Issuu

From Data-Privacy Rights to Privacy Processes

ompliance officers are hearing more and more chatter these days about the European Union’s (EU) impending new General Data Protection Regulation (GDPR), coming into effect in May 2018. Rightly so. The GDPR is likely to be a transformative experience for many businesses dealing with personal data. For all practical purposes, the GDPR’s reach is global, including the Philippines, including the companies handling European data. The potential penalties for noncompliance are enormous. The procedural challenges to achieve compliance are huge, same as in the Philippines, where the implementation of the data-privacy law has commenced already. And the appetite for tough enforcement of the GDPR is high among regulators and the public alike, because of one simple fact: companies keep screwing up data privacy. Why is GDPR compliance so daunting? Because it’s about more than data privacy alone. “Compliance” with the GDPR is really about empowering your customers to exercise a set of rights the EUgrants to its citizens. Those rights allow EU citizens to control information about them

Kirill Makarov | Dreamstime media partner of the year

United nations

2015 environmental Media Award leadership award 2008

»continued on A12

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

Tuesday, November 7, 2017 Vol. 13 No. 27

Tourism earnings double in August on China factor By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

ARNINGS from tourists in the Philippines recovered in August 2017, powered by the increase in arrivals from mainland China. A report from the Department of Tourism (DOT), a copy of which was obtained by the BusinessMirror,

showed visitor receipts doubling to P32.47 billion in August, after coming from a low base of P15.7 billion

‘Embrace weaker peso’

he government should welcome a weak peso rather than fear it if it wants to cut poverty faster and attract more foreign investments, according to an economist from the University of the Philippines (UP). In a presentation at the AyalaUP School of Economics (UPSE) Forum on Monday, National Scientist and UP Professor Emeritus Raul V. Fabella said a weak peso will make the Philippines an attractive investment destination and will encourage businessmen to consider long-term investments in the country. To significantly reduce poverty incidence in the country, Fabella said the ratio of foreign investments to total investments should

go up to as much as 30 percent. “Even up to now, C h i n a’s [foreign] investment rate is around 40 percent. With 30 percent, we will be able to improve our infrastructure. To make it sustainable, the Philippines should have open markets and, I claim, that we should embrace rather than fear the weak peso,” he said. However, Foundation for Economic Freedom Vice Chairman Romeo Bernardo said he does not agree that a weak peso can help cut poverty faster. Bernardo also added allowing the peso to depreciate further just to make the country’s business environment more competitive could hurt the poor. See “Peso,” A2

Access to bank financing still MSMEs’ big headache By Cai U. Ordinario @cuo_bm

& Elijah Felice E. Rosales @alyasjah

By Henry J. Schumacher

s President Duterte puts micro, small and medium enterprises (MSMEs) on top of his agenda at the upcoming Asia-Pacific Economic Cooperation (Apec) Summit in Vietnam, local businessmen lamented that the lack of access to financing is making it difficult for local MSMEs to barge into the international stage. In an interview with the BusinessM irror at the sidelines of the Ayala-

University of the Philippines School of Economics Forum on Monday, Philippine Chamber of Commerce and Industry (PCCI) President George Barcelon said many MSMEs do not have access to funds that would help them expand their business. He added this prevents them from using as leverage, for instance, information technology, which can propel their businesses to the international scene, as this would require additional capital. “We’re talking to the banks, financial institutions, to be more flexible with the small companies,” said Continued on A2

PESO exchange rates n US 51.2700

₧32.47B The country’s tourism receipts in August, pushing the January-toAugust total to P212.33 billion, up 30 percent

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business news source of the year

P25.00 nationwide | 5 sections 30 pages | 7 days a week

Massive infrastructure within six years Manny B. Villar

THE ENTREPRENEUR

in August 2016. Earnings in August 2016 dropped a whopping 28.6 percent from the

mong the major undertakings of any administration, it is infrastructure that probably presents the biggest challenges, for two reasons. First, the Constitution limits the presidential term to six years. Second, infrastructure projects generally take a long time to implement—from planning to selection of contractors through lengthy bidding procedures to actual construction, which is often delayed because of lengthy negotiations for rights-of-way.

See “Tourism,” A2

Continued on A8

BMReports

Customs bureau wrestles with multifaceted issues By Rea Cu

Smuggling issue

@ReaCuBM

Part Two

HE Bureau of Customs (BoC) incurred the public’s ire for the entrance of a shipment containing shabu, or methampetamine hydrochloride, in the country with a value of P6.4 billion. The illegal drugs went through the green lane where goods and cargo underwent minimal inspections. The illegal drugs entered under the watch of former Customs Commissioner Nicanor E. Faledon. Congress has ordered a probe on Faeldon and the BoC because of this. Earlier, senators learned that BOC personnel allegedly violated standard operating procedures in the seizure of the P6.4 billion worth of shabu, raising concerns that it could weaken the case against suspects involved in the illegal-drug shipment. The BoC was said to have opened the 23 crates containing the substances ahead of the arrival of Philippine Drug Enforcement Agency (PDEA) operatives. Only the latter were authorized to open the shipment, not the BoC. During the probe, a BoC official offered to quit his post amid bribery allegations. Customs Intelligence and Investigation Service Director Neil Anthony Estrella said he decided to submit his courtesy resignation out of delicadeza while insisting innocence over allegations made by Customs Broker Mark Taguba.

A man with a camera prepares to take a video of cargo at the Manila International Container Port. Having been under public scrutiny, the Bureau of Customs announced several reforms to curb corruption and smuggling in the processing of goods entering the country’s ports. NONIE REYES

Estrella also tendered his resignation during the probe.

Initial probe

T HE De pa r t me nt of Ju st ice (DOJ) began early this month its preliminary probe into the string of drug and criminal charges filed against Faeldon and other former BoC officials. Aside from Faeldon and Estrella, also named as respondents in the PDEA complaint were former BOC director Milo Maestrecampo, intelligence officers Joel Pinawin and Oliver Valiente, Manila International Container Port (MICP) district collector lawyer Vincent Phillip Maronilla and Faeldon’s fiancee, lawyer Jeline Maree Magsuci. BOC employees Alexandra Ventura, R andolph Cabansag,

Dennis Maniego, Dennis Cabildo and John Edillo have been summoned to appear during the proceedings and answer the allegations against them. In its complaint, the PDEA sought the indictment of Faeldon et. al. for alleged conspiracy to import illegal drugs and protecting or coddling of drug traffickers under Republic Act 9165. Faeldon has sought the dismissal of the criminal charges filed against him and several others before the DOJ. He submitted a 27-page counter-affidavit denying the allegations hurled against him. The counter-affidavit was filed following the decision of the DOJ to deny his motion to dismiss the complaint on grounds of lack of jurisdiction.

EVEN before Faeldon, the BoC has been castigated for providing a playground for smugglers. Faeldon himself has cited that the BoC saw a P50-billion loss in revenue due to smuggling. According to the former customs chief, the smuggling of motor vehicles, oil products and cigarettes were among the top sources of revenue leakage in the country. From the collection goal of the BOC amounting to P467.9 billion for this year, the leakage is equal to at least 11 percent. Based on data assessed by United States-based think tank Global Financial Integrity and the International Monetar y Fund, the BoC was to miss P22.5 billion from oil smuggling alone, P16 billion more from illegal cigarette sales and another P21 billion from vehicle smuggling. According to the BOC, the revenue loss from all three big-ticket items translates to some $3.85-billion annual import-revenue loss from smuggling, or 35.4 percent of the current revenue target. This translates to P165.5 billion in revenue losses at an exchange rate of P45 to the greenback. O i l smu g g l i ng i s com mon through pilferage or siphoningoff of oil from tankers to barges on the high seas. According to the report, oil is loaded onto trucks for delivery to depots. Luxury vehicle smuggling, on the other hand, is carried out through Continued on A2

n japan 0.4496 n UK 67.0201 n HK 6.5716 n CHINA 7.7243 n singapore 37.5797 n australia 39.2267 n EU 59.5655 n SAUDI arabia 13.6717

Source: BSP (6 November 2017 )

A2 Tuesday, November 7, 2017

BMReports BusinessMirror

www.businessmirror.com.ph

Customs bureau wrestles with multifaceted issues Continued from A1

misdeclaration, misclassification and undervaluation. Cigarette smuggling robs the government of revenues from the nonpayment of duties and taxes, aside from the use of fake ta x stamps of the Bureau of Internal Revenue.

Lapeña’s watch

SINCE being recently appointed

Tourism. . .

Continued from A1

previous year, as arrivals from China slipped 6 percent year-on-year (YoY), in reaction to the ruling by the Permanent Court of Arbitration on both countries’ dispute over the South China Sea. (See, “Chinese arrivals fell 20 percent in August on South China Sea ruling,” in the BusinessMirror, October 26, 2016.) August 2017, on the other hand, saw the number of Chinese visitors increasing 55 percent. The August 2017 visitor receipts, along with July’s hefty contribution of P33.53 billion, helped boost the cumulative earnings from January to August 2017 to P212.33 billion, up some 30 percent from the same period in 2016. On a monthly basis, South Koreans continued to be the top spenders among tourists who visited the

Peso. . .

Continued from A1

A weak peso would make imported products more expensive. This is a major concern, especially for a country like the Philippines—a net food and fuel importer. “[A weaker peso] could lead to labor demands for higher wages and feed inflation further. This will not only negate the depreciation we need but could lead to a real appreciation, not to mention the impact of inflation on the poorest sectors,”Bernardo said. But Fabella said the Philippines could take a cue from China, whose economic success was largely due to its decision to allow the entry of more foreign investors. He added that China’s economic success was ushered in by Deng Xiaoping, who opened

Govt. . .

Continued from A12

Transportation Undersecretary Cesar B. Chavez told the BusinessMirror his agency is looking at placing in a new maintenance provider in six month’s time. Initial terms, he said, would include a concession period of as long as five years.

as the new customs chief, Lapeña has ordered the reshuffling of BoC employees and officials in a bid to shake up the bureau clean. Eight district collectors and 30 section chiefs of the BOC have been relieved from their posts, following the earlier pronouncement of Lapeña that he will be relieving any officer who will disregard his marching order to stop corruption and benchmarking in their respective ports.

The district collectors who were reportedly axed from their post include the following: Elvira Cruz of the Port of Cebu, Romeo Rosales of the Port of San Fernando, Julius Premediles of the Port of Limay, Jose Naig of the Port of Iloilo, Carmelita Talusan of the Port of Subic, Divina Garrido of the Port of Legazpi, Halleck Valdez of the Port of Zamboanga and Tomas Alcid of the Port of Appari. The order was contained in a

Philippines in August, contributing P9.86 billion. No data was provided by the DOT regarding the comparative period in August 2016, however. In second place were mainland Chinese, who spent P9.3 billion in August 2017, followed by Americans at P2.6 billion, the Japanese at some P2.4 billion and the Taiwanese at P2 billion. Other high-spending tourists were Saudi Arabians, Germans and Indians, who spent more than P200 million in the country during their stay in the Philippines. Tourists in August this year spent an average of 5,926.39 every day, up 44.7 percent from P4,095.22 in August 2016. Said tourists also stayed an average of 10.16 nights from 9.65 nights YoY. For their entire stay in the country, each tourist spent an average of P60,212.16, a 52.4-percent jump from August 2016’s average capital expenditure of P39,519.79.

For the last three months to August, tourists from Taiwan were the highest per-capita spenders in the Philippines, with expenses running to P100,079.95; followed by visitors from China at P97,302.11; Ma laysia, P88,404.70; South Korea, P69,523.37; and Singapore, P54,162.30. There were 545,254 tourists who arrived in the Philippines in August 2017, up 8.5 percent YoY. South Korea maintained its lead as top source market for tourists, with 141,869 arrivals during the said month, although this was almost 4-percent off from August 2016 arrivals. This was followed by China at 95,687, representing a huge 55-percent jump YoY; followed by Japan at 64,114 (+3.32 percent); the United States, 61,415 (+11.5 percent); and Taiwan at 19,993 (down 7 percent). DOT officials noted that August is usually a lean month for Philippine tourism, and will likely

pick up between October and November until the first quarter of the new year. Arrivals from China have been steadily increasing since Beijing lifted its travel ban to the Philippines in October 2016, following the state visit of President Duterte. The travel ban was imposed in 2014, due to the spate of kidnappings and killings of Chinese citizens in the Philippines. That year, 14 Chinese citizens were kidnapped in the country, five of who were found dead. There were also bomb threats made against China’s Embassy in Manila that year, further escalating the need of Beijing to issue the travel ban. Beijing has committed 1 million Chinese tourists to the Philippines, raising the overall arrivals target of the DOT this year to 7 million to 7.5 million, from the official 6.5-million target under the National Tourism Development Plan of 2016-2022.

his country’s doors to the world after Mao Zedong’s death in 1976. Allowing free enterprise, foreign investment, and earning from exports enabled China to lift 600 million of its citizens out of poverty between 1980 and 2014. Poverty incidence rate fell to ,6.5 percent in 2014, from 88 percent in 1980. Fabella said the government should also roll out improvements in the country’s infrastructure and lower the cost of power to attract more foreign investors. He said lowering power costs could include exempting manufacturing firms from paying feed-in tariffs and completing the so-called One PHL Power Grid, as the country’s power grids remain “fragmented.” Fabella said the government should consider continuing its privatization efforts, which could be aided by the lifting of restrictions

in some economic sectors. He noted that the privatization of government’s telecommunication assets in the 1990s enabled the business-process outsourcing sector to flourish in the Philippines. Addressing poverty is one of the primary targets under the Millennium Development Goal (MDGs) and the new Sustainable Development Goals. Under the MDGs, poverty should have been halved by 2015. The SDGs aim to wipe out poverty by 2030. However, the Philippines failed to meet its target of goal of cutting poverty incidence to 17 percent by 2015 under the MDGs. The target was based on the 34-percent rate in 1990, the baseline year for the MDGs. In October former UPSE Dean Ramon Clarete said the Philippine GDP must grow by at least 6 percent every year until 2030 to eradicate poverty. Clarete said this economic growth

should be accompanied by a 5-percent annual growth in per-capita income over a period of 25 years. GDP growth in the Philippines averaged 6.2 percent between 2010 and 2015. In 2016 GDP expanded by 6.9 percent and 6.4 percent in the first semester. Growing the economy, Clarete said, requires making food cheap and accessible for all as well as boosting the country’s trade and investment growth. Clarete noted that rice remains expensive not only for consumers but also for farmers. Data showed that this is largely due to expensive trade costs. Clarete said trade costs in the Philippines are very high. The United Nations Economic and Social Commission for Asia and the Pacific pegged trade costs at 50 percent of world prices.

“The best case scenario is by three months, we could have a new maintenance provider. But we are looking at around three to six months to procure a new maintenance provider, which should be there for about three to five years,” he said. Already, three groups have expressed interest in the maintenance of the railway system. Chavez listed the three as Singapore MRT, Sumitomo Corp. and RATP.

System overhaul

implement the unsolicited proposal of Metro Pacific Investments Corp. (MPIC). “The better solution is to take the Metro Pacific proposal,” Santiago said. MPIC submitted the transportation department on July 14 a P20-billion unsolicited proposal for the overhaul and expansion of the MRT 3. The proposal involves the expansion of the capacity of the railway system by adding more coaches to each train, allowing it to carry more cars at faster intervals. It will double the capacity of the line to 700,000 passengers a day from the current 350,000 passengers daily. The multimillion-dollar expansion is deemed as an all-encompassing deal, including the improvement of the reliability of rolling stock, the upgrading of power supply, the upgrading of stations, and the replacement of rails, which will allow the company to operate the new trains purchased by the government from Chinese train manufacturer Dalian. Should the government grant MPIC such a status, it can proceed with the Swiss Challenge for the deal. Unsolicited proposals are required, under the law, to go under a competitive challenge, wherein other groups can offer a similar proposal, and the original proponent can present a counter offer. The railway system is owned by the group of Robert John L. Sobrepeña and a few minority shareholders. The facility serves roughly 500,000 commuters daily, way above its rated capacity of 350,000 riders a day.

Despite this, Santiago said he expects no change in the MRT at all. “Maintenance needs history of every parts in a train and where to buy, lead time, etc. New bidder cannot guess what parts will break over contract period. Incentive is to postpone and scrimp on parts in order to earn profit.” Hence, the most plausible way to fix this mess is to consider and

Customs Personnel Order (CPO), indicating relief from their respective offices has been released and dates back to October 4.

Relief, appointments

IN separate CPOs dated September 27, about 30 section chiefs from the formal entry division (FED) of the Port of Manila and Manila MICP were also removed from their posts and reassigned to various provincial collection districts of the bureau.

