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Monday, November 13, 2017 Vol. 13 No. 33
‘Talks on trade in services to delay forging of RCEP’
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By Cai U. Ordinario
@cuo_bm
he proposed Regional Comprehensive Economic Partnership (RCEP) between the Association of Southeast Asian Nations and its six trading partners could be delayed by negotiations on trade in services, according to the National Economic and Development Authority (Neda).
16
The number of negotiating parties in the proposed Regional Comprehensive Economic Partnership While there is interest in fasttracking the completion of the RCEP, which includes provisions See “RCEP,” A2
BMReports
Asean Vision 2025 articulates Southeast Asian nations’ goal By Henry J. Schumacher
Special to the BusinessMirror
A
Part One
SEAN 2025 is a forwardlooking road map that articulates their vision of the Association of Southeast Asian Nations eight years from now; one that is ‘politically cohesive, economically integrated, socially responsible’ and a consolidated community across three pillars— political-security, economic and sociocultural. In sum, Asean 2025 reaffirms the commitment toward the continuation and consolidation of Asean community building. Community building over the next decade will build on the experiences and expertise the Asean acquired in the preceding years to tackle new challenges, harness new technologies and ensure opportunities for all. Through the Asean community-building process, the Asean
demonstrates to its partners and the world that it is determined to maintain the Asean’s role in dealing with challenges that affect peace, security and stability of the region.
Goals
THE broad goals of Asean 2025 include the following: putting more emphasis on the peoples of the Asean and their well-being; the increased awareness of the Asean; and more engagement with the peoples of Asean member-states. Other goals include: commitment to fundamental freedoms, human rights and better lives; strengthened capacity to deal with challenges while maintaining Asean centrality; remaining an outward-looking and global player; implementing the Asean agenda while pursuing national aspirations and contributing to Asean community building; and strengthening Asean organs and the Asean Secretariat. Continued on A2
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It’s a small world after all: The case for Asean banking integration BSP Deputy Governor Diwa C. Guinigundo
Agree to disagree The small-world phenomenon celebrated playwright
A W
and coincidentally one of the ith the ongoing 31stof Asean summit in Manila, it founders of London School Economics and Political Science would be timely to Shaw share once somefamously thoughtsquipped, on the impor(LSE), George Bernard “If all of the Asean integration, particularly in the area of economiststance were laid end to end, they would notBanking reach aIntegration conclusion.” It’s a Small World After All - The Case for ASEAN By and finance. banking Economics as a field has been characterized by a number of disDeputy Diwa C. Guinigundo Most of us,One especially those who social network, as agreements. only has toGovernor look atare theinto epic debate betweensuch FriedFacebook, Instagram and Twitter, are familiar with the concept of rich Hayek and John Maynard Keynes to realize this. Even expresThe Small World Phenomenon “six degrees of separation.” This network theory that, on sions associated with the field, such as “two sides suggests of the same coin” ASEAN Summit itconnote would be timely to share some thoughts With the forthcoming 31stbe average, anyone can connected tocat,” anyone else just sixsense steps. and “there are many ways to skinin aManila, aincertain of on the importance of the ASEAN integration, particularly in the area of banking and finance. More thanIndeed, just a pop-culture the idea that everything ambivalence. economistsmantra, often “agree to disagree.” connected has also become an such economic and finan- and is Most Speaking of disagreements, onesocial concept that has a frequent of us, especially thoseincreasingly who are into networks as been Facebook, Instagram, cial reality. With with the the advent of ofglobalization technologisubject of debate among israpid the implications Twitter, arepassionate familiar concept “six economists degrees of and separation.” This network theory that on average anyone markets can be connected toaanyone in just six now steps. calsuggests innovation, financial all is over the else world are of current-account imbalances. This very timely issue formore the interconnected than ever. While this development certainly has its Philippines as the country’s current-account balance reversed to More than just a pop-culture mantra, the idea that everything is connected has also increasingly 1. of globalization become an economic and financial reality. With the potential advent and rapid greater also has its risks. abenefits, deficit, after 13connectedness years of consecutive surpluses innovation, financialconnectedness markets all over the world nowto more interconnected For instance, hasare led more occur technological Naturally, thisgreater triggered concerns among policy-makers and than ever. While this development certainly has its benefits, greater connectedness also has its rence of financial spillovers or contagion, whereand a problem economists alike. But what does this really mean should in weone repotential risks. country can quickly become a problem elsewhere. The prelimially be worried? For instance, greater connectedness has led to more occurrence of financial spillovers or nary results of the Financial Connectedness Index for the global 2 contagion, where a problem in one country can quickly become a problem elsewhere. The equity markets bythethe Bangko Sentral Too many waysofcurrently to Financial skin abeing cat developed preliminary results the Connectedness Index for global equity markets currently ngbeing Pilipinas would show that spike contemporaneously Just as there are ways to a cat, the concept of current developed by the many BSP would showspillovers thatskin spillovers spike contemporaneously with economic and financial (Chart 1).1 with economic financial shocks (Chart 1). 1 account canshocks alsoand be interpreted in several ways. Chart First, the simplest interpretation of Jan current is the differ1. Connectedness Index for Global Equities Markets, 2004 – Augaccount 2017 (in percent) ence between a country’s value of exports and the value of its imports. A deficit then means that a country is importing more goods than it is exporting. This naturally points to issues of competitiveness. Are the country’s exports less competitive than other countries’ exports? The concept of competitiveness is very elusive and multifaceted, and deserving a more extensive discussion in another article. But if the deficit is not an issue of competitiveness, is it therefore just a simple case of a country importing more because its economy Continued on A12
Bring back the old glory days of CIIF Source: BSP Department of Economic Research
crossover vehicle Suzuki Philippines Inc. finally unveiled on November 9 the allnew Vitara built with a monocoque body instead of the old body-on-frame construction it used to offer in the past. Executives at the launching include Norminio Mojica (from left) Suzuki Philippines managing director and treasurer; Shigeo Takezawa, department general manager, Asia automobile division; Hiroshi Suzuki, president, Suzuki Philippines; Shuzo Hoshikura, general manager for automobile, Suzuki Philippines; Nobutaka Suzuki, department general manager, global automobile planning department, global business administration and planning division; and Cecil Capacete, assistant general manager for automobile, Suzuki Philippines.
This development, among others, has contributed to a volatile, uncertain, complex and ambiguous environment, or what is known as Vuca world. Under such an environment, the Asian region becomes Page 1 of 5 more susceptible to risks emanating from the pace of monetarypolicy normalization, notably by the Federal Reserve and the European Central Bank (ECB); geopolitical risks, particularly on the Korean peninsula and in the Middle East; as well as the consequences of sustained low global inflation.
Photo by Randy Peregrino and Nonoy Lacza.
INDIA, PHL RELATIONS SEEN WARMING WITH MODI VISIT
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CONOMIC relations between India and the Philippines are expected to be reinvigorated if the visit this week by Indian Prime Minister Narendra Modi leads to easing restrictions. While eager to Modi’s visit, officials of the Philippines-India Business Council Inc. (Pibci) see relaxation of foreign equity restriction as key to unlocking the full potential of improving business ties between the two Asian countries. “This will be the first time in a very long time that we have an Indian Prime Minister going to the Philippines, and this will help to open the bridge between the two countries,” Pibci Chairman Johnny
Chotrani said in a recent interview. “There are a lot of venues for cooperation that we see opening up.” Modi is expected to participate in the 31st Asean Business and Investment Summit and the 12th East Asia Summit to be held in Manila. During the week, Modi will be officially inviting President Duterte to India to celebrate the latter’s Republic Day celebrated on January 24, Chotrani said. With the Association of Southeast Asian Nations looking at deepening economic ties via multiple agreements, the time is ripe for the two countries to strengthen ties even bilaterally, he added.
