, Shingo Katayama, Prayad Marksaeng and Jeunghun Wang.

Europe: Shane Lowry, Andy Sullivan, Chris Wood, Kristoffer Broberg, Danny Willett, Soren Kjeldsen, Matt Fitzpatrick, Bernd Wiesberger, Victor Dubuisson, Lee Westwood, Ian Poulter and Ross Fisher. AP

Sports BusinessMirror

S “M  C,” A

| THURSDAY, JANUARY 14, 2016

mirror_sports@yahoo.com.ph sports@businessmirror.com.ph Editor: Jun Lomibao Asst. Editor: Joel Orellana

B L S. M

RORY MCILROY, here posing with the Race to Dubai trophy, will be meeting Jordan Spieth for the first time this year in Abu Dhabi. AP

LIKE Tiger Woods, Jordan Spieth has seven major victories at the age of 22, including this one US Open at Chambers Bay in University Place, Washington, last year. AP

STRIKING RESEMBLANCE SPIETH USES TIGER COMPARISONS TO STAY GROUNDED

B D F The Associated Press

H

ONOLULU—To compare Jordan Spieth with Tiger Woods is not a mistake because Spieth does it all the time.

That’s what keeps him grounded.

And don’t be shy about throwing Phil Mickelson into that conversation. Spieth thinks a lot about Lefty, too.

As he walked toward a Maui sunset with a lei around his neck and the silver trophy in his hand from an eight-shot victory in the Hyundai Tournament of Champions, Spieth was asked what kept him from getting a big head.

It would be hard to fault him. In the last 10 months, the 22-year-old Texan has won the Masters and the US Open, pursued the calendar Grand Slam like no one before, crossed $20 million in career Professional Golfers’ Association (PGA) Tour earnings and established himself as No. 1 in the world.

He has the golf world at his feet.

He keeps Woods and Mickelson on a pedestal.

“The more you look at Tiger, you look at Phil, you start realizing how far away you are

from one of the best players to ever play the game,” Spieth said. “And if you look at that, it keeps your head small.

“Now hopefully, you have a chance to ask me that when there’s a possibility of it getting big,” he added. “But for now, I think the more I look at, ‘What have they done?’ and ‘What are they thinking about how I’m talking?’ when they’re sitting there with 45 and 79 wins and major championships... you look at guys I come in contact with, my peers on the golf course who are just so much more accomplished, and it keeps me a little smaller.”

The comparisons with Woods are largely about age.

Since 1970 when the PGA Tour began keeping more thorough records, Spieth and Woods are the only players with seven victories at age 22. Woods was about a month younger when he picked up his seventh tour victory, and he had not quite completed two full years as a pro. Spieth is in his fourth PGA Tour season.

Woods won seven of his first 38 starts.

Spieth won seven of his first 77 starts.

Spieth wasn’t doing the math when he walked off the 18th green at Kapalua and was asked about comparisons with Woods. He heard “Tiger” and thought about a decade of

dominance and numbers that will be tough for anyone to match.

“Nowhere near,” he said. “I don’t think there’s any reason to compare. It’s awfully early. We’re excited about where we’re at to start our career. What Tiger’s done I can’t image ever being done. But it’s nice to be in that company.”

Spieth isn’t the first player to be compared with Woods.

Just over four years ago, Rory McIlroy was 22 when he won his first major at Congressional by smashing the US Open scoring record in an eight-shot victory. One major, and the comparisons with Woods had already begun.

Padraig Harrington led the charge that week, saying that McIlroy might be in better position to break Jack Nicklaus’s record of 18 majors because he had at least 20 more years of prime golf. Woods had been stuck on 14 majors and missed the US Open that week for the first time because of leg injuries.

“If you’re going to talk about someone challenging Jack’s record, there’s your man,” Harrington said. McIlroy responded then like Spieth does now. He lowered his head and said quietly, “Paddy, Paddy, Paddy.”

There’s another reason to consider McIlroy

H

SPORTS

while being in awe of Spieth.

At this time a year ago, McIlroy was No. 1 by an even greater margin than Spieth is now. McIlroy had come off a year in which he won the British Open and PGA Championship, and he was headed to the Masters with a shot at the career Grand Slam. He started the year with a runner-up in Abu Dhabi and a victory in Dubai.

And by the end of the year, McIlroy was No. 3.

Woods paid Spieth the ultimate compliment in the Bahamas last month when watching from a cart. “This kid is so smart,” Woods said.

Spieth shows that on and off the golf course, particularly when it involves his place in history.

For all his success, for the magic of his wedges and the pureness of his putting, comparing Spieth with Woods is based on projections and predictions while the kid is preaching patience.

“I just think it’s premature, but I’ll say that probably my entire career,” Spieth said. “There’s just such an age gap that I understand the comparisons are going to be there. I hope they continue to be there. That means I’m still being in the same ballpark as he is.”

For now, that’s not a bad place to be.

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Spieth meets McIlroy for 1st time this year ONOLULU—Fresh off an eight-shot victory, Jordan Spieth gets one week of rest before stepping back into spotlight.

He leaves this weekend for the Abu Dhabi HSBC Golf Championship and his first meeting of the year with Rory McIlroy.

“I didn’t know he was playing. I’ll probably withdraw now,” Spieth jokingly said on Tuesday during a conference call for the Valspar Championship.

McIlroy was in Spieth’s position a year ago—No. 1 in the world (by a greater margin), a multiple major champion, a great start to the year. What he never saw coming was an ankle injury while playing soccer that kept him out for two months and kept him from defending titles in the British Open and Bridgestone Invitational.

He ended the year with a victory in the DP World Tour Championship to win the Race to Dubai.

The ankle injury slowed what could have been an interesting year between Spieth and McIlroy. Three weeks after Spieth won the Masters, McIlroy answered with victories in the Cadillac Match Play and Wells Fargo Championship. Spieth won the US Open. And then McIlroy put on soccer shoes.

“In a season that he considered lost, he still came back and ended up winning the Race to Dubai, the final event. It proves what a player he is,” Spieth said. “I’m sure there’s very few people working harder than he is to make this season his best season yet, which is scary.

Hopefully, I can help prevent that to an extent.”

Spieth is playing Abu Dhabi for the first time before going to the Singapore Open. He returns for the AT&T Pebble Beach National Pro-Am and the Northern Trust Open at Riviera before heading to Florida for the World Golf Championship at Doral and his title defense at the Valspar Championship.

That playoff win at the Valspar Championship seems like a long time ago considering all Spieth has done. He mentioned on Tuesday that it was his first professional victory when he had to make a big putt on the final hole, in this case a 30foot birdie on the third extra hole.

That remains true. He won the Masters by four shots and the US Open with a two-putt birdie. He won the John Deere Classic when Tom Gillis hit into the water in a playoff. He won the Tour Championship by five shots. And he won at Kapalua by eight shots. AP

SB 2987

THE Commission on Elections (Comelec) and its media partners, spearheaded by CNN Philippines and sister company the BUSINESSMIRROR, gather for a snapshot following the signing of an agreement for the conduct of presidential and vice-presidential debates. Dubbed as “Pilipinas Debates 2016,” the pre-election series of nationwide debates seeks to present a forum for candidates to present their platforms and views that the Comelec intends to replicate down to the local level. Photo shows (from left) Pal Marquez, vice president, News and Current Affairs of CNN Philippines; the BUSINESSMIRROR Publisher T. Anthony C. Cabangon; Herman Z. Basbaño, Kapisanan ng mga Broadkaster ng Pilipinas (KBP) board chairman; Comelec Chairman Andres D. Bautista; Ruperto S. Nicdao Jr., KBP president; Armie Jarin-Bennett, executive vice president and managing editor of Nine Media Corp./CNN Philippines; Maria Ressa, CEO and executive editor of Rappler; and Frederick Alegre, vice president for corporate affairs of the BUSINESSMIRROR. Under the agreement, CNN Philippines and the BUSINESSMIRROR, in partnership with Rappler, will play the lead roles in the holding of debates for vice-presidentiable bets. NONIE REYES

The Senate bill that millers fearcould expose raw sugar to the 12-percent value-added tax

256 kbps should be minimum mobile Internet speed–NTC

STRIKING RESEMBLANCE C1

Philippine Sugar Millers Association (PSMA) President Francisco D. Varua told the BM that right now, the technical definition of raw sugar and raw cane sugar in Senate Bill (SB) 2987 is prone to misinterpretation.

“The definition of the Senate version is that raw sugar has a polarity of 99.5 degrees and below. And then, they came up with another statement that raw cane sugar is based on a simple process. That’s correct, too; but that could also lead to another misinterpretation later on the part of the BIR,” Varua said in a phone

C1

ELECOMMUNICATIONS companies will be forced to step up their game once the government implements stricter rules on the sale of broadband services in the Philippines, with the minimum mobile Internet speed now proposed to be set to at least 256 kilobits per second (kbps).

With about 90 percent of Internet users in the Philippines on mobile,

B J R. S J

CABARIOS: “The memo for mobile is a sequel of the first memo saying fixed broadband should deliver at least 256 kbps.

We will adopt the same for mobile broadband.”

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HE Commission on Elections (Comelec) has signed a memorandum of agreement (MOA) with several media partners for the conduct of presidential and vice-presidential debates prior to the May 9 elections.

Comelec Chairman Andres D. Bautista, who led the signing of the MOA on Wednesday, said guidelines for the debates have been drafted and will be presented to the candidates.

The holding of the debates is

consistent with Republic Act 9006, or the Fair Election Act, which allows the Comelec to require national television and radio networks to sponsor at least three national debates among presidential candidates, and at least one national debate among vice-presidential candidates during the campaign period.

This will mark the first time that the Comelec will be holding a series of national debates since the 1992 presidential elections.

Bautista said the objectives of the debates are to assist voters in making informed choices during

election day; encourage candidates to focus on substantive issues and public-policy pronouncements; and provide mechanism for exacting accountability among elected officials on their campaign promises.

Based on the plan, there will be three presidential debates— one each in Luzon, the Visayas and Mindanao—while the single vice-presidential debate will likely be held in Metro Manila. Dubbed as “Pilipinas Debates 2016,” the first debate will take place on February 21 at the Cagayan de Oro S “D,” A

C  A

$20 oil no longer hallucination as world confronts 12-year low

T HEALTH&FITNESS

HE world mostly ignored Ed Morse 11 months ago, when the head of commodities research at Citigroup said oil could drop to as low as $20.

It’s paying attention now that crude has tipped below $30.

Crude futures in the US sank into the $20s for the first time in more than 12 years on Tuesday, hours after BP

PESO EXCHANGE RATES ■ US 47.3250

Plc. said it would slash an additional 4,000 jobs; Petroleo Brasileiro SA cut its spending plan; and Petroliam Nasional Bhd. warned that it faces several tough years. Morse, who wrote in a February 9 research note that oil could fall “perhaps as low as the $20 range for a while,” said in Calgary on Tuesday that the world is now confronting $20 oil.

“The $20 number is something you have to talk about,” Morse said.

“When you’ve seen a $10 price slide and WTI [West Texas Intermediate] is trading just slightly above $30, the likelihood is fairly great. Clearly oil markets cannot maintain a price at below the $30 level for very long.

The question is how much longer.”

WTI fell as low as $29.93 a bar-

rel before settling at $30.44 on Tuesday, the lowest level since December 2003.

Financing challenges

LOW prices could cause problems for US oil companies with covenants that specify certain debt-to-earnings ratios or interest coverage, and will make it even harder for them to

obtain financing to continue operating, said Mark Sadeghian, a senior director for the energy and commodities group at Fitch Ratings Ltd. The Bloomberg Commodities Index fell to the lowest level since at least 1991, as demand from slowing emerging-market economies fails to keep pace with a flood of supply

■ JAPAN 0.4020 ■ UK 68.3704 ■ HK 6.0977 ■ CHINA 7.1970 ■ SINGAPORE 32.9126 ■ AUSTRALIA 33.0274 ■ EU 51.3808 ■ SAUDI ARABIA 12.6173

C  A

Source: BSP (13 January 2016 )

BMReports BusinessMirror

A2 Thursday, January 14, 2016

Millers to Congress. . .

C  A

interview. SB 2987, which has been approved recently by the Senate, seeks to amend Section 109 (A) of the National Internal Revenue Code (NIRC) and provides the criteria to be adopted to define raw sugar as accepted and recognized by the World Customs Organization and the Codex Alimentarius, or the Food Code.

The bill also exempts raw sugar from the 12-percent VAT as imposed by the BIR. Under SB 2987, the term raw sugar means sugar “whose content of sucrose by weight in the dry state corresponds to a polarimeter reading of less than 99.5 degrees, and the term raw cane sugar refers to partially purified sucrose, which is crystallized from partially purified cane juice, without further purification, but which does not preclude centrifugation or drying, and which is characterized by sucrose crystals covered with a film of cane molasses.”

However, Varua clarified that raw sugar and raw cane sugar should be defined as “one and the same.”

The PSMA, he said, is proposing that the Senate adopt the House version of the technical definition of raw sugar and raw cane sugar.

“We propose that [the Senate] should follow the definition done by the House of Representatives—raw sugar and raw cane sugar is one and the same, and it has a polarization of 99.5 degrees and below. The definition should simply be based on polarization rather than on any other issues to simplify everything,” Varua said.

House Bill 5713 states that “Raw cane sugar shall mean raw sugar whose content of sucrose by weight

in the dry state corresponds to a polarimeter reading of less than 99.5 degrees, such that but not limited to blanco directo, premium raw, special raw, washed sugar, sweeping and muscovado.”

Ma. Regina Bautista-Martin, administrator of the Sugar Regulatory Administration (SRA), said in a text message the bill is the response of the Senate and the House to the clamor of sugar farmers across the country to “uphold the long-standing legislative intent that raw cane sugar and raw sugar refer to one and the same agricultural product, which is exempt from VAT.” Sen. Sergio Osmeña III, who authored the bill, said raw cane sugar has been tax exempt since 1987 under the original, amended and reformed VAT laws.