Cai U. Ordinario

Following the revamp, the respective FED assistant chiefs of the two ports were designated as acting chiefs. Lapeña has also repeatedly asked BOC personnel to stop the practice of tara and to immediately do away with benchmarking and instead apply the correct valuation of goods. Meanwhile, some officials from the PDEA, which Lapeña previously led, has joined him in the BOC. They include Melvin Estoque from

PDEA Regional Office 7, who is now the chief of the BoC Account Management Office, which is in charge of accrediting importers. Director Jeoffrey Tacio from PDEA Regional Office 1 have been assigned as the officer in charge of the bureau’s Import Assessment Service. And PDEA Regional Office 4-B Director lawyer Jacquelyn L. de Guzman is the new officer in charge of the administration office. To be concluded

Access to bank financing still MSMEs’ big headache Continued from A1

the head of the PCCI, which is the largest business organization in the country. “We’re asking for accessibility, since there are times collateral is not needed. Small businesses often do not have collateral. So what we’re saying is their primary collateral is their knowledge collateral, what they know, their innovation.” Barcelon, however, said that once MSMEs gain access to finances, these companies must be “fiduciarily responsible” and ensure that they use the funds to grow their business. He added that they should also be responsible creditors, who pay back the financial institutions that entrusted them with funds. Apart from access to finance and being responsible creditors, Barcelon said MSMEs need to do their homework and understand the international market. He said this is where information communications technology (ICT) can come in. MSMEs must harness technology to gain more information about prospective markets and partners. Barcelon said MSMEs must also educate themselves in terms of learning about the various trade agreements that they can maximize to grow and expand their businesses. “It’s an opportunity, but its also about competition,”Barcelon said. “Use ICT as leverage to know how you can be competitive, and in what sector. The opportunity’s there but you gotta do your work.” On Monday BusinessM irror reported that the Philippines and 27 other countries are asking the World Trade Organization (WTO) to establish a program that would reduce trade costs and make it easier for more MSMEs to participate in and benefit from international trade. The Friends of MSMEs, a 28-nation group that includes the Philippines, has submitted a draf t ministerial decision on establishing a work program for MSMEs to the WTO General Council. The draft ministerial decision, a copy of which was obtained by the B usiness M irror, has been circulated among WTO member-countries upon the request of the Friends of MSMEs. The group hopes that it will get the nod of member-countries during the 11th WTO Ministerial Conference (MC11) this December in Buenos Aires, Argentina. Once the draft ministerial decision is adopted by WTO membercountries at MC11, a work program addressing the issues surrounding the participation of MSMEs in global trade shall be established. Meanwhile, Manila will push for the full participation of MSMEs in the global value chain at the Apec summit as part of the Duterte administration’s efforts to promote MSMEs with trading partners. Foreign Affairs Assistant Secretary Leo Herrera-Lim said the promotion of MSMEs tops Duterte’s agenda in his attendance at the Apec summit in Danang, Vietnam, from November 8 to 11. “In the 2017 Apec Economic Leaders’ Meeting, the key priorities of the Philippines would be full participation of the micro, small and medium enterprises in the global economy,

sustainable and inclusive growth, connectivity and human-resources development,” Lim said in a news briefing on Monday. Lim added that the Apec summit will be an opportune avenue for the Philippines to endorse its MSMEs, citing “9 out of our top 10 trading partners are within Apec economies.” Lim said the President is expected to discuss with high-value businessmen the benefits of investing on MSMEs, which is one of the focal points of his chairmanship of Asean. “It’s pretty much a drive or a push for the micro, small and medium enterprises, not only in the Philippines, but [also] across the region,” the diplomat said. “At the same time, the President will push for pretty much the foundation [of his] MSME advocacy, which is sustainable and inclusive business.” In his chairman’s statement for the 30th Asean Summit, the President said leaders of the region are eager to pursue the three strategic measures of “increasing trade and investment, integrating MSMEs in the digital economy and developing an innovation-driven economy.” “We were pleased with the stronger focus on MSME development in this year’s Asean economic agenda,” Duterte said. The President, together with Asean leaders, believes investing on MSMEs will lead to an “inclusive and innovative growth in the region,” in particular, microenterprise stakeholders, “which comprise up to 99 percent of registered businesses and generate a large proportion of total employment in the region.” Carrying with him national and regional interest, Lim said Duterte will bring the promotion of MSMEs at the spotlight of the Apec summit. Aside from this, the President is also scheduled to hold bilateral meetings with economic leaders of China, Russia and Vietnam to tackle matters on trade and investment. On the other hand, Lim discounted the possibility of Duterte using the Apec summit as a platform to ramp up negotiations on the Regional Cooperation Economic Partnership (RCEP). “I think we’re modestly satisfied that we’ve made substantial improvements [on the negotiations on the RCEP]. In terms of using [the Apec Summit] as a platform for [the] RCEP, I don’t think it will happen,” the diplomat said, adding there was so much work already completed on the proposed trade agreement under the Chief Executive’s chairmanship of the Asean. The RCEP is the proposed trade agreement between Asean countries and trading partners Australia, China, India, Japan, South Korea and New Zealand. It aims to lower, if not remove, tariff on trade in goods between the 16 negotiating parties. According to the Office of the United States Trade Representative, Apec member-economies account for at least 41 percent of the world’s population, 54 percent of the world’s total GDP and 44 percent of global trade activity. The President is scheduled to travel to Vietnam on Wednesday and return to the Philippines on Saturday, in time for Manila’s hosting of the 31st Asean summit.

The Nation BusinessMirror

www.businessmirror.com.ph

Editor: Vittorio V. Vitug • Tuesday, November 7, 2017 A3

Roque tells Sereno to quit SC post or face removal

By Elijah Felice E. Rosales

@alyasjah

residential Spokesman Harry Roque Jr. urged Chief Justice Maria Lourdes A. Sereno on Monday to resign, telling the Chief Magistrate to quit her post rather than be removed from office.

At a news briefing on Monday, Roque Jr. said he and the President share the same opinion Sereno should quit the Supreme Court (SC) so as to save the Judiciary from “further damage.” “I believe so,” Roque said, when asked if he believes Sereno should resign. “As a senior lawyer, as a law professor, I do not think the Judiciary can survive another decision that would remove the incumbent Chief Justice. I think it is high time now for [the] Chief Justice to reexamine very carefully the effect of another removal to the institution itself,” Roque added. Roque said it would damage the integrity and credibility of the SC if another head magistrate, in a span of no more than six years, is impeached, referring to the fate of

the late Chief Justice Renato C. Corona, who was removed from office in 2012 for nondisclosure of assets. “We cannot wait for that,” the Palace official said. “If we were to wait for that, it is finding the guilt that will undermine the independence of the Judiciary.” Asked if Duterte shares the same opinion, Roque said: “Of course, the President wants her to be removed altogether by all means. Of course, like [resigned poll chief Andres D.] Bautista, she could spare the court from further damage by voluntarily [resigning].” The Chief Justice is embattled by impeachment complaints filed against her by lawyer Lorenzo G. Gadon. Gadon has accused Sereno of corruption, culpable violation of the Constitution, betrayal of public trust and other high crimes.

Senate probers eye UST liability in fatal hazing case By Butch Fernandez

@butchfBM

enators castigated University of Santo Tomas (UST) officials at the resumption of hearings on Monday into law student Horatio “Atio” Castillo III’s fatal fraternity hazing for apparent lapses in supervising student organizations in UST. “There is really incompetence and negligence [on the part of school authorities concerned],” Sen. Sherwin T. Gatchalian said. Before adjourning Monday’s hearing, Senate probers asked UST officials to submit to the joint committee inquiry chaired by Sen. Panfilo M. Lacson Sr. a list of proactive measures taken by UST to prevent similar acts of violence in the university. Sen. Miguel F. Zubiri confirmed that the Senate will take a deeper look into “UST’s liability” in Atio Castillo’s case. “If you ask me, the school is liable,” Zubiri said, adding this was why we want to fast-track the passage of remedial law that would effectively prevent death from fraternity rites?” Apart from imposing stiffer sanctions, Zubiri is eyeing a “total ban on hazing to stop it once and for all.” Interviewed after the hearing, Lacson noted some “inconsistencies” in the testimony of Aegis Juris fratman Marc Anthony Ventura, who is being considered as a state witness. Lacson suggested that Ventura could still submit a supplemental affidavit for him to qualify as state witness. “Right now, his admission to the witness protection program is provisional,” the senator added. The Senate chief prober, however, alerted the Department of Justice (DOJ) on the possibility of Ventura being turned as “a Trojan Horse tasked to weaken the case” against the fratmen linked to the fatal hazing rites. “But on second thought, the mere fact that he changed lawyers from [AJF] Aegis Juris Fraternity members to non-AJF members...that is indication enough that he’s already severing ties with AJF by testifying against his fellow frat members,” Lacson said. At the same time, Lacson admitted Senate probers are in the process of authenticating the Facebook chat messages between fratmembers discussing how to handle Castillo’s death on learning of the fatal hazing rites held at the frat house near the UST campus. “Once this is authenticated, Police Chief Supt. Joel Coronel made it clear it will form part of their evidence to be submitted to the DOJ, and eventually in court,” Lacson added. Affirming the need to amend the existing anti-hazing law, Gatchalian also noted that two things clearly need to be fixed by remedial legislation: “One, the responsibility of the university because school officials are pointing at each other; two, the dean of Student Affairs is washing his hands claiming they are not responsible for what happened.” Gatchalian cited testimony by school officials that they installed an adviser purportedly to keep close track of the activities of the AJF. “For six years, they did not detect hazing in the university, so we can see ineffective responsibility of the school. We need to firm it up.” Second, the senator added: “We saw that even after that time, school officials even resort to concealment or cover up for the fraternity so we also have to put in the law that frat members, even those who did not participate in hazing, but took part in cover up, should also face imprisonment.” Gatchalian cited testimonies obtained at the hearing showing that senior members of AJF, even its elders who are lawyers, “are the ones who are teaching younger frat members how to cover up the case.”

The House Committee on Justice on October 5 found sufficient grounds to impeach Sereno, with 25 members of the panel voting in favor of the charges and two against. The committee will next determine the probable cause of the impeachment complaints. “In the determination of probable cause, that is when we will have to go through it more methodically and we will have to look at each and every allegation to determine its sufficiency for purpose of impeachment,” said Rep. Reynaldo V. Umali of the Second District of Oriental Mindoro, the chairman of the panel. For lawyer and former lawmaker Neri J. Colmenares, the President’s call to Sereno to resign is nothing but a display of his “intolerance for dissent.” “There are people who believe that they are always right and everybody’s wrong: that’s President Duterte,” Colmenares told the BusinessMirror. Colmenares said there is nothing wrong with Duterte criticizing the Chief Justice. However, to pressure her to resign is a different thing. “Ang problema, [when] some people think he’s wrong, nagagalit siya, binibira niya using government platform [The problem is, when some people think he’s wrong, he attacks those people using government platform],” Colmenares added. The former lawmaker also said

there is nothing for the President to fear about political stability, as he apparently controls the majority of legislators in Congress and justices in the SC. Colmenares urged Sereno to cling on to post as her resignation will eventually “give way to an appointee of Duterte.” However, he said it is still up to Sereno if she can bear the heat of facing charges in Congress and pressure to resign from Malacañang. National Union of Peoples’ Lawyers (NUPL) President Edre U. Olalia said the Chief Executive should cease from bulldozing Sereno, and must be reminded they are coequals in terms of power. [We, in the NUPL,] view these impeachment proceedings, to begin with, as a threat to the institution [of] the Judiciary and it undermines the separation of powers and checks and balances, which are very important principles in a supposedly

democratic society,” Olalia told the BusinessMirror. With this, Olalia said the President’s call to the Chief Justice to resign is inappropriate. He added two branches of the government—the Executive and the Legislative—are “in unison with each other in trying to boot out” the head magistrate. To be clear, Olalia said he is not in defense of Sereno, but called on Duterte and his allies to respect the independence of the judiciary.

‘Threat’

Sereno, for her part, called on the stakeholders in the judiciary to strengthen the institution amid the current “resurgence of political forces threatening and harassing the independence of the Judiciary.” Sereno, who is facing impeachment proceedings before the House of Representatives, made the call during her speech before the eighth

The delicate balance required to properly evaluate conflicting positions and competing interests can only be sustained by a wise and mature Judiciary that is unafraid to face the challenges of increasingly changing landscapes.”—Sereno

21 government agencies mobilized to ensure security for Asean summit

A worker uses a high-pressure hose to wash a set of wooden signage for the forthcoming Asean summit in Manila at the Quirino Grandstand. At least 21 government agencies have been tapped to ensure the security of the forthcoming high-profile event next week. NONIE REYES

By Roderick L. Abad Contributor

@rodrik_28

he mobilization of a total of 60,000 forces and resources from 21 government agencies has already started early this week as part of security preparations for the 31st Asean Summit 2017 and Related Meetings in Manila from November 13 to 17. Department of the Interior and Local Government Officer in Charge and Association of Southeast Asian Nations 2017 Committee on Security, Peace and Order, Emergency Preparedness and Response (CSPOEPR) Chairman Catalino S. Cuy led the send-off ceremony at Rizal Park’s Quirino Grandstand in Manila last Sunday. “The coming week will serve as the culmination of our yearlong efforts. Various meetings were held during the past months, but this week is even more important as the head of states and head of government of Asean membernations, as well as the dialogue partners,

will be attending,” he said. Joining him were Amb. Marciano Paynor Jr., director general for operations, Asean National Organizing Council (NOC); Salvador C. Medialdea, chairman, Asean NOC; Police Dir. Napoleon Taas, commander, Asean Security Task Force; Armed Forces of the Philippines Chief of Staff Lt. Gen. Rey Leonardo Guerrero; and Philippine National Police Chief Ronald M. dela Rosa. Apart from the deployment of troops to prevent possible local and international threats during the event, Cuy revealed that huge resources will be available to monitor, respond and provide support during the five-day summit that include 203 patrol cars, 394 motorcycles, 22 armored cars, 30 helicopters, 59 fire trucks, 94 ambulances, 125 explosive-detection dogs or K9 and 82 sniper teams. Cuy added that several joint task groups, task groups and subtask units have also been organized, and are on deck with their personnel and logistics

to ensure that the conclave will run as smoothly and peacefully as possible. Meanwhile, dela Rosa said that the 19,000-strong police force is all set and ready for the culmination of the 50th anniversary celebration of the Asean to be hosted by the Philippines. This year’s Asean summit will be attended by heads of state of the 10 Asean member-nations, dialogue partners, observer states and other invited delegates from the Asia-Pacific region. Expected to arrive in the country are the 21 global leaders, including United States President Donald J. Trump and United Nations Security Council Secretary-General Antonio Guterres. Malacañang declared November 13 to 15 as special nonworking days, no classes and work in Metro Manila, Bulacan and Pampanga. Nevertheless, Metro Manila mayors extended the suspension of classes in all levels, public and private, in their respective local government units on November 16 and 17.

International Conference on the Training of the Judiciary (IOJT) in Taguig City. “We note that in troubled times in the past, kings would demand that courts would pronounce their acts as legal, not because kings did not have the physical force to impose their will, but rather, that kings wanted their acts to have the force of moral legitimacy, a legitimacy that many times was perceived to come from courts of law,” Sereno said. She underscored the need to strengthen the Judiciary to be able to discharge its mandate, despite the forces undermining its independence. “The delicate balance required to properly evaluate conflicting positions and competing interests can only be sustained by a wise and mature Judiciary that is unafraid to face the challenges of increasingly changing landscapes,” she stressed. T he Chief Mag istrate a lso pointed out the importance of rule of law in the fulfillment of the Judiciary’s mandate to protect the basic rights of the people. “The Judiciary must never forget the value of each human being while never forgetting that the community has interests that must be protected by reasonable restraints on the activities of individuals,” she said. With Joel R. San Juan

DFA: No Filipino casualty in Texas church shooting

he Philippines has expressed its grief over the deaths of 26 people who were massacred by a lone gunman while attending church services in San Antonio, Texas, last Sunday. No Filipino was killed in the shooting, the Department of Foreign Affairs (DFA) said. There’s an estimated 150,000 FilipinoAmericans and multiracial Filipino Americans in Texas. “We are saddened by this unimaginable tragedy in San Antonio that took the lives of many innocent men, women and children,” Foreign Affairs Secretary Alan Peter S. Cayetano said in a news statement issued on Monday. “The Filipino people grieve with the families of the victims of this unfortunate incident,” Cayetano added, as he also offered prayers for the speedy recovery of 20 other churchgoers who were reported wounded in the shooting. Cayetano was referring to the massacre of 26 worshippers and the wounding of 20 others in Texas, the latest in a series of mass shootings that have plagued the United States. Authorities identified the gunman as Devin P. Kelly, a 26-yearold Caucasian. The DFA said the Philippine Consulate General in Los Angeles said none of the 7,400 Filipinos in San Antonio were reported to be among the dead and wounded in the incident that took place in the small town of Sutherland Springs outside San Antonio. Consul General Adelio Angelito Cruz said a lone gunman walked inside the First Baptist Church past 11 a.m., and fired his rifle at people attending church services there. The assailant fled immediately after the incident and was later found dead with a gunshot wound inside his vehicle. Authorities are still investigating the incident, which has been described as the largest mass shooting in Texas history. The San Antonio shooting came a little over a month after a lone gunman killed 58 people in Las Vegas. More than 546 people were also injured in the incident, which has been described as the worst mass killing in US history. Recto Mercene

Economy

A4 Tuesday, November 7, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

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Health out-of-pocket spending grew by 54.2% in 2016–PSA

By Cai U. Ordinario

@cuo_bm

ilipino households saw their out-of-pocket expenditures for health increase by 54.2 percent in 2016, according to the Philippine Statistics Authority (PSA).

PSA data showed households spent P342 billion for their various health needs, such as medicines, food supplements, other medical products and diagnostic needs, including medical and dental care, among others, in 2016. This contributed to the 10.5-percent increase in total health expenses P655 billion in 2016, from

P593 billion in 2015. The contribution to GDP was at 4.5 percent. “Per-capita health spending of Filipinos in 2016 grew by 8.7 percent to P6,345. In real terms, per-capita health expenditure of Filipinos amounted to P4,406,” the PSA said. PSA data showed the bulk of these out-of-pocket expenses were allocated for hospitals at P259 billion,

₧342B

The total amount spent by Filipino households for health needs, such as medicines, food supplements, other medical products and diagnostic needs, including medical and dental care, among others or 41.1 percent of the total. Pharmacies came in second with P173 billion, or 27.5 percent of the total, followed by providers of preventive care at P53.3 billion, or 8.5 percent of the total.