Continued on A12
Dr. Jesus Lim Arranza
PPP for Marawi City Make Sense and Tacloban City
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am saddened by the report that reached me about the two factions in the government-sequestered Coconut Industry Investment Fund-Oil Mills Group (CIIF) that are now squabbling on who should lead the government-sequestered company. Continued on A11
Alberto C. Agra
ead
L AlbertoPPP C. Agra
H
ow does a city reel from the devastation of war, like Marawi City, and from a calamity, like Tacloban City? After combat operations in Marawi have been declared terminated and, after four years since Supertyphoon Yolanda lashed its fury on Tacloban, how can the government reconstruct and rehabilitate, and provide, in an expeditious manner, more and better, yet affordable, services? Who will finance and build the destroyed homes, hospitals, markets, roads, bridges, irrigation systems, schools and water-supply facilities? Continued on A11
See “Modi visit,” A2
n japan 0.4524 n UK 67.4137 n HK 6.5740 n CHINA 7.7244 n singapore 37.7340 n australia 39.3828 n EU 59.7023 n SAUDI arabia 13.6725
Source: BSP (10 November 2017 )
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A2 Monday, November 13, 2017
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Asean Vision 2025 articulates Southeast Asian nations’ goal Continued from A1
For Asean peoples, Asean 2025 means that they will continue to live in a more united, secure, peaceful and cohesive region; and enjoy the protection of human rights and fundamental freedoms—Myanmar and the Philippines will have to do some catching up, be better prepared for pandemics and natural disasters, enjoy greater prosperity and benefit from greater job opportunities and connectivity. For Asean partners, Asean 2025 means engaging with a community that is committed to and has the capacity to contribute to a peaceful, secure and stable region; can respond effectively
RCEP. . .
Continued from A1
on trade in services, Neda Undersecretary Rosemarie G. Edillon noted that the removal of barriers that allow the free movement of persons in the region is a main contention point in various trade agreements. “Not this year,” Edillon said when asked whether the RCEP could be concluded this year. The Philippines, as chairman of Asean 2017, has been pushing for the conclusion of the free-trade deal by year-end. “When it comes to trade agreements, the most difficult is the trade in services, which has four modalities. The last to be discussed is always the movement of persons,” she added. Edillon said however, that without provisions on trade in services, the RCEP will just be similar to the General Agreement on Tariffs and Trade of the World Trade Organization (WTO). A l so, she added t he t r ade i n
Modi visit. . . Continued from A1
“In the bloc, it would make sense for the Philippines to want to be dominant in certain industries. A good way to do that is to partner up with another who [is] already very good at particular industries,” Chotrani added. “India is a leader in information technology [IT]; so we can complement
to existing and emerging challenges (China to be watched) and is committed to working with external partners to address issues ranging from drug-related crimes to trafficking in persons and people smuggling. Engaging with the Asean community offers more economic, trade and investment opportunities. It also offers linkages with an Asean that has a greater role and voice in global economic fora and contributes to global economic governance.
Opportunities
HOW EV ER , the stor y of the Asean’s future prospects needs a little perspective. There are 10 member-nations spread across Southeast Asia that
have a wide variety of government styles. At the last count, there were three constitutional monarchies, three republics, two communist states, one constitutional sultanate and a former military junta in the Asean. The people in the Asean practice several religions and speak over 70 languages and dialects. Turning the Asean into a unified powerhouse of manufacturing and trade by 2025 will require both public and private efforts and the removal of key administrative barriers. And, to maximize the benefits of integration, it will need to maintain macroeconomic, political and policy stability, build world-class infrastructure and intensify its focus on work-force skills. It will also require the right set of incen-
tives for investors, removing excessive red tape, loosening foreigninvestment restrictions and establishing an effective government agency for investor facilitation and protection. The integration of regional economies through the free movement of products, services and people has challenged companies in the Asean to expand into Asean markets to benefit from the opportunities the Asean 2025 Vision offers.
Footprint
LET’S look at the footprint. Those active in Asean countries include Thailand’s PTT Public Co. Ltd. and Ocean Glass, which are active in all 10 Asean member-states, and Bangkok Bank Public Co.,
Minor International Public Co. and Regional Container Lines, which are active in nine Asean membercountries. There’s also the Malayan Banking Berhad of Malaysia, which is active in all 10 Southeast Asian nations. Malaysian entities CIMB Group Holdings Berhad and RHB Capital Berhad, to note, are active in nine. Also active in nine countries are Neptune Orient Lines and OSIM International Ltd of Singapore. The Gokongwei family-led JG Summit Holdings Inc. and Universal Robina Corp. are also active in nine Asean member-states. A momentum is seen in the growing number of cross-border investments, as well as merger and acquisition activities in bank-
services aspect of the RCEP is one of the “strongest incentives” for the Philippines to push for the conclusion of the trade agreement. “We think that’s where the Philippines can really benefit [because our main] advantage is our human resource. There is interest [in reaching an agreement on the movement of persons] but it’s a very sensitive issue,” Edillon said. Based on the guiding principles of the RCEP on Trade in Services, the trade pact will be “comprehensive, of high quality and will substantially eliminate restrictions and/or discriminatory measures with respect to trade in services between the RCEP participating countries.” It is also envisioned that the RCEP’s rules and obligations on trade in services will be consistent with the General Agreement on Trade in Services (GATS) and will be directed toward achieving liberalization. The RCEP aims to have all sectors and modes of supply subjected to negotiations. Edillon said the Committee on Tariff and Related Matters (CTRM) has been
directed to treat the RCEP as a “high priority.” This means the CTRM is required to periodically update the Neda board, chaired by the President, of developments in the RCEP. The CTRM advises the President and the Neda board on tariff and related matters, and on the effects on the country of various international developments; coordinates agency positions and recommends national positions for international economic negotiations; and recommends to the President a continuous rationalization program for the country’s tariff structure. Earlier, local experts said the Asean can take the lead in fast-tracking the implementation of agreements pertaining to the removal of barriers to labor mobility across the region, and even at the WTO. As the region’s economic ministers meet in Manila this week, experts reminded Asean economic ministers that the Mutual Recognition Agreements (MRAs) in the region have not yet been fully implemented. The MRAs cover the
movement of skilled persons. Experts also said the Asean should push for the removal of barriers to implement Mode 4 of the GATS pertaining to the movement of natural persons. They said Asean economic ministers can address these concerns by prioritizing discussions on the removal of investment restrictions, such as those included in negative lists. The Philippines’s own Regular Foreign Investment Negative List contains a list of professions and industries where foreign ownership is 100-percent restricted or have caps, such as 60 percent and 40 percent. The RCEP negotiations were launched by the 10-member Asean and China, India, Japan, South Korea and New Zealand during the 21st Asean summit and related summits in Phnom Penh, Cambodia, in November 2012. The 16 RCEP participating countries account for almost half of the world’s population, contribute about 30 percent of global GDP and over a quarter of world exports.
each other on particular areas in IT.” The council chairman said IT is particularly of interest from Indian investors, as the strong English-speaking skills and the available space here in the Philippines is an edge over the limited land area of English-speaking countries in the Asean like Singapore. Aside from IT, other areas for cooperation are in pharmaceuticals and agriculture, Chotrani said. Crucial to this improved business relations, however,
is the foreign-ownership provision in the Philippine Constitution, he added. “We are looking at the Philippines to also relax their rules, because [the] ‘60-40’ rule is one of the issues that bothers a lot of Indian investors. An Indian multinational company would find it hard to come here and just own 40 percent. They’d like more equity; at least 50,” Chotrani said. “This is all about unshackling policy benefits for the Philippines.”
He expects trade and investments between the two countries to “continue to steadily improve” if this rule is “reformed.” The total trade between Philippines and India amounted to $1.8 billion last year, taking a 1.3-percent share of total Philippine trade. The balance of trade is in favor of India, with the Philippines posting a trade deficit of $1.4 billion. As of 2016 India stands as the 14th-largest trading partner of the Philippines. Catherine N. Pillas
ing, manufacturing, transport and communications sectors. For international and regional investors, there are many opportunities opening in an area that will be able to be addressed as a single market and will allow economies of scale. Integration of the diverse economies promise to make the Asean much more competitive in attracting global investment and as a location for establishing manufacturing operations. This is the time of positive and accelerating change as new growth and development strategies are implemented to sustain economic and social progress. Asean countries are likely to play a far more significant role in the global economy as the 21st century unfolds. To be continued
Trans-Pacific. . .
Continued from A12
countries if [we] do not open up our economy because globalization is an irreversible trend,” he added. Currently, there is a proposal in the 17th Congress amending the economic provisions of the Constitution. There is also present effort to amend the Constitution in the shift toward federalism type of government.