However, he added that the BIR has issued several regulation that veered away from the definition of raw sugar or raw cane sugar, and effectively removed the VAT exemption of the agricultural product.

Varua said upon the release of the provisions of the BIR, the PSMA has filed cases in court to prevent the BIR from imposing the 12-percent VAT, while government officials are settling the issues on the definition of raw sugar.

Should the sugar industry have allowed the BIR to impose the VAT on raw sugar, Varua said it could have affected the local production of the commodity.

“What is happening is that the sugar is becoming globalized already, and if we are going to impose such a VAT on sugar, we are going to diminish the competitiveness of the local sugar industry,” he said. He added that the additional tax could force sugar farmers, particularly small-holder farmers and land reform beneficiaries with less than 5 hectares, to shift to other commodities.

“If you are going to impose the tax, [smallholder farmers] will be out of the business.

It will diminish their income, they will not become competitive and they will look for other agricultural crops that will be beneficial to them,” he said. Martin agreed, saying “it will lower the income of the farmers, which would eventually affect production. That could also cause prices to go higher.”

Martin also noted that, while the Philippines still imposes 5-percent tariff on sugar originating from Asean, the 12-percent VAT will certainly affect the domestic industry’s competitiveness in the region.

“We have the Sugar Industry Development Act [Sida]. There is a fund provided under the Sida to help the industry. Different government agencies are also given funds for modernization mechanization, and improvement of research facilities and state universities for the improvement of production. If you impose the 12-percent VAT, then the assistance you are giving them would become wasted. They [sugar farmers] will have difficulty in their efficiency,” Martin emphasized.

Data showed that the industry produced 15,823,220 50 kg bags of sugar from September 1, 2015 to January 3, 2016. This production translates to P28.94 billion in sales based on the 2015 average wholesale price of P1,829. This means that the BIR could collect P3.47 billion in VAT from this five-month output alone.

news@businessmirror.com.ph

256 kbps should be minimum mobile Internet speed–NTC C  A

the National Telecommunications Commission (NTC) saw it fit to shield consumers from “false advertisements” that were purportedly made by telcos in the past.

The memorandum, which will be promulgated before the national elections in May, lists the rules covering minimum speeds for services advertised as mobile broadband.

Specifically, the memo requires companies to deliver a minimum mobile Internet speed of 256 kbps, the same speed for advertised fixed broadband services.

The said speed is the standard set by the International Telecommunications Union.

“The memo for mobile is a sequel of the first memo saying fixed broadband should deliver at least 256 kbps. We will adopt the same for mobile broadband,” NTC Deputy Commissioner Edgardo V. Cabarios said late Tuesday.

He noted that his office is trying to fast track the implementation of the rules, as they have been delayed for too long.

“This has been long overdue. We promised it to be promulgated last November,” Cabarios said.

Civil and consumer groups welcomed this development, as this will give consumers an edge against telcos.

“We accept the draft memo on mobile broadband in its entirety and hope it gets promulgated soon,” consumer group Democracy.Net.PH Cofounder Pierre Tito Galla said.

Mary Grace Mirandilla-Santos, an independent researcher on information and communications technology (ICT) and telecommunications policies, also supported the regulator’s move to set standards for Internet services in the country, saying that her group will help the government call for volunteers for broadband testing and monitoring.

“We will do a public call over social media so we can encourage more people to actively participate in the monitoring process,” she said.

Law with sharper teeth DEPARTMENT of Trade and Industry Adjudicating Division Officer

Ronald Calderon noted that his office has proposed higher penalties for erring telcos.

“We had a discussion with the Committee on Trade and there is a proposal to amend the act, including penalties. Criminal and administrative penalties on false advertisement of broadband speeds were proposed to increase to P50,000 to P1 million,” he said.

Under the Public Service Act of 1936, the penalty for such complaints is around P200. The law was promulgated in the 1930s, hence the call for an amendment.

The National Economic and Development Authority (Neda) estimates that P200, when the law was promulgated, is equivalent to about P1.4 million in present time.

But for Galla, the regulator has to set the standards first before imposing new penalties, as this would be the basis for the determination of fines.

The government plans to start testing Internet speeds across the country by May. However, it has yet to procure the needed equipment for the evaluation.

“The test will be used for both fixed and mobile broadband. It will be made available—if there is no hitch along the way—we wish to complete the process before the election month. If there will be, it will go beyond the election month, so June,” Cabarios said.

He noted that, under currently published prices, equipment for broadband speed monitoring costs roughly P15 million each. The regulator plans to procure at least three devices.

No problem with new standard

TELCOS offering mobile broadband services see no reason to fear the new standard, after all the new rules are patterned with the international norm for Internet speeds.

Globe Telecom Inc. Spokesman Yolanda C. Crisanto said her company welcomes the proposal of the government, saying that her company’s infrastructure can accommodate such a standard.

“As far as we are concerned, if the government sees it fit to set it there, we have not qualms about it.

Debates. . .

Our speeds go way above 256 kbps already. The minimum speed in our network is about 3.5 megabits per second [mbps],” she said.

She even tagged the new standard as “a bit low,” given that Globe’s network reaches faster speeds than the proposed minimum mobile broadband speed.

“At the end of the day, it is still our consumers that will dictate the market. We create products that will make the consumers happy in terms of their experience. But, we know that even at 3.5 mbps, consumers can still complain— depending their usage of the services,” Crisanto said.

Philippine Long Distance Telephone Co. (PLDT) and Smart Communications Inc. Spokesman Ramon R. Isberto did not give a categorical answer to the BM’ queries, but said mobile broadband speeds are heavily dictated by many factors.

“The problem with mobile and wireless broadband, they are subject to many environmental conditions like distance from the cell site and the number of people in a particular area,” he said.

Fitch Ratings predicts that incumbent telecommunications companies in the Philippines will invest P85 billion to aggressively roll out high-speed mobile and fixedline broadband networks to offer better services.

Internet development in the Philippines has been lagging behind its neighbors in the AsiaPacific region.

Studies conducted by Ookla, an Internet metrics provider, showed that the Philippines has the secondslowest average download speed among 22 countries in Asia with an average speed of 3.64 mbps.

It ranked 176th out of 202 nations around the world. It is eight times slower than the global average broadband download speed of 23.3 mbps.

Separately, Cloud services provider Akamai Technologies found that, while the Philippines might have improved its connection by a percentage point, its overall ranking in Asia still remains at number 13 out of 15, or the third-worst connection in the region.

C  A

City’s Capitol University.

The Visayas leg of the debates will be held in Cebu on March 20, while the Luzon leg has been set on April 24, either in Central or Southern Luzon.

The vice -presidential debate, meanwhile, is set on March 10 with the specific area in Metro Manila yet to be announced.

“The preferred venue for these debates is a school,” Bautista noted.

The first debate will be organized

by GMA-7 and the Philippine Daily Inquirer, while the second debate will be arranged by ABC-5 and Philippine Star.

ABS-CBN and Manila Bulletin are in charge for the holding of the third debate.

The only vice presidential debate will be cohosted by CNN Philippines, BUSINESSMIRROR and Rappler.

Bautista said the Comelec is eyeing to also conduct debates for the candidates jockeying for local posts.

“We will tell the local Comelec to replicate these debates on the local level so we will be sharing with them the rules and regulations that we will be signing today [Wednesday], as well as subsequent rules and regulations that we will be formulating to help our media and civil-society organizations and Comelec field officials to help replicate these debates on the local level,” Bautista said.

He reiterated that the attendance of the presidential and vice-presidential candidates will not be compulsory.

However, the poll chief said he

would advise candidates against skipping the opportunity to present his or her platform of governance to the voters on a nationwide scale.

“We just think that them not showing up is already a message in itself. I believe in freedom. They are free to attend or not to attend. But, obviously, they will also miss out a great opportunity to speak to the Filipino people because these debates will be telecast all over the country,” Bautista added.

He said that all candidates that shall be invited will have a seat allocated for them with their name on it.

“We have not formally communicated with them. I have been reading newspapers and have been hearing some of them say this is a welcome development,” he added.

In Mindanao the possible topics to be debated on include agricultural development, poverty reduction/ asset creation and redistribution, Charter change, and peace and order.

For the round two of the debates, possible topics include disaster preparedness/climate-change adaptation, heath care, education and fighting corruption.

For the final round, the possible topics include traffic and public transportation, electoral and political reforms, foreign policy, tax reforms and national defense.

All topics covered by the presidential debates will also apply for the vicepresidential debate.

BMReports BusinessMirror

news@businessmirror.com.ph

Thursday, January 14, 2016

A3

Czech businessmen back proposed Philippine-EU free-trade agreement

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B C N. P

HE Czech Republic on Wednesday expressed its full support for the forging of a freetrade agreement (FTA) between the Philippines and the European Union (EU), saying this will further spur international trade.

“The Czech Republic is very much supportive of market access.

That’s why we’re supportive of the dialogues for the EU-GSP+ for the Philippines and the FTA,” said Czech Deputy Minister for Foreign Affairs Martin Tlapa during a business opportunity briefing on Tuesday.

The briefing hosted by the Philippine Chamber of Commerce and Industry (PCCI) focused on available business opportunities in the Philippines for Czech businessmen. The Department of Trade and Industry (DTI) announced last December the launch of negotiations for an FTA between the Philippines and EU, three years after going through the so-called scoping stage.

The Czech Republic, which is part of the 28-member bloc, stands to gain from an FTA between the Philippines and EU, as its economy is heavily reliant on global trade.

Tlapa said it has urged the EU to consider the FTA with the Philippines as a “high-priority deal” even as it continues to negotiate with the US for the Transatlantic Trade and Investment Partnership (TTIP).

He said the two parties must

$400M Value of PhilippinesCzech Republic bilateral trade strike a “balanced” trade deal which would entail the opening up of the Philippines’ public procurement sector and the expansion of access to the local farm sector.

The FTA will also force the Philippines to improve its product standards, which is considered an important component of the FTA with the EU. Currently, Czech firm Home Credit Group has invested in the country’s financial services sector. Total bilateral trade between the Czech Republic and the Philippines, which stands at $400 million, has more potential for growth, according to PCCI President George Barcelon.

Possible synergies

DURING the business briefing of the Czech Business Mission, Tlapa

CZECH Republic Deputy Minister of Foreign Affairs for Economic Relations Martin Tlapa tackles the business prospects in the Czech Republic at the Philippine Chamber of Commerce and Industry office in McKinley,Taguig City. ROY DOMINGO

outlined his country’s strengths and competencies.

Aside from posting the thirdhighest growth rate in the EU in the second quarter of 2015, the Czech Republic has expertise in the automotive industry, allowing it to attract investments from major auto makers.

T hree major car ma kers— Volkswagen Group, the TPCA (a

Toyota/PSA joint venture), and Hyundai—have operations in the Central European nation. Tlapa said Czech businessmen are keen on forging partnerships with Philippine companies in following sectors: rail and transport; energy; agriculture and food; and mechanical engineering.

He said the Czech Republic is specifically keen on rail and trans-

port, given the weak state of the country’s infrastructure.

Tlapa said aerospace is another potential area for cooperation between local and Czech businessmen. He said his country currently manufactures small- and medium-sized aircraft and has a long history of manufacturing and hosting aircraft maintenance, repair and operations.

The Philippines, which exports mostly electronic components used for assembly to the central European country, currently enjoys a trade sur plus with the Czech Republic. The Czech Republic, meanwhile, supplies the Philippines with materials in the manufacture of glass; accessories of trailers and vehicles; and milk cream.

Govt releases ₧428B to LGUs T HE Department of Budget and Management (DBM) has already released P428.62 billion in internal revenue allotment (IRA) to local government units (LGUs) for this year. Budget Secretary Florencio B. Abad said he expects the increase in the IRA will also redound to increases in expenditures for infrastructure and social services in the countryside. Abad added these functions have already been devolved to LGUs and will “allow the government to spread development and reduce poverty throughout the country.”

“On top of the CCT [conditional cash transfer], PhilHealth [Philippine Health Insurance Corp.], and the innovative Bottom-up Budgeting projects, the increase in IRA can only mean more capacity for LGUs to provide social services and local infrastructure projects for local communities,” Abad said in a statement. The IRA is a 10-percent increase from last year’s IRA share of LGUs in the total national government revenues. According to Abad, the current IRA is also more than 60 percent more if compared to the IRA level in 2010, which was only P265.8 billion.

According to the Local Government Code (LGC) of 1991, LGUs shall have a 40-percent share from the taxes collected by the national government during the third fiscal year preceding the current year.

This IR A should be automatically released to the LGUs. This is divided among 43,593 LGUs consisting of barangays, municipalities, cities and provinces throughout the country. Abad claims the DBM policy is even better than the policy mandated under the LGC, which

mandates that releases be done on a quarterly basis. He based his claim on the DBM’s policy to automatically and comprehensively release the IRA of LGUs at the start of every year, without any conditions or actions required from such LGUs. Abad also attributed the increase in IRA to more efficient tax collection during the Aquino administration. For the period of January to November 2015, total revenues of the government amounted to P1.945 trillion, according to the Department of Finance (DOF).

Meanwhile, President Aquino said his successor should continue t he i nc re a ses i n t he bud get s for the CCT program, which is another antipoverty program of the national government expected to provide instant assistance to poor Filipinos while giving them incentives to send their children to schools.

At a conference on January 13, Mr. Aquino said the budget for the CCT program increased from P10 billion in 2010 to P62 billion last year. He said the program proved to be effective “in bringing about transformation in the lives of the poorest Filipinos with just a little push from the government.”

From 786,000 households who were beneficiaries of the CCT program, close to 4.4 million Filipino families received the monthly stipends as of last year. For this year, the budget for the CCT program is P62.7 billion to cover 4.6 million households. Mr. Aquino said he hopes the next administration would continue the CCT program.

He took note of the policy on using the CCT as an incentive for fami-

lies to send their children to school that he claims will eventually wean them away from the government’s dole out program as those children graduate high school and become productive citizens.