“In the Family Income and Expenditures Survey, these [outof-pocket expenditures] include medicines, food supplements, other medical products, therapeutic appliances, outpatient medical care, dental care, diagnostic services and private and public hospital care,” the PSA said. T he PSA sa id gover nment schemes and compulsory contributory health-care financing schemes reached P216 billion, or 34.2 percent of health expenditures. Voluntary health-care payment schemes contributed P73 billion, or 11.6 percent of the total. In July 2017 Philippine Institute for Development Studies senior research specialist Danica Aisa P. Ortiz and research fellow Michael R.M. Abrigo said Filipinos carried the triple burden of disease that has

caused the loss of centuries worth of life and billions in public, as well as out-of-pocket expenditures. Ortiz and Abrigo said the affliction of household members communicable diseases (CDs), noncommunicable diseases (NCDs) and other health conditions can put a toll on families through the loss of life and/or skyrocketing out-ofpocket expenditures. The authors said that data in 2015 showed that for every million Filipinos around 580 years of life have been lost due to heart disease and stroke. Further, for every million Filipinos, nearly a century or 95 and 75 years of life were lost due to Tuberculosis and interpersonal violence, respectively. Apart from the loss of life, households and the nationa l

government spent around P465 billion to finance current health expenditures (CHE). By classification of diseases/conditions, NCDs account for more than half of the 2012 CHE, followed by CDs at more than a quarter. Injuries, meanwhile, constitute about 6 percent, or P30 billion. Ortiz and Abrigo said there is a need to improve the health system, particularly effective service delivery, as well as functional and strategically located health facilities. Also crucial, the authors said, is the adequate human resource that will deliver the necessary services to the afflicted. The authors said the government should implement an effective health-insurance program to ensure that Filipinos will be able to get the healthcare they need.

LTE speed, coverage improved in October, global report shows

he country’s long-term evolution (LTE) coverage and download speed improved year-onyear in October by 31.3 percent to 58.83 percent and 13.3 percent to 8.23 megabites per second (Mbps), respectively, according to OpenSignal’s the State of LTE Report of November 2017. Interestingly, the report showed that the LTE availability in the Philippines was up against Germany’s 57.52 percent and Russian Federation’s 55.86 percent. OpenSignal also observed that 4G speeds have stalled in topperforming countries, even as LTE availability was increasing worldwide. It reported that the number of countries that averaged speeds greater than 20 Mbps has decreased. OpenSignal’s availability metric tracks show how often consumers with 4G devices can connect to an LTE network in their respective countries. Meanwhile, Ookla’s Speedtest Index released its October 2017 report, indicating that the country’s average download speed for mobile

broadband improved by 65.7 percent, from 7.44 Mbps (July 2016) to 12.33 Mbps (October 2017). For fixed broadband average download speed, the country registered a marked improvement of 69.53 percent, from 7.91 Mbps (July 2016) to 13.13 Mbps (October 2017). For mobile, the country’s monthly averages were a steady growth at 7.44 Mbps (July 2016), 7.7 Mbps (August 2016), 8.18 Mbps (September 2016), 8.56 Mbps (October 2016), 8.59 Mbps (November 2016), 9.53 Mbps (December 2016), 9.34 Mbps (January 2017), 10.07 Mbps (February 2017), 9.73 Mbps (March 2017), 9.71 Mbps (April 2017), 9.93 Mbps (May 2017), 10.32 Mbps (June 2017), 10.23 Mbps (July 2017), 10.47 Mbps (August 2017), 11.95 Mbps (September 2017) and 12.33 Mbps (October 2017). For fixed broadband, the country’s monthly averages also took an upward trend, from 7.91 Mbps (July 2016), 8.54 Mbps (August 2016), 8.76 Mbps (September 2016), 8.60 Mbps (October 2016), 9.35 Mbps (November

2016), 9.71 Mbps (December 2016), 10.16 Mbps (January 2017), 10.68 Mbps (February 2017), 10.81 Mbps (March 2017), 10.84 Mbps (April 2017), 10.96 Mbps (May 2017), 11.66 Mbps (June 2017), 12.43 Mbps (July 2017), 13.29 Mbps (August 2017) and 13.41 Mbps (September 2017) to 13.13 Mbps (October 2017). Speedtest by Ookla is the global leader in Internet-performance testing and consumer-initiated network diagnostics with over 10.2 billion speedtests clocked worldwide. Speedtest Intelligence is a trusted and vital research and analysis tool used by businesses, industry associations and government agencies. The improvement in the Philippines’s Internet speed may be attributed to President Duterte’s repeated calls for telecommunications companies to improve their services. Internet speed and availability are also expected to improve even further with the implementation of the recently launched National Broadband Plan.

fLUVIAL FESTIVAL

Mandaluyong City Mayor Carmencita Abalos (black polo) waves to people as she leads the fluvial parade along the Pasig River during the 86th anniversary of the law changing the name of the municipality of San Felipe Neri in the province of Rizal to Mandaluyong over the weekend. PNA

P5-M GEF-funded project to boost Groups protest MICC ‘reversal’ of Lopez’s open-pit mining ban drive against wildlife trafficking By Jonathan L. Mayuga @jonlmayuga

he Department of Environment and Natural Resources (DENR) will start next year the implementation of a P5-million capacity-building project to combat wildlife trafficking. Environment Undersecretary for Climate Change Analiza R. Teh said the three-year project titled “Combatting Environmental Organized Crime in the Philippines” will be implemented under the Global Wildlife Program. The project also aims to combat environmental crime in the Philippines through legal and institutional reform, capacity building in the law-enforcement chain and demand reduction measures. It has three major components, namely: 1) reforming and mainstreaming policy, legal and regulatory instruments; 2) enabling institutional capacity development in tactical operations addressing wildlife crimes; and 3) reducing demand for illegal wildlife trade products and derivatives. Under the first component, the target is to revise the Wildlife Act and its implementing rules and regulations and encourage local government units to enact local ordinances in support of the policy. It also aims to increase information and knowledge sharing to facilitate multiagency coordination and support the adoption of enforcement tools and methods. Under this component, the DENR will conduct training for law enforcers on the use of Environmental Law Enforcement Management Information Service and CITES e-permitting system. CITES, or the Convention on International Trade in Endangered Species of Wild Fauna and Flora, is an international agreement between governments. Its aim is to ensure that international trade in specimens of wild animals and plants does not threaten their survival. “The Philippine government is a recipient of a GEF [Global Environment Facility] funding to strengthen our enforcement mechanism. One of our weaknesses is information and intelligence gathering…,” Teh admitted. She added, however, the project will also boost the campaign, as it will focus on strengthening legal actions against those involved in wildlife trafficking. Director Theresa Mundita S. Lim of the DENR’s Biodiversity Management Bureau (BMB) said illegal wildlife trade and wildlife trafficking had evolved to be today’s “cybercrime.” She said various activities of the DENR-BMB targets the illegal trading done in cyberspace. “Right now, our partners are looking at fighting illegal wildlife trade in cyberspace. A lot of illegal wildlife trading is going on using the Internet, which makes it very difficult for wildlife law enforcers to penetrate,” Lim said. The Philippines, which is one of the mega-diverse countries in the world, is also a biodiversity hot spot because of habitat loss, illegal wildlife trade, pollution and destructive human activities that include mining, logging and conversion of forest for agriculture and agroindustrial uses. Jonathan L. Mayuga

rou ps u nde r t he K a likasan-People’s Network for the Environment (Kalikasan-PNE) on Monday held a protest rally in front of the Department of Environment and Natural Resources (DENR) to assail the reported move to lift the ban on open-pit mining implemented during the brief incumbency of environmentalist and former Environment Secretary Regina Paz L. Lopez The group is demanding Environment Secretary Roy A. Cimatu to uphold DENR Administrative Order 2017-10, even as the Mining Industry Coordinating Council (MICC) has recommended its lifting. Cimatu is expected to present the recommendation of the MICC during a Cabinet meeting with President Duterte on Monday. The order bans prospective open-pit mining for gold, copper, silver and complex ores, exempting nickel-mining, which also employs surface-mining, as well as all quarrying activities. Clemente Bautista, national coordinator of Kalikasan-PNE, said the reversal of the national openpit mining ban would lead to the commencement of new open-pit mines without the necessary regulatory rigor. “This would lead to the wholesale destruction of agricultural lands, watersheds and other critical ecosystems, as we have experienced in abandoned mines from Marinduque to Rapu-Rapu,” he said. Cimatu has indicated he will accept the recommendation of the MICC, a multistakeholder body mandated to review mining policies and programs, to reverse the ban.

“The past 22 years under the policy framework of the Mining Act of 1995 did nothing to ensure that high-risk projects, such as open-pit mines are effectively regulated. The fact that the DENR’s national mining audit found 68 percent of commercially operating mines means the country’s mining industry is in no position to safely manage additional open-pit mines,” Bautista said. Bautista recalled that in August 1996, a year after the Mining Act was passed, the open-pit mine of the Marcopper mining company, now owned by Canadian miner Barrick Gold, caused a massive mine spill that poured 1.6 million metric tons of toxic mine tailings into the Boac River. He said water samples in affected river tributaries exhibited heavy metal contamination, which is 1,300 percent above human tolerable levels. A legal case was filed against the company in 2005, but no resolution is still in sight 12 years hence. Meanwhile, in 2015, Bautista said an environmental investigation mission by scientist group AGHAM revealed that the Rapu-Rapu openpit mine in Albay, a flagship project of the previous Arroyo administration, was left unrehabilitated, even as its South Korean owner KORES spent all of its P158-million mining-rehabilitation fund. Water tests reportedly showed continuing toxic acid mine-drainage generation in one of the creeks downstream from the abandoned mine, registering extreme acidity with pH levels of 3.25 to 3.42, far exceeding the DENR standards for irrigation. “Prospective open-pit mines also have the bloodiest track records in securing their corporate interests. The Tampakan mining project, the largest mining project in Asia, is

also the bloodiest, with at least 12 extrajudicial killings of its critics and opponents monitored since 2001. The Tampakan mine is one of the projects that will benefit from the reversal of the open-pit mine ban,” Bautista said. The groups urged the Duterte administration to reinstitute the open- pit mine ban as a moratorium on all new projects using this technology until new mining policy reforms are put in place. T hey said a comprehensive mining-policy proposal, House Bill 2715, or the people’s mining bill, is currently pending in Congress and should be prioritized by the government to ensure stronger environmental and socioeconomic regulations over open-pit and other large-scale mines. “No new open-pit mine should commence until a new mining policy is put in place. As long as openpit mining is framed in promoting foreign investments through lax regulations and allowing land and other natural- resource grabs, it will always be a destructive endeavor detrimental to our national interest to protect national patrimony and the environment,” he said. The anti-mining group Alyansa Tigil Mina (ATM), for its part, rejected the recommendation of MICC, but expressed no surprise of the MICC’s recommendation and Cimatu’s decision to endorse it to Malacañang. ATM National Coordinator Jaybee Garganera said that they have anticipated the recommendation from the MICC. “This is not surprising, and we are disappointed and frustrated, especially the mining-affected communities. The MICC failed to consult the communities as legitimate stakeholders,” he said.

ATM believes that the recommendation is for the benefit of the mining industry, as the MICC itself is heavily influenced by the mining industry. Finance Undersecretary Bayani H. Agabin, who was formerly a lawyer for the Rapu-Rapu Mining Inc., in Bicol, headed the review committee. Meanwhile, MICC Cochairman Finance Secretary Carlos G. Dominguez III, whose family has investments in Sagittarius Mines Inc., is the owner of the controversial Tampakan Mines in South Cotabato. Dominguez himself was a former president of a mining firm. ATM noted that the Chamber of Mines of the Philippines has been actively engaging the MICC review committee for this review of the open-pit ban. Though the MICC is only a recommendatory body, ATM believes this move might be the main basis of Cimatu to lift the ban on openpit mining, escaping the accountability for endorsing the destructive mining method, despite his administrative power to uphold the ban. “Allowing destructive open-pit mining method is allowing the destruction of the rich Philippine biodiversity, forests, ancestral domains and other natural resources; there’s no other way to interpret it. Permanent land-use change is still at the center of the open-pit mining. The long-lasting impacts of open-pit mining include forest clearing and extensive tree-cutting, water diversion, use of explosives, reduced access and volume of water resources by communities and even physical displacement of families. Maintenance of toxic waste and acidification are also serious perpetual obligations,” Garganera said.

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Editor: Jun B. Vallecera • Tuesday, November 7, 2017

Nonfood prices seen ramping up October inflation

By Rea Cu

@ReaCuBM

nflation, mostly because of price increases in nonfood items, ramped up even higher in October to 3.5 percent, based on estimates by the Department of Finance (DOF). This represented an escalation from inflation averaging only 3.4 percent in September. However, consumer prices should remain manageable on the expected palay harvest in the latter part of the year and as base effects from the utilities subgroup taper off, DOF Undersecretary Gil S. Beltran said in his latest economic bulletin. Food accounts for more than half the consumer price index from which the inflation rate is computed. “Food inflation may decline further in November 2017 as the rice-harvest season has started pushing down domestic

rice prices,” said Beltran, who is also the DOF’s chief economist. The forecast inflation in October is higher than the 2.3 percent posted in the same month last year. The 3.5-percent forecast inf lation is the highest since November 2014, when this stood at 2.7 percent. Food prices have also “started to taper down, sliding slightly to 3.5 percent, from 3.6 percent in September,” according to Beltran. The DOF said alcoholic beverages and

tobacco likely increased to 6.7 percent, from 6.4 percent; housing, utilities and fuels to 4.1 percent, from 3.8 percent; electricity, gas and other fuels to 9.2 percent, from 8.2 percent; furnishings and household equipment to 1.9 percent, from 1.8 percent; and recreation and culture to 1.5 percent, from 1.4 percent. Meralco rate per kilowatt-hour (kWh) for a household consuming 200 kilowatts per month increased to P9.28, from P9.25 in September. Also, Meralco generation charge per kWh in October increased to P4.72, from P4.54 in September 2017. Inflation in September accelerated to a five-month high of 3.4 percent, from 3.1 percent in August, because of the higher annual increment in food and nonalcoholic beverages index at 5 percent and the double-digit increase in transport index at 11.3 percent. This brought the average inflation in the first nine months to 3.1 percent, still within the target range of 2 percent to 4 percent set by the Bangko Sentral ng Pilipinas this year. In September the Monetary Board (MB), where Finance Secretar y Carlos G. Dominguez III sits as a member, kept the benchmark interest rates

Forum highlights role of dashcams in insurance-claims processing

ortune General Insurance (FGen) urged regulators on Monday to make mandatory the use of dashboard cameras or dashcams in motor vehicles to speed up and simplify insuranceclaim processing. FGen reiterated the importance of taking advantage of advances made in technology and gadgets to help optimize insurance-claims processing acknowledged to be prone to inefficiencies and even corruption among law-enforcement officials and sometimes insurance executives. FGen has since begun offering a 10-percent discount on their motor-vehicle insurance products to encourage the use of dashcams by clients. “FGen was among the firsts to offer a discount for motorists with dashcams, but we need to do more for the benefit of our customers,” FGen President

Michael F. Rellosa said. The call to make dashcams mandatory and encourage greater use was made during the nonlife-insurance industry forum hosted by the Philippine Insurers and Reinsurers Association (Pira) at Blue Leaf Filipinas in Parañaque City. In that forum, dashcams are very useful tools in claims processing compared to mere police sketches and reports. “There’s so much room for extortion with police sketches and police reports; there’s so much room for inefficiency,” said James Deakin, a popular motorist advocate. Over 200 nonlife-insurance industry officials heeded his call and resolved to simplify claims documentation by allowing the use of dashcam videos and on-site pictures sent digitally to insurers. FGen has a head start in promoting the technology as it has offered dashcam

discounts since early this year. “We are continuing to lead the insurance industry in the promotion of technology that benefit customers and insurers,” Rellosa said. According to Antonio Roderick B. Cabusao, a member of Pira’s public relations and education committee, the use of dashcams or the improvement in claims form should be strengthened for insuranceclaims purposes. “Either the dashcam or the claims form. But it’s better if the dashcam is used. The claims form can be tampered with, but the dashcam is actual,” Cabusao said. He also added the use of dashcams in place of photos or police reports have yet to be standardized in the insurance industry. “That is why [Deaken] is proposing to use technology for claims purposes,” he said. Rea Cu

The three most important words in investing

f you were to capsulize investing into three words, what would those be? “Margin of safety”—legendary investor Warren Buffett once said, that these are the three most important words of investing. The concept is simple, yet very powerful. Entire books have been written about it. In any investing seminar, whether directly or indirectly, would involve a discussion on margin of safety. Warren Buffett was only echoing what his mentor Benjamin Graham said. In Chapter 20 of Graham’s seminal work, The Intelligent Investor he concludes the book with a chapter on margin of safety as a central concept in investing and wrote: “In the old legend, the wise men finally boiled down the history of mortal affairs into the single phrase: This too will pass. Confronted with a like challenge to distill the secret of sound investment into three words, we venture the motto: MARGIN OF SAFETY. This is the thread that runs through all the preceding discussion of investment policy—often explicitly, sometimes in a less direct fashion.” So what does “margin of safety” mean? It simply means knowing how to minimize your risk by investing at a certain price that would decrease the probability that you would loose money if not eliminate the possibility of such no matter whatever factors might impact your investment. But how do you actually apply the concept of margin of safety in your investing? Let us learn further from Benjamin Graham himself, who has this to say: “We greatly doubt whether the man who stakes money on his view that the market is heading up or down can ever be said to be protected by a mar-