‘Death trap’
Rene E. Ofreneo, labor and industrial relations professor at the University of the Philippines, warned Manila not to enlist in the TPP, as this might be a “death trap.” Ofreneo said the Philippines should weigh its options before entering into major trade agreements, especially the TPP, as the deal is “prone to complications” between the government and the private sector. “Lalakas ’yung relasyon between the State and investors [Relations between the State and investors will strengthen under the TPP]”, Ofreneo told the BusinessMirror. “With this, investors are given power to sue the State in partnerships that they deem unfavorable to their commercial interests,” Ofreneo added, citing the arguments of Malaysian lawmaker Charles Santiago against the TPP. Santiago is a staunch critic of the TPP, and has urged Kuala Lumpur not to pursue its plan of joining the trade agreement. Santiago in 2013 said the TPP “intrudes” in domestic affairs by allowing international arbitrations to decide on cases involving the State and the private sector. “Once the TPP rules and regulations are adopted by negotiating countries, it must be ratified by national governments or parliaments, then local laws must be changed to accommodate the new rules agreed upon,” Santiago said. “This will allow companies to sue national governments at international arbitration centers based in Washington and Geneva; thus, undermining national sovereignty and public policy-making responsibilities of nations. In short, tribunal verdicts cannot be reviewed in domestic courts, and companies can dictate policies to governments,” the Malaysian lawmaker added. Echoing Santiago, Ofreneo said democratically elected governments will bear the burden of financial penalties and trade sanctions ruled by international arbitrations. This, he said, is a drawback of the TPP, and should already be a reason enough not to enlist in it. Ofreneo added the government should come up with a development framework first before it even considers entering into the TPP, as Manila might be on the receiving end of the trade agreement in the long run given its weak manufacturing base. Dr. Rolando T. Dy, executive director of the University of Asia and the Pacific’s Center for Food and Agri Business, is also not keen on the TPP, as it seeks to lower tariffs on some agricultural products. “Low tariffs mean threats to poultry and pork from non-Asean countries like Canada and South Korea,” Dy told the BusinessMirror. “Also, how will rice be treated? Feed wheat tariff is already very low, [which is a] corn substitute.” There have been talks of cutting tariffs for meat traded within TPP member-countries, particularly those from Canada, the US, Australia and New Zealand, which are Philippines’s major meat-import sources. Economist Pablito M. Villegas echoed Dy’s remarks. But, he also noted the lowering of tariffs could also result in cheaper goods for Filipino consumers. “TPP is pro-open economy. Filipino consumers will benefit more from cheaper imports but not producers and manufacturers who are into sectors where we have limited competitive advantages,” said Villegas, who is the vice president of Confederation Filipino Consulting Organizations. The TPP is a free-trade agreement aimed at lowering tariff and nontariff barriers to trade involving Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Members of the TPP last Saturday agreed to move forward with the negotiations without the participation of the US, which was withdrawn in January upon the instruction of US President Donald J. Trump. Trump has criticized the TPP for allegedly abusing trade relations that hurt American workers. With Jovee Marie d. dela Cruz and Jasper Emmanuel Y. Arcalas
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Editor: Vittorio V. Vitug • Monday, November 13, 2017 A3
DFA to help OFWs if Saudi situation escalates
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By Recto Mercene
@rectomercene
he Department of Foreign Affairs (DFA) last Sunday said it is ready to respond to any contingency arising from the brewing tension in the Middle East to ensure the safety of the close to 2 million Filipinos working in the region.
“Of course, we are very much concerned with what is happening in the Middle East because whether we like it or not we would be affected by the outcome of developments taking place there,” Foreign Affairs Secretary Alan Peter S. Cayetano said from Vietnam, where he is attending the 29th Asia-Pacific Economic Cooperation (Apec) forum.
The crisis in the Middle East rose to fever pitch when Saudi Arabia intercepted and destroyed a “ballistic missile” fired at Riyadh by Houthi rebels in Yemen. Saudi Arabia issued a bellicose warning to Iran, accusing it of carrying out a missile strike on the Saudi capital that may have constituted an “act of war.”
CAYETANO: “We would like to assure the public, however, that there is no need to be alarmed at this point but if the situation escalates, we can be expected to respond and lead our kababayans out of harm’s way.”
Meanwhile, Lebanese Prime Minister Saad Hariri announced his resignation while on a visit to Saudi Arabia, a move that surprised many analysts and plunged his country into yet another political crisis. In the late hours last Saturday, Saudi authorities conducted what appears to be a farreaching purge, detaining more than two dozens of royal family members, cabinet ministers and prominent businessmen.
Last Monday Saudi Arabia announced that it was temporarily closing all of Yemen’s ground, sea and air ports in retaliation for the attempted Houthi missile strike. The blockade will sharply exacerbate the already-dire humanitarian crisis in Yemen, a country that has suffered through more than two devastating years of civil war. In addition to a cholera epidemic, roughly 7 million Yemenis are on the brink of famine, aid workers said. Cayetano assured the public that the DFA is on top of the situation and that it is continuously monitoring developments in the Middle East, particularly in Saudi Arabia, Lebanon and Iraq. “We would like to assure the public, however, that there is no need to be alarmed at this point but if the situation escalates, we can be expected to respond and lead our kababayan out of harm’s way,” Cayetano added. The secretary also expressed
his concern over last week’s ballistic- missile attack in Saudi Arabia, host to almost 1 million Filipino workers. He said the attack, which targeted the heavily populated airport area in Riyadh, endangered the lives of many innocent civilians, including Filipinos. He added the DFA is also closely watching the situation in Lebanon, host to almost 30,000 Filipino workers, after Saudi Arabia, Bahrain, Kuwait and the United Arab Emirates ordered their nationals to leave the country. In Iraq the secretary said the DFA is monitoring the situation in the Kurdistan region, host to 3,000 Filipino workers, after tensions between Baghdad and Erbil went up in the aftermath of an independence referendum in the region. Cayetano said the DFA Office of Migrant Workers Affairs headed by Foreign Affairs Undersecretary Sarah Lou Y. Arriola is closely monitoring the situation on the ground
in close coordination with the Philippine embassies in Riyadh, Beirut and Baghdad. According to Arriola, contingency plans of the three foreign service posts have been updated and the DFA is ready to raise alert levels and issue an order for mandatory evacuation if the situation calls for it. She said DFA rapid-response teams are also on standby ready to be deployed anytime to assist in any evacuation. Arriola added a rapid-response team from the Philippine Embassy in Baghdad is now in Erbil, where it is assisting in the repatriation of Filipinos who have expressed their desire to leave as a result of tensions in the Kurdistan region. Arriola added the DFA has made representations with the International Organization for Migration, which has again offered to assist in case there would be a need for mass evacuation.
Voter registration to continue during Asean Leaders’ Summit By Joel R. San Juan @jrsanjuan1573
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he Commission on Elections (Comelec) assured the public over the weekend that voter registration will continue amid the long “holiday”
period as the country hosts the 31st Association of Southeast Asian Nations Leaders’ Summit this week. Comelec Spokesman James Jimenez said the long holiday does not affect the ongoing voter-registration period.
Instead, Jimenez advised the public, especially the youth, to take advantage of the long holiday to register. “We are urging the millennials in Metro Manila and in the nearby provinces to make use of the long holiday break to regis-
ter,” Jimenez said. The government has declared November 13 to 15 as special nonworking days, while also suspending classes in the National Capital Region (NCR) and the provinces of Bulacan and Pampanga in light of the Asean summit.
Similarly, the Metro Manila Council also decided to suspend classes in the NCR from November 16 to 17. The poll body earlier resumed voter registration nationwide, except in Lanao del Sur, in connection with the May 14, 2018, barangay
and Sangguniang Kabataan elections. Voter registration will run until November 30. All local poll offices will be open from Monday to Saturday, including holidays, from 8 a.m. to 5 p.m. to receive and process applications for voter registration.