“One of the key expansions to the CCT program involved covering households with children in high school, based on the finding that those who graduate from high school earn 40 percent more than those who merely attained some elementary education,” Mr. Aquino said. “These same students who are able to attain a higher level of education thanks to the CCT, one day, through their contributions to the economy and through the taxes they remit, will help further break the cycle of poverty, and keep the engines of inclusiveness engaged at full throttle,” the President added.

“In short: through the CCT and other meaningful interventions, we are spurring a virtuous cycle, where empowered Filipinos in turn become the keys through which their fellowmen are likewise empowered.” Mr. Aquino said the latest round of assessments conducted by the National Household Targeting System of the CCT program indicates that almost 1.55 million CCT families, or over 7.7 million, have been lifted out of poverty.

“Given such a development, our National Economic and Development Authority projects the sustained reduction in our poverty incidence in terms of population: from what used to be 26.3 percent in 2009, to anywhere between 18 to 20 percent for 2016,” Mr. Aquino said at the conference organized by the Asian Development Bank.

David Cagahastian

TERUYUKI MATSUMURA (left), director/senior managing executive officer of Autobacs Seven Co. Ltd.; and Eugene Sergio Naguiat, Motech Automotive president, answer questions from the media during the contract signing and news conference of Motech Automotive and Autobacs Seven Co. Ltd. held at Wack-Wack Golf and Country Club in Mandaluyong City. The contract signing came after the Osaka Prefecture government inked a memorandum of agreement with the Philippine Economic Zone Authority on Tuesday. Related story on B2. NONOY LACZA

Peza seeks more Japanese manufacturers B C N. P

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HE Philippine Economic Z o n e A ut ho r it y ( Pe z a ) hopes to entice more Japanese investors to bet on the country’s manufacturing sector, after it signed a memorandum of agreement (MOA) with the Osaka Prefecture on Tuesday.

“This MOA with the Osaka Prefecture will encourage small and medium companies to come here because we need manufacturing support companies like in die and mold,” Peza Director General Lilia B. de Lima told reporters on the sidelines of the MOA signing.

De Lima said Peza is keen on investments in manufacturing given the weak supply chain in the Philippines and the sector’s

p ote nt i a l for job ge ne r at ion .

T he business delegat ion f rom the Osaka Prefecture consisted most ly of sm a l l a nd med iu m fir ms engaged in manufacturing products such as electronics and car parts.

The Osaka Prefecture offers huge trade opportunities for the Philippines as the Kansai region accounts for nearly a fifth of Japan’s GDP. As much as 60 percent of Kansai’s GDP comes from the Osaka Preferecture, according to Peza.

With the inking of the MOA, Peza expects trade relations between the Osaka Prefecture and t he Phi l ippine gover nment to strengthen. The agreement is also expected to boost the Department of Trade and Industry’s efforts to pilot “Small and medium enterprise

[SME] parks” for small Japanese manufacturers inside Peza zones.

The initiative, which is still in the early stages, aims to lure in small firms to help fill the gaps in the country’s manufacturingsupply chain. The government aims to cluster these small firms in one zone to reduce their cost.

The government said it intends to put common service facilities in SME parks as a way of helping small manufacturing firms cut costs. Small Japanese firms are reportedly keen on the clustering approach in industrial parks.

According to an industry source, a pilot zone in an industrial park has already been identified by the government. The source, however, refused to reveal the location of the pilot zone.

A4

Thursday, January 14, 2016

BMReports BusinessMirror

news@businessmirror.com.ph

Manila, Washington defense talks exude optimism with Edca ruling on backdrop

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B R A

EFENSE Secretary Voltaire T. Gazmin emphasized the need for the United States and the Philippines to develop a credible defense posture and strengthen their territorial-defense cooperation given the security challenges in the region, including China’s activities in the West Philippines Sea (South China Sea).

“It is timely for the Philippines and the US to focus on building a credible defense posture and enhancing interoperability for territorial defense, maritime security and maritime domain awareness, and humanitarian assistance and disaster response,” Gazmin said, who, together with Foreign Secretary Albert F. del Rosario, were meeting their American counterparts in the US. “We look forward to further deepening our strategic partnership, and ensure that we maintain an effective alliance that is responsive to the challenges of the 21st century,” Gazmin added, before the start of the bilateral 2+2 meeting with US Defense Secretary Ashton Carter and US State Secretary John F. Kerry. Gazmin’s remarks and those of their counterparts were

sent to military reporters covering Camp Aguinaldo. Gazmin and del Rosario’s meeting with their US counterparts came on the heels of the Supreme Court’s ruling upholding the constitutionality of the Enhanced Defense Cooperation Agreement (Edca) signed in April 2014 with the US that would allow the increased rotational visits of US forces into the country.

The meeting also takes place in the aftermath of China’s more assertive actions in the territory that it disputes with its neighbors, the latest of which was its landings on two occasions of three civilian aircraft in the Fiery Cross Reef.

Vietnam already accused China of threatening safety of civilian flights over the disputed South China Sea by failing to properly inform

DEFENSE Secretary Voltaire T. Gazmin (from left), Foreign Secretary Albert F. del Rosario and US State Secretary John F. Kerry

its aviation authorities of Beijing’s recent test flights to a manmade island also claimed by Hanoi.

Gazmin said the US and the Philippines share common security concern—including territorial and maritime disputes—and working together to address them would even bring peace in the region.

“While we grapple with nontraditional security concerns and

natural manmade disasters, traditional security challenges—to include territorial and maritime disputes—remain to be fundamental concerns,” he said.

“Given this strategic context, we should be in a position to address such common concerns, as well as contribute to regional peace and stability,” the defense chief added.

On the other hand, del Rosario expressed the appreciation of the Aquino administration on the continued assistance of the US in developing the capabilities of the Armed Forces and in the overall efforts of the country to continuously beef up its security.

“We appreciate the increase in foreign military financing and other forms of security assistance in support of our defense-modernization efforts,” he said. Del Rosario said the government is looking forward to a stronger and robust defense alliance and cooperation between the two countries through the implementation of the Edca.

Before the start of the meeting, Kerry reiterated the US position that it has “an ironclad commitment to the security of the Philippines.”

The US secretary also welcomed the court’s ruling on the rotation visit of the US forces in the country and their storage of assets and equipment in selected bases around the country.

“We welcome the Philippine Supreme Court’s decision that the Enhanced Defense Cooperation Agreement is consistent with the Philippine Constitution. It’s a very important decision. And we look forward to implementing this accord, which will increase the interoperability of our armed forces and contribute to modernization

While we grapple with nontraditional security concerns and natural manmade disasters, traditional security challenges— to include territorial and maritime disputes—remain to be fundamental concerns.” —Gazmin and improve our joint capacity to respond to humanitarian emergencies,” Kerry said.

Meanwhile, Carter said the Edca will give the US new opportunities to work with the Philippines, especially on issues of maritime and territorial defense.

He also said the US will continue to sail, fly and operate in the West Philippines Sea. Vietnamese Foreign Ministry Spokesman Le Hai Binh said that although a Chinese Embassy representative did inform the Vietnamese Foreign Ministry about the flights last month, prompting a protest from Hanoi, that did not extend to the Civil Aviation Authority of Vietnam (CAAV) and threatened the safety of civil aviation.

The notification from the Chinese Embassy “cannot substitute China’s notification to the appropriate air-traffic services units of Vietnam in order to ensure the safety and regularity of flight operations,” the CAAV said in a statement late Tuesday.

C h ina Foreig n Min ist r y Spokesman Hong Lei told reporters on Monday that China’s three test f lights to the Fiery Cross Reef—one of seven South China Sea features where China

had carried out extensive land reclamation—were state aviation activities and had no restrictions under international law.

Hong said Beijing informed Vietnamese aviation authorities last December 28 and Foreign Ministry two days later about them.

He said Vietnam had failed to see “the professional, technical and civil nature of China’s inspection and test flights.”

Binh disputed Hong and said that, at the meeting with the Chinese Embassy representative, Vietnam protested and demanded that China cancel the flights.

Binh said the flights violated Vietnam’s sovereignty over the islands, and demanded that China stop any such activities. Vietnam and China both claim the Paracel Islands and the two, along with the Philippines, Malaysia, Brunei Darussalam and Taiwan, claim all or parts of the Spratlys, which sit on potentially oil- and gas-rich resources, and occupy one of the world’s busiest shipping lanes.

China’s recent increasing assertiveness has caused serious concerns among its neighbors and the US, which backs freedom of navigation and overflights in the South China Sea. With AP

$20 oil no longer hallucination as world confronts 12-year low C  A

from investments made during the price boom of a half-decade ago.

Malaysia stands to lose 300 million ringgit ($68 million) for every $1-a-barrel decline in crude, according to government estimates.

ConocoPhillips is losing $1.79 billion in net income each quarter for every $10 drop in prices, according to analysts at Barclays Plc. Petrobras, as Brazil’s state-controlled oil producer is known, cut its five-year

business plan to $98.4 billion, the latest adjustment to the original $130 billion announced last year.

The US Energy Information Administration reduced its forecast for WTI prices for 2016 by 24 percent to $38.54 a barrel. In its monthly Short-Term Energy Outlook, the agency said the oil market would come back into balance in 2017.

The call for oil in the $20s has grown louder. Goldman Sachs Group Inc. gave a 50 percent chance of oil falling to $20 in September

and Morgan Stanley said on Monday that a strong dollar could drop oil below $30. Morse was first with the $20 call, although he said last Februar y that it could happen in the first half of last year, followed by the market balancing. “Right now, the real driving factor is access to capital markets,” Sadeghian said by phone from Chicago. “$20 oil just digs an even deeper hole from where you need to be before the markets open up again.” Bloomberg News

Asean

BusinessMirror Editor: Max V. de Leon • Thursday, January 14, 2016 A5

www.businessmirror.com.ph

The AEC journey begins Asean-EU Perspective

HENRY J. SCHUMACHER

A

FTER decades of preparation, the Asean Economic Community (AEC) came into being with the prospect of great changes in society and business in the years ahead. With their commitment to integration, the 10 economies in Southeast Asia now aim to take the next step in their rise of prominence on the global stage. From a European perspective, it can be confirmed that the interest in Asean integration is high both among European companies operating in Asean and European small and medium enterprises in Europe, trying to find the right strategy into the Asean market and choosing the right Asean country to use as “entrance” to the integrating market. The European Union (EU)-Philippine Business Network (EPBN), in its missions to Europe and in the response from EUbased business, feels the changed dynamics.

However, we all have to be realistic also; no one involved in the lengthy process of creating the AEC will claim that everything they hoped for has been achieved. One need only look at the experience of the EU, a far more ambitious project, to understand how difficult such attempts at integration are.

If Asean has learned one lesson from the EU, it is to avoid even thinking about a single currency, given the stark differences in levels of economic development in the region. But the other lesson Asean has to learn from the EU is that the economic integration was driven by business leaders and not by politicians. Asean integration is still driven by bureaucrats—that needs to be changed. More stakeholders need to be involved in creating the Asean vision and the Asean Secretariat has to be strengthened so it can drive that common vision.

As the region heads toward a greater glow of people and trade, some of the basics of greater cooperation need to be strengthened. And while the EU is not the best example for a single monetary union, as mentioned above, it has many other virtues when it comes to setting high standards and regulating the way things are done in the member-states. Many of the positive things that have happened in the EU have come about because the European Commission has a mandate to streamline regulations and processes, enforce good governance and break down the barriers nations are always trying to put up. The European Commission also does a great service to consumers in many diverse areas, from food safety to data roaming.

We are looking at a very different game in Asean; many countries in the region continue to have tons of nontariff barriers and try to extract as much as possible from other Asean member-nation’s citizens. This is something that needs to be tackled. This is part of the work the EPBN (described above) does: we are strong in advocacy to create win-win solutions in improving the regulatory environment with the aim to achieve a level-playing field for local and foreign business, driving competition that is good for Juan de la Cruz, as he will benefit by getting better products and services at a better price.

Vietnam’s consumer promise beckons as state eases rules

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IETNAMESE mergers and acquisitions (M&A) are forecast to hit a fresh record again this year, spurred by foreign buyers’ interest in the country’s fastgrowing consumer sector.

Announced acquisitions involving Vietnamese companies rose 40 percent last year to $4.3 billion, beating the previous record of $4.2 billion from 2012, data from the Vienna-based Institute of Mergers, Acquisitions and Alliances show. The financial sector had $1.6 billion in deals, followed by consumer, with $1.2 billion.

Deal-making could rise further in 2016 after free-trade agreements (FTAs) came into effect and the government passed streamlined investment rules, according to Baker & McKenzie and Duane Morris Llp. Overseas buyers are attracted by an economy forecast to expand 6.7 percent in 2016, the fastest pace in nine years, and a consumer market where 60 percent of the population is under age 35. Boon Rawd Brewery Co., Thailand’s oldest beer producer, agreed last month to invest $1.1 billion in units of Vietnam’s Masan Group Corp. that make Phu Yen beer and Nam Ngu fermented fish sauce.

“There is a clearer path for people interested in M&A in Vietnam,”

$4.3B Value of announced acquisitions involving Vietnamese firms last year

said Baker & McKenzie (Vietnam) Ltd. Managing Partner Fred Burke, who advised Boon Rawd on the deal, which was the biggest overseas purchase in the country in more than three years. “The way things are going, M&A activity could be even bigger this year.”

Vinamilk divestment

THE country revised its investment legislation over the past several months, in part to make the process of buying local companies quicker and more transparent. An amended

law, enacted last July, cut the time needed to acquire an investment license by two-thirds to 15 days.

Vietnam last December specified 18 industries where foreign investment is allowed, including consumer, property, transport, construction and manufacturing. A June decree said foreigners could—for the first time—buy majority stakes in some kinds of publicly listed companies including brokerages.

ANA Holdings Inc., operator of Japan’s biggest airline, agreed this week to buy a $108-million stake in state-owned Vietnam Airlines Corp.

The government said last March that France’s Aeroports De Paris was interested in acquiring a stake in Airports Corp. of Vietnam, which is overseeing a construction boom.

Vietnam said in October it plans to sell its entire 45.1-percent stake in Vietnam Dairy Products JSC, the nation’s largest listed company, valued at about $3 billion.