Zigfred Diaz

personal finance gin of safety in any useful sense of the phrase…. Thus, in sum, we say that to have a true investment, there must be present a true margin of safety. And a true margin of safety is one that can be demonstrated by figures, by persuasive reasoning and by reference to a body of actual experience.” According to Benjamin Graham, first of all, in order to have a true margin of safety, it must be “demonstrated by figures.” This means that you have to dig into the financial statements of the company to know what it is truly worth. To do this, you need to understand the basics of a financial statement. An investor does not need to go to accounting or finance school for this. One just needs to pick up a book that explains how to understand and read financial statements easily. Further, you only need to look at certain key figures and ratios in the financial statements for investment purposes. It may not be as simple as a walk in the park, but it is definitely not that hard once you know what you are looking for. Second, Graham says that a true margin of safety must be “demonstrated by figures by persuasive reasoning...” In other words, when you look at the figures you must be persuaded that, indeed, you are getting into an investment with sufficient margin of safety

using reasoning and logic. To do this, you need to think like how a good businessman thinks. After all, as Benjamin Graham said, investing is most intelligent when it is most business like. You need to find out what the investment is truly worth by using some kind of fundamental analysis-valuation tool, then you compare it with how much it is being sold to you. If it is below what it is worth then, by reason and logic, it must be a good investment. It would be illogical and unreasonable to buy something that is being sold many times over what it is truly worth. You wouldn’t buy a mobile phone worth P20,000, twice that price. Similarly, it makes not sense to buy or invest in something that is being sold for more than what it is truly worth. Last, according to Graham, a true margin of safety must be “demonstrated by figures…by reference to an actual body of experience.” Graham may not have expounded much on this, but if you take the overall context of what he is saying, he means simply to relate the figures as reported and what the actual business is doing. In other words, do your own due diligence, “experience” the businesses’ products, service and management in order to make sure that what is being reported is somehow reasonably and logically connected to how the business is actually performing. Zigfred Diaz, RFP, is Registered Financial Planner based in Cebu. He is director at CERTA Inc., a personal-finance advisory firm. To learn more about personalfinancial planning, attend the 66th RFP program this November 2017. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

mainly because of the manageable inflation environment and robust domestic economic growth. “So now we are in the period of normalization, and we are going back to the normal interest rates, the normalization of inflation. It’s just going back to where it was,” Dominguez said of the monetary sector. The 3.5-percent rate for overnight lending, 3 percent for overnight borrowing

and 2.5 percent for deposit facilities were maintained. The deposit reserve ratios were similarly maintained. The MB also kept the average inflation forecast this year and next at 3.2 percent. But the forecast for 2019 was adjusted upward to 3.2 percent, from an earlier estimate of 3.1 percent. “We are still within the target,” National Treasurer Rosalia V. de Leon, told financial reporters.

Case clippings

By Justice S J Ranada Jr. INDISPENSABLE PARTIES–concept and definition Case law defines an indispensable party as “one whose interest will be affected by the court’s action in the litigation, and without whom no final determination of the case can be had. The party’s interest in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other parties’ that his legal presence as a party to the proceeding is an absolute necessity. PN Bank v. Sabado 30 Aug 2017

GR 224204 Perlas-Bernabe, J

Metrobank income 5 percent higher over nine months

etropolitan Bank and Trust Co. (Metrobank) reported even higher income in the third quarter on the basis of sustained momentum in its loans and deposits. In a regulatory filing, the bank on Monday reported a 5-percent rise in consolidated net income in the first nine months to P13.2 billion. Metrobank attributed this development to strides in its core banking business, particularly its loan expansion and low-cost deposit growth. Fee income was also seen to improve, and operating expenses were limited to a single-digit growth rate. In particular, the bank reported a 15-percent growth in low-cost current account and savings account (Casa) deposits. Metrobank’s Casa accounted for 62 percent of total P1.5 trillion deposit base. Growth in net loan receivables hit 20 percent to reach P1.2 trillion, largely fueled by the commercial segment as the bank continued to provide funding to both corporate and middle-market clients. “We are pleased to report that our core earnings results are moving ahead of plans,” Metrobank President Fabian Dee said.

“And we are also continuously improving our operations and have made the necessary enhancements to our internal processes to ensure that we become an even stronger institution,” he added. The bank’s net interest income grew 16 percent, making up 72 percent of P62.9 billion total revenues. Its noninterest income totaled P17.6 billion during the period. Broken down, Metrobank’s noninterest income was comprised of P9.1 billion in service fees and commissions, P4 billion in net trading and foreign-exchange gains and P4.5 billion in miscellaneous income. Operating expenses, meanwhile, grew by 8 percent to P35.8 billion. In terms of asset quality, Metrobank reported nonperforming loan ratio of only 1.07 percent. The bank also allotted P5.9 billion as provisions for credit and impairment losses for the period. Metrobank ended the period with total equity of P210.4 billion. Total capital adequacy ratio remained well above the regulatory limit at 16 percent, with Common Equity Tier 1 ratio at 13.3 percent. Bianca Cuaresma

HSBC sets aside $100 billion for sustainable financing

SBC pledges to provide $100 billion in sustainable financing and investment by 2025. The goal is 1 of 5 new commitments that HSBC is making to tackle climate change and support sustainable growth in the communities it serves. The bank will intensify its support for clean energy and lower-carbon technologies, as well as projects that support the implementation of the United Nation’s Sustainable Development Goals. HSBC also pledges to: n Source 100 percent of its electricity from renewable sources by 2030, with an interim target of 90 percent by 2025. By signing long-term agreements with suppliers, HSBC aims to support the development of new renewable-power facilities. n Reduce its exposure to thermal coal and actively manage the transition path for other high-carbon sectors. This includes discontinuing financing of new coal-fired power plants in developed markets and of thermal coal mines worldwide. n Adopt the recommendations of the Task Force on Climate-related Financial Disclosures to improve transparency. In its next two group annual reports, HSBC will give more details on its approach to climate-related risks and opportunities. n Lead and shape the debate about sustainable finance and investment. This includes promoting the development of industry-wide definitions and standards.

Group Chief Executive Stuart Gulliver said: “For more than a decade, HSBC has helped clients break new ground in the green bond markets in Europe and Asia, and to finance some of the biggest climate-friendly infrastructure projects in the world. The $100-billion commitment that we are announcing today acknowledges the scale of the challenge in making a transition to a low-carbon future. We are committed to being a leading global partner to the public and private sectors as they make that transition.” The pledges build on HSBC’s longstanding involvement in green and sustainable finance. Over recent years, it has: played a leading role in developing voluntary standards for issuers of green bonds and social bonds; issued its own €500-million green bond; and won recognition for the quality of its research into climate change. HSBC announced the new commitments in an update on the action it is taking to meet its social, environmental and governance responsibilities. The bank has continued to improve its own environmental performance in key areas. Over the past year HSBC has reduced water usage by 9 percent, carbon emissions by 9 percent and energy consumption by 13 percent. It has also signed agreements with clean-energy producers to source 24 percent of its electricity from renewable sources.

Tuesday, November 7, 2017 • Editor: Lyn Resurreccion

The World BusinessMirror

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Texas church shooting leaves at least 26 dead

UTHERLAND SPRINGS, Texas—A gunman clad in all black, with a ballistic vest strapped to his chest and a military-style rifle in his hands, opened fire on parishioners at a Sunday service at a small Baptist church in rural Texas, killing at least 26 people and turning this tiny town east of San Antonio into the scene of the country’s newest mass horror. The gunman was identified as Devin Patrick Kelley, 26, according to two law-enforcement officials who spoke on the condition of anonymity because the investigation is continuing. Kelley, who lived in New Braunfels died shortly after the attack. He had served in the Air Force at a base in New Mexico, but was court-martialed in 2012 on charges of assaulting his wife and child. He was sentenced to 12 months’ confinement and received a “bad conduct” discharge in 2014, according to Ann Stefanek, chief of Air Force media operations. The motive of the attack was unclear last Sunday, but the grisly nature of it could not have been clearer: Families gathered in pews, clutching Bibles and praying to the Lord, were murdered in cold blood on the spot. Kelley started firing at the First Baptist Church in Sutherland Springs not long after the Sunday morning service began at 11 a.m. Central time, officials said. He was armed with a Ruger military-style rifle, and within minutes, many of those inside the small church were either dead or wounded. The victims ranged in age from 5 to 72, and among the dead were several children, a pregnant woman and the pastor’s 14-yearold daughter. It was the deadliest mass shooting in the state’s history. At least 20 more were wounded. “It’s something we all say does not happen in small communities, although we found out today it does,” said Joe Tackitt, the sheriff

of Wilson County, which includes Sutherland Springs. Tackitt and other officials said the gunman first stopped at a gas station across Highway 87 from the church. He drove across the street, got out of his car and began firing from the outside, moving to the right side of the church, the authorities said. Then he entered the building and kept firing. The authorities received their first call about a gunman at about 11:20 a.m. Officials and witnesses said Kelley appeared to be prepared for an assault, with black tactical gear, multiple rounds of ammunition and a ballistic vest. “He went there, he walked in, started shooting people and then took off,” said Rep. Henry Cuellar, a Texas congressman who represents the region and who was briefed by law-enforcement officials. When Kelley emerged from the church, an armed neighbor exchanged gunfire with him, hitting Kelley, who fled in his vehicle. Neighbors appa rent ly followed him, chasing him into the next county, Guadalupe County, where Kelley crashed his car. Kelley was found dead in his vehicle. Officials said it was unclear how Kelley had died. At the church, he left behind a scene of carnage. Of the 26 fatalities, 23 people were found dead inside the church, two were found outside and one died at a hospital. In nearby Floresville, hours after the attack, Scott Holcombe, 30, sat with his sister on the curb outside the emergency room at Connally Memorial Medical Center.

FBI agents and other law-enforcement and crime-scene personnel are outside the First Baptist Church of Sutherland Springs, where a gunman wearing all black and a ballistic vest killed at least 26 people and injured at least 20 more, in Sutherland Springs, Texas, on November 5. Callie Richmond/The New York Times

The estimated number of people who were wounded

They were both in tears. Their parents, Bryan and Karla Holcombe, had been at the church and had been killed. “I’m dumbfounded,” Holcombe said. “This is unimaginable. My father was a good man and he loved to preach. He had a good heart.” His sister, Sarah Slavin, 33, added: “They weren’t afraid of death. They had a strong faith, so there’s comfort in that. I feel like my parents, especially my mom, wasn’t scared.” A parishioner, Sandy Ward, said that a daughter-in-law and three of her grandchildren were shot. Her grandson, who is 5, was shot four times and remained in surgery last

Millions of leaked files shine light on where the elite hide their money

t is called the Paradise Papers: the latest in a series of leaks made public by the International Consortium of Investigative Journalists (ICIJ) shedding light on the trillions of dollars that move through offshore tax havens. The core of the leak, totaling more than 13.4 million documents, focuses on the Bermudan law firm Appleby, a 119-year-old company that caters to blue-chip corporations and very wealthy people. Appleby helps clients reduce their tax burden; obscure their ownership of assets like companies, private aircraft, real estate and yachts; and set up huge offshore trusts that in some cases hold billions of dollars. The New York Times is part of the group of more than 380 journalists from over 90 media organizations in 67 countries that have spent months examining the latest set of documents. As with the Panama Papers, the Paradise Papers leak came through a duo of reporters at the German newspaper Suddeutsche Zeitung and was then shared with ICIJ, a Washington-based group that won the Pulitzer Prize for reporting on the millions of records of a Panamanian law firm. The release of that trove of documents led to the resignation of one prime minister last year and to the unmasking of the wealth of people

close to President Vladimir Putin of Russia. The predominantly elite clients of Appleby contrast with those of Mossack Fonseca—the company whose leaked records became the Panama Papers—which appeared to be less discriminating in the business it took on. Much of the material makes for dull reading: Spreadsheets, prospectuses and billing statements abound. But amid these are documents that help reveal how multinational companies avoid taxes and how the superrich hide their wealth. The records date back to 1950 and up to 2016. Appleby has offices in tax havens around the world. In addition to its Bermudan headquarters, it works out of the British Virgin Islands and the Cayman Islands in the Caribbean; the Isle of Man, Jersey and Guernsey off Britain; Mauritius and the Seychelles in the Indian Ocean; and Hong Kong and Shanghai. Americans—companies and people—dominate the list of clients. Past disclosures, such as the 2013 “Offshore Leaks” from two offshore incorporators in Singapore and the British Virgin Islands, the 2015 “Swiss Leaks” from a private Swiss bank owned by the British bank HSBC and another leak in 2016 from the Bahamas were dominated by clients not from the United States.

The documents come not only from Appleby, but also from the Singaporean company Asiaciti Trust and official business registries in places, such as Bermuda, the Cayman Islands, Lebanon and Malta. Setting up companies offshore is generally legal, and corporations routinely do so to facilitate crossborder transactions, such as mergers and acquisitions. Appleby, in a public statement on October 24, after inquiries from ICIJ, said that it was “subject to frequent regulatory checks” in “highly regulated jurisdictions.” “Appleby has thoroughly and vigorously investigated the allegations and we are satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients,” the company said. But with this latest leak, some wealthy individuals and multinational corporations may think twice about using offshore ownership structures, said Jack Blum, a lawyer who worked for decades on congressional committees investigating money transfers overseas. “The danger of being found out has increased exponentially,” Blum said in an interview. “If I were a rich guy looking to hide money offshore so that the tax man won’t get me, my nightmare would be to put it in the hands of somebody whose documents leak.” New York Times News Service

Sunday night. She said she was awaiting word on her other family members. Ward said she did not attend services last Sunday because of her troubled knees and a bad hip. “I just started praying for everybody who was there” when she learned of the shooting, she said. At a news conference last Sunday, Gov. Greg Abbott said he and other Texans were asking “for God’s comfort, for God’s guidance and for God’s healing for all those who are suffering.” President Donald J. Trump, who was in Japan on a trip to several Asian countries, called it a “horrific shooting.” He ordered flags flown at half-staff at the White House and all federal buildings through on Thursday. In a time of crisis, he said, “Americans will do what we do best: We pull together and join hands and lock arms and through the tears and sadness we stand strong.” The FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives were helping in the investigation, which was being led by the Texas Rangers. The death toll at the church ex-

ceeded the number killed in 1966 by a student at the University of Texas at Austin, Charles Whitman, who opened fire from the school’s clock tower in a day of violence in that ultimately killed 17. Until the attack last Sunday, the deadliest mass shooting in Texas was in 1991, when George Hennard drove his pickup truck through the window of a Luby’s Cafeteria in Killeen and opened fire on patrons there. He killed 23 people before turning a gun on himself. The shooting last Sunday occurred more than two years after Dylann S. Roof opened fire at Emanuel African Methodist Episcopal Church in Charleston, South Carolina, in June 2015, killing nine people, including the pastor. The motive in that attack was racial hatred—Roof, a white supremacist, plotted an assault on a black congregation—but no motive has been established by the authorities in the shooting in Sutherland Springs. The First Baptist Church is predominantly white, and Kelley is white. The authorities said Kelley used an Ruger AR-15 variant—a knockoff of the standard service

rifle carried by the United States military for roughly half a century. A lmost a l l A R-15 var iants legally sold in the US fire only semiautomatically, and were covered by the federal assault weapons ban that went into effect in 1994. Since the ban expired in 2004, the weapons have been legal to sell or possess in much of the United States and sales of AR-15s have surged. Ruger’s AR-15s made for civilian markets sell for about $500 to $900, depending on the model. Kelley grew up in New Braunfels, in his parents’ nearly $1-million home, and was married in 2014. He had been married at least once before, and was sued for divorce in 2012 in New Mexico, the same year he was court-martialed on charges of assaulting his wife and child. Why he chose to attack a church 30 miles away from his home is one of the questions that remained unanswered. Sutherland Springs in Wilson County is about 34 miles east of downtown San Antonio, in a slowpaced region where churchgoing is a common part of the Sunday routine. The church marquee last Sunday needed updating from last week, reading, “Join Us, Fall Fest, October 31, 6 p.m. to 8 p.m.” The unincorporated community has a population that numbers in the low hundreds—the 2000 census was 362, according to the Texas State Historical Association. The preliminary death toll would amount to about 7 percent of that population. Joseph Silva, 49, who lives about 5 miles northeast of Sutherland Springs, said the police had instructed his family and neighbors to stay indoors. He described Sutherland Springs as “a one-blinking-light town.” “There is a gas station and a post office,” he said. “That’s about all there really is.” Silva said he had been approached by a woman who said she had two loved ones at the church who were shot. “There are a number of individuals just weeping and just wanted to know what’s happened to their loved ones,” he said. “Everybody is pretty grief-stricken. Everyone’s worried.” New York Times News Service