Economy
A4 Monday, November 13, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
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Govt issues draft policies on power-market operator
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HE country’s trading floor for buying and selling electricity would be led by an independent market operator (IMO) whose members do not have any ties with the government and power-industry participants. This was stated in the Department of Energy (DOE) draft circular, entitled “Adopting Policies for the Efficient Transition to the IMO for the Wesm [wholesale electricity spot market]”. “The directors of the IMO board shall be independent from the electric power-industry participants and from the government,” the draft circular stated. The circular also proposes that the board of the IMO be composed of at least five members, whose composition and specific qualifications are approved by the DOE. The agency is soliciting comments on the draft circular. It will accept comments until November 15. An IMO board shall be deemed independent if it’s composed of a member who “is not a director, officer, employee, contractor, consultant, agent, adviser, legal counsel, manager or shareholder of a WESM member or the ‘System Operator.’” Also, the draft circular states that a member of an IMO board is not an official of employee of the government; has not been employed as an officer or in a supervisory or managerial capacity by an electric power-industry participant or associated with a WESM member within one year prior to nomination. The IMO board member should agree not to be employed by a company affiliated with a WESM member of the System Operator within one year after the person ceases to be a member of the IMO board. This is meant to dispel concerns of continuing government intervention at the WESM. At present, the WESM is operated by the Philippine Electricity Market Corp. (PEMC). PEMC, which was incorporated in 2003, is a 15man body led by the secretary of the DOE and composed of representatives from each sector of the electric power industry, as well as independent members. The PEMC was constituted as the autonomous group market operator to oversee market governance and perform the functions of the market operator in the Wesm. Under the Electric Power Industry Reform Act of 2001, the PEMC is supposed to last for only one year and would transition to
an IMO. So far, PEMC has existed for 12 y e a r s no w. “The objectives of the WESM are to establish a competitive, efficient, transparent and reliable market, where a level playing field exists, prices are governed as far as practicable by commercial and market forces and efficiency is encouraged,” the draft circular stated. The DOE, in its draft circular, proposed that PEMC remains the government arm of the WESM. To note, the PEMC identified a number of power firms that breached the WESM rule on must offer during November and December 2013. Under the must-offer rule, generation companies registered in the WESM must declare and offer the maximum generating capacities of their power facilities in the spot market. Separately, the Energy Regulatory Commission (ERC) conducted a probe among WESM participants that were allegedly engaged i n a nt i- compet it ive behavior and abuse of market power. It has identified 12 generation firms that withheld their capacity during the October to December 2013 supply months. This resulted in record-high generation charge of Manila Electric Co. to P9.10 per kilowatt-hour in December 2013. At present, PEMC is being led by a five-man transition committee composed of the following: former ERC Chairman Oscar Ala as PEMC president; Francis Saturnino Juan, former ERC executive director; Rauf A. Tan, former ERC commissioner; Jose Mari T. Bigornia; and concurrent chairman of the National Renewable Energy Board Jose M. Layug. Energy Secretary Alfonso G. Cusi sits as PEMC chairman. Aside from Cusi, the PEMC board is being governed by Ronald Dylan P. Concepcion, Victor Emmanuel B. Santos, Emmanuel V. Rubio, Neeraj Bhat, Deon James, Rolando M. Cagampan, Octavius M. Mendoza, Allan L. Laniba, Noel V. Aboboto, Jesus L. Arranza and Peter L. Wallace. A department circular gives the committee seven months from August 1 to complete its tasks, while PEMC transforms into an IMO. Lenie Lectura
Flow of intl cargo in ports boosts Asian Terminals’s 9-month income
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HANKS to the growth of international containerized cargoes that flowed in and out of the ports of Manila and Batangas, profits of Asian Terminals Inc. (ATI) rose by almost a quarter during the first nine months of 2017. In absolute terms, the increase amounted to a net income of P1.77 billion, or 23.9 percent higher from P1.43 billion in the same period in 2016. In the same comparative periods, the company’s revenues stood at P7.72 billion, a 13.7-percent increase from P6.8 billion, while expenses inched up by a slower 4.4 percent to P3.32 billion. From Januar y to September, Manila South Harbor handled over 820,000 twenty-foot equivalent units (TEUs) of foreign box-
es, setting it on track of a back-toback 1,000,000-TEUannualthroughput performance, after achieving a record year in 2016. B at a n g a s C o nt a i e r Te r m i n a l ( B C T ), on t he ot er ha nd, ha nd led just shor t of 150,000 TEUs by end-September, bringing it close to its 2016 full year container throughput of nearly 160,000 TEUs with still a quarter to go. “A T I i s r e a d y a n d h a s t he capacit y for f uture volu me g row t h. Invest ment i n infrastructure,equipment and technology is continuous to sustain efficiencies at both Manila and Bata gas ports in support of the country’s supply chain,” ATI Executive Vice President Andrew Hoad said. Lorenz S. Marasigan
MANILA TRADE A shopper browses pillow cases displayed for sale along a street in Manila,
which authorities cleared in preparation for the Association of the Southeast Asian Nations summit. Analysts have projected the combined GDP of the 10 member-countries of the Asean to hit $2.6 trillion with economic growth expected at 4.6 percent. Asean GDP is forecasted to reach $2.5 trillion for the full year of 2016. ALYSA SALEN
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DOT allots P2M to Zamboanga City for reblooming project By Ma. Stella F. Arnaldo @Pulitika2010 Special to the BusinessMirror
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HE Department of Tourism (DOT) has allotted funds for Zamboanga City to enhance its product offerings and boost its desirability as a tourism destination. Tou r i sm Sec ret a r y Wa nd a Corazon T. Teo announced the Mi Ciudad Limpyo Y Floriao (My City, Clean and Bloom) project, a cleanliness and beautification effort launched during the city’s ongoing Hermosa Festival. The DOT said in a statement it has allocated P2 million for this product-enhancement initiative. “Any tourist who visits in time for the Hermosa Festival is bound to be one big happy guest with all the fun activities and cultural performances to experience; more so if he comes back next year to witness Hermosa amid the city’s colorful blooms,” Teo said on her recent visit to Zamboanga City, once known as the “City of Blooming Flowers.” The annual Hermosa Festival, held in honor of the miraculous image of Nuestra Señora del Pilar (Our Lady of the Pillar), Zamboanga City’s patron saint, traditionally runs the entire month of October, although there are several prefiesta events that began in September and closing activities that will last until November 14. Zamboanga derives its name from “Jambangan,” a Malay word that means “City of Flowers.” Even before the Spanish conquistadores came to the Philippines, Zamboanga was already known for its blooms and colorful environment. “We are not going to redesign or rebrand Zamboanga City with this project,” DOT Regional Direc-
tor Antonio Francisco Blanco said. “This is to purely enhance and build back a better Zamboanga City to anchor all our programs and advocacies on, and to make it the best place for tourism.” Under the Rebloom project, the DOT bought bougainvillea flowers to be planted in 10 barangays closest to the city and then will further extend to the rest of the city’s 98 barangays. Local government officials, the Department of Education, and La Hermanidad, an association of Zamboangueños based in Manila and overseas, actively supported the project. Teo, meanwhile, enthused about the myriad of activities tourists have enjoyed during the Hermosa Festival, as she graced a recent streetdancing competition. “The festival’s distinct atmosphere, coupled with the Zambangueños’ hospitable nature make the Hermosa one of the most enjoyable fiestas this side of the country,” she said. The said festival is one the country’s grandest and muchawaited celebrations, which combines a variety of competitions from beauty, sports, cooking, dance and music; with craft demonstrations; awards; and religious parades, to name a few. This year’s festival theme was anchored on the different colors in one shade. The theme also focuses on unity amid diversity. Zamboanga City is the top tourist draw in the Zamboanga peninsula, recording 678,125 visitor arrivals in 2016, up 60 percent from 2015. Aside from its colorful blooms, the city is known for its heritage, sites such as Fort Pilar, Paseo del Mar, Pasonanca Park, the Great Sta. Cruz Island with its pink sand, the barter trade center, among others.