Consumer spending

“AS long as the government stays true to its course, inflow of foreign capital should continue to increase, especially in 2016 and 2017,” Ralf Matthaes, managing director of consultancy Infocus Mekong Research in Ho Chi Minh City, said in an e-mail.

Such deals are being driven by an expanding middle class in Vietnam, where consumer spending is forecast to grow 47 percent in the four years through 2019 to $184.9 billion, data from Euromonitor International show. Beer intake alone is set to rise

33 percent over the period to 4.8 billion liters, while consumption in Thailand will fall over the same period, according to Euromonitor.

There is still work to be done. Vietnam’s customs and tax procedures are “torturous” and access to loans needs to be improved, said Oliver Massmann, partner and general director of Duane Morris Vietnam Llc.

Deeper integration

OVERSEAS companies also need to do extensive due diligence on acquisition targets in Vietnam to ensure they are well managed, according to Baker & McKenzie’s Burke. Any worsening of the Chinese market rout could also cause investors to pull capital out of other emerging markets like Vietnam, said Chris Freund, a partner at Ho Chi Minh City-based Mekong Capital Ltd. To live up to its promise, Vietnam will need to keep its commitments made in recent trade pacts, Duane Morris’s Massmann said. A FTA with South Korea took effect at the end of December, while Vietnam and the European Union approved a new FTA last month.

That could help further boost overseas companies’ participation in Vietnam, where disbursed foreign direct investment jumped 17 percent last year to a record $14.5 billion, according to government data.

“The country’s deeper and wider integration into the world’s economy is offering new opportunities for M&A activities,” Massmann said.

“The trend will continue.”

Bloomberg News

Test flights rattling region

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ENSIONS broke out anew in the South China Sea after Beijing announced on January 4 that it had sent a civilian plane to test a 3-kilometer runway it had built on Fiery Cross Reef, one of the sites of China’s island-building activities. This was followed by a statement released by Xinhua on January 6 on new flights carried out by China Southern Airlines and Hainan Airlines.

Vietnam immediately filed a formal protest against the move, saying China’s actions are causing anxiety and could endanger freedom of overflight. The United States and Japan both expressed concerns, with Tokyo saying that China’s unilateral actions are an attempt to change realities on the ground and create a fait accompli.

Foreign Secretary Albert F. del Rosario said last week that Manila would protest the flights and raised concerns on the repercussions of the Chinese provocative activities “if they are not challenged.”

Del Rosario’s British counterpart, Foreign Secretary Philip Hammond, who was in Manila last week for a visit, said the freedom of navigation and overflights were“nonnegotiable”and constitute “red lines” for the United Kingdom.

China has transformed Fiery Cross Reef, a low-tide elevation that generates no maritime entitlements under the 1982 UN Convention on the Law of the Sea (Unclos), into an artificial island with an airstrip and other facilities.

While analysts said China could have been trying to alter the Fiery Cross Reef and other low-tide elevations to gain maritime entitlements, experts said this is not allowed under the Unclos. Scientists and environmental groups worldwide have also scored the island-building as damaging to the Spratly’s well-documented rich marine environment.

Prior to the test flights, Beijing has come under intense scrutiny because of its attempts to restrict freedom of navigation and overflight in the Spratlys. Beijing challenged Freedom of

Navigation operations and patrols from the US and Australia.

Last December China reportedly used audio warnings, flashing lights and flare warnings against Philippine Air Force overflights over several features in the South China Sea under the Kalayaan Group of Islands. The flights are a standard part of the Philippines’s usual maritime patrol in the area, which Manila had been regularly conducting sans Chinese protest for the past decades.

China likewise used audio warnings against other civilian flights in the area.

These recent developments have worsened the situation in the South China Sea, where China has carried out its massive and ecologically destructive island-building amid calls from the international community for Beijing to exercise self-restraint and adhere to relevant regional agreements and international law.

China’s neighbors have collectively criticized China’s show of force amid new realities on the ground, even as Beijing’s spokesmen continue to affirm publicly its commitment to the AseanChina Declaration on the Conduct of Parties in the South China Sea. Asean, composed of 10 Southeast Asian nations, including four claimantstates the Philippines, Vietnam, Malaysia and Brunei Darussalam, have made clear their concerns on China’s islandbuilding activities at the Joint Communiqué issued by the Ministers following a meeting on August 4, 2015, in Kuala Lumpur, Malaysia. They bewailed that these activities have worsened the situation as they have eroded trust and brought tensions to new highs.

Beijing’s relations with its neighbors have soured since 2012, after China took increasingly assertive actions in the disputed South China Sea. A standoff between China and the Philippines broke out that year after Beijing prevented Manila from arresting illegal Chinese fishermen caught poaching in waters off Scarborough Shoal. PNA

WORST-PERFORMING PROPERTY MARKET Residential and commercial buildings stand in the Boat Quay area of Singapore on Tuesday. A further slide in residential home prices in 2016 may finally persuade the Singapore government to take its foot off the brakes in Asia’s worst-performing property market. BLOOMBERG

Thailand hoping rise in visitors can offset export decline

T

HAILAND expects to generate 2.41 trillion baht in tourism revenue this year, a 4.7-percent increase from an earlier target, in a bid to offset the export slowdown.

The higher revenue projection was concluded after Deputy Prime Minister Somkid Jatusripitak met with high-ranking officials of the Tourism Authority of Thailand (TAT).

TAT Gov. Yuthasak Supasorn and his team are confident the tourism industry will continue to grow and generate revenue of 2.41 trillion baht this year, up from an earlier forecast of 2.3 trillion.

At the meeting they said domestic

tourism would be crucial to stimulating the sector, with the revenue target increased to 850 billion baht from 802 billion.

The revenue projection from foreign tourists remains unchanged at 1.56 trillion baht. Somkid said to boost domestic tourism, investment in the sector should rise to sustain long-term growth.

“The economic slowdown may be a good opportunity to develop the industry thanks to full government support that is focused on domestic tourism,” he said.

Somkid instructed the TAT and the Tourism and Sports Ministry to brainstorm with private tourism

operators and related agencies.

The “Quick Win” campaign is aimed at increasing the frequency of travel by offering a lucky draw worth 1 million baht each month for Thai tourists traveling within the country. It will also offer a big reward each quarter.

The TAT is collaborating with tourism-related bodies such as the Thai Hotels Association to offer special discounts on hotel rooms.

Yuthasak expects the campaign, set to be launched next month, will boost tourism revenue by at least 50 billion baht this year.

“We’ll also have big events each quarter to boost tourism sentiment

until year-end,” he said.

Somkid also has an idea to promote night-time tourism by lighting up temples and historic sites, as well as pedestrian street markets.

Tourism is another sales channel for farm products and can increase employment to boost the economy.

Somkid wants to attract more investment in tourism by offering special tax privileges for those investing in tourism and services. The Board of Investment is working on this plan.

Tourism and Sports Minister Kobkarn Wattanavrangkul said her ministry would promote sports along with community-based events and water tourism. MCT

TheBroa

Business

A6 Thursday, January 14, 2016

Whys still hound the Mam G B B F

IVING a glimpse on the line of questioning at the resumption of the Senate’s Mamasapano inquiry on January 25, Sen. Juan Ponce Enrile indicated that senators are likely to focus the investigation on why the 44 Special Action Force (SAF) commandos died during the 11-hour-long firefight with rebels in an area known to be controlled by the Moro Islamic Liberation Front (MILF).

SEN. Grace Poe holds a copy of the report by the Police Board of Inquiry on the botched January 25, 2015, police operation to capture wanted Malaysian Muslim terrorist Zulkifli bin Hir, also known as Marwan, that resulted in the death of 44 elite police commandos, during a news conference on March 17, 2015, in Pasay City. Poe said in the report that President Aquino is “ultimately responsible” for the incident. AP/BULLIT MARQUEZ

Enrile noted that there were no reports that government military forces acted quickly to rescue the encircled SAF commandos already extricating from the MILF area after completing their mission to bag Jemma’ah Islamiya bomber Zulkifli bin Hir, alias Marwan.

Should the President volunteer to appear before the Senate inquiry, the senator said Aquino would likely be asked to enlighten senators on what the Commander in Chief and government forces did to rescue the SAF commandos.

“What did the President do?

He is the leader who triggered everything that happened, he is the head of state and Commander in Chief of the Armed Forces, with wide-ranging authority. Ano b’ang ginawa niya na hindi sinagip ’yung mga tao para kung may mamatay man ay hindi ganon karami?” Enrile asked.

At the same time, Sen. Ferdinand Marcos Jr. deplored the Aquino administration’s attempt to “discredit the reopening of the Senate probe of the Mamasapano incident even before it started.”

In a statement, Marcos noted that Aquino himself said he saw politics behind the reopening of the Mamasapano inquiry, lamenting, “it is unfortunate that instead of awaiting the outcome of the investigation, Malacañang insinuates bad faith in the reopening of the Mamasapano probe.”

Marcos pointed out that President Aquino also admitted the resumption of the probe may produce answers to lingering questions on what really happened in Mamasapano. “If Malacañang really has nothing to hide, it should welcome the reopening of the investigation. I believe majority of the Filipino people sincerely want answers and would be discerning enough to recognize any attempt at grandstanding merely to score political points,” the senator said.

The senators set the reopening of their Mamasapano inquiry to scrutinize new evidence on January 25, exactly one year after the bloody police operation.

Cries for justice

DESPITE the President’s promise to bring justice to the families of the Fallen 44, a year after, his promise remains a promise.

And the Department of Justice (DOJ), which has been tasked to bring their killers before the bar of justice, admitted it is not that easy.

In the investigation report submitted by the National Bureau of Investigation-National Prosecution Service (NBI-NPS) factfinding team to the DOJ, it noted that more than 1,000 participated in the massacre of SAF commandos, but only 90 were identified by witnesses, particularly a star witness known only by the code name “Marathon.”

Marathon provided the NBI a video stored in his mobile phone that depicts scenes from the Mamasapano incident.

Despite Marathon’s admission that he was not the one who recorded the video as it was only shared to him via Bluetooth, the fact-finding team said he was able to prove the due execution and authenticity of the said video.

The 90 respondents belong to the MILF, its rival Bangsamoro Islamic Freedom Fighters and local private armed groups, according to investigators.

They have been charged with the DOJ for the complex crime of direct assault with murder for the death of the 35 of the 44 SAF members belonging to the 55th Special Action Company (SAC).

On the other hand, the NBINPS fact-finding team failed to gather evidence that would point to those responsible for the killing of the other nine members of the 84th SAC.

State prosecutor Alexander Suarez, one of the members of the five-man preliminary investigation panel, said only six out of the 90 respondents have responded to the subpoenas they issued.

Out of the six, four have submitted their counter-affidavits, denying their involvement in the incident, while the two others are expected to submit their own counter-affidavits on January 14, the last day of the preliminary investigation.

“So we hope come January 14 they would appear and submit their counter-affidavit, if not then the complaint will be submitted for resolution,” Suarez said.

Suarez admitted that the panel could not ascertain whether the subpoenas they issued were actually served to the 84 respondents or not, as authorities tasked to serve the notices have not submitted any return.

“Well we don’t know if those subpoenas were received or not, but with respect to those who participated, they told us, of course, the fact that they participated, they received the subpoena and basically the respondents are only in the same area, so I doubt that they did not receive the subpoena,” Suarez pointed out.

Last month the panel considered as submitted for resolution the cases of direct assault with murder against the 84 other suspects following their failure to show up during the earlier preliminary investigation hearings.

It can be recalled that the MILF leadership had turned down calls for it to surrender its members implicated in the killing of SAF 44.

It insisted that, being a revolutionary group, it must be understood that they are not subject to Philippine criminal laws.

They stressed that MILF members found involved in the Mama-

RELATIVES and members of the Philippine National Police Special Action Force mourn the police commandos who were killed in what authorities said was an accidental clash with a Muslim rebel group, on January 29, 2015, at Villamor Air Base in Pasay City. AP/BULLIT MARQUEZ

sapano incident must be punished under their own internal discipline procedures.

Due process

SUAREZ said the failure of the 84 respondents to participate in the preliminary investigation does not mean an automatic filing of a case against them in court.

He explained that the respondents’ right to due process will have to be respected and the evidence presented against them should still be carefully examined.

“There is a clamor for justice, but people should understand it is easy to file a complaint, saying that this particular person who is not even guilty, that he has a hand, he participated, but we also have to determine if we have evidence to say that this particular person, indeed,

participated,” Suarez explained.

“So, in determining probable cause, the minimum requirement of evidence should at least be there to prove that, indeed, this person participated. Baka the public is expecting all of these respondents will be indicted, kaya nga tayo may due process,” he added.

The DOJ panel has, so far, conducted two preliminary hearings to give the respondents an opportunity to answer the allegations against them.

The third and last preliminary investigation is scheduled on January 14.

Suarez told the BusinessMirror that the resolution of the case of SAF 44 is being prioritized as instructed by Justice Secretary Alfredo Benjamin Caguioa and Prosecutor General Claro Arellano.

“We are prioritizing it. Justice Secretary Caguioa and Prosecutor General Claro Arellano instructed us to do so,” Suarez said.

He added that the panel understands the sense of urgency to resolve the case in time for the commemoration of the first anniversary of the tragic incident.

But, the official admitted that, with the voluminous documents and evidence to scrutinize, it is unlikely that a resolution will be released before January 25.

“We will resolve it with dispatch as soon as possible because we know the public is already awaiting, there is already a clamor, moreso that the anniversary [is coming],” he said.

Suarez said the last day of the preliminary investigation is on January 14, thus, if ever the case is sub-

aderLook masapano incident probe

sMirror

www.businessmirror.com.ph | Thursday, January 14, 2016

A7

RELIEVED Philippine National Police Chief Supt. Getulio Napeñas listens to his counsel at the start of the Senate probe on February 9, 2015. AP/BULLIT MARQUEZ

mitted for resolution the panel will only have 11 days to resolve the case in time for the anniversary.