Report: Commerce head has stake in firm tied to Putin orbit

EW YORK—Newly leaked documents show that Commerce Secretary Wilbur Ross, the Trump administration’s point man on trade and manufacturing policy, has a stake in a company that does business with a gas producer partly owned by the son-in-law of Russian President Vladimir Putin. According to records obtained by the International Consortium of Investigative Journalists (ICIJ), Ross is an investor in Navigator Holdings, a shipping giant that counts Russian gas and petrochemical producer Sibur among its major customers. Putin’s son-in-law Kirill Shamalov once owned more than 20 percent of the company, but now holds a much smaller stake. Commerce Department Spokesman James Rockas said Ross “never met” Shamalov and has generally supported the Trump administration’s sanctions against Russia, according to the ICIJ report. Rockas added that Ross has withdrawn from matters related to transoceanic shipping vessels and has met the “highest ethical standards.” The details are likely to add to the questions about ties between Russia and the Trump administration, connections that for months have shadowed the White House and are a focus of an investigation by special counsel Robert Mueller. Yet, it wasn’t immediately clear how many part-

ners Ross might have or what the profit-sharing agreement might be. ICIJ disclosed the Ross holding as part of reporting on 13.4 million records of offshore entities in tax havens leaked to German newspaper Süddeutsche Zeitung. The newspaper then shared the records with ICIJ and a network of more than 380 journalists in 67 countries. The New York Times is its US partner in this inquiry. The Times reported on the Ross holding last Sunday. It wasn’t immediately clear exactly how much of Navigator, which is publicly traded on the New York Stock Exchange, Ross personally owns. ICIJ reported that Ross and other investors own four Cayman Island entities that, in turn, own 31.5 percent of Navigator, a stake worth $176 million at Friday’s closing stock price. Ross’s stake in Navigator is likely a small fraction of that. In financial disclosure forms he filed with the government this year, Ross valued his holdings in the Cayman Island entities, which include other companies besides Navigator, at no more than $10.1 million. Sibur contributed 8 percent to Navigator’s revenue last year, according to reports filed with securities regulators. Russia’s energy sector is largely controlled by individuals with ties to state actors, including Putin. Much of the new trove of files

includes bank statements, e-mails and loan agreements from Appleby, a law firm that helps set up offshore dummy companies and trusts. Appleby told the ICIJ that there is “no evidence” that it has done anything wrong. Other records came from Asiaciti Trust, a family-run offshore specialist based in Singapore, and from 19 corporate registries maintained by governments in jurisdictions that draw the wealthy seeking privacy. Big investments in two United States tech companies from a Russian government bank and Russian energy giant have also come to light. The ICIJ reported that Silicon Valley investor and Russian citizen Yuri Milner got $191 million from VTB Bank, and invested that money in Twitter. The leaked records also show that a financial subsidiary of Russian energy company Gazprom funded a shell company that invested in a Milner-affiliated company that held roughly $1 billion in Facebook shares shortly before its 2012 initial public offering. Milner told the ICIJ that he was unaware of any involvement by the Gazprom subsidiary in any of his deals and that none of his investments has been related to politics. Milner has also invested in a tech-savvy real-estate fund that was cofounded by Trump adviser and son-in-law Jared Kushner called Cadre. Milner told the ICIJ that he used his own money for the investment. New York Times News Service

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Editor: Lyn Resurreccion • Tuesday, November 7, 2017 A7

Investors worldwide size up power play in oil-rich kingdom

IN this March 7, 2010, photo, Saudi billionaire Prince Alwaleed bin Talal al-Saud attends the speech of King Abdullah bin Abdul Aziz al-Saud of Saudi Arabia, at the Saudi Shura “consultative” council in Riyadh, Saudi Arabia. Saudi Arabia has arrested dozens of princes and former government ministers, including a well-known billionaire Prince Alwaleed bin Talal al-Saud. AP/Hassan Ammar

ust two weeks ago, Saudi Arabia gathered the global business elite in Riyadh, promising a new age for the oil-rich kingdom as it sought to court overseas money and investment. But late last Saturday, the kingdom showed its old face of palace intrigue, with the arrests of four ministers and 11 princes, including Prince Alwaleed bin Talal, the billionaire who is one of the country’s most public investment figures. International investors and business executives are now trying to interpret the power play. To some, the arrests portend a quick consolidation of authority under the young, reformist Crown Prince Mohammed bin Salman, who wants to vault the country to modernity.

In that way, the arrests are viewed as a sign that the crown prince will be able to push through his ambitious economic agenda, including selling off shares in the giant state oil company. To others, the arrests point to the potential for political tumult that could lead to the collapse of his entire project. Overseas investors have been reluctant to plow money into a country where the rule of law is weak and the ruling family trumps all. “It might have good consequences for stability maybe, or just the opposite,” said Dragan

Vuckovic, president of Mediterranean International, an oil-service company that does business across the Middle East and North Africa. “It’s questionable what is happening behind the scenes, it is a very secretive society.” The arrests came at an awkward time for the kingdom. Salman recently invited more than 3,500 investors, corporate chief executives, and leaders of nongovernmental organizations to Riyadh for a three-day conference intended to promote future business opportunities. Officials promised that the public offering of the state oil company, Saudi Aramco, would go forward and that the sovereign wealth fund would soon rank among the richest in the world with more than $400 billion in assets by 2020. T hey pledged to build a utopian megacity on a stretch of deserted land that would attract capital and

talent from all over the world. The conference attracted a slew of senior executives and officials, including Tony Blair, former prime minister of Britain; Christine Lagarde, managing director of the International Monetary Fund; Masayoshi Son, chief executive of the Japanese technology company SoftBank; and Blackstone’s chief executive, Stephen Schwarzman. Some of the attendees spoke highly of Salman’s economic ambitions. The planned initial public offering of Aramco, they noted, could free government capital to spend on urban investment and job development. Cultural changes like granting women the right to drive could encourage Western companies to invest in or start operations in Saudi Arabia. Despite the goodwill, few had backed the effort with time and money. And the weekend’s arrests could add to that reluctance. But they could also change some perceptions, if the crown prince can eventually show a broader commitment to shaking up an entrenched royal bureaucracy. “I think this is going to slow things down, but if the gambit is successful it will help,” said Charif Souki, chairman of Tellurian, a liquefied natural gas company now attempting to make energy deals with Saudi Arabia. Speaking of Salman, he said, “Once he has consolidated power, he will do what he wants to do, which is to modernize the country and modernize Islam, which are all good things. But it might be very dangerous and it might not work.” Even before the arrests, investors did not quite know what to make of the kingdom. Saudi Arabia has unveiled a sweeping economic reconstruction called Vision 2030, intended to diversify the country’s employment beyond oil. The cornerstone of the economic effort is the proposed initial public offering of Saudi Ar-

It might have good consequences for stability maybe, or just the opposite.” —Vuckovic amco, which exchanges around the world have been vying to secure. In a tweet just hours before the arrests, President Donald J. Trump said he would appreciate it if the Saudi Aramco public offering took place on the New York Stock Exchange. The crown prince and his father, King Salman, have also won praise from local and international business leaders for their promises to return the kingdom to the kind of religious moderation that was more prevalent before a period of religious and sectarian unrest in 1979, when the royal family began to rely on conservative Islamic clerics to guarantee stability. They have had the temerity to take on the religious police and begin rolling back some social policies. But Saudi Arabia has also faced unusual turbulence, complete with the sacking of two crown princes, a costly war in Yemen and a confrontation with Qatar. The weak price of oil has amplified the financial stress in the kingdom. The government has been forced to cut benefits for highly paid civil servants. There remains a great deal of skepticism that the economic reengineering can be pulled off, in part because much of the royal family and old guard have been made rich from payments by Saudi Aramco, whose books are essentially closed to the public. That is one reason there is growing talk that the Saudis will eventually turn to China, rather than

the London or New York stock exchanges, to get around Western regulators and raise capital for Saudi Aramco. “I don’t see them get investor interest unless they can produce a set of financial books that have been audited to Western accounting standards,” said Nancy T. Schmitt, president of Taum Sauk Investments, a firm based in New York that specializes in energy. “If this is a step to getting to that, then this is a good thing. But I don’t know that because I can’t read the palace intrigue.” The arrests just make it harder to sort through the business climate. Some interpreted the arrests as being disturbingly arbitrary. One of the officials arrested was the for mer Finance Minister Ibrahim al-Assaf, a Saudi Aramco board member. Another was Adel Fakieh, an early drafter of the crown prince’s reforms, who was ousted from his post of economy minister earlier Saturday. “I don’t think it sends a particularly good signal to investors,” said Rachel Ziemba, managing director for emerging markets at Roubini Global Economics, a research firm in New York. There is another school of thought among business leaders and analysts that the arrests were part of an effort to make the Saudi Aramco offering and other reforms unstoppable. In that way, it would be the sort of proof that the crown prince has the power to get his agenda done. “This is just the kind of determination and commitment that is called for,” said Sadad al-Husseini, former executive vice president of Saudi Aramco. Helima Croft, global head of commodity strategy at RBC Capital Markets, who attended the Riyadh conference, was somewhat more circumspect. “Does this scare off a pension fund or can this be sold as creating the necessary conditions of success?” she asked. “It’s a high-stakes game.” New York Times News Service

Catalan Five get conditional freedom in Belgium Ex-US trade rep: Leaving

RUSSELS—Ousted Catalan president Carles Puigdemont and four close separatist allies regained their freedom at the end of a tumultuous Sunday that started when they surrendered in Brussels to face possible extradition to Spain for allegedly plotting a rebellion. But a Brussels investigative judge quickly ruled there was no reason to put the five politicians behind bars, and released them on condition they stay in Belgium and attend their court sessions within two weeks. Hours after the former Catalan regional president and four ex-ministers turned themselves in to Belgian authorities, Puigdemont’s party put him forward as its leader for an upcoming regional election called by the Spanish government—meaning he could end up vocally heading a campaign from Brussels while he fights a forced return to Spain. The decision was rife with implications for Spain and political consequences for Catalonia, the restive Spanish region fighting Madrid for independence. The five Catalan politicians who fled to Belgium after Spanish authorities removed them from office on October 28 were taken into custody last Sunday on European arrest warrants issued after they failed to show up in Madrid last week for questioning. In Belgium even the prosecutor didn’t think it was necessary to detain the five after Puigdemont made it amply clear he would fully cooperate with Belgian authorities. “The request made this afternoon by the Brussels’ Prosecutor’s Office for the provisional release of all persons sought has been granted by the investigative

judge,” a statement from the prosecutor’s office said. The office said the whole extradition process could take more than 60 days, well past the December 21 date set for the regional election in Catalonia. Puigdemont and the four ex-ministers left for Belgium last week as the Spanish government, seeking to quash Catalan separatists’ escalating steps to secede, applied constitutional authority to take over running the region. The officials said they wanted to make their voices heard in the heart of the European Union, and have refused to return to Spain, maintaining they could not get fair trials there. Nine other deposed Catalan Cabinet members heeded a Spanish judge’s summons for questioning in Madrid on Thursday. After questioning them, the judge ordered eight of them to jail without bail while her investigation continues. The ninth spent a night behind bars before posting bail and being released. Whether in Brussels or Barcelona, Puigdemont is at the heart of political jockeying for position to start a campaign that promises to be as bitter as it is decisive to Spain’s worst institutional crisis in nearly four decades. While parties opposed to breaking away from Spain try to rally support to win back control of Catalonia’s regional parliament, prosecession parties are debating whether or not to form one grand coalition for the upcoming ballot. Another former president of the region, Artur Mas, told Catalan public television last Sunday that he backed a fusion of parties for the December vote. But Mas said the main goals of secession supporters must be recovering self-rule and the

release of the jailed separatists. “If we add the issue of independence, we won’t get as many people to support us,” said Mas, who was the first Cata lan leader to har ness the politica l momentum for secession. An opinion poll published by Barcelona’s La Vanguardia newspaper last Sunday forecast a tight election between parties for and against Catalonia, ending the region’s century-old ties to the rest of Spain. The poll predicts that pro-secession parties would win between 66-69 seats, less than the 72 seats they won two years ago. Sixty-eight seats are needed for a majority. Puigdemont and his fellow separatists claimed that a referendum on secession held on October 1 gave them a mandate for independence, even though it had been prohibited by the nation’s highest court, and only 43 percent of the electorate took part in the vote, which failed to meet international standards and was disrupted by violent police raids. Catalonia’s Parliament voted in favor of a declaration of independence on October 27. The next day, Spain’s central government used the extraordinary constitutional powers to fire Catalonia’s government, take charge of its administrations, dissolve its parliament and call the December election. Hundreds of pro-secession Catalans gathered in towns across the region last Sunday. “We want to send a message to Europe that even if our president is still in Brussels and all our government now is in Madrid jailed, that the independence movement still isn’t finished,” 24-yearold protester Adria Ballester said in Barcelona. AP

TPP a ‘strategic blunder’ T rump administration’s decision to withdraw from the Trans-Pacific Partnership (TPP) trade agreement will cost the United States access to markets in the Asia-Pacific and make it easier for China to advance its own vision for the region, said Michael Froman, who served as the US Trade Representative under former President Barack Obama. Froman, who led US negotiators in the creation of the multilateral trade pact, said in an interview last Friday that the nation would become less competitive in the region as other countries move ahead with their own trade agreements. President Donald J. Trump withdrew the US from the TPP early in his administration, and has stated a preference for pursuing bilateral trade deals. Froman characterized the move as a retreat of US leadership in the Asia-Pacific. “I think the Trump administration has put the thumb on the scale in terms of a Chinacentric Asia-Pacific,” he said. That’s “not in the interest of an open, free and rules-based global trading system.” Froman, who is now a fellow at the Council on Foreign Relations, spoke ahead of Trump’s first presidential visit to the region, a trip that includes meetings with leaders from Japan, China, South Korea and Vietnam. He expects security concerns related to North Korea to be the “dominant issue” in most of the countries the president visits.

Trump’s trip

But there will still be pressure on economic issues. “When there are trips by presidents, there’s always a search for deliverables,” Froman said. He pointed to agreements previously reached between Japan and the US in the TPP nego-

tiations as “available to take off the shelf ” if the two countries want to produce concrete results. In a separate interview on Bloomberg TV, Froman said policy-makers in Asian countries would be watching Trump’s visit to see if the US is withdrawing from the region, or for its alternative vision to the TPP, if it plans to stay engaged. Speaking to business leaders in Tokyo on Monday, Trump reaffirmed his decision to pull the US out of the trade agreement. “TPP was not the right idea,” Trump said. “I’m sure some of you in this room disagree but, ultimately, I’ll be proven right.” Talk of a bilateral trade agreement may come up during Trump’s meeting with Japanese Prime Minister Shinzo Abe, Froman said, but both countries have much more preparation to do before work on such an agreement could begin in earnest.

Japan’s stance

U.S. negotiators will be kept busy for some time with talks on the North American Free Trade Agreement (Nafta) and the US-Korea Free Trade Agreement. Japan, for its part, is watching the substance and style of the Trump administration’s negotiations before making its own commitments, he added. “The renegotiation of Nafta really is the Trump administration’s first opportunity to make clear and make specific what it considers to be good trade policy,” he said. “That will inform Japan’s decision as to whether it wants to invest the time and political capital” in negotiating a bilateral trade deal. Froman also praised the TPP-11 initiative, an effort by other TPP countries to enact the agreement without the US. Bloomberg News

A8 Tuesday, November 7, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Closer

cience Secretary Fortunato T. de la Peña told ABS-CBN News recently that they are developing tools to encourage more Filipinos to work from home, as artificial intelligence threatens to displace up to 40,000 people by 2022, particularly in the outsourcing sector. Working from home is a “very positive social development” because this will allow parents to have more time with their children and reduce the number of commuters on the streets, the ABS-CBN report said. We agree. The commute to and from workplaces is getting to be too expensive in terms of not only money but lost time, so much so that “geographic compatibility” now matters even in personal choices, like where to work or what school to go to. Factoring in transport costs today, perhaps, the best one is always the nearest one. The best school to go to is the nearest school. The best place to work is the one closes to your home (if not working at home), or the best place to live is the place closest to where you work. We see a lot of condominiums being built conveniently near the Metro Rail Transit and Light Rail Transit routes. These railways are now the preferred modes of transport for those commuting to their workplaces, and they are servicing more people than ever precisely because transport costs eat so much into the daily income and there is so much time wasted in traffic that it’s quite impractical even for private-car owners to be driving to work every day. Wages have barely increased and whatever trivial increases there have been are easily gobbled up by inflation. The limited living budgets we have depend on the small choices and the small changes we make every day. These turn out big when computing our expenses at the end of the month. Prices of everything are going up so we have to be smart. There are plenty of examples to follow. Like the office people who ditched their cars and invested in good bicycles, which they now use to go everywhere for solo trips; or those drivers who have modified their driving habits and now take fewer trips, taking public transport on certain days or using carpooling services on others. The condominium and housing developments that we see today are being built on the same principle, that the buyer would be within close proximity to everything he or she needs. Home is close to school, church, hospital and workplace. The community is self-contained. In terms of legislation, there is a Senate bill filed by Sen. Joel Villanueva that seeks to give employees and employers an option to adopt flexible working arrangements. Senate Bill 1571 espouses alternative work arrangements that allow both employer and employee to agree on something that works best for both parties. It amends Article 83 of the Labor Code, which limits normal hours of work at eight hours a day for five days. Under the filed measure, an employer has an option to implement any type of flexible work arrangement, which includes: 1) compressed workweek; 2) gliding or flexi-time; and 3) flexi holidays schedule. We support this and similar measures. Traffic jams in Metro Manila and other urban centers in the country are getting worse. We are all becoming weary of long commuting times and wish to work closer to home, if not from home. Being able to do so would immediately lead to savings for workers and their families; and the biggest and most important savings of all are time and stress—more time for our private lives with much less stress. Since 2005

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THE Entrepreneur Continued from A1

T cannot be denied that among the presidents that followed the martial-law regime, President Duterte is the most committed and determined to put in place the infrastructure systems that the Philippines direly needs, to pave the way for investment inflows and sustain strong economic growth. Nothing can be done about the constitutional limit on the presidential term, so the President and his economic team are adopting strategies and reforms to complete as many projects, particularly the most needed ones, within the sixyear term. For projects that are so big as to require more than six years, such as the country’s first subway system, the goal is to ensure financing and finish at least the initial phase, so the projects could be completed by succeeding administrations. On the funding side, President Duterte—through his independent foreign policy—has been able to obtain commitments from China and Japan for billions of dollars in grants and loans to support the Philippines’s “Build, Build, Build” infrastructure program. At the same time, the commitments from the two economic giants, as well as the sincerity and determination of the government to pursue

the massive infrastructure program has kindled the interests of other countries and foreign investors to participate in local infrastructure projects. With the six-year term of the President in mind, the Department of Public Works and Highways (DPWH) has adopted innovations and strategies to reduce project completion periods. For instance, Public Works Secretary Mark A. Villar, after finding out that some ongoing projects have construction periods of seven years or longer, revised deadlines for these projects and put a five-year maximum time for completion. He formed a task force composed of lawyers from the department that will handle right-of-way issues to make sure these do not delay implementation of projects. Maximizing technology, he added, such as the use of drones, keeps himself updated on the work progress on all projects,

The economic storm

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

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Massive infrastructure within six years

John Mangun

OUTSIDE THE BOX

he storm always comes quietly and slowly. The changes are noticeable, but it is difficult to know whether the early dark clouds will result in a shower or a typhoon.