Lawmaker seeks tax discounts for children Group urges Trump to rethink
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HE vice chairman of the House Committee on Appropriations is pushing for the passage of a measure providing 20-percent discounts on selected goods and services and value-added tax-free privileges for children up to the age of 12. In House Bill (HB) 6041, or the proposed “Junior Citizens Act,” Rep. Luis Raymund F. Villafuerte of the Second District of Camarines Sur said his proposal also provides for mandatory Philippine Health Insurance Corp. (PhilHealth) coverage. “[This proposal will] complement the personal income-tax exemptions under the proposed Tax Reform for Acceleration and Inclusion Act ,” Villafuerte said. The bill aims to ease the financial burden of the parents whose annual income is below P250,000. “Government support for its young citizens is imperative, especially during their formative years, in order for them to grow up into fully equipped adult citizens,” he added. The proposal is now pending before the House Committee on the Welfare of Children. According to Villafuerte, it is especially important to children from disadvantaged areas, where access to health-care services is low or limited to private institutions. HB 6041 is the counterpart version of Sen. Grace Poe’s “ junior citizen” bill she filed in the Senate. “All junior citizens shall be covered by the national health-insurance program of PhilHealth and shall therefore be automatic PhilHealth members until they reach the age of 12, regardless of the family income,” Villafuerte said. Under the measure, the benefits accorded to junior citizens would be extended to professional fees of physicians and dentists in private hospitals and of home health-care
service providers, as well as funeral and burial services in case of death. The bill said the discount covers the purchase of medicines, vaccines and ot her essentia l medical supplies. It also proposes to cover milk supplements for children aged 4 to 12 years old and medical and dental services, such as x-rays, diagnostics and laboratory fees. Admission charges to leisure and amusement sites, such as movie houses and concert halls are also taken into consideration in the bill. The bill said qualified children are required to obtain a Junior Citizen ID and booklet to avail themselves of the privileges. Villafuerte said the Philippines has made “great leaps” in fulfilling its commitment to the United Nations Millennium Goal of reducing child mortality and improving maternal health by establishing the National Coordinating Council for the Welfare of Children and implementing pertinent laws. Some of the laws cited include the early childhood care and development law in 2000 and the Barangay-Level Total Protection of Children Act in 1992. The latter requires all local government units to establish day-care centers in all barangays. Also, he said the Department of Health has, in turn, been implementing programs, such as the “Safe Motherhood Program,” which provides maternal and newborn health services, and the “Women’s Health and Safe Motherhood Project,” which improves the delivery health services to disadvantaged women. However, Villafuerte said these initiatives mostly focus only on the first 1,000 days of a child from the womb up to two years of age. Jovee Marie N. dela Cruz
stance on environment issues
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ISITING President of the United States Donald J. Trump was asked last Sunday to take a second look at the issue of global warming and climate change, apparently hoping to convince one of the world’s global leaders to reconsider his position on environmental issues. To recall, Trump has announced his decision to withdraw US support to the Paris climate accord. Citing studies, they said developing countrie,s like the Philippines, are among those gravely affected by global warming and climate change. “[A] few days ago, we remembered the painful memories of the gruesome deaths of 6,000 Filipinos and the massive devastations of a great part of our country brought about by Supertyphoon Yolanda that ravaged the Philippines [on] November 8, 2013,” Clean Air Philippines Movement Inc. (Capmi) Chairman Michael Aragon said in a statement. “Because of the continuing threat to Filipino life and limb, we are appealing to Trump to take a second look at the issue of global warming and climate change.” A ragon c ited st ud ies t h at showed the Philippines is included among the top list of countries most vulnerable to the deadly effects of climate change. According to Aragon, the Philippines’s minor contribution to the total global carbon footprint is only 0.3 percent, or less than 1 percent visà-vis the major carbon footprint contributions of the First World countries like the US. “Yet, when fatal disasters strike due to global warming and climate change, it is the Filipinos who suffer most.” Aragon said Capmi does not intend to debate on Trump’s personal
[A] few days ago we remembered the painful memories of the gruesome deaths of 6,000 Filipinos and the massive devastations of a great part of our country brought about by Supertyphoon Yolanda that ravaged the Philippines [on] November 8, 2013.”—Aragon
views on climate change. “But we seek your compassionate heart for you to see the clear and present danger that continuously threatens all Filipinos due to global warming and climate change.” Aragon first made the appeal last Friday during the launching ceremony of the joint CapmiEnvironmental Management Bureau Clean Air Patrol project at the EMB central office grounds in Quezon City. C apm i recent ly dec l a red Davao City a “Clean Air City” and Mayor Sara Duterte-Carpio as its “Clean Air Champion.” Jonathan L. Mayuga
Agriculture/Commodities BusinessMirror
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Editor: Jennifer A. Ng • Monday, November 13, 2017
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Farm-gate price of rice continues to decline By Jasper Emmanuel Y. Arcalas
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@jearcalas
he average farm-gate price of unmilled rice fell for the seventh consecutive week in October, settling at P18.55 per kilogram (kg), according to the latest data from the Philippine Statistics Authority (PSA). As of the fourth week of October, data from the PSA showed that the farm-gate price of unmilled rice declined by nearly 0.26 percent, from the previous week’s P18.60 per kg. Har vesting of wet-season rice crop usually kicks off in September. On a yearly basis, the farm-gate price was 8.4 percent higher than the P17.11 per kg recorded in the fourth week of October 2016, according to the PSA’s report, titled “Updates on Palay Price and Corn Prices.” Data from the PSA also showed that the average retail price of regular milled rice slid to P37.99 per kg, from previous week’s level
of P38.01 per kg. However, the figure was 2.33 percent higher than the previous year’s P37.12 per kg. “The average wholesale price of P35.58 per kg slid by 0.04 percent from last week’s report, but rose by 3.91 percent from last year’s record,” the report read. Increments were also observed in both wholesale and retail prices of well-milled rice. “The average wholesale price at P39.05 per kg inched up by 0.07 percent from last week’s posting. Relative to last year’s report, price increased by 2.9 percent,” the PSA said.
“Retail price at P42.18 per kg posted minimal increment of 0.09 percent from last week’s record. This was up by 2 percent from last year’s quotation,” the PSA added. Data from the PSA also showed that the average farm-gate price of yellow corn in the fourth week of October rose by 9.83 percent to P11.74 per kg, from P10.69 per kg a year ago. It was also slightly higher than the previous week’s price of P11.64 per kg. “The average farm-gate price of white-corn grain at P15.58 per kg gained by 0.62 percent and 41.19 percent from last week’s and last year’s quotations, respectively,” the PSA said. The country’s rice supply is expected to get a boost, as harvest has started, and imports have started arriving. As of October 6 the National Food Authority (NFA) said a total of 205,392 metric tons (MT), or 82.14 percent, of the 250,000 MT contracted by the food agency, were already delivered to various ports in the country. The remaining volume of about 32,600 MT, or 15.44 percent, were either in transit or at laycan,
while 6,008 MT have yet to be shipped from Vietnam, according to the NFA. “While there is a slight delay in the arrival of part of the rice imports, the NFA has enough stocks to supply the needs of relief-giving agencies, and local government units should such need arise,” NFA Administrator Jason Laureano Y. Aquino said. As of October 25 the NFA said it has procured a total of 299,506 bags of palay as harvest began to peak in some provinces across the country. This brought to 389,282 bags of palay already procured since January nationwide, according to the NFA. “We are optimistic that this trend will continue through the main harvest season [October to December] so that we can increase our buffer stock through local procurement as instructed by the President,” Aquino said. The NFA buys clean and dry palay at P17 per kg, with additional incentives totaling to P0.70 to P1 per kg for delivery (P0.20 to P0.50 per kg), drying (P0.20 per kg) and cooperative incentive fee (P0.30 per kg).
Ogsai organic demo farm certified as training site By Leonardo Perante II Correspondent
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ABARROGUIS, Quirino— The OceanaGold Sustainable Agroforestry Inc.’s (Ogsai) 4.5-hectare central nursery and organic demonstration farm located uphill in Barangay Tucod here has recently been certified as an organic agriculture learning site by the Department of Agriculture (DA) Agricultural Training Institute in Region 2 or Cagayan Valley. OceanaGold (Philippines) Inc. (Ogpi) established Ogsai to operate and manage the company’s reforestation commitments and obligations in the Philippines while establishing enterprise development through agroforestry, commercial tree plantations, wood-resource utilization and trade of various agroforestry products, in partnership with local farmers. Part of the enterprise development deal is the establishment of an integrated organic or natural farming-demonstration farm to serve as training ground for community partners and other local farmers. The sustainable development and management of an integrated organic agriculture demonstration farm in the village paved the way for Ogsai to get the accreditation from DA-Agricultural Training Institute. As part of its continuing efforts to ensure a productive and healthy community, the Australian firm is revitalizing agriculture that encourages more villagers to plant organically nutritious vegetables and fruits right in their own backyards. “Like what we always emphasize, mining and agriculture can
The first batch of trainees and panels at the OceanaGold Sustainable Agroforestry Inc. organic agriculture training center Barangay Tucod, Cabarroguis, Quirino, show their certificates, while (insets) others practice what they have learned hands-on. LEONARDO PERANTE II
coexist so it is precisely of this reason that we established a training center to educate our local farmers on proper organic-crop production and postharvest techniques,” Ogpi Senior Vice President for Communications and External Affairs Chito Gozar said. Hillside farmers at the mining village are now into large-scale vegetable farming. What used to be idle mountainside contours have been converted into productive vegetable gardens planted with organically grown vegetables. The organic agriculture-demon-
stration farm expanded from highvalue vegetable crops to include the production of fresh-water fish ponds, a chicken coop for free-range chicken, ducks and a native swinegrazing area. The training center has a fully functional training facility capable of accommodating 30 participants for organic agriculture tra inings, inc lud ing lect ures on related agriculture subjects, such as aquaculture, livestock production and vermiculture or the production of organic fertilizer from decomposed materials
using earthworms. The inaugural training on Basic Organic Farming was held on September 23 and 24. Initially, 23 community members from Didipio and neighboring villages participated in hands-on training. “We want to keep sustainable environmental compliance with our advance rehabilitation programs and the trendy organic agriculture to keep OceanaGold inst it ut ionalized as a ‘green’ env ironment-fr iend ly mining company,” Ogsai Chairman Jose Leviste Jr. said.