“I don’t think so, with the number of respondents and the voluminous documents; although we are five members of the panel, even if we divide the workload, we have to scrutinize everyone because it’s very hard, it’s not, some people think because they are already respondents, they should already be charged,” Suarez stressed.

He added that “mere presence on the scene of the crime does not [render a person accountable for an offense],” thus, they have to look at the evidence presented against each one of the respondents.

Accountability

THE reopening of the Senate investigation into the slaughter of

the Fallen 44 was pushed by Enrile in the wake of what he called new evidence on the case.

Enrile wants to know where and what President Aquino was doing during the whole day that the commandos were being mowed down, suggesting there was a “paralysis” of the government.

The Committee on Public Order and Dangerous Drugs, one of the two Senate committees that will jointly hold the hearing, has already made a finding of facts when it investigated the case last year, recommending for the prosecution of President Aquino or at least holding him liable over the carnage.

“The President must bear responsibility for giving assent to and failing to prevent the unlawful exercise of official functions

by PDG [Police Director General] [Alan] Purisima in connection with Oplan Exodus,” Sen. Grace Poe’s committee’s executive summary report read.

“As the Commander in Chief of all armed forces of the Philippines, the President exercises supreme operational command of the nation’s military forces. The President also controls all the executive departments, bureaus and offices. He wields the awesome powers of government, and has its vast resources at his disposal,” she added “The President’s decision not to use these resources at that instance must be explained by him.

The President is ultimately responsible for the outcome of the mission,” Poe’s committee also added.

Not only Poe’s committee held Mr. Aquino liable over the slaugh-

ter of the 44 policemen, six of them junior officers, but even by another investigation or an inquiry that was conducted by the National Police, which the President administratively supervises through the Department of the Interior and Local Government.

The investigation was conducted by the force’s Board of Inquiry, which was headed by Director Benjamin Magalong, then the chief of the Criminal Investigation and Detection Group.

“Based on the records, Oplan Exodus was approved by the President and implemented by suspended CPNP [Chief, Philippine National Police] Purisima and the director of SAF [Getulio Napeñas] to the exclusion of Officer in Charge of the National Police Leonardo Espina,” the board declared in its findings.

“The participation of the suspended Purisima in Oplan Exodus was carried out with the knowledge of the President. Records revealed instances when Purisima met with the President and Napeñas to discuss Oplan Exodus,” the board added.

“In dealing with Napeñas, and even Purisima, instead of Espina, the President bypassed the chain of command,” Magalong’s board also said.

While the two investigations declared the liability of the President, not a single case has been filed against Mr. Aquino, and even against Napeñas and Purisima.

As to those who were directly involved in the slaughter, while an investigation has been conducted by the National Bureau of Investigation, which recommended for the filing of charges, not any member of the MILF and the BIFF or even a member of the private armed groups was arrested and prosecuted.

If justice and accountability escape the massacre, the standing demand of the National Polie for the MILF to return all of the equipment of the killed commandos that were looted by its members in order to at least mollify the grieving police organization has not also been fully met.

In March last year, the military managed to collect from people in Maguindanao some of the mission equipment that the killed SAF members lost during the ambush.

The equipment included five night-vision goggles, three laser target pointers, two night-fighting devices, two night-vision monoculars, three handheld Harris radio transceivers, a Nebo Protec laser designator, two gas masks, one kevlar helmet, a vest, a pair of combat boots, lower uniform pants and two gun protective cases.

In February or a month before that, the MILF also turned over to the military 16 of the firearms and other weapons that the SAF lost during the operation. The firearms were later turned over by military officials to the National Police then headed by Deputy Director General Leonardo Espina.

Most of the firearms that were turned over, however, had missing parts or no longer have their original parts. One firearm does not even have its lower assembly, prompting the police and even senators to ask whether the MILF was really serious in its peace talks with the government.

The surrender of the lost firearms, which MILF fighters took from the police commandos after they have slaughtered them, was supposed to be a small token of confidence-building measure from the MILF in order to get the peace talks moving.

The policemen lost a total of 63 fi rearms, including a rocketpropelled grenade launcher. They were also stripped of their combat uniforms and personal belongings, like watches and wedding rings.

The BIFF, which was also involved in the ambush-killing of the commandos, has taken at least 10 firearms, including an RPG launcher, which it said it will never return to the government.

While they are still grieving, relatives of the killed elite policemen regularly wail of not having received benefits and assistance that have been promised to them by the government weeks after the killing.

But the National Police spokesman, Chief Supt. Wilben Mayor, said the families of the killed policemen were being taken care of, with all of the benefits due them being accorded.

He said that as of June last year, the families had already received a total of P69,566,524.88 in lump-sum death benefits from the Office of the President, the National Police and the National Police Commission (Napolcom).

An additional P11 million in cash donations from the Senate, the House of Representatives and the local government of Dasmariñas, Cavite, have also been given.

In addition to the lump-sum benefits and cash donations, qualified beneficiaries were also receiving an average monthly pension of P12,000 from the National Police and another P16,000 average monthly pension from the Napolcom.

The lump-sum benefits received by all SAF 44 beneficiaries included P250,000 from the President’s Social Fund, totaling P11 million; an average of P174,600 Special Financial Assistance from the National Police, totaling P7.6 million; and an average of P218,294.19 Commutation of Accrued Leaves, totaling P9.6million.

Mayor said other individual lump-sum benefits received by each of the SAF 44 families included an average P26,062 in back-earned pension (BEP) from the National Police; an average of P65,759 in burial benefits from the Napolcom; an average of P263,039 Napolcom gratuity; an average of P38,222.36 BEP from the Napolcom; and an average of P557,677.12 insurance benefits from the Public Safety Mutual Benefit Fund Inc. “Each individual SAF 44 beneficiary has received an average of P1,593,656.19 in total lump-sum benefits, depending on rank,” he said.

Mayor said the Napolcom is also granting educational scholarship to deserving children of the SAF 44.

A8

Thursday, January 14, 2016

The World BusinessMirror

news@businessmirror.com.ph

Once accommodating neighbors US sailors held by Iran may be released soon reject hundreds of Syrian refugees W

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EIRUT—After taking in a million Syrian refugees, Lebanon has quietly changed course in recent months, forcing refugees to return to Syria—where they are at risk of persecution or death—or stay illegally, leaving them vulnerable to exploitation and abuse.

The situation is drawing attention at a time when Turkey and Jordan have also tightened their admission policies. A Human Rights Watch report published on Tuesday warned that Lebanon’s new regulations have “set the stage for a potentially explosive situation.”

Even as conditions in Syria deteriorate in a fifth-year of war, Lebanon last week forcibly repatriated 407 Syrians who were stranded at Beirut airport after Turkey tightened its visa restrictions with little notice. It was by far the largest such forced-repatriation to date.

Amnesty International called the action “an outrageous breach of Lebanon’s international obligations,” which require that it not return vulnerable people to a conflict zone.

“Syrians have no value here.

They’ve closed the door on us,” said a 34-year-old refugee from Raqqa, the Islamic State group’s de facto capital in northeastern Syria, who is now living and working as a doorman in Beirut. He refused to be named for fear of expulsion.

Lebanon in 2015 reversed a longstanding open-door policy for Syrians that allowed them to enter the country and reside here relatively unencumbered. At a minimum, they must now pay $200 per adult for a permit that lasts between six and 12 months, to say nothing of the onerous bureaucratic process that accompanies

each application. Nadim Houry, Middle East deputy director for Human Rights Watch, said most of refugees have lost their legal status over the past year because of the new regulations. “That’s not just an abstract notion. If you don’t have legal status, you basically cannot cross any checkpoints.

So men cannot leave the house,” Houry said.

Security checkpoints dot the country’s Bekaa Valley and the north, where most Syrians are living. “That means you have to send the kids to work, because they aren’t usually stopped. It also means if a woman gets sexually harassed, she cannot complain to the police, because she will be arrested,” Houry said. The situation is similar in Turkey, which has over 2 million refugees. Ankara began implementing visa restrictions for Syrians entering the country as part of its efforts to stem the flow of migrants into Europe. That decision reversed a long-standing agreement that allowed visa-free entry to Syrians.

Jordan insists it has kept its borders open to Syrian refugees since the start of the conflict in 2011. However, it has increasingly tightened its admissions policy.

A remote stretch of desert between Syria and Jordan has been the only land access route for Syrian refugees since mid-2013.In recent months, growing numbers of

16,000 the number of refugees gathered on a remote stretch of desert between Syria and Jordan

refugees have amassed in an area near a berm, awaiting entry. Government Spokesman Mohammed Momani said earlier this week that about 16,000 refugees are gathered there. He said 50 to 100 are allowed in each day, with priority given to women, children, the elderly and the ill, adding that “security is the first priority.”

The UN refugee agency warned last December that conditions at the berm are deteriorating and that a majority of those waiting for admission, often for months, are women and children.

The UN refugee agency says Jordan hosts about 630,000 refugees. In recent months, thousands have left by plane to Turkey and from there to Europe, while others have gone back to Syria. The exodus was sparked, in part, by further cuts in assistance to refugees by cash-strapped aid agencies.

Syrians now have two avenues to stay in Lebanon, either by relying on their precarious status as a UN-registered refugee, or by finding a Lebanese citizen to sponsor them. Human Rights Watch said obstacles on the UN route were increasingly pushing Syrians into the murky sponsorship trade.

“The sponsorship requirement is a recipe for abuse,” said Houry.

Of the 40 refugees interviewed for the report, only four have been able to renew their residency since January 2015. Over a million Syrians are registered as refugees with the United Nations High Commissioner for Refugees

(UNHCR) in Lebanon—equivalent to one-quarter of the resident population—though the number has declined over the past year as families find their conditions untenable. They are thought either to have returned to Syria or attempted a perilous escape to Turkey or Europe.

Over 90 percent of the refugees are trapped in debt, and 70 percent live below the poverty line, according to a recent UN study. Antirefugee sentiment has crept into the fragile Lebanese political order as the war in Syria drags on. In October 2014, months before the new residency regulations came into effect, the government voted to stop receiving refugees, and in January, it prohibited the UNHCR from registering any more. The UN estimates around half of Syria’s population has been displaced, perhaps the starkest indicator of the ruthlessness of the war.

Another Syrian refugee in Beirut, who identified himself by his nickname Abu Ali to remain anonymous to Lebanese authorities, said he came to Lebanon in 2012 and this year lost his residency because of the new regulations.

“I can’t put my daughter in school because we are now illegally residing in the country,” he said, speaking at the sandwich shop he works at in Beirut. Short of options in Lebanon, some families have pooled resources to send a husband or son to Turkey, where they can then set off for Europe, seeking asylum. An official at Lebanon’s General Security bureau, in charge of immigration and border control, denied that the new restrictions are aimed at forcing Syrians to return.

“There was a lot of pressure at our border, and we had to organize our criteria for entry,” said the official, who spoke on condition of anonymity in line with regulations.

“It is not to force people to leave.” AP

Snyder activates National Guard in Michigan, seeks federal help

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LINT, Michigan—Gov. Rick Snyder late Tuesday activated the Michigan National Guard to help distribute bottled water and filters in Flint and asked the federal government for help dealing with a drinking water crisis that began months ago.

Snyder’s executive order triggering the Guard’s deployment is intended to bolster outreach to residents, whose tap water became contaminated with too much lead after the city switched its water supply in 2014 to save money while under state financial management. Local officials first declared a public health emergency in Flint last October in response to tests that showed children with elevated levels of lead.

Since then, authorities have struggled to ensure residents have safe drinking water. People in Flint have been told not to drink the water until it is determined to be safe, and volunteers and police in recent days have been going door to door with bottled water, filters and lead-test kits. Snyder on Tuesday also requested and was granted support from the Federal Emergency Management Agency (Fema) to coordinate a recovery plan with other federal agencies that have the programs, authorities or technical expertise to help.

Fema appointed a disaster recovery coordinator to help the state, spokesman Rafael Lemaitre said.

“As we work to ensure that all Flint residents have access to clean and safe drinking water, we are providing them with the direct

assistance they need,” the Republican governor said in a written statement. Guard members are expected to begin arriving as early as Wednesday. More than 30 members will be in place by Friday, enabling American Red Cross volunteers to join door-to-door efforts instead of staffing sites where residents can pick up free bottled water, filters, replacement cartridges and home water-testing kits.

Earlier on Tuesday Genesee County sheriff’s Capt. Casey Tafoya said volunteers and police hoped to get to 500 to 600 houses a day in a city of about 99,000 residents with an estimated 30,000 households.

State troopers and sheriff’s deputies escorted eight teams as they trudged through cold temperatures and 3 inches of snow, with more falling. Flyers were left at homes where no one answered, giving the location of where to pick up the items later.

“We plan to go every day this week, and we’ll continue until everyone has safe drinking water,” state police Lt. Dave Kaiser said.

For more than a year, water drawn from the Flint River leached lead from old lines into homes after the city switched its drinking water. Exposure to lead can cause behavior problems and learning disabilities in children.

Flint has since returned to Detroit’s system for its water, but officials remain concerned that damage to the pipes caused by the Flint River could allow them to continue leaching lead. They also want to ensure monitoring protocols are followed properly this time. AP

AARON DUNIGAN waves to cars as volunteers hand out water at the Joy Tabernacle Church on January 11 in Flint, Michigan. Michigan Gov. Rick Snyder pledged on Monday that officials would make contact with every household in Flint to check whether residents have bottled water and a filter and want to be tested for lead exposure while his embattled administration works on a long-term solution to the city’s water crisis. AP

ASHINGTON—Ten US Navy sailors taken into custody by Iran after their two small boats drifted into Iranian waters were expected to be released, possibly as early as Wednesday morning local time, American officials said.

These officials said that Tehran had assured them the crew and vessels would be returned safely and promptly. Meanwhile, the Navy chief of the powerful Iranian Revolutionar y Guard sa id on Wed nesd ay t hat t he American boats showed “unprofessional acts” for 40 minutes before being picked up by Iranian forces after entering the country’s territorial waters.

The Navy chief, Gen. Ali Fadavi confirmed on state TV on Wednesday that the Guard was holding the crew and their two small boats.