The global political/economic cycle began changing toward the end of 2015. No one took much notice of it and when discussed—as I did at the time—it seemed more theoretical than real. Maybe the first cloud happened in September 2014, when Scotland took a vote for independence from the United Kingdom. The final vote was clearly onesided. The “No” vote was 55 percent. Less than two years later, 51.9 percent of the voters wanted the UK to leave the European Union (EU). And in less than 18 months, the Catalan region of Spain has put that country, as well as

the EU, into a massive storm. Along the way, the customary political class knew it was on rocky ground but every one expected it would still be business as usual. In the Philippines the traditional ruling class was offering the voters a choice between two or three of its members. The United States was preparing that the most momentous change would be a female president, one from an entrenched political dynasty. While both of those elections were won by persons, who, one year before, were not even under consideration, these were considered outliers. By now, the

and to deter corruption. In the past, public works projects are among the most politicized— even the smallest infrastructure project was accompanied by billboards screaming the pictures and names of politicians who claim credit for the projects. Under the Duterte administration, roads and bridges that go nowhere are a thing of the past. The DPWH still entertains proposals from congressmen because they are supposed to know what their constituencies need, but these proposals are subject to study—projects that are accepted are included in the official master plan for infrastructure. Actually, infrastructure projects had started to move in the final years of the previous administration. Instead of setting these projects aside and replacing them with new projects under the current administration, the DPWH under President Duterte hit the ground running. Instead of implementing reorganization, only minimal changes were done, so the department was able to continue the implementation of the inherited projects. Villar’s rationale is that these are not projects of any person or leader; all of these are the projects of Filipinos, and should be completed as soon as possible, for their benefit. There are no old or new projects; if these are ready for implementation, there should be no delay. That is why approval even of bigticket projects is faster now. During a roundtable with reporters last week, the Asian Development Bank (ADB) said the Duterte

administration was sending a positive signal through recent reforms in streamlining the approvals and project preparation for flagship infrastructure projects. The government is now working harder to eliminate bottlenecks in project approval and preparation, according to ADB officials and economists. Under President Duterte’s recently issued Administrative Order 8, as many as 11 agencies were removed from the board of the National Economic and Development Authority (Neda). The board, chaired by the President, is the highest decisionmaking body for national infrastructure projects. The Neda board is now composed of the President as chairman, socioeconomic planning secretary as vice chairman and as members are the executive secretary, Cabinet secretary, secretaries of budget, finance, public works and highways, trade, transportation, chairman of the Mindanao Development Authority and deputy governor of the Bangko Sentral ng Pilipinas. The connector road for the North and South Expressways, which went through three administrations, is finally moving. Under the Duterte administration, we don’t expect to see the disagreements that caused the delay of the project. The President and his economic managers are moving as a team, and are working toward the same goal: Finish the job!

traditional game is gone. France elected a “traditional” politician in Emmanuel Macron. But he formed his own political party and the two political parties that had ruled France for decades were completely shut out. If we needed any more proof that global politics is in typhoon mode, look no farther than this past weekend’s headlines about the “palace coup” in Saudi Arabia that saw the arrest and detention of dozens from the old guard political class. Now comes the economic storm. And it will be triggered by a strong US dollar. The US economic numbers show a complete turnaround. Consumer confidence just hit its highest level in almost 17 years as the unemployment rate falls to its lowest level also in 17 years. The US stock market is up 31 percent in the past 12 months. It is likely that the US Federal Reserve—under new leadership —can begin unwinding its “money printing” polices. The US dollar index has been on a oneway downward track since January 2016, giving some credibility to those that have been saying for a decade that the dollar was dead. But the dollar actually bot-

tomed out in 2011, and has been going sideways in a relatively narrow range— about 6 percent—since late-2014. The Trump administration’s taxreform proposal will make the US the most desirable place to do business of the developed economies. Combined with stronger interest-rate increases next year, there will be billions upon billions of wealth flowing to the US economy. While on surface this would be favorable for trade to the US, the issue today is not trade but capital flows. Money moving into the US dollar would be a disaster for Europe. Countries all around the world need to constantly issue new and refinance old debt. Higher US interest rates and a stronger dollar will make that increasingly difficult. If you liked the political chaos of the past two years, you are going to love the economic chaos of the next two years. Be prepared.

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

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

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Tuesday, November 7, 2017 A9

Correcting injustices in the Clean polls and economic growth benefits and pension system Ernesto M. Hilario

ABOUT TOWN

Cecilio T. Arillo

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N reaction to my column, “Reforming seven uniformed services retirement benefits” on October 26, the Confederation of Uniformed Services Associations (Conusa) has strongly suggested to Congress to replace Executive Order (EO) 201 with a joint congressional measure to correct injustices in the allocation of benefits and pension system in the country’s uniformed services.

Speaking for Conusa, retired Vice Admiral Ariston V. de los Reyes explained that during the Arroyo administration, it was Congress’s Joint Resolution 4 S-2009 which, among other things, authorized President Duterte to implement salary adjustment in four equal yearly tranches, commencing on July 1, 2009. “In order to execute the same annually, the President had to issue an executive order each year. Thus, for the third tranche, President Benigno Aquino III issued EO 40 S 2011,” de los Reyes said. According to him, on the final semester of the Aquino administration in 2016, Congress failed to pass the bill for salary standardization in government due to disagreement on the indexing of pension of retired military and uniformed services personnel (MUP) to new rates. “The Senate supported said indexing; the House of Representatives did not. Thus, President Aquino took it upon himself to usurp legislative power by issuing EO 201 in lieu of a bill or a joint resolution passed by Congress. Congress has yet to conduct an inquiry on the matter in aid of legislation,” de los Reyes explained. To correct iniquities, the Conusa wrote Duterte three times since July 2016 recommending to amend EO 201 so as to provide for adjustment of base pay of MUP in the active service, and allow pension indexing of the retired, pending enactment of a salary standardization law in lieu of EO 201. However, the Conusa has yet to receive a reply from the Office of the President on the matter. The federation found EO 201 unconstitutional, unlawful, unduly oppressive and discriminatory against the active and retired MUP, who have served faithfully and honorably, and oftentimes at the risk of their lives in order to secure our people and defend our land. EO 201 merely grants provisional allowance and officer’s allowance in lieu of increase in base pay of MUP. Without a permanent law, MUP’s base pay, longevity pay, flying pay, sea duty pay, instructor duty pay and combat duty pay in the active service cannot be increased. Likewise, the pension of retired MUP cannot be adjusted in accordance with existing laws, which allow automatic indexing of their pension to current base pay. “On the other hand,” the Conusa said, “indexing of pension of the retired justices and members of the constitutional commissions under EO 201 is allowed which is very discriminatory to the retired MUP. It will surely have continuing deleterious effect to their morale and welfare, now and in the future.” “As an illustrative example, the pension of a retired chief of staff (CS) of the Armed Forces of the Philippines and that of a deputy ombudsman falls

To correct iniquities, Conusa wrote President Duterte three times since July 2016 recommending to amend EO 201 so as to provide for adjustment of base pay of MUP in the active service and allow pension indexing of the retired, pending enactment of a salary standardization law in lieu of EO 201. However, Conusa has yet to receive a reply from the Office of the President on the matter. under the same salary grade (SG) 30. EO 201 increased the base pay of SG 30 by 122 percent from P78,946 to P178,043 (step 2). By 2019 when the fourth and final tranche of base pay adjustment shall have been completed, the monthly pension of a retired CS shall remain at P86,062.50, while that of a deputy ombudsman shall increase to more than P180,000 (allowances not yet factored in). Similarly, an undersecretary, also with SG 30 who will retire at age 65 in 2019 would be entitled to receive monthly pension of more than P160,000 by 2024,” the Conusa lamented. The Conusa also said: “Such disparity is also apparent in varying degrees at the lower ranks in the MUP, which is tantamount to continuing relative diminution of their pension due to inflation, while the pension of their civilian counterparts continue to increase as years go by. Indeed, suspension of pension in the MUP by EO 201 is a grave oversight and is not in consonance with sound national policy formulation. It will likely cause low morale and dissension among the ranks of the MUP in the near future.” Meanwhile, there is a pending proposed joint resolution from the Office of the President covering only adjustment for MUP (partly from the provisional allowance and officer’s allowance provided by EO 201, plus increases by rank in accordance with the President’s public pronouncements), and more significantly suspending pension indexing. EO 201 will continue to be the basis of base pay and pension adjustment of civilian government officials and employees until 2019, which already allows the indexing of pension of the retired justices and members of the constitutional commissions. Thus, EO 201 will be institutionalized and become a precedent to similar issuance by a President. To correct the injustices, the Conusa proposed a joint resolution that must embody the pertinent contents of EO 201, with allowances for MUP being replaced with base pay and without provision for suspension of indexing of pension as in the case of the retired justices and members of the constitutional commissions. To reach the writer, e-mail cecilio.arillo@ gmail.com.

S there a correlation between free and fair elections and economic growth? From our own experience in the 2016 general elections that were fully automated from the actual voting to the counting of the votes, we can definitely conclude that clean and credible polls are an important factor in boosting economic growth. In 2016 our GDP posted growth of 6.9 percent, allowing the country to emerge as the top performer in the 10-member Association of Southeast Asian Nations. This year, the economy is projected to maintain its growth rate of between 6.5 percent to 7 percent. For next year, the Asian Development Bank (ADB) sees our economy growing at 6.7 percent. For its part, the International Monetary Fund (IMF) retained a growth forecast of 6.6 percent for the Philippines this year. The IMF expects the Philippines to continue outperforming other economies in Asean, particularly Vietnam (6.3 percent); Malaysia (5.4 percent); Indonesia (5.2 percent); and Thailand ( 3.7 percent). Finance Secretary Carlos G. Dominguez III sees an average growth rate of 7 percent for the Philippines from 2017 onwards, as well within our grasp as our macroeconomic fundamentals remain

strong, with robust overseas Filipino workers remittances also keeping the economy on even keel. Sustained economic growth is possible only with political stability. While we have to deal with extremist groups in southern Philippines and the communist rebellion in certain parts of the country, the threats remain manageable. The expansion of the Philippine economy is not surprising as both local and foreign investors remain optimistic about our growth prospects, and are confident that our political system can overcome challenges. A vibrant democracy allows not just political dissent but also ensures credible elections. The three automated polls we have had so far in 2010, 2013 and 2016 restored our people’s faith in our electoral process despite technical glitches here and there. The automated election in 2016 is generally considered clean and fair and reflective of the people’s will.

Slouching toward war with North Korea Nicholas Kristof

new york times

ohn Brennan, the former head of the Central Intelligence Agency, estimates the chance of a war with North Korea at 20 to 25 percent.

Joel S. Wit, a Korean expert at Johns Hopkins University, puts it at 40 percent. Richard Haass, the president of the Council on Foreign Relations, says the odds may be somewhere around 50-50. Yet, we’re complacent: Neither the public nor the financial markets appreciate how high the risk is of a war, and how devastating one could be. The Congressional Research Service last month estimated that as many as 300,000 people could die in the first few days of war—and that’s if it remains nonnuclear. If there is a nuclear exchange, “there easily could be a million deaths on the first day,” says Scott Sagan, an international security expert at Stanford. Sagan says the odds of war “are certainly greater than is widely recognized by the American public.” President Donald J. Trump is traveling in Asia this week, rallying countries to strengthen sanctions against North Korea. His past efforts at this have been quite successful, and during my recent visit to Pyongyang, I saw signs that

sanctions were biting. But the goal appears doomed: Almost no expert believes that sanctions will force Kim Jong Un to give up his nuclear weapons or halt his missile program. That puts us on a collision course, for North Korea seems determined to develop a clear capacity to target the United States with nuclear weapons, while the White House hints that it would rather have a war than allow the North to become a nuclear threat. “Our president has been really clear about this,” H.R. McMaster, Trump’s national security adviser, said on Fox News. “He is not going to permit this rogue regime, Kim Jong Un, to threaten the United States with a nuclear weapon. And so he is willing to do anything necessary to prevent that from happening.” The whispers in Washington are that “anything necessary” includes airstrikes on North Korea, such as a strike on a missile as it is being prepared for launch. When I asked North Korean officials what would happen in those circumstances, they answered unambiguously: war. Tammy Duckworth, a former military pilot who is now a Demo-

Asia can make TPP work without the US

onald J. Trump’s grand tour of Asia will attract a lot of attention this week, but in one respect the fuss will be misleading. The president will be no more than a bystander when the region’s leaders make a very big decision—whether to go ahead with the Trans-Pacific Partnership (TPP), a deal that the United States designed and subsequently abandoned. They can go ahead without the US, and they should. True, the pact was designed to go into

effect only if countries accounting for 85 percent of the region’s output signed on. This bar is impossible to reach without the US. Also, countries, such as Vietnam and Malaysia made concessions during the original talks in hopes of gaining access to the huge American market. Without that incentive, their interest in the deal is diminished—and if the agreement were thrown wide open to take account of this, it might unravel altogether. Yet, the deal isn’t dead. Negotiators have narrowed their differences, and it’s pos-

Manual elections in the past had been marked by the rule of the three Gs—guns goons and gold—thus, allowing traditional politicians and dynasties to dominate the political system. Automated elections reinvigorated our electoral process, and marks a significant departure from the manual system that tended to perpetuate patronage politics in the country. If we hope to maintain the trust and confidence of investors in the economy, then we must strengthen the foundations of our democratic system with political and electoral reforms. We must not allow a return to the manual system of elections that will represent a step backward in our efforts to promote participatory democracy and an inclusive economy. We must protect the sanctity of our electoral process. The proposal of some quarters, including the camp of losing vicepresidential candidate Ferdinand “Bongbong” Marcos Jr., for us to go back to manual counting of votes because of claims that automated polls are just as susceptible to cheating, will erode the gains made so far in reforming our political system. It is nothing less than a frontal attack on the democratic system that we restored in 1986, and are now seeking to fortify after Filipinos ousted tyrannical rule in 1986. A group called Democracy Watch has warned of apparent attempts to “discredit the automated elections and reverse the historic gains in our country’s democracy.” The 2016 elections have been widely hailed by both local and for-

sible agreement can be reached this week. They should seize the moment. Prolonging the talks raises the risk that political winds will shift again. It would have been far better to wrap up the initial negotiations sooner, so that the US could have signed before Trump’s election—but it’s too late for regrets on that score. Prompt action now can salvage a pact that’s valuable even without the US. This is partly because the deal’s most far-reaching clauses aren’t about tariffs, but aim to set new standards for

the protection of intellectual property, data flows, labor and environmental conditions, and more. In the long run, this will serve the interests even of countries, such as Vietnam that stood to gain most from increased trade with the US. Japan’s government, for its part, rightly sees the TPP’s ambitions as a tool to push through structural changes that make sense in their own right, and which would be politically difficult otherwise. Japan and others are also wary of US pressure to negotiate a bilateral

eign observers because of the speedy transmission of votes and a marked decline in election-related violence. Besides this, the group said, last year’s elections attracted a huge turnout of nearly 82 percent of the electorate, saw the biggest deployment of vote-counting machines in the world, and highlighted the poll body’s efforts to tap technical expertise, including the printing of some 40 million vote receipts and the training of more than 45,000 field technicians in less than three months, to make the political exercise reflect the mandate of the people. In fact, the Commission on Elections transmitted 86 percent of all votes on the night of the voting, leading to the proclamation of almost all 18,000 elective positions in a short period after election day. All of these, Democracy Watch said, were the end-result of the crucial and historic switch to automation. We agree completely. “To govern according to the sense and agreement of the interest of the people is a great and glorious object of government. This object cannot be obtained except through the medium of popular election,” the British political theorist Edmund Burke said many years ago. It’s as relevant today as it was then. It is true that a vibrant democracy makes for a dynamic and robust economy. By protecting our gains in restoring democracy, we lay the groundwork as well for enhancing the country’s sustained economic growth in the years ahead.