From agriculture to the food and beverage sector
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n last week’s column I highlighted the importance of agri-food supply and value chains. Today I would like to emphasize the importance of those supply chains if we are serious about lifting the agricultural sector out of poverty. In this context, it is imHenry J. Schumacher portant to realize that the food and beverage industry is Europe’s largest manufacturing sector, while agriculture accounts for more than a quarter of GDP in several memberstates of the Association of Southeast Asian Nations. In the Philippines agri-food or food and beverage can have a great future provided more assistance is provided by the government to get this super-important sector called agriculture going and assisting/convincing the farming community that there is money in this sector. Overview of agri-food in the Asean and the European Union:
europe Beat
Asean Almost all countries in the Asean are experiencing high economic growth accompanied by rapid changes in the consumption pattern. A growing middle class is developing preferences for food and beverages that are more convenient and packaged well, especially juices and premium beverages. Through Asean’s Economic Community blueprint, the seven priority areas for food, agriculture and forestry include: n Strengthening food security; n Facilitating trade in agriculture and forestry products; n Generating and transferring technology to increase productivity and develop agri-business; n Developing rural communities and human resources (including cooperatives); n Involving and investing in the private sector; n Managing and conserving natural resources for sustainable development; and n Strengthening Asean cooperation in addressing regional and international issues.
European Union
Together, the European food and drink industries are the largest manufacturing sector in the Euoperan Union (EU) in terms of turnover, value added and employment. Overall, food and drink accounts for about 6 percent of all EU exports, and about 5 percent of all EU imports. While the Asean and the EU markets offer great potential for enhanced trade and investment in agri-food, there continue to be key issues in the regulatory space that are constraining development and growth: 1. Market Access a. Tariffs, taxes and nontariff barriers (for the Philippines, GSP+ solves some of the issues); b. World Trade Organization (WTO) compliance; c. Technical standards and product-classification rules; d. Labeling; e. Sanitary and Phytosanitary Standards; and f. Religion and Halal standards; 2. Other issues a. Foreign investment restrictions; b. Intellectual-property protection; and c. Traceability protection. As we are moving closer to the Asean 2025 vision, here are key recommendations: n Import tariffs and nontariff barriers should be phased out over time; n All member-states should ensure their internal taxes and regulations are simple, transparent and fully compliant with WTO rules; n Labeling rules for packaged goods should be harmonized and simplified; n Technical standards/definitions and product classification rules should be based on internationally recognized standards; n The protection and enforcement of intellectual-property rights should be improved; and n Governments should consult industry on proposed amendments or any new regulations affecting the agri-food sector. Another factor increasing the pressure to grow more food is population growth. The number of people living in the Asean region is projected to reach 800 million by 2050, a third higher than at present. Population expansion and changing foodconsumption patterns, together with growing demand for dairy and meat products, is making food security a primary challenge for Southeast Asia. The situation is compounded by concerns over water resources and the effects of catastrophic weather events, such as the typhoons. The World Economic Forum (WEF), in collaboration with the Asean, has launched an initiative known as Grow Asia, focusing on smallholder farmer development and environmental agricultural sustainability. The program is part of the WEF’s New Vision for Agriculture initiative, which is seeking to bring together both private and public sectors, to work on market-based solutions to the development of inclusive and sustainable farming in the region. One of the aims is to increase agricultural productivity and profitability, while also reducing detrimental environmental effects in cultivation. Other areas of focus are inefficiencies in supply chains, postharvest losses, access to finance and crop insurance, access to land titles, access to mechanization, access to extension services, access to best practices in the cooperative movement and access to market without abusive middlemen. Comments are welcome; contact me via e-mail Schumacher@mcasia.org.
US sage grouse policy heading back to square one
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PARK S, Nevada—Federal scientists and land managers who’ve been crafting strategies to protect a ground-dwelling bird’s habitat across the American West for nearly two decades are going back to the drawing board under a new Trump administration edict to reassess existing plans condemned by ranchers, miners and energy developers. Federal officials are wrapping up a series of public meetings with three sessions starting on Tuesday in Utah ahead of a November 27 cutoff for comment on Interior Secretary Ryan Zinke’s order last month to consider revisions to land-management amendments for the greater sage grouse that were adopted under the Obama
administration. Zinke says he wants to make sure the amendments don’t harm local economies in 11 western states, and allow the states to have maximum control over the efforts within their borders. Conservationists say it’s a thinly veiled attempt to allow more livestock grazing and drilling, similar to Trump’s efforts to roll back national monument designations, but on a much larger scale. They warn it could land the hen-sized bird on the endangered species list in 2020 when the United States Fish and Wildlife Service is scheduled to review its 2015 decision not to list it. “They appear to be dismantling the whole land-planning amendment system and starting over,”
said Patrick Donnelly, the Center for Biological Diversity’s Nevada state director. “It’s revisionist history,” he told a Fish and Wildlife Service official during a scoping meeting-turnedbrainstorming session at a Sparks hotel-casino last Wednesday night. Instead of recording public testimony, agency officials marked up easel pads with lists of criticisms, concerns and suggestions. About 80 participants moved between five breakout groups, including “minerals,” “livestock grazing” and “wildlife and vegetation.” They treaded familiar ground. Disagreement reigned over the size of protective buffer zones around grouse-breeding grounds, states’ role in setting federal policy, and
whether cattle or wild horses cause more habitat degradation. There was general agreement that invasive cheat grass is fueling one of the biggest threats—catastrophic wildfires—but little consensus on what to do about it. “I don’t understand why we’re starting all over again,” shouted a man who briefly disrupted the meeting and refused to provide his name. Nevada Farm Bureau Vice President Doug Busselman said research increasingly suggests properly regulated grazing reduces fire fuels. But he said existing policy is “taking a restrictive approach...and then watching massive fires sweep across the landscape, setting up the process for expansion of cheat grass, then more fire.”
In this April 20, 2013, file photo, male greater sage grouse perform mating rituals for a female grouse, not pictured, on a lake outside Walden, Colorado. AP Photo/David Zalubowski, File
The US House Natural Resources Committee heard the same thing last month from Idaho House Speaker Scott Bedke, a fifth-generation rancher who blames grazing restrictions for a wildfire that wiped out his family’s winter grazing allotment this year.
“In the process of placating antigrazing activists, federal agencies have made the No. 1 threat to the greater sage grouse in Idaho worse,” Bedke said. Idaho Gov. C.L. Otter, a Republican, filed one of a series of lawsuits aimed at blocking the Obama plans. AP
AseanMonday
A6 Monday, November 13, 2017 • Editor: Max V. de Leon
BusinessMirror
Asean, Hong Kong ink free-trade deal
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By Catherine N. Pillas
@c_pillas29
embers of the Association of Southeast Asian Nations and the Hong Kong Special Administrative Region signed a freetrade agreement and an investment agreement last Sunday. The Asean-Hong Kong, China (HKC) Free Trade Agreement (AHKFTA) and the investment agreement are regarded by both parties as a “clear signal” that the Asean and its trade partners will continue to push back against trade protectionism. The AHKFTA was signed at the sidelines of the 31st Asean summit and related summits in Manila. Aside from mutually benefitting from increased market access, and possible partnerships between small businesses in the Asean and Hong Kong, the two trade agreements were viewed as a symbol of continued trade liberalization in Asia, in contrast to increasing protectionism in
other parts of the world. “In the face of protectionist sentiments across the world, these two agreements are, in fact, a loud and clear vote that all of us here prefer free and open trade,” said HKC Commerce and Economic Development Secretary Edward Yau during the signing ceremony held last Sunday at the Marriot Hotel. Philippine Trade Secretary Ramon M. Lopez expressed confidence that the agreement would boost trade relations between Southeast Asian countries and HKC, the sixthlargest trading partner of the Asean. For one, HKC stands as the gateway to mainland China. As a group, the Asean was Hong
Hong Kong port Bloomberg
Kong’s second-largest trading partner, in 2016, after mainland China. Total merchandise trade between Hong Kong and the Asean amounted to HK$833.3 billion, representing 11
percent of Hong Kong’s global merchandise trade in 2016 and registering an annual average growth rate of 3.4 percent per annum between 2012 and 2016.