The detainees included nine men and one woman, who were being held overnight at an Iranian base on Farsi Island in the Persian Gulf.

They were expected to be transferred on Wednesday to a US ship in the region.

Referring to the two small boats that had drifted into Iranian waters after experiencing mechanical problems, Fadavi also said the Guard will carry out orders from the country’s top leadership over the case, suggesting the Americans could be freed soon.

But in a subsequent statement, Gen. Ramezan Sharif, spokesman for the Guard, said that “reports about their immediate release is media speculation. I neither confirm nor deny this.” Sharif’s remarks were posted on the Guard website, sepahnews.com.

Sharif said the US sailors will be debriefed.

“If it is determined, after the investigation is carried out, that their action was not intentional, another approach will be taken,” he said. “But If it’s determined, after they are debriefed and interviewed, that their entry (into Iran’s territorial waters) was for intelligence gathering or irrelevant

action, definitely the authorities will take the necessary measures.”

Pentagon Spokesman Peter Cook told the Associated Press the Riverine boats were moving between Kuwait and Bahrain when the US lost contact with them.

US officials said that the incident happened near Farsi Island in the middle of the Gulf. They said some type of mechanical trouble with one of the boats caused them to drift into Iranian territorial waters near the island, and they were picked up by Iran.

“We have been in contact with Iran and have received assurances that the crew and the vessels will be returned promptly,” Cook said late on Tuesday, US time.

The incident came amid heightened tensions with Iran, and only hours before President Barack Obama gave his final State of the Union Address to Congress and the public. It set off a dramatic series of calls and meetings as US officials tried to determine the exact status of the crew and reach out to Iranian leaders.

Secretary of State John Kerry, who forged a personal relationship with Iranian Foreign Minister Mohammed Javad Zarif through three years of nuclear negotiations, called Zarif immediately on learning of the incident, according to a senior US official. Kerry “personally engaged with Zarif on this issue to try to get to this outcome,” the official said.

Kerry learned of the incident around 12:30 p.m. EST as he and Defense Secretary Ash Carter were meeting their Filipino counterparts at the Department of State, the official said.

Officials said the sailors were part of Riverine Squadron 1 based in San Diego and were deployed to the US Navy’s 5th Fleet in Bahrain.

When the US lost contact with the boats, ships attached to the USS Harry S Truman aircraft carrier strike group began searching the area, along with aircraft flying off the Truman. AP

The World BusinessMirror

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Ocean search for Malaysian airliner finds 2nd shipwreck

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ANBERRA, Australia—The undersea search for the Malaysian airliner that vanished almost two years ago has found a second 19th-entury shipwreck deep in the Indian Ocean off the west Australian coast, officials said on Wednesday.

A sonar search for the wreckage of Malaysia Airlines Flight 370 found what appeared to be a man-made object on December 19, the Australian Transport Safety Bureau said in a statement.

A follow-up investigation using an underwater drone captured high-resolution sonar images on January 2 that confirmed that the find was a shipwreck, said the bureau, which is running the search for the Boeing 777 which vanished on March 8, 2014.

The Shipwreck Galleries of the Western Australian Museum conducted a preliminary review of the images and advised that the wreck was likely to be a steel or iron ship dating from the turn of the 19th century, the bureau said.

The sea hunt similarly found what appeared to be a man-made object in March last year. But it wasn’t until May that a closer look confirmed that it was not plane wreckage but the wreck of a cargo ship built in the mid-to late-19th century.

Hundreds of such ships were lost during voyages across the Indian Ocean. Neither ship is likely to be identified because of the cost of mounting closer examinations.

Flight 370 is thought to have crashed in the Indian Ocean with 239 passengers and crew aboard more than 1,800 kilometers southwest of Australia after mysteriously flying off course during a flight from Kuala Lumpur, Malaysia, to Beijing.

Searchers have been combing a 120,000-square-kilometers part of the Indian Ocean since late 2014 but have yet to turn up any trace of Flight 370, although a wing flap was found last July washed up on remote Reunion Island far to the west.

More than 80,000 sq km of the seafloor have been scoured so far, and the search is scheduled to be wound up by the middle of the year if nothing of Flight 370 is found. AP

Thursday, January 14, 2016

A9

Norwegian company cancels power plant plan in energy-starved Nepal

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ATHMANDU, Nepal—A Norwegian company said it has canceled plans to build a $1.5-billion hydropower plant in Nepal to generate electricity in an energystarved country where people get only a few hours of power every day.

The company, Statkraft, said in a statement on Tuesday that it made the decision to withdraw plans for the Tamakoshi Hydropower Project due to increased bureaucratic hurdles for foreign investment in Nepal and

the Himalayan country’s fragile political situation.

The plant would have generated 650 megawatts of electricity for Nepal, where people face rolling blackouts of up to 14 hours daily.

Accord ing to Gha nashya m

Ojha of the government’s Investment Board Nepal, the company had been issued a survey license i n 20 07, a nd h ad completed groundwork including detailed surveys of the area where the project was based.

Though the physical construction of the plant had not started, the company is estimated to have already spent around $13 million, which it will not get back from Nepal, Ojha said.

In its statement, Statkraft cited several factors that led it to cancel the project, including “insufficient transmission capacity for power evacuation and absence of necessary policies and regulatory framework for operationalizing power sales.”

Nepal’s existing power plants are not able to meet demands, and a decade-long communist insurgency followed by years of political instability is blamed for delays in making new ones.

Nepal, which is covered mostly with mountains, has many rivers that are ideally suited for the construction of dams and reservoirs to generate electricity.

The withdrawal from the Norwegian company comes at a time when Nepal is facing severe fuel shortages due to ethnic protests in the south. Protesters have blocked the main border point with India for months, cutting down fuel supplies. Nepal gets most of its oil from India. Fuel is being rationed, causing an increase in prices of

14

the number of hours of blackout every day in Nepal

transport and other goods, and forcing many people to travel on bus roofs.

Negotiations between the government and protesters have not made much progress. AP

South Carolina governor defends immigrants in response to Obama

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ASHINGTON—South Carolina Gov. Nikki Haley used the formal Republican response to President Barack Obama’s State of the Union Address on Tuesday to try softening the tough stance toward immigrants embraced by some of the party’s leading presidential candidates, urging Americans to resist “the siren call of the angriest voices.”

Haley, the US-born daughter of Indian immigrants, said the country is facing the most dangerous security threat since the terrorist attacks of September 11, 2001. That was a reference to the Islamic State group, which has taken credit for attacks in Paris and elsewhere and may have inspired last month’s mass shooting in San Bernardino, California.

“During anxious times, it can be tempting to follow the siren call of the angriest voices,” Haley, mentioned by some as a potential vicepresidential candidate this year, said in her party’s formal response to Obama. “We must resist that temptation.”

Speaking from the governor’s residence for nine minutes, Haley did not mention the Republican presidential race. But the frontrunner so far, real-estate mogul Donald Trump, has called for deporting millions of immigrants in the US illegally. Two other contenders, Florida Sen. Marco Rubio and Texas Sen. Ted Cruz have battled over which of them has the tougher record on the issue.

“Growing up in the rural South, my family didn’t look like our neighbors,” Haley said.

She said no one who works hard and follows the laws “should ever feel unwelcome in this country.” Haley said the US should continue admitting “properly vetted legal immigrants, regardless of their race or religion”—an apparent reference to calls by Trump to temporarily bar Muslims from entering the country. She also hewed closely to Republican demands in the immigration debate, saying: “That does not mean we just flat out open our borders,” and said the US should refuse entry to refugees “whose intentions cannot be determined.” AP

IN this May 13, 2015, file photo, Google’s new self-driving prototype car is presented during a demonstration at the Google campus in Mountain View, California. The self-driving cars needed some oldfashioned human intervention to avoid some crashes during testing on California roads, the company revealed on January 12. AP

In California tests, self-driving cars still require human help

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OS ANGELES—Futuristic self-driving cars traveling along California roads have needed plenty of old-fashioned human intervention to stay safe.

California’s Department of Motor Vehicles (DMV) on Tuesday released reports filed by seven companies the agency gave permission to test prototype vehicles in public. The documents summarized instances in which a human driver had to take over due to technology problems or other safety concerns.

The reports show wildly different levels of success since on-road testing started in September 2014.

Ex per ts in the technolog y said Google, whose cars drove the most by far, performed relatively well, though they also cautioned that the testing typically happened during good weather.

Other companies reported frequent instances in which the person who is required to be in the front seat—just in case—had to grab the wheel.

Nissan, for example, tested just 1,485 miles in public, but reported 106 cases where the driver had to take control. The automaker has said it plans to have “commercially

viable autonomous drive vehicles” by 2020. A spokesman did not return a request for comment.

Google said its cars needed human help 341 times over 424,000 miles. That would be the equivalent of about 10 times per year, given the 12,000 miles the average-US vehicle travels annually.

In 11 of the 341 instances, Google said its cars would have gotten in a crash.

The head of the company’s selfdriving car project said that while the results are encouraging, they also show the technology has yet to reach his goal of not needing someone behind the wheel.

“There’s none where it was like, ‘Holy cow, we just avoided a big wreck,’” said Chris Urmson, Google’s self-driving car project leader.

“We’re seeing lots of improvement. But it’s not quite ready yet,” Urmson said. “That’s exactly why we test our vehicles with a steering wheel and pedals.”

The California DMW, which is writing new regulations for the technology, said it was still reviewing in the reports.

Google reported 272 cases in which the cars’ software or on-

board sensors failed. Though Google did not release detailed scenarios, the problems included issues with the self-driving cars seeing traffic lights, yielding to pedestrians or committing traffic violations. There were also cases where intervention was needed because other drivers were reckless, and several dozen instances of an “unwanted maneuver” by Google’s car.

Bryant Walker Smith, a professor at the University of South Carolina who closely follows selfdriving car developments, said Google’s rate of potential collisions was “not terribly high, but certainly not trivial.” He said it remains difficult to gauge how self-driving cars compare to accident rates among human drivers, since even the best data underreport minor collisions that are never reported to authorities.

While Google’s problem rate is “impressively low,” a trained safety driver should remain in the front seat, said Raj Rajkumar, an engineering professor at Carnegie Mellon University who specializes in self-driving cars.

According to data in Google’s report, a driver typically took

control within one second of the car asking for help.

Drivers at other companies often reacted quickly as well, according to their reports, though Volkswagen Group of America reported that, in one case, it was more than 12 minutes before the person took control of one of its test Audis. Audi of America Spokesman Brad Stertz said he was gathering details on the incident, but believed it was a software glitch that did not affect public safety, and possibly was a false reading.

John Simpson, a frequent critic of Google who focuses on privacy issues for the nonprofit group Consumer Watchdog, said the company’s report “underscores the need for a driver behind the steering wheel capable of taking control of the robot car.”

Google has argued to California regulators that once the company concludes the cars are ready for the public to use, they should not need a steering wheel or pedals because human intervention would actually make them less safe.

Google released its report on Tuesday before the agency posted reports from other companies in what Google described as an effort

to be transparent about its safety record. The company had lobbied against having to report disengagements in the first place, saying the data could be misinterpreted.

The other companies testing self-driving cars on California streets are Tesla Motors, MercedesBenz, and parts suppliers Bosch and Delphi.

Google’s testing mostly involves driving around the company’s Silicon Valley headquarters or the streets of Austin, Texas. The company’s rate of human intervention has improved in recent months, according to its data, but Urmson cautioned that the rate might again rise as Google subjects the cars to more challenging environments and weather conditions.

Google said its cars would have been responsible in eight of the 11 avoided accidents, according to computer modeling the company performed later. In two other cases, its cars would have hit a traffic cone.

Google cars have been involved in nine collisions since September 2014. In each case, the other car was responsible, according to an analysis by researchers at Virginia Tech University. AP

A10 Thursday, January 14, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Fixing our tax system

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HE BM recently published a news item focusing on the country’s efficiency in collecting taxes. It said the efforts of our tax collectors continue to languish in levels far below that typically reported by peers in the region. Tax effort, which represents the government’s efficiency in collecting taxes, remains wanting among our revenue officials.

The Department of Finance (DOF) conceded that our tax efforts are inferior to those of other countries monitored by the International Monetary Fund (IMF). From January to November 2015, the DOF reported a tax-effort ratio of only 13.72 percent. No wonder the IMF has to prod our fiscal authorities to get the Filipino taxpaying public more conscious of their civic duties.

Total revenues collected by the government at the end of November 2015 hit P1.67 trillion, up 7.2 percent from P1.56 trillion reported in the same period in 2014. But the bulk of this amount came from the Bureau of Internal Revenue, which contributed P1.33 trillion. Seeing these figures, we can say the Bureau of Customs greatly disappoints.

In various articles published by the BusinessMirror, our resident tax advocates have discussed the need to rationalize our outdated and overly burdensome tax rates. They pointed out that tax compliance in this country is costly, and there’s a pressing need to refashion and trim the bureaucracy.

Our tax administrators can start their tax-collection efficiency campaign by reviewing government records, which show that 60 percent of professionals and 70 percent of entrepreneurs do not pay their tax dues. Only the fixedincome earners—the salary people—are the ones with 100-percent compliance. Some big companies and rich businesspeople who have the money to pay lawyers and tax experts continue to exploit the loopholes in our tax laws.

Now comes the much talked-about Asean economic integration, which promises to transform the region into an economic powerhouse. If our government wants to maximize the opportunities that a single Asean market may bring, it needs to overhaul our tax system soon. This is one good way to make the Philippines more competitive in the region and more attractive to foreign investors.

Among Asean members, the Philippines currently has the second to the highest individual income-tax rate at 32 percent, next to Vietnam’s 35 percent.

We have the highest corporate income-tax (CIT) rate at 30 percent, while Singapore has the lowest CIT rate at 17 percent. We also have the highest indirect tax in the form of value-added taxes.

The government needs to review other tax schemes, such as withholdingtax rates on dividends, interest income and royalty. It needs to align revenue policies along the single Asean market blueprint, which advocates free flow of trade and capital.