E-mail: ernhil@yahoo.com.

cratic senator from Illinois, says that from what she hears, the chance is greater than 50-50 that the president will order a strike. “I see a change in posture,” she told me. “I am extremely worried that we’ve moved beyond “Let’s prevent war” to “It’s acceptable to do a first strike.” Duckworth and other Senate Democrats have introduced legislation that would prevent the president from making a preemptive strike on North Korea without congressional approval, barring an imminent threat to the US or its allies. Sen. Lindsey Graham, R-S.C., has said that Trump told him he’d choose a war with North Korea over allowing it to continue on its course. “There is a military option: to destroy North Korea’s program and North Korea itself,” Graham told the Today show, relaying a conversation with Trump. “If thousands die, they’re going to die over there. They’re not going to die here—and he’s told me that to my face.” Graham said that if North Korea continues to test intercontinental ballistic missiles, a war is “inevitable.” This may be a bluff, but, if not, war is coming, for almost every expert believes that North Korea will continue its testing. Trump didn’t create the problem, and it’s real: We should fear North Korea’s gaining the capacity to destroy US cities. Eerily, on my last visit, North Koreans repeatedly said that a nuclear war with the US was not only survivable but winnable. The US must now choose among three awful options: 1) A “freeze for a freeze” deal, which Secretary

of State Rex Tillerson seems to be pursuing; 2) Long-term deterrence, just as we have deterred North Korea for decades from using its chemical and biological weapons; and 3) A conventional war that might escalate into a nuclear exchange. Security experts overwhelmingly say the least terrible choice is the deal for a freeze on North Korean testing in exchange for reductions in sanctions or US-South Korean military exercises, but at this point it’s not clear that either Washington or Pyongyang would agree to such an arrangement. Deterrence is next best, and war is the worst option. But that’s the option Trump seems headed toward. North Korea may also inflame the situation with provocations at any time, such as firing a long-range missile into the sea near Guam, or conducting an atmospheric nuclear test that would send radioactive fallout drifting toward the US. Trump may also shoot down a North Korean missile over international waters; that’s less provocative than a strike on North Korean territory, but I’d still expect a military response. And there’s a constant risk of miscalculations and incidents that spiral out of control. Fourteen years ago, America stumbled into a devastating war with Iraq without thinking through the consequences. This feels like déjà vu—only potentially far more devastating. “I do believe there’s a greater risk than people appreciate,” Haass told me. “I don’t know if the odds are 50 percent, 40 percent, 60 percent, but it’s a hell of a lot more than negligible.”

free-trade agreement instead of the TPP. Having a regional deal in hand would make it easier to engage with the US on level terms. Best of all, adopting the agreement largely as it stands would allow a future US administration, with a clearer understanding of US interests, to join without protracted new bargaining. With that in mind, negotiators have wisely decided to suspend and not eliminate certain clauses especially sought by the US, such as those dealing with “biologics.” These

could be easily reinstated. The region’s leaders shouldn’t let this chance slip. Talks led by China on the Regional Comprehensive Economic Partnership are moving along, but that’s almost certain to be a narrower deal, focused on tariff reductions rather than questions of greater concern to advanced economies, such as Japan and Australia. In stepping aside from the TPP, Trump has let his country down. There’s no reason other leaders should make the same mistake. Bloomberg View

Global Eye

A10 Tuesday, November 7, 2017 • Editor: Angel Calso

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Saudi assets seen heading for rocky times detained aren’t public, creating even more uncertainty in a market that’s already considered opaque. The kingdom’s attorney general said that “during the investigation, all parties retain full legal privileges relating to their personal and private property, including funds.”

Saudi makeover

IN this file photo, the Kingdom Tower, operated by Kingdom Holding Co. (center), stands on the skyline above the King Fahd highway in Riyadh, Saudi Arabia. Bloomberg

By Arif Sharif & Filipe Pacheco | Bloomberg

audi Arabia has thrown investors a curve ball. King Salman’s move to arrest a string of high-profile nationals, from ministers to princes, has left some encouraged by the authorities’ willingness to take on corruption. Yet, they’re also worried about who might be next.

“This is all new in Saudi Arabia, and the market doesn’t know

how it will all end,” said Tariq Qaqish, managing director of

the asset-management division at Mena Corp. Financial Services Llc. in Dubai. “We will see a shift in terms of sentiment, especially among foreign investors. For local and GCC investors, they will probably be on the sidelines until they understand how this latest move will play out.” In less than 24 hours, dozens of high-profile Saudis were arrested, the government intercepted a ballistic missile Yemeni Houthi fired at Riyadh’s international airport, and Lebanese Prime Minister Saad al-Hariri unexpectedly resigned in a televised speech from the kingdom. They’re signs of the changing times in Saudi Arabia. T he charges against those

Investors aren’t calling an end to naira problem By Paul Wallace

Bloomberg

opened in April and yields on oneyear Treasury bills that were above 20 percent for most of the year.

Oil production

Foreign holdings of Nigerian government debt may have more than doubled from around 5 percent a year ago, according to Standard Chartered Plc. That’s helped the naira to appreciate 2 percent since August to 355.49 per dollar, trimming its loss in 2017 to 13 percent. The yield on one-year T-bills has dropped around 400 basis points in two months to 18.2 percent, still among the highest in major emerging markets tracked by Bloomberg. For now, Nigeria’s benefiting from a bullish oil market and rampant demand for developing-nation assets. Crude prices have increased 34 percent since June as Opec members including Saudi Arabia push for output cuts to continue in 2018. And production in Nigeria, which is exempt from the curbs, has risen 15 percent this year to 1.7 million barrels a day. Foreign reserves are up to $34 billion, the highest in almost three years. But a drop in Brent crude to around $50 a barrel would probably be enough to push Nigeria’s current account back into deficit, according to Bank of America Corp., which sees the naira falling to 432 per dollar by the end of 2018.

That could force Nigeria, whose President Muhammadu Buhari has long leaned on the central bank not to let the currency weaken, to choose between selling down its reserves or saving them at the expense of foreign-exchange liquidity.

‘Looking rosy’

“It’s all looking rosy at the moment for Nigeria,” said Kevin Daly, a fund manager in London at Standard Life Aberdeen, which started buying T-bills soon after the Nafex window opened. “But that could easily change. Will the authorities be comfortable letting the naira drop to 380? That’s not been tested.” In the longer run, he says, Nigeria will struggle to sustain tight monetary policy, which is key to attracting foreign investors, and import restrictions if it wants the economy to pick up. Output contracted last year for the first time in three decades. Nigeria will be vulnerable to foreign-exchange shortages as long as it maintains a complicated currency regime and refuses, unlike other oil exporters, such as Kazakhstan and Russia, to allow its currency to float freely, says Ashmore. The central bank keeps its official exchange rate, used for government transactions and fuel imports, pegged at 305 against the dollar, almost 20 percent stronger than the Nafex rate.

pushing the austerity and transformation agenda, the benefits of which very few investors are pricing in.”

Detained Saudis

Among those arrested is Prince Alwaleed bin Talal, the billionaire with stakes in companies, such as Citigroup Inc. and Twitter Inc. Ranked the world’s 50th richest person with a net worth of about $19 billion, according to the Bloomberg Billionaires Index, Alwaleed is the founder of Kingdom Holding Co., a Riyadh-based investment firm. Kingdom Holding’s shares fell as much as 9.9 percent last Sunday in

the Saudi capital, bringing its losses for the year to 21 percent. “People that were untouchable aren’t anymore,” said Joice Mathew, the head of equity research at United Securities in Muscat. “Locals might think twice before bringing money in the stock market. People will refrain for making new positions, and be very vigilant and careful.” While Saudi stocks on Sunday fell as much as 2.2 percent, they recovered to advance 0.3 percent at the close. “The index could be getting support from the government—the Public Investment Fund could be in the market buying,” Mathew said.

Bulls bet banks to push Australia stocks By Abhishek Vishnoi

Bloomberg

igerian officials are increasingly confident the naira’s troubles are over for good. Some investors disagree. Portfolio inflows have risen in the past three months with crude prices rising above $60 a barrel and money managers taking heart from a foreign-exchange trading window, where the naira has converged with the black-market rate. That prompted central bank Governor Godwin Emefiele and Patience Oniha, the head of the nation’s Debt Management Office, to tell investors in London on October 27 that the currency was set to strengthen. Finance Minister Kemi Adeosun concurred, saying on November 2 that the government sees no significant exchange-rate risk as it prepares to raise dollar funding. But Nigeria’s system of capital controls, multiple exchange rates and the trading window known as Nafex would struggle to survive a drop in oil prices or a turn in sentiment against emerging markets, which may come as the Federal Reserve raises interest rates, according to investors including Ashmore Group Plc. and Standard Life Aberdeen Plc. “At the moment, it’s easy for them to manage the current system and muddle through,” said Brett Rowley, a managing director at TCW Group Inc. in Los Angeles, which oversees $200 billion, and recently started buying naira debt again after pulling out during the 2014 oil crash. “That could change if we got a significant drop in crude production or prices. That would be a key test to reassure investors they can get their money out even in times of stress.” Yield-starved global investors have piled billions of dollars back into the country in the second half of this year, attracted by the naira’s devaluation after the Nafex window

The government is giving the entire nation a makeover, from allowing women to drive to the construction of a new business hub on the Red Sea. The overhaul was kick-started by Crown Prince Mohammed bin Salman, who has bypassed senior royals to become the kingdom’s predominant leader, after a plunge in crude prices strained Saudi Arabia’s finances, and forced the energy-rich nation to confront the realities of life after oil. Since then, the kingdom has allowed foreigners to trade Saudi stocks directly and shifted the bourse’s settlement cycle to T+2, among other changes. But total foreign ownership has lingered below 5 percent of the value of shares on the exchange. The Tadawul All Share Index has declined 3.2 percent this year, compared with MSCI Emerging Markets Index’s 30 percent advance. The centerpiece of the crown prince’s “Vision 2030” reform plan, intended to diversify the kingdom’s economy and invest more heavily in infrastructure, is oil giant Aramco’s initial public offering, which could be the world’s largest. The crackdown “is the latest act of concentration of power in Saudi,” said Hasnain Malik, the global head of equity research at Exotix Capital. “As unprecedented and controversial as it may be, this centralization might also be a necessary condition for

ustralia, home to one of the worst performing stock markets anywhere in the developed world this year, is finally poised to leave the financial crisis behind. K2 Asset Management Ltd., whose fund has trounced the market, is betting financial and commodity companies will drive gains for equities down under. While many countries saw their local markets recently hit fresh record highs, Australia’s benchmark Standard & Poor’s/ASX 200 Index is only just approaching the highest level since 2008. Along with K2, Eight Investments Partners and Credit Suisse Group AG see earnings continuing to recover amid broader global economic growth and an improving outlook for commodity prices. “Looking forward, the capacity for Australian companies to generate profits is quite good,” said Melbourne-based David Poppenbeek, whose K2 Australian Fund has outperformed its benchmark by a factor of almost two since starting in 1999, and now has 35 percent of assets devoted to financial stocks. “Jobs are being created and confidence is returning.” K2’s cut the cash portion of its A$470-million ($360-million) portfolio to buy more equities. Profits for ASX 200 companies will grow another 6 percent in the year through June after expanding 15 percent in the previous period, according to Credit Suisse estimates. Australia added more jobs than forecast in September, even as concerns over wage growth and consumer sentiment persist. The Reserve Bank of Australia has held rates at the lowest on record for more than a year, steering growth toward services as the economy transitions away from a mining-investment boom. It has also signaled it’s in no rush to join global peers in reining in stimulus even as the nation’s economy is improving.

Global bull run

The equity benchmark posted its best month this year in October, rising 4 percent amid a worldwide bull run. A broader measure of the local market reached a postcrisis high last week—the All Ordinaries Index, which tracks Australia’s 500 largest stocks, is trading at the highest level since May 2008. There are signs the market’s advance was too much too soon. The Relative Strength Indicator, a technical measure, has been suggesting stocks are poised for a drop. “Statistically we are close to profit taking,” said Chris Weston, chief market strategist at IG Group in Melbourne. “Put no new money to work, wait for the pullback.” The ASX 200 on Monday closed down 0.1 percent at 5,953.80. The biggest drag was Westpac Banking Corp., which fell 2.2 percent after its full-year profit missed estimates. CEO Brian Hartzer said the outlook for the financial industry is becoming more challenging. The biggest contributor to October’s rally was the country’s largest lender, Commonwealth Bank of Australia, which posted record profit in August, thanks to mortgage and business lending. Westpac, National Australia Bank Ltd., BHP Billiton Ltd. and Macquarie Group Ltd. rounded out the top five. The biggest risk for the nation’s banks is a correction in property prices, but that scenario is unlikely, according to S&P Global Ratings. “Loan losses in the next two years are likely to remain very low by historical and international standards,” S&P said last Friday.

6,000

The ASX 200 previously approached the 6,000-level back in May and in 2015. Touching that level could spur more optimism around the 17-yearold measure, which was worse off than the S&P 500 in 2008 with a 41 percent decline. “It is a significant level” that may bring further gains, said Kerry Series,

who oversees A$250 million as chief investment officer of Eight Investments Partners in Sydney. “Stable economic growth and relative low bad debts, falling unemployment are positive for the economy and banks,” while “synchronized global growth” will support commodity prices and miners. He’s betting smaller companies, such as Cooper Energy Ltd. will outperform their larger rivals. Still, the banks and the miners have the two highest weightings on index so their fortunes can determine the direction of the local stock market. For instance, a surprise bank tax announced in May helped trigger five straight months of losses for stocks.

Dividends

For some, the 6,000-level may just be a number. Reinvesting dividends, which play a prominent role in the local market, would have helped investors recoup losses from the financial crisis back in 2013, based on the performance of the S&P/ASX 200 Accumulation Index. The lack of large technology stocks in Australia has limited the market’s performance this year. Tech firms, which make up less than 2 percent of the local benchmark, have led gains on the MSCI All-Country World Index, where they account for more than 17 percent of the global equities gauge. The ASX 200 has climbed 5 percent this year in local dollar terms. In US dollars, that advance is 11 percent, compared with 16 percent for the S&P 500 and 18 percent for the MSCI World. That relative underperformance has made the Australian measure cheaper, and possibly more attractive. Consensus price targets for the index’s 200 members suggest the gauge will be at 6,040.59 in a year, according to data compiled by Bloomberg. Credit Suisse is more bullish. Strategist Hasan Tevfik expects the index to finish 2018 at 6,500, implying a 9.2 percent advance from Monday’s close.

Global Eye BusinessMirror

www.businessmirror.com.ph

Qualcomm bracing for $100 billion fight with Broadcom By Ian King | Bloomberg

ualcomm Inc. is preparing to fend off an unsolicited $100-billion takeover bid from Broadcom Ltd., arguing it undervalues the company, people familiar with the plans said. Broadcom is preparing a $70-a-share offer for Qualcomm, which could come as soon as Monday, said the people, who asked not to be identified because the plans are private. Qualcomm will argue that the proposal, the largest-ever technology acquisition, is an opportunistic move to buy the chipmaker on the cheap, the people said. While Qualcomm’s board and management will give the offer due consideration, the San Diegobased company will likely recommend that shareholders reject it, the people said. This would force Broadcom to pursue a proxy fight if it wishes to proceed. A Qualcomm spokesman declined to comment, and Broadcom didn’t immediately respond to a request for comment. Qualcomm will make the case to shareholders that, in addition to a possible battle with the board, Broadcom may also face challenges from regulators, the people said. Broadcom has been trying since last year to secure approval for its purchase of Brocade Communications Systems Inc., a substantially smaller deal. Qualcomm is likely to argue that a regulatory limbo could put it on a prolonged and uncertain path that would cast doubt on the value of the deal, the people said. The combination of Broadcom and Qualcomm would create a colossus that controls key pieces required for any company that wants to build a smartphone. Meanwhile, Qualcomm is in the process of acquiring NXP Semiconductors NV, another major chip supplier. If those two join Broadcom, it would be the world’s third-largest chipmaker, with huge sway over the supply chain for phones and a growing presence in connected cars and data centers. Although Qualcomm’s stock jumped 13 percent last Friday after Bloomberg first reported on Broadcom’s plan to make an offer, the shares lag other chip stocks and are well short of the highs from last year. Qualcomm traded above $70 a year ago. That was before a raft of regulatory and legal challenges. In January Apple filed a lawsuit accusing Qualcomm of illegally misusing its leading position in phone chips to unfairly bolster profits from technology licensing. Qualcomm management said last week that the Apple suits would play out on court timetables, suggesting they won’t be resolved soon. Apple is considering dropping Qualcomm components from future iPhones and iPads, which would deliver a significant blow to the chipmaker’s sales, people familiar with the matter have said. Regulatory actions and investigations all over the world have raised concerns among investors. Qualcomm was slapped with record fines in South Korea and Taiwan and an antitrust suit by the United States government. Qualcomm has its own mega deal to worry about. The $47-billion purchase of the Netherlandsbased NXP would be Qualcomm’s biggest ever. But it may be delayed until next year due to government scrutiny, particularly from the European Union and China, the companies have said. They had aimed to close the acquisition by the end of 2017.

Tuesday, November 7, 2017 A11

Tomorrow’s gas station will charge vehicles and feed you in 10 minutes By Sandrine Rastello & Mikael Holter | Bloomberg

pit stop on a Norwegian highway in the middle of fields between Oslo and the Olympics town of Lillehammer will soon offer a glimpse of the future for the global gas station industry.