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outheast Asia started banding its unwieldy cluster of fledgling democracies, monarchies and authoritarian regimes into an European Union-like collective half a century ago, but the diverse region of 620 million people remains hampered by conflicts, poverty, humanrights crises and other issues. It has, nevertheless, evolved into an important arena of discourse, power plays and influence that gathers world leaders in annual summits. Leaders of the Association of Southeast Asian Nations will mark the 10-nation bloc’s 50th anniversary with handshakes, unity photo-ops and pageantry in a gala dinner last Sunday. They’ll gather for two days of summitry under tight security in Manila starting on Monday and meet world leaders led by President Donald J. Trump to tackle a slew of security worries. A list of the most pressing issues:
Hong Kong’s domestic exports to the Asean amounted to over HK$7.9 billion, accounting for 18.5 percent of Hong Kong’s total domestic exports in 2016.
host to allow a stronger statement on the crisis, causing some tension. “If it will be discussed, it will be up to Myanmar to raise the issue because this a domestic concern for them,” said Robespierre Bolivar, spokesman of Manila’s Department of Foreign Affairs.
South China Sea
North Korea
this August 29 file photo distributed on August 30 by the North Korean government shows what was said to be the test launch of a Hwasong-12 intermediate-range missile in Pyongyang, North Korea. Korean Central News Agency/Korea News Service via AP.
long-stalled denuclearization talks.
Muslim militants
The siege by pro-Islamic State group militants that left at least 1,172 combatants and civilians dead and left swaths of the southern Philippine city of Marawi in smoldering rubble will be on every leader’s mind in Manila. Although Philippine troops have essentially crushed the five-month insurrection, the massive militant attack served as a reality check for governments of the new scale of havoc Islamic State-aligned militants could wreak on urban areas. Consequently, the main summit venue in a theater complex by Manila Bay has been placed in a security lockdown and declared a no-fly and no-sail zone. Nearly 60,000 police
and military personnel will keep watch in Manila and Clark Freeport to the north where some of the leaders will land and senior diplomats are meeting. Duterte plans to brief leaders on how Filipino forces quelled the siege. Asean states and their Asian and Western counterparts find a common interest in addressing the resurgent threat of terrorism and radicalization without much friction.
Rohingya dilemma
Alarm over violence in Myanmar’s western Rakhine state that has forced more than 600,000 Rohingya Muslims to flee to Bangladesh will likely stay off the Asean’s formal agenda and summit communique. That’s because its member-states,
which include Myanmar, uphold a bedrock policy of non-interference in each other’s domestic affairs. While the policy has held back the regional group from taking a stronger and more relevant stance on such calamities in step with much of the international community, it has allowed the Asean to endure as a club of nations with disparate backgrounds. Individually, however, heads of state can raise concern and outrage over the Rohingya crisis during their so-called “retreat,” a free-for-all but closed-door session. Malaysia, among others, is expected to push Myanmar to take stronger steps to address the humanitarian problem, which has caused many of the Rohingya to flee to its territory. Malaysia has also pushed the Philippine
The leaders of China and the Asean, which includes four member-states directly involved in South China Sea territorial disputes, are expected to announce the start of negotiations on a so-called “code of conduct” in the contested waters based on a framework or outline that their foreign ministers endorsed in August. Both sides would laud such progress, which China acquiesced to after the Philippines under Duterte backed down from being one of Beijing’s most virulent US-backed critics. Duterte pursued a policy of rapprochement with Beijing and has not immediately pushed for Chinese compliance with an arbitration ruling by a United Nation-aligned tribunal that invalidated China’s expansive claims in the strategic waterway. “There is more cooperative spirit in managing, in reducing the tensions there,” Bolivar said. The Asean, however, has been dismissed as an ineffective broker largely because it tends to get paralyzed by indecision due to its consensual decision-making style when many of its member states are either aligned with China or the US. The two-page framework took 15 years to conclude and lacked key provisions, including a dispute-settlement mechanism, that China opposes. “The biggest problem is our insistence that, for some reason, the Asean has to solve this, which it’s not equipped to do, and we shouldn’t force it to,” said Greg Poling, a Washington-based South China Sea expert. AP
SE Asian countries vow to beef up measures vs human trafficking
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he Department of Foreign Affairs (DFA) last Saturday said the Asean Intergovernmental Commission on Human Rights (AICHR) is committed to play an active role in the implementation of the Asean Convention Against Trafficking in Persons, Especially Women and Children (ACTIP). The ACTIP was created on March 8 when the Philippines became the sixth Association of Southeast Asian Nation member-state to submit its instrument of ratification to the
Asean Secretariat. Presently, eight member-states have already ratified ACTIP, including Lao PDR, Malaysia and the Philippines. In August Indonesia organized the AICHR Cross-Sectoral Consultation on Human Rights-Based Instruments Related to the Implementation of the ACTIP, in which Philippine Representative and AICHR Chairman Leo Herrera-Lim along with DFA-Asean Executive Director Zaldy Patron highlighted the need
VietJet may buy A350s as airline weighs US route
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N. Korea, Marawi siege, sea feud top Asean summit worries
Manila is the last stop on Trump’s Asian swing where he’s expected to lobby for more punitive action, including diplomatic sanctions, against Pyongyang over its nuclear program. He’ll generally find a receptive audience, with the summit’s foulmouthed host, President Duterte, having called North Korea’s leader a “crazy son of a bitch” with a “chubby face that looks kind” but who could wipe the region off the map with his “dangerous toys.” China, which wields considerable influence on the Asean, will, however, be a tempering presence. It has called for dialogue with North Korea and urged the United States to tone down its rhetoric, arguing that sanctions alone cannot solve the impasse. Asean leaders will likely stick to their expression of alarm over Pyongyang’s ballistic missile and nuclear tests and press their call for North Korea to return to
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to familiarize and educate people on how to look out for red flags that could lead to trafficking in persons (TIP) incidents. The Philippine government, for its part, stressed the importance of regional cooperation among all 10 members of the regional bloc to combat TIP. According to the agency, AICHR granted consultative relationships to six civil-society organizations (CSOs), bringing to 22 the total number of CSOs with such relationship with AICHR. The six CSOs
are the Islamic Renaissance Front, Suara Initiatif Sdn Bhd, Philippine Migrants Watch, Inc. (PMRW), Persatuan Korban NAPZA Indonesia, FORUM ASIA and Persatuan Kesedaran Komuniti Selangor. The CSOs accredited to AICHR have a wide range of advocacies that include trade unions, migrant workers, indigenous peoples, former prisoners, women’s and children’s rights, persons with disabilities, the environment and development. Aside from the PMRW, other
Philippine CSOs that are part of this group include Save the Children Philippines, Child Rights Coalition Asia, and the Institute for Strategic and Development Studies Inc. AICHR Philippines will partner with AICHR Singapore and Child Rights Coalition Asia in 2018 in conducting a workshop to promote and protect the rights of children in the Asean. The Philippines is the chair of AICHR in 2017, coinciding with the Asean’s 50th Anniversary. PNA
ietJet Aviation JSC plans to expand its fleet to include wide-body jets as the Vietnamese low-cost carrier considers California as its first United States destination starting in 2019. Vietnam’s biggest private airline would use the larger aircraft to begin the route after the US Federal Aviation Administration grants Vietnam airlines permission to fly to America, said Nguyen Thi Phuong Thao, VietJet’s founder and CEO. The first flights could link the Southeast Asian nation with the Norman Y. Mineta San Jose International Airport, near a large Vietnamese community, and would also be close enough to serve San Francisco, she said. “We aim to expand international flights in the next few years” Thao said in an interview. “We want to make international flights 60 percent of our total flights. We are also studying the possibility of using wide-body planes for long-haul flights when market conditions are favorable.” VietJet, known for a publicity stunt involving bikini-clad flight attendants, is expanding rapidly as it goes head on with Vietnam Airlines Corp. for a larger slice of an air-passenger market that the International Air Transport Association estimates will be among the world’s five fastestgrowing in the next 20 years. Vietnam Air CEO Duong Tri Thanh said this week the state-controlled carrier is considering a route to Los Angeles by late-2019 or early-2020. VietJet—which currently operates only single-aisle planes—last Sunday signed a $600-million deal to acquire Pratt & Whitney engines to outfit 10 narrow-body jets during a ceremony with US President Donald J. Trump in Hanoi. Trump visited the nation’s capital after attending the Asia-Pacific Economic Cooperation leaders’ meeting in Danang. The latest deal is separate from a $3.6-billion contract signed earlier this year for 215 engines. The