On top of these needed reforms, government must make it easy and convenient for everybody to pay taxes. There’s a need to put a premium on ethical business practices, and government must provide incentives to promote honesty in doing business in our country. We need to address not only tax evasion, but also corruption both in government and the business sector.

The problem with oil John Mangun

OUTSIDE THE BOX

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ETROLEUM has been used in one form or another for at least 4,000 years since the Babylonians used asphalt to pave their streets, much like we do today. Almost everything that has happened with the human race in the last 100 years is related to crude oil.

The increasing need for the use of oil was created by inventions, such as the internal combustion engine that required an efficient fuel. Then, because these engines became more powerful, inventions led to airplanes and ships that could travel the globe.

As we looked closer at what could be derived from crude oil, literally, at least 6,000 products are available today that would not exist without oil.

Oil is the lifeblood of the world economy. Without oil, the technological clock would be turned back at least a century. The problem with oil is that no one knows what a barrel of oil is actually worth.

In 2008 we were warned that oil prices were going to the $250 a barrel level. Now, we are being warned that the price could drop to $10, that is unless Iran and Saudi Arabia go to war, and then $250 is back on the table.

In January 1946 oil traded at

$1.17 ($15.26 adjusted for US inflation). The current price is about $30 per barrel. But what is a proper price for oil? Usually, we price products based on the production cost. But a barrel of oil can cost anything from $1 per barrel to $80, depending on the oil field.

But crude oil is really worthless, until it is refined into a product like gasoline, so maybe the price of gasoline could help us determine what the raw material should cost. But because of government price manipulation for political purposes, a liter of gasoline in Venezuela costs $0.02, while in Hong Kong that same liter is $1.82.

The price of any product or service that is not manipulated or controlled is determined by what the buyer is willing to pay. Supply and demand may influence the buyer, but ultimately a choice to purchase or not at a particular price—even for a critical

product like oil—is made on the buying side.

Since 1973 the Middle Eastern oil cartel set the price and justified this price fixing by supposedly controlling production. I say “supposedly,” because production records are as imaginary as China’s economic data.

Oil companies invested, and global oil dealers traded crude, knowing that the cartel would keep prices in a relatively narrow band to protect profit margins. Further, by agreement with the US government in order to keep the dollar artificially more valuable, oil was priced in US dollars. The US government economically and militarily protected the cartel.

But then, in 1991 the Soviet Union disappeared and by 1999— when oil hit a 20-year low price at $12.85— Russia entered the oil game in full force. While Russia is not a member of the cartel, it cooperated, as price kept rising until 2008 at $140. Then the financial crisis hit, and nobody needed all that oil. Prices fell back to below $50. Then the price rose back to over $100.

But with the financial crisis still in full swing in 2014, suddenly US started big production increases and global interest rates went even lower to zero and below as economic growth was minimal. More important, cartel members, as well as independent oil countries, like Norway, Canada and Brazil, started selling below cartel-set prices to raise cash.

The Middle Eastern cartel, in order to maintain its market share and with low production costs, started cutting prices. Now, for the first time in 40 years, we know what the true market price of a barrel of oil really is based on what buyers are willing to pay.

A major part of the artificial price of oil and the current price drop has been the pricing in US dollars. Think of the cartel pricing its oil in the amount of US dollars required to buy a condominium in New York City. But then, in the last few years—while it may seem silly—China, the biggest importer of oil, comes and says: “How about if we buy oil and pay in renminbi yuan? Besides, condos are cheaper in Shanghai.” This is starting to undermine the worth of dollars for oil purchases and, with the general strength of the dollar, oil priced in dollars goes down.

Certainly, Saudi Arabia, as well as others, can “cut” production and raise prices. But there will always be another country or two that will sell lower. The greatest problem with oil is that once a seller gets a taste of the free markets and sees how to take advantage of it, consumers eventually benefit.

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

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

Turkey’s terrorism problem

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UESDAY’S terrorist bombing in Istanbul wasn’t as deadly as last year’s in Ankara, and there’s at least one other difference that’s encouraging—if such a word can be used for an attack that killed at least 10 people and injured 15 more: This time, President Recep Tayyip Erdogan hasn’t tried to blame it on Kurdish militants.

Turkey deserves all the help and sympathy it can get after this attack on the heart of the country’s vital tourist industry. While the details remain sketchy, it appears that a Syrian-born man carried out a suicide attack next to the 3,500-year-old Obelisk of Theodosius, in Istanbul’s Sultanahmet district.

Afterward, Erdogan warned his people that they must now stand either with the government against terrorists—including both Islamic State and the insurgent Kurdistan Workers’ Party—or with the terrorists. But the government would do well to consider its priorities, too: It can focus on the crucial fight against Islamic State (IS) or allow itself to be perpetually distracted by the fight against the Kurdistan Workers’ Party, or PKK, in northern Iraq and eastern Turkey.

If Erdogan sounds defensive, it’s because many Turks hold him personally responsible for what

they see as blowback from both the PKK and IS. In the case of the PKK, that’s because Erdogan ended the peace process he had been fitfully pursuing until last summer, a decision that—whether by accident or design—helped him to claw back votes for his party ahead of parliamentary elections last year.

As for IS, its adherents hide in plain sight among the 2 million or more Syrian refugees in Turkey. In his attempts to dislodge President Bashar al-Assad from power in Syria, Erdogan turned a blind eye to extremist fighters crossing the border, including IS fighters. This allowed the group to put down roots in Turkey.

In recent months, security forces have at last begun to sweep up IS cells in Turkey and close the border. But as the response to last year’s suicide bombing in Ankara —the worst in modern Turkish

history—showed, the government remains consumed by its focus on a war with Kurds it did much to fan.

In truth, Turkey was always going to be caught up in Syria’s civil war simply because of geography. Yet, the best way for Erdogan to demonstrate his determination to take on IS now would be to de-escalate the Kurdish conflict. Turkey’s Kurds have negotiable demands on language rights and autonomy. And while the PKK carries out terrorist attacks, too, its leader—Abdullah Ocalan—is in Turkish custody and available for

talks. Peace-minded Kurds are represented by elected politicians in the Turkish parliament, and rather than continue to accuse them of “treason,” Erdogan should talk with them about cooperation. Turkey’s Kurdish problem, in other words, is difficult, but solvable.

IS’s goals, in contrast, can never be accommodated. Rather than fight a war on two fronts, Turkey’s security forces should be able to focus all their resources and efforts toward eliminating IS. Bloomberg View

Opinion BusinessMirror

opinion@businessmirror.com.ph

Keep calm and invest in infrastructure

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EORGE OSBOR NE, the United Kingdom’s chancellor of the exchequer, depressed both his currency and his countrymen last week with a downer of speech that blamed “a dangerous cocktail of new threats from around the world” for a considerably gloomier economic outlook than the one he delivered less than two months ago.

He’s not wrong about the state of the world. But he would have done better to focus more on what the UK can do to strengthen its own economy.

For all its post-crisis rhetoric about the need for austerity and budget-balancing, the government has done too little to prepare the UK economy for tougher times.

Its most exciting initiative is the so-called Northern Powerhouse, designed to encourage growth in the north of the country through investment and a “devolution revolution” away from London. But much of the extra money (or power, for that matter) has yet to materialize.

On measures from GDP per capita to health and education outcomes, Britain’s northeast lags the rest of the country.

Osborne also filled in some details about a new commission on infrastructure, which is scheduled to deliver a report in March.

He is correct to reemphasize the benefits of more infrastructure spending, but it’s not as if this is a new idea. The question is how much to spend, and the answer is pretty straightforward: as much as the UK can afford.

The chancellor is also right to warn against complacency. The UK’s economy is doing better than Europe’s, in no small part, because it is open and flexible. There is a reason why so many migrants from around Europe and beyond want to settle there.

That said, there are signs the UK economy isn’t quite as robust as many think—or as the chancellor has claimed.

T he UK economy grew 2.1 percent year-on-year in the third quarter of 2015, lower than forecast. Per capita GDP has barely recovered to its pre-crisis level. Productivity in the UK remains stubbornly low.

Its spending on research and development (R&) remains low compared with that of its major trading partners. And key areas of advanced manufacturing, such as aerospace and pharmaceuticals—areas the government would like to see grow—require high levels of R&D. Britain’s economy cannot help but catch a chill when the global winds blow colder. Yet, all the pressures Osborne cited in his speech— turmoil in China, tensions in the Middle East, low commodity prices —were well-known last fall, when he and other government officials were declaring the UK economy in good health.

In the wake of the financial crisis, there was much official talk about “rebalancing” the UK economy— relying less on consumption and debt and more on investment. If the UK economy remains unbalanced, the government has mainly itself to blame. Bloomberg View

The Child and His Father Msgr. Sabino A. Vengco Jr.

ALÁLAONG BAGÁ

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OD is to be praised for His mighty deeds that reveal His justice, loving-kindness and faithfulness (Psalm 98:1, 2-3, 3-4). His Son, even as a child, teaches us the primacy of God above all else (Luke 2:41-52).

All see the saving power of God THE psalm praises God as mighty king over all. A new song must be sung to extol the new marvelous things God has done in behalf of His people Israel. Like a triumphant warrior, He has achieved victory with His right hand and holy arm.

From the beginning in creation He was victorious over the primordial forces of chaos.

Now His undisputed victory and absolute power is seen by all the nations, as in plain sight they see “the Lord restoring Zion. Break out together in song, O ruins of Jerusalem! For the Lord comforts His people, He redeems Jerusalem. The Lord has bared His holy arm in the sight of all the nations.

All the ends of the Earth will behold the salvation of our God” (Isaiah 52:8-10).

God’s victorious deeds reveal His righteousness rectifying injustice done to His people, as well as His loving-kindness verifying His faithfulness to the covenant promises He made to the house of Israel. “Before the eyes of all your people I will work such marvels as have never been wrought in any nation anywhere on Earth, so that the people...may see how awe-

Antibusiness Tax Code provisions Atty. Benedicta Du-Baladad

TAX LAW FOR BUSINESS Part One

Penalty charges

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VERY first week of the month in 2016, I have committed to write about and discuss the antibusiness provisions in the Tax Code that need to be changed, removed, overhauled or clarified.

I do this with the hope to provide a common understanding, to both the private business and the government, of the difficulties encountered in doing business under a tax system that is unjust, complicated, unclear and unreasonable. I do this with the end-objective that changes to these laws be considered in proposals for tax reform for the new administration, six months from now.

Thus, today, I discuss the civil penalties imposable on assessed deficiency taxes, such as the surcharges and penalty interests which, many believe, are too burdensome, confiscatory and its application confusing.

Too heavy penalty charges encourage more tax evasion

UNDER current tax laws, any unpaid tax, whether intentional or not, shall be imposed with the following penalty charges: 1. A 20 percent per annum “deficiency interest” computed from the date the tax is required to be paid until its full payment. As the term connotes, it is imposed on a deficiency tax—that is, the amount of tax not reported and paid in the tax return such as those arising from tax investigations. (Section 249, Tax Code) 2. A 20 percent per annum delinquency interest for failure to pay the amount of tax due indicated in the return, or amount of tax due for which no return is required, and on deficiency taxes, including surcharges and interests, as appearing in the notice of demand or final assessment

notice. The interest is computed from the due date indicated in the letter of demand, or from filing of the return or in the case where return is not required, from the due date of payment until fully paid. (Section 249, Tax Code) 3. A surcharge of 25 percent for failure to file a return and pay the tax on time, or filing a tax return with the wrong venue, or failure to pay the deficiency tax within the time prescribed in the notice of assessment. (Section 248, Tax Code) 4. A surcharge of 50 percent in case of willful neglect to file a return, or in the case of false or fraudulent return. (Section 248, Tax Code) 5. A penalty ranging from P1,000 to P25,000 for each failure to file the required information. (Section 250, Tax Code) These penalty charges can be imposed singly, or a combination of two or more, or all of the above simultaneously for as long as the circumstances warrant, without regard as to whether the nonpayment arose from simple mistake, inadvertence or intentional.

In a recent decision of the Court of Tax Appeals (CTA) involving an assessment case (Fort Bonifacio Development Corp. v. Commissioner of Internal Revenue, December 21, 2015, CTA Case 7696 and 7728),the following civil penalties were applied and added to the basic tax assessment: 1. A 25-percent surcharge for failure to pay the deficiency tax within the time prescribed for its payment in the notice of assessment;

2. A 20 percent per annum deficiency interest from the time it is required to be paid until its full payment; 3. A 20 percent per annum delinquency interest on the basic tax assessment from the time the demand to pay was made as indicated in the assessment notice until full payment; 4. A 20 percent per annum delinquency interest on the 25-percent surcharge until full payment; and 5. A 20 percent per annum delinquency interest on the deficiency interest accrued until full payment.

For a clearer picture of its application, let us take an example of a taxpayer with an income-tax liability of P1 million (basic tax) in 2011, as indicated in the Assessment Notice and Letter of Demand of the Bureau of Internal Revenue (BIR). The letter demands that payment be made on or before April 15, 2014. The tax has not been paid and it will be paid only on April 15, 2016. Applying the above decision, the total tax liability will be computed as follows: A tax liability of P1 million, which remains unpaid for four years despite a BIR demand letter on the second year, will amount to P2.87 million at the end of the fourth year.

It will increase by 187 percent, or equivalent to an annual simple interest of 46.75 percent on the average.

This is due largely to the overlapping application of the deficiency interest and the delinquency interest, thus resulting to a 40-percent interest per annum, which will apply once a Letter of Demand or Assessment Notice is issued. The 40-percent interest is

inspiring are the deeds which I, the Lord, will do at your side” (Exodus 34:10). God’s marvelous triumph is the restoration of right order and justice, as it is the celebration and redeeming action of His covenant fidelity. As all this is revealed to all the nations, they are all summoned to sing praise to God.

Why were you looking for me?

THE gospel narrative is the only scriptural account that gives us a glimpse of the time between the infancy of Jesus and the years of His public ministry. The story offers us a description of the family of Joseph, Mary and Jesus. They were a religious family; Jesus was brought up in a family life characterized by fidelity to God. The Holy Family is said to make the regular annual pilgrimage to Jerusalem for the big feast of the Passover, going through the weeklong celebration in the holy city, bracketed by the long trek from Nazareth to Jerusalem and back.