At the Circle K in Dal, 34 miles (55 kilometers) north of the capital, owners of the next generation of electric cars will within months be able to charge their battery in as little as 10 minutes—about one-third the time it now takes. While they wait, drivers can pop inside and wolf down a made-to-order burrito and other culinary items not usually found at gas station convenience stores. The new power and food services are two of several pilot projects in Norway by Circle K owner Alimentation Couche-Tard Inc., a Canadian convenience-store company that gained a European foothold with its 2012 acquisition of Statoil ASA’s retail arm. Couche-Tard is using the Nordic country as a testing ground for how to respond to the electricvehicle boom. “This is a trend that will continue to grow, so what is important to us is to transform with the market, like we have done many, many times over the last 100 years,” Jacob Schram, Couche-Tard’s head of European operations, said in an interview. The growing global popularity of environment-friendly electric cars, spurred by government incentives and falling prices, is threatening the core relationship between gas stations and drivers who now have various options to reload their batteries. To keep customers loyal in Norway, where electric vehicles now account for almost 30 percent of new sales, Circle K is even planning a 2018 foray

into residential charging stations. “We should transform much more, from expecting that the customer comes to us at the station,” Schram said. “We should maybe start also coming to them.” According to Schram, 60 percent to 70 percent of plug-ins takes place at home, 20 percent to 30 percent at work and in public places, and only 10 percent at gas stations. That’s forcing retailers to step up their game. At Circle K’s Dal facility, the new supercharger is part of a Europeanwide push financed by a group of carmakers, including BMW AG and Ford Motor Co. Circle K, is their northern European partner, with 60 stations planned in seven countries—20 in Norway alone—and room for six cars per charging station. The retailer will pocket rent from automakers, as well as a share of revenue, according to Schram. The Norway experiment is being closely monitored by Quebecbased Couche-Tard. The company, which started with one convenience store outside of Montreal in 1980, has gobbled up rivals to build a network of more than 12,000 stores spanning the globe from Florida to Latvia, with most offering fuel. The anemic performance by the company’s stock this year—it’s up less than 1 percent after more than doubling since the start of 2014— partly reflects investors’ questions over long-term growth prospects. In the United States, most US-

Electric vehicles at a Circle K fast-charging station in Oslo Bloomberg

based gas retailers don’t show much concern about electric cars, at least so far, said Jennifer Bartashus, a retail analyst at Bloomberg Intelligence in New York. Couche-Tard stands out because its international footprint enables it to study a nascent industry in a foreign market. “If you think about Norway, it’s small, it’s fairly self-contained, it’s environmentally focused, so it’s a unique market that not a lot of other companies will have that kind of presence in,” she said. “Whether or not we really get there, I think there will be a lot of interesting learning that we can take from the pilot.” With almost 120,000 electric vehicles for 5.3 million people, Norway boasts the highest electric-vehicle penetration in the world, helped by long-standing policies that exempt owners from several sky-high taxes. For example, a fossil-fuel car buyer would pay an average of 95,000 kroner ($11,700) just for a one-time ac-

quisition tax, according to the Norwegian Electric Vehicle Association. Electric-car drivers also enjoy additional perks, such as free passage through toll booths, access to bus lanes and complimentary parking and charging in cities, even if some of those benefits are being curbed. Slower charging is offered for free, which has left an opening for faster, for-pay options. In addition to the project with carmakers, Circle K plans to add to its 54 new charging stations next year. Food and services, which come with higher margins, are also part of the strategy. Despite efforts to offer better coffee, pastries and fresh food, Couche-Tard has been struggling to increase that category as a share of total in-store revenue—in part because of the continued strength of lower-margin tobacco sales. In Norway, where gas stations typically sell hot dogs and, at times, burgers, Circle K has introduced

a Mexican food experiment in a handful of stores, with burritos and quesadillas in the $8 to $11 range. Fresh salads are also available as a more healthful alternative. Later, stations may expand seating space and restrooms, according to Schram. Meanwhile, at a gas station in Oslo on a recent Wednesday afternoon, Jan-Anders Maao-Ruden, 36, plugged his Nissan Leaf into a 50-kilowatt charger, Circle K’s most powerful option at the moment. He said he didn’t know about the new food concept inside. But with five children to feed, it could be worth trying, he said. Superchargers at strategic spots throughout the country’s highway network could also be of help, even if Maao-Ruden’s Nissan is able to cover the 110-kilometer distance from the capital to his home in Bjoneroa when it’s fully charged. “I bought this car in August,” he said. “So I haven’t really had time to get rid of this low-battery anguish.”

Qatar Airways buys Cathay Pacific stake for $662 million By Kyunghee Park Bloomberg

atar Airways Ltd. agreed to acquire a stake in Cathay Pacific Airways Ltd., a deal that would help it gain a foothold in the world’s second-biggest aviation market. The Middle Eastern carrier will buy 9.6 percent of Cathay from Hong Kong-based Kingboard Chemical Holdings Ltd. and related companies for HK$5.16 billion ($662 million), according to a filing to the city’s stock exchange on Monday. CEO Akbar al Baker, confirming the deal, said the investment “further supports Qatar Airways investment strategy.” When completed, the purchase, the first-ever investment by a Middle Eastern airline in an East Asian carrier, would make the Doha-based company the third-largest shareholder in Cathay. It would also provide access to mainland China, a country set to emerge as the world’s biggest aviation market within a decade. The deal comes a few months after Qatar Airways dropped a plan to invest in American Airlines Group Inc., which rebuffed the attempt. “Geographically, the Middle Eastern carriers have been constrained from conquering Hong Kong and China,” said Mohshin Aziz, an analyst at Maybank Investment Bank Bhd. in Kuala Lumpur. “They have a lot of capacity so they have to look elsewhere. If both airlines can work together, it will definitely be good for Cathay.” Shares of Cathay fell as much as 4.9 percent on Monday in Hong Kong

A Cathay Pacific Airways Ltd. aircraft prepares to land at Hong Kong International Airport in Hong Kong, China. Bloomberg

—in spite of the shares being sold at a small premium—before recouping most of the losses. The deal dimmed the prospects of a merger with Air China Ltd., a possibility that has been the topic of much speculation among traders in recent months, said K Ajith, an analyst at UOB Kay Hian Pte. in Singapore. The state-owned carrier, Cathay’s second-biggest shareholder with 29.99 percent, said it was happy with Qatar Airways’s purchase. China has been at the center of many deals with global airlines seeking a piece of the pie as international traffic from the country surges. Delta Air Lines Inc. bought a minority stake in China Eastern Airlines Corp. in 2015, while American Airlines purchase a minority stake in China Southern Airlines Co. this year. The International Air Transport

Association predicts passengers will nearly double to 7.8 billion by 2036, and Asia Pacific will contribute more than half of the new additions. Cathay is in the midst of the biggest corporate revamp in two decades to help revive earnings after getting squeezed between Middle Eastern carriers, such as Emirates Airline and Etihad Airways PJSC at the premium end of travel, and low-cost and mainland Chinese rivals at the other. It has announced job cuts and was in talks with pilots over compensation as it reported its worst half-year loss in at least two decades in the six months through June. In a statement on Monday, Cathay CEO Rupert Hogg said he looks forward to a “continued constructive relationship” with Qatar Airways. Cathay Pacific is part of the Oneworld alliance, as well. Hong Kong

conglomerate Swire Pacific Ltd., is the largest shareholder of Cathay with about 45 percent. Qatar Airways is also facing troubles back home after the emirate of Qatar came under a blockade starting June by a Saudi-led group of Arab states. Four neighboring countries barred the carrier from their airspace, forcing it to redeploy a part of its fleet. A prior attempt to buy an American Air stake didn’t go well for Qatar Airways. The United States company’s chief, Doug Parker, said he wasn’t keen on having the Gulf carrier as a shareholder. While the airlines are partners in the Oneworld alliance, Qatar Airways’s move came as a surprise since American had publicly opposed the growth of Middle Eastern airlines in the US, saying they’ve benefited from $50 billion in illegal aid. Qatar Airways has a 20-percent stake in British Airways parent IAG SA. It also has 10 percent of Latam Airlines Group SA, the biggest South American carrier, and plans to take

a 49-percent stake in minor Italian operator Meridiana SpA. “Cathay Pacific is one of the strongest airlines in the world, respected throughout the industry and with massive potential future,” Qatar Airways said in its statement. Qatar Airways will buy about 378.2-million shares at HK$13.65 apiece in cash, a 3.4-percent premium over Friday’s closing price of HK$13.20. The transaction will be completed later on Monday, Qatar Airways said. “I don’t see Cathay being excited about this and I wouldn’t expect major changes even in the medium term,” said Will Horton, an analyst at Capa Centre for Aviation in Hong Kong. “It has the flavor of a passive stake despite the optics appearing significant.” Kingboard Chemical, a diversified group that is into the manufacture of laminates, glass yarn and copper foil, had built up the stake in Cathay Pacific through purchases from the stock market along with its associates.

2nd Front Page BusinessMirror

A12 Tuesday, November 7, 2017

DA to ensure cattle imports from Brazil will be free from foot-and-mouth disease

By Jasper Emmanuel Y. Arcalas

@jearcalas

he Department of Agriculture (DA) will see to it that live cattle to be imported from Brazil would be free from the highly contagious foot-and-mouth disease (FMD), which usually affects cattle, pigs and sheep.

Agriculture Secretary Emmanuel F. Piñol said he would personally lead a technical team that would inspect the Girolando heifers that the Philippines would purchase from Brazil next year. Piñol added that the heifers would only be sourced from the state of Santa Catarina, the lone area in Brazil that currently enjoys the FMD-free without vaccination status. “We cannot be indiscriminate. We fully undertstand the risk [of FMD]. That’s why we will be very discerning and be very careful [with the importation],” he told reporters in an interview on Monday. “We are bringing a technical team to Brazil this December, and I will be leading the delegation that will visit the area of Santa Catarina,” Piñol added. The DA chief’s pronouncement comes after industry players from the local livestock sector raised concerns over the importation of meat from Brazil. Hog raisers belonging to the Pork Producers Federation of the Philippines (ProPork) warned against lifting the ban on meat imports from Brazil, which has been accorded the FMD-free but with vaccination status by the World Organisation for Animal Health or OIE. They argued that importing meat products from Brazil may “endanger” the local hog sector and the country’s “FMD-free without vaccination” status. ProPork President Erwin G. Chen told the BusinessMirror earlier that, during the term of former President Gloria Macapagal-Arroyo, the government imported 2,000 heads of Murad buffaloes from Brazil. More than 100 heads were found to be infected with FMD. Piñol disclosed that a pool of Argentinian experts would also aid the Philippines

in determining which Girolando heifers to be imported. “We will also have the assistance of Argentinian experts. They will help us select the breeding cattle to be brought into the country and they will also check if they are FMDfree,” he said. The DA is also targeting to source fertilized cattle embryos from Argentina in its bid to boost the Philippine dairy sector. The government had crafted a five-year dairy and livestock development road map to prop up Philippine dairy production. Piñol revealed that the DA is planning to tap the expertise of Argentinian firm Genex Biotech Group in embryo-transfer (ET)

6,000

The number of Girolando heifers that the Philippines plans to import from Brazil next year technology. “Genex will handle the embryo transfer and will select the heifers ideal for impregnation using fertilized embryos.” The DA is eyeing to import 6,000 heads of Girolando heifers next year, which will be all fertilized through ET, according to Piñol. He added that the ET process will happen here in the Philippines once the Girolando heifers have arrived and have passed quarantine procedures. “At an average birth rate of 70 percent, we are expecting that after the first year, we will have an additional 3,500 heads. This is on top of the 6,000 that will be imported,” Piñol said. Should the deal with Genex push through, Piñol said the government will pay the company P35,000 for every live cattle born. The importation of Girolando cattle from Brazil is part of the DA’s plan to ramp up local milk produc-

tion to meet at least 10 percent of annual domestic requirement by 2022 and reduce the country’s reliance on imports. The DA is allotting at least P1 billion for the live cattle-importation program. “Our target is to bring in 500,000 heifers by the end of the term of the President. As to whether we will have the money to procure the cattle, the answer will largely depend on the performance of the first batch of heifers,” Piñol said. “If the performance [of the program] is excellent, then we will be able to convince our economic managers that this program is worth the government’s investment,” he added. Based on the latest database of the OIE, the Philippines is among the 66 recognized FMD-free countries where vaccination is not practiced. The OIE officially recognized the Philippines as a country free from FMD without vaccination in May 2015. The OIE also recognized the country as free of Peste des Petits Ruminants, a highly contagious disease affecting small ruminants, that same year. The OIE database also shows that the state of Santa Catarina is the only area in Brazil that is recognized as FMD-free without vaccination since 2007.

TRUMP IN JAPAN United States President Donald J. Trump speaks during a state banquet at the Akasaka Palace on Monday, November 6, in Tokyo. Trump is on a five-country trip through Asia, traveling to Japan, South Korea, China, Vietnam and the Philippines. AP/Andrew Harnik

From Data-Privacy Rights to Privacy Processes Continued from a1

on an ongoing basis. For example, not only must a company obtain consent before it collects personal data about a customer; it must allow that customer to revoke consent whenever the customer likes. Customers also have the right to see information collected about them; that implies some process to grant access. They have the right to specify where data collected about them is stored; that requires visibility into your data storage practices. And, yes, you still need to keep all personal data secure; and meet daunting breach disclosure requirements when (not if) customers’ personal data is stolen somehow. This is different in the Philippines? No. That’s the reason every

organization here also needs dataprotection officers. Do you have one already? Have you informed the National Privacy Commission? If upholding those rights is the goal, then the first step toward compliance is analyzing your business processes to see how those processes do—or don’t—achieve those rights. Ideally, your organization has already begun that assessment. It’s also crucial to ask: Are we involving the right people within our enterprise, so that assessment is useful? And are we asking the right questions? For example, your chief information security officer (Ciso) should certainly be involved in assessing data-storage risks. But

if your company has easy processes to let employees store data online (collecting the birthdates of clients’ children, for example, and tucking them away in a customer relationship management application)—then you might need to involve the head of sales. That person knows how the business process truly happens; you and the Ciso know where the compliance risks within that process are. The challenge for compliance officers is to repeat that cycle again and again, working your way through all processes that might somehow intersect with consumer data collected in your extended enterprise. The data-privacy law in the EU and the one in the Philippines

force you to reconsider how you handle employee and customer data, to ensure security and consumer control are upheld. It will be a sweeping exercise, intended to make companies consider “privacy by design”—that is, how to govern privacy risks in every step of every process, and impose appropriate controls given the risks. And they have little more than six months left to do it in the EU; you have basically no time left in the Philippines. If you need assistance regarding the process transformation, we have experts in data-privacy protection and cybersecurity protection on call; contact me under Schumacher@eitsc.com.

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‘GOVT MUST BE CAREFUL IN CHOOSING NEXT MRT 3 MAINTENANCE PROVIDER’ By Jovee Marie N. dela Cruz @joveemarie

& Lorenz S. Marasigan

@lorenzmarasigan

ERMINATING the maintenance contract of Busan Universal Rail Inc. might be a sound decision on the part of the government, but it must thoroughly study its game plan for the Metro Rail Transit (MRT) Line 3 so as not to make the same mistake twice. Rene S. Santiago, a rail expert, said the government’s move to end the maintenance deal with Busan Rail is “inevitable,” given its performance over the past year and a half. “It is about time,” he told the BusinessMirror. “Poor outcomes merit termination.” Citing four grounds for the termination, the Department of Transportation served the notice of termination to Busan Rail on Monday. In the said document, Transportation Secretary Arthur P. Tugade listed the four grounds as: poor performance; failure to put in the prescribed number of working trains in service hours; failure to implement a feasible procurement plan for spare parts; and failure to comply with the contractual requirements of a complete and up to date computerized maintenance management system. “It cannot be overemphasized that what is at stake here is the welfare and interest of the riding public. This office could not just sit back and wait while watching Busan Rail trifle and flirt with the lives of the commuting public, with its substandard performance,” Tugade said.

‘Lemon’

Busan Rail Legal Counsel Maricris B. Pahate said the government should recall its decision, as there are no legal bases on its claims that the group failed to deliver on its contract. “We regularly deliver the required number of trains under the contract. We are also entitled to procure spare parts as needed,” she said. “Why are they blaming us? The whole system is a lemon.”

It cannot be overemphasized that what is at stake here is the welfare and interest of the riding public. This office could not just sit back and wait while watching Busan Rail trifle and flirt with the lives of the commuting public.”—Tugade The company has always been vocal in its view that the MRT 3 has inherent flaws, which have caused system glitches since its first year of operation. Busan Rail started maintaining the rail system in January 2016, after it won the P3.8-billion deal under a negotiated procurement process. The government resolved to such a process because the first two auctions failed due to lack of interest. Pahate said her group is aware that the system is flawed inherently, but still decided to pursue the deal because the government gave its assurance on issues of liability. “We were given the assurance that if the glitches are based on the rails or signaling we will not be liable. Right after we entered into the contract, four days into it, we surveyed it. We wrote them that they need to change the rails, as these could result in derailments,” she said. Pahate added the government should honor the terms of the contract, which calls for an arbitration procedure for disputes such as these. It has filed for arbitration proceedings through the Philippine Dispute Resolution Center Inc. (PDRC), a nonprofit organization. “We have sent a notice of arbitration for us to do the arbitration on the PDRC,” Pahate said. “It is provided for in the contract.”

‘Charge those liable’

Lawmakers also pushed for the filing of criminal negligence and plunder against behind the “anomalous” maintenance contract with Busan Rail. “It is not enough to terminate the contract with Busan Rail, but also to hold them accountable for the unacceptable deterioration of the MRT system, that affected and endangered hundreds of thousands of the commuting public,” Party-list Rep. Ariel B. Casilao of Anakpawis said. Party-list Rep. Jericho B. Nograles of Puwersa ng Bayaning Atleta agreed, saying that the transportation department should start the process of fully rehabilitating MRT 3. “It’s really doesn’t matter who takes over as maintenance service provider so long as the provider has a proper and valid contract and has actual and proven track experience,” Nograles said. Party-list Rep. Carlos Isagani T. Zarate of Bayan Muna said the termination should have been done much earlier, “as the company miserably failed to do its job in maintaining the MRT.” Since terminating the maintenance contract may mean service interruptions, Tugade said his agency has established a maintenance transition team to take over the upkeep requirements of the train line while it procures a replacement. “The question then is: what would they put in place? If another short-term contractor, the result will be the same by another dog with a different collar,” Santiago said. “It’s the similar game plan of previous administration. It will end up the same way.” See “Govt,” A2