Jesus is identified as a child, a niño. At 12 years of age, He is still anticipating to assume the full religious responsibilities of an adult, which takes place at the age of 13.

Jesus, apparently, considers

computed from the time the demand for payment is made until full payment of the tax.

In adopting this position of overlapping application, the CTA relied on the provisions of the Tax Code which require the imposition of both the deficiency and delinquency interest until full payment of the tax is made— which means, therefore, that a tax liability that remains unpaid on the due date indicated in the Assessment Notice or final Letter of Demand shall be slapped with both deficiency interest and delinquency interest at the rate of 20 percent per annum each, or a total of 40 percent per annum or more when compounded.

But the CTA has not been consistent of its position on this. One case decided by the CTA En Bank, (in the case of Liquigaz Phils. Corp. v. CIR, CTA En Banc 1117, September 21, 2015), the court adopted a more liberal interpretation, saying that when the assessment becomes delinquent, the deficiency interest stops to run and delinquency interest begins.

In short, there is no overlapping in its application.

The BIR, on the other hand, supported the overlapping application of deficiency and delinquency interests through its issuance of Revenue Regulations (RR) 18-2013 (November 28, 2013). However, it clarified that if the assessment is timely protested, the delinquency interest does not begin to run until the assessment becomes final, due and collectible. Such that, if after the protest is considered and the tax assessment is upheld, then it is only

Basic Tax Due

1,000,000

Add: 25% Surcharge

250,000

Add: 20% deficiency interest on the basic tax from 4-15-12 to 12-31-15 (4 years)

800,000

Add: 20% delinquency interest on basic tax from 4-15-2014 to 12-31-15 (2 years)

400,000

Add: 20% delinquency interest on the 25% surcharge from 4-15-2014 to 12-31-15 (2 years)

100,000

Add: 20% delinquency interest on accrued interest from 4-15-2014 to 12-31-15 (2 years) Total tax liability

320,000 2,870,000

Thursday, January 14, 2016 A11

The evangelist portrays Jesus much like a hero while still a child doing an exploit. The people in the temple area were astounded at the boy’s understanding and answers.

Their reaction describes the human response of amazement to a manifestation of divine power. Mary’s question to Jesus is a traditional form of accusation: Why did You do this? (cf. Genesis 12:18; Exodus 14:11; Numbers 23:11). himself ready to do so, though His parents clearly perceive Him still as a child. On the way home following the festivities, Joseph and Mary discovered that Jesus was not with them nor with their friends.

On the third day, they found Him in the Temple in Jerusalem, engaged in the informal questionand-answer session the Sanhedrin conducts on feast days. His parents were surprised and unprepared for this behavior of Jesus who did not tell them anything about staying behind in the temple. And Jesus was surprised Himself that they did not know!

I must be in my Father’s house

THE evangelist portrays Jesus much like a hero while still a child doing an exploit. The people in the temple area were astounded at the boy’s understanding and answers.

Their reaction describes the human response of amazement to a manifestation of divine power.

Mary’s question to Jesus is a

from this time that the delinquency interest applies until full payment is made. It abandoned its old position under RR 12-99 that delinquency interest and deficiency interest are not imposed simultaneously.

Interest rate of 20% per annum is too high

ON the rate of penalty interest at 20 percent per annum, this is complained of as too high considering the prevailing interest rates in the market. The rate of interest, which is pegged at 20 percent per annum regardless of the nature and amount of infraction, whether intentional or through deceit or fraud, and regardless of the prevailing market rate, is too restrictive. At present, bank deposits earn from 1-percent to 2-percent interest, while other investment products yield as high as 7 percent to 8 percent only.

The 20-percent interest penalty charge was incorporated in the Tax Code during that time when prevailing interest rates are high. While there is justification in imposing a higher than market rate (to discourage nonpayment of taxes), a 20-percent rate compared to the 1-percent to 2-percent prevailing interest rates is too high as a penalty and is no longer commensurate to the infraction being punished.

Penalties that are too restrictive, especially when imposed on acts of simple mistake or inadvertence, not intentional, not through deceit or fraud, will encourage more tax evasion rather than to encourage more compliance. I say this because, with our complicated tax laws as complicated further by complicated tax regulations and compliance requirements, it is almost certain that taxpayers, no matter how careful they are, will not make a 100-percent compliance. Thus, for taxpayers who cannot afford professional assistance such as the small and medium enterprises, they would rather take the risk of not joining the tax net and do business underground rather than to register and comply but face a bigger chance of being caught and penalized heavily.

Of course, tax, by its very nature, is confiscatory and burdensome.

traditional form of accusation: Why did You do this? (cf. Genesis 12:18; Exodus 14:11; Numbers 23:11). The parents of Jesus were greatly concerned for Him, who was moving out of His traditional dependency as a child.

The response of Jesus is a big surprise. With childlike simplicity, He seemed to presume that Joseph and Mary would be the first persons to understand what He was doing.

Indeed, they were still a long way from fully comprehending God’s design for their son. Jesus was assuming already His responsibilities in this world. It was in the Temple in Jerusalem that He declared to the world His fundamental option to live completely according to the will of His heavenly Father.

He is in the world to live as in His Father’s house. There is no conflict between the relationship of Jesus with Joseph and Mary and God’s primacy for Him. He is faithful to all of them: in His pre-initial public appearance, He wants to make a statement on the centrality of God in His life, even as He returns back home to Nazareth to a life of loving obedience to His parents.

Alálaong bagá, the child Jesus in His wisdom and by example is teaching Joseph and Mary and all of us that our blessedness and fulfillment lies in living as in our Father’s house, where there is wonderment and praise for the loving-kindness of God, and attentiveness and obedience to His every word. The child in His Father’s house is singing a song of praise to God’s salvific love.

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

But, I have always believed that, if put in proper structure, it can even be a booster to business, removing inequalities in the playing field, and promotes efficiency.

Recommendations for tax reform

CHANGES in the civil penalties imposed for deficiency and delinquency taxes should form part of the taxreform package and it should have the following features: Penalty interest, both deficiency and delinquency interest, should be benchmarked to prevailing market rates or at least, near market rates to cover for the cost of money lost by the government due to nonpayment of the tax. Then, a certain percentage increase shall be added, say 3 percent to 5 percent for example, as a form of penalty for nonpayment. In the case of nonpayment with intent to evade or in case of fraudulent returns, the increase shall be a higher rate than those committed through mistake or inadvertence, or in cases involving highly technical and difficult questions of law.

There should be no overlapping application of deficiency interest and delinquency interest to avoid compounding the penalty. Deficiency interest shall only be imposed from the time the tax is required to be paid until the date stated in the Letter of Demand and Assessment Notice, or if protested, from the time the assessment becomes final, due and demandable. The delinquency interest, on the other hand, shall be imposed from the date indicated in the Assessment Notice andLetter of Demand or from the finality of the assessment up to full payment of the tax.

The author is the managing partner and CEO of Du-Baladad and Associates Law Offices (BDB Law), a member-firm of World Tax Services Alliance.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter.

Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at dick.du-baladad@bdblaw.com.ph or call 403-2001 local 300.

2nd Front Page BusinessMirror

A12 Thursday, January 14, 2016

www.businessmirror.com.ph

All systems go for reproductive-health initiative

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B C M-C

EALTH Secretary Janette Garin on Wednesday declared all systems go for the implementation of the Responsible Parenthood and Reproductive Health (RPRH) Law, despite a P1-billion cut in the Department of Health’s (DOH) budget.

Brushing aside worries that the budget cut would adversely affect the RH law beneficiaries, particularly the marginalized workers, Garin said the DOH will continue to procure family-planning supplies— contraceptives and condoms—using the P337.5 million for the program sourced from the 2015 budget.

The amount, she said, was originally intended to purchase additional blood-pressure apparatus for barangay health workers.

Garin said there are three “big foreign partners” that have committed to help the DOH in its family-planning campaign. She refused to name the agency’s three international partners.

“The Aquino administration, through the DOH, assures the full implementation of the reproductivehealth law, despite this challenge. We

₧1B ₧

Amount slashed from Department of Health budget

can find the resources to keep the program going, because the President is supportive of the RH initiative,” Garin said.

On January 4 the DOH learned that in the 2016 General Appropriations Act, the budget for its Family Health and Responsible Parenting program was reduced to P2.2 billion, from P3.2 billion.

“The P1-billion cut would adversely affect the procurement of family-planning commodities. The remaining P2.2 billion is intended for the purchase of vaccines, micronutrients, medicines and dental supplies,” Garin said.

She explained that realigning the remaining part of the P2.2 billion for the purchase of family-planning commodities is not possible, because this will mean sacrificing immunization, nutrition and other health programs, which already have identified beneficiaries. “These programs are important in meeting our country’s commitments for the Sustainable Development Goals,” she added.

However, Garin said the DOH is looking for other sources of funds for its family-planning program, which may include agency savings identified and declared at the end of the year, as well as assistance from development partners.

Republic Act 10354, or the RPRH Law, was signed into law in 2012, but it was contested by concerned citizens at the Supreme Court. In 2014 the High Court subsequently declared the law constitutional.

Considered a landmark health legislation of the Aquino administration, this law ensures access to reproductive-health information, lifesaving commodities and services to reduce maternal mortality and empower families to decide the number and spacing of their children.

IN this July 11,2014, file photo, students listen to the correct use of a contraceptive at a United Nations Population Fund booth during a daylong activity to mark the World Population Day in Mandaluyong City. The day was marked with lectures on reproductive health care and handing contraceptives to help increase awareness to the growing world population. AP

Enrile clarifies budget cuts to boost air-defense assets S B B F

ENATE Minority Leader Juan Ponce Enrile confirmed the reported multibillion-peso realignments in the P3-trillion 2016 national budget, but insisted he had nothing to do with the majority senators’ decision to slash and reallocate P1 billion from the Department of Health (DOH) to the Armed Forces of the Philippines (AFP). “’Yung P1 billion na nilagay sa AFP? Hindi ko alam ’yun. Ang pinacut ko para bigyan ng pera ’yung AFP, tinanggal ko ’yung P4 billion doon sa budget ng DPWH [Department of Public Works and Highways],” Enrile said in an interview over the weekend.

Enrile admitted he also moved to “cut the calamity or contingency or confidential fund [of the Office of the President]; ginawang P3 billion, I removed P1 billion, iniwan ko sa kanya P2 billion.”

“Then I cut P5 billion from the CCT [conditional cash transfer],”

Enrile added, referring to the controversial cash transfer dole-out scheme continued by President Aquino from the previous administration. “Binuo ko ’yung P10 billion to add for an additional aircraft for the Air Force.”

He recalled appealing to his Senate colleagues to retain the realigned funding for much-needed air-defense assets in the face of brewing territorial row with China in the West Philippine Sea (South China Sea).

“Sinabi ko sa kanila, iwanan ’yang P1 billion sa Air Force sapagkat nakakahiya tayo sa buong mundokung ganyan ang paningin natin sa safety and security ng bansa natin,” Enrile said.

He then said an option for Congress: to scrap the air-defense funding altogether holds the risk of exposing weakness in protecting Philippine territory amid growing Chinese aggression.

“These people do not know what they’re doing about the security of the country,” said Enrile, who

served as longtime defense minister under late-Presidents Ferdinand Marcos and Corazon Aquino. “Nangyayari na yung problema ng China, ’yung problema ng Saudi Arabia at Iran. Puputok lahat ’yan, from now until 2030. Eh wala tayong preparation? Walang nag aaral?

Anong importance ng lahat ng ginagawa na limpak limpak, bilyon bilyong infrastructure kung sasalakayin tayo ng kaaway natin na China kung hindi natin maprotektahan [ang Philippine territories].”

In the same interview, Enrile also disclaimed any role in the reported P1-billion cut in the DOH budget for reproductive health (RH) programs to control population growth.

“Hindi ako nag-cut nunpara ilagay ’yun dun sa Air Force. I do not know the purpose. I’m finished with the RH. Wala na akong issue dyan. Sinasabi ko sa inyo na ngayon ko lang nalaman na ’yung P1 billion na iniwan nila para sa Air Force ay kinuha nila sa RH,” Enrile said.

Balisacan chides DOE for lack of leadership

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HE National Economic and Development Authority (Neda) strongly urged the Department of Energy (DOE) to take the lead in coordinating with other industry players in crafting a blueprint that will outline the long-term development plans for the power sector.

Economic Planning Secretary Arsenio M. Balicasan said during the second day of the Energy Policy and Development Program (EPDP) conference the country would enjoy uninterrupted and affordable power supply if all government agencies within the power sector work together.

“If we want to sustain the growth of our economy from last year, then we must all plan very well. There should be a blueprint for the energy industry. The DOE must be on top of this,” Balicasan said.

He noted the lack of coordination

among the DOE, Energy Regulatory Commission (ERC), National Grid Corp. of the Philippines (NGCP) and other agencies in crafting plans and programs for the oil and power sectors.

“The DOE should have an overall development plan and it should let other agencies and other sectors to get involved. You have new power plants, but you don’t have transmission lines. Where is coordination there? There is growth in manufacturing, then DOE projections should also include that, as well, in its plan,” Balisacan pointed out.

The Neda spearheaded the EPDP, which aims to help the government develop policies and strategies that will make cost-effective use of resources; promote sustainable energy development; and make electricity accessible and affordable to Filipinos.

Balisacan said the EPDP is Neda’s

own way of crafting an energy policy program to contribute to national policy-making. A workshop was recently convened to review the energy development areas prioritized by the government for evidence-based policy-making. “[The] EPDP was set up so that we would have a better understanding of the power industry.

Every policy should be based on evidence. With enough evidence and data, the level of success of any particular policy is higher than those not based on data,” Balisacan added.

One important issue that continues to hound the power sector is the cost of electricity in the country.

“The cost of energy must fall.

If there is more growth expected, then it means we have to put in more power capacity. We want an affordable electricity 24/7,” he said. Lenie Lectura