budget airline’s international capacity has soared by more than 150 percent in the past year, said Brendan Sobie, a Singapore-based analyst at CAPA Centre for Aviation. “The domestic market has had this great growth in the last five years, tripling in size, but there is a limit to that,” he said. “A lot of these people who have become first-time fliers in the last five years will be able to travel overseas as they build discretionary income.” The carrier has ordered 230 Airbus SE and Boeing aircraft since 2014. VietJet and national carrier Vietnam Airlines each had a 42-percent share of the domestic aviation market last year, though VietJet’s 2017 share is probably less as it focuses on overseas expansion, Sobie said. Last year the budget carrier ordered 100 Boeing 737 Max 200 aircraft with a list price of $11.3 billion. It agreed to buy 30 A320neos valued at $3.6 billion in 2015, adding to an order for as many as 100 Airbus planes a year earlier. VietJet, which began operations in December of 2011, expects to serve 17 million passengers this year, after carrying about 15 million travelers last year. The carrier expects its 2017 profit to rise 10 percent from its target for the year, according to Thao. VietJet’s international expansion has focused entirely on Asia, with more than 400 weekly overseas flights scheduled by the end of this year, up from just 130 a year ago in October, Sobie said. Flying to the US will be a much tougher challenge for VietJet as it goes up against entrenched carriers, Sobie said. “The competition is very fierce,” Sobie added. “When you fly over 12 hours, it becomes more expensive. There are huge costs initially. The prospect of making money on this route is bleak.” Bloomberg News
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AFP’s best forces to help secure Asean meetings By Rene Acosta @reneacostaBM
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he military has sent its specialized land, air and sea forces to support the massive government contingent tasked to secure delegates to the 31st Association of Southeast Asian Nations Summit 2017. Five joint task groups have been deployed to perform security and emergency-response operations during the summit. The deployment is part of the Task Force’s Oplan Asean Leaders’ Summit (ALS). “The Armed Forces of the Philippines [AFP] is all set in securing Asean Summit 2017 by providing our best forces and conducting measures to support the lead government agencies. We have extended this to monitoring and addressing threats from the New People’s Army, as well as of petty criminals,” Armed Forces Chief of Staff Gen. Rey Leonardo Guerrero said. Under Oplan ALS, the Joint Task Force National Capital Region (JTF-NCR) provides augmentation forces to the National Capital Region Police Office and Presidential Security Group. It will also provide emergency- response units, such as search, rescue, and retrieval units and ambu-medic units to provide rescue and health support to delegates and all deployed forces. “The AFP through the JTFNCR has deployed the best among its forces to work with the Philippine National Police and other government agencies concerned in ensuring the safe and secured conduct of the Asean meetings in the Philippines,” military Public Affairs Office chief Col. Edgard A. Arevalo said. The deployment of soldiers, part of the 60,000 assembled security personnel for the meetings, was the contribution of the Armed Forces in ensuring that no untoward incident would happen while leaders are meeting in the country. “The AFP has long been planning and preparing for contingency measures to address any worse-case scenarios during the Asean Meetings. This is in line with our task of providing security coverage for the venues, as well as the safety of the people and all our visitors,” Arevalo added. The JTF-NCR is currently led by Brig. Gen. Jesus Manangquil Jr.
Additional Internet capacity
THE Philippine Long Distance Telephone (PLDT) Inc. has deployed additional Internet capacity to several locations in Clark and Metro Manila, particularly in areas where the Asean summit will take place. Eric R. Alberto, the chief revenue officer of the telco provider, said his group has installed fiber-optic links and voice solutions to conference venues and key hotels to deliver speeds of up to 11 Gigabits per second to delegates and attendees of the Asean summit. “Our facilities and our teams on-ground have been preparing the necessary equipment to ensure that our services run smoothly and help ensure the success of all events,” he added. Aside from boosting fixed-line connectivity, PLDT, through subsidiary Smart Communications Inc., increased the capacity of its wireless network to handle huge amounts of mobile data during the said conference. “We at PLDT and Smart are closely coordinating with our key partners in government and the Asean50 organizing committee to provide the telecommunications and ICT [information and communications technology] requirements that will help this Asean summit achieve its objectives,” Alberto said. With Lorenz Marasigan
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Asean businessmen to talk infra By Catherine N. Pillas
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@c_pillas29
orld leaders and the industry captains in memberstates of the Association of Southeast Asian Nations will discuss key economic issues, such as the Duterte administration’s infrastructure program and the state of entrepreneurship in the Philippines on Monday.
The “Build, Build, Build” proram and entrepreneurship will be front and center at the Asean Business and Investment Summit (Abis) 2017, the annual gathering of the pillars of the Asean business community with heads of government. Abis is the initiative of the Asean Business Advisory Council (BAC), the representative body of private businesses in the Asean. As the overall chairman of Asean for the year, the Philippines’s representative to the Asean-BAC hold the chairmanship, as well. The Abis 2017, which will run from November 12 to 14, will be attended by 30 top-level government officials and CEOs, as well as the heads of global think tanks. Participants are expected to reach 1,200. A sean-BAC chairman Joey Concepcion said the Philippines’s
infrastructure program, “Build, Build, Build” will be the main discussion point in the first panel of the Abis on November 13. “On Monday three state leaders will join us: Russian Prime Minister Dmitry Medvedev will be participating in the infrastructure forum, and will give his own speech. He will be joined by AirAsia Group Chief Executive Officer Tony Fernandes, the Ayala Group’s Jaime Augusto Zobel de Ayala, International Container Terminal Services Inc. Chairman Enrique K. Razon, as well as top representatives of Japan International Cooperation Agency and the Asian Development Bank,” Concepcion said in a news briefing last Sunday. Josephine Romero, Asean-BAC chairman adviser, said that given the keen interest of the Russian delegation in sharing transportation infra-
The ongoing Skyway Stage 3 project involves the construction of a 14.8-kilometer elevated tollway connecting Skyway or South Luzon Expressway in Buendia and North Luzon Expressway in Balintawak. The government’s infrastructure push will take center stage during the Asean Business Investment Summit on Monday. NONIE REYES
structure know-how, there could be cooperation on this area. South Korean President Moon Jae-in will be speaking, as well, to be followed by a panel on women empowerment through entrepreneurship to be led by Asean-BAC Chairman and SM Investments Corp. Vice Chairman Tessie Sy-Coson, and Hyundai Asia Resources Inc.’s Maria Fe Perez-Agudo. Another state leader, Indian Prime Minister Narendra
Modi, will serve as the main panelist in a forum on money and markets, which would focus on financial accessibility for small and medium enterprises in the Asean. “The Asean-BAC chairmen will have a meeting with Asean leaders and will be delivering their report to Asean leaders on Monday. On Tuesday we’ll be sharing parts of that report,” Romero added. On Tuesday former President
Gloria Macapagal-Arroyo will talk about the prospects and challenges for Asean in the next 50 years, and the private-sector chairmen of the Asean-BAC will serve as reactors. Topics on the shared economy and the digital economy will also be taken up briefly. After turning over the chairmanship of the Abis to next year’s host, Singapore, Vice President Maria Leonor G. Robredo will close the summit on November 14.
International experts: Asean and China discussions not working
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nternational security experts sounded the alarm over what they said was the lackluster future of an all-important code of conduct on the West Philippine Sea. “Those negotiations, if they begin—and they haven’t—would still take years,” said Gregory Poling, Director of Asia Maritime Transparency Initiative at the sidelines of the Stratbase ADR Institute summit on “Asean Leadership amid a new world order” held recently in Makati. “What I expect is that the disappointments that [are] going to be
obvious after this year might finally kick Asean [Association of Southeast Asian Nation] states into gear, make them realize that they need to think of a different venue to get this done.” Experts had long identified a legal Code of Conduct as a critical mechanism in maintaining peace and security in the region in light of the rising incursions of China. “One of the most important actions is for the countries to exercise self-restraint and focus on peaceful means in resolving the disputes,” said Dindo Manhit, president of private think tank Stratbase ADRi.
A code of conduct, he added, could give governments the ease they need to work past their differences, especially in the context of Asean’s relationship with the rising global power. Manhit proposed a brand of multilateralism that stands on international law to resolve misunderstandings and ultimately guarantee regional stability, something that the Philippines could have spearheaded following the international tribunal’s favorable decision regarding the West Philippine Sea in 2016. Otherwise, the usual feeble
approach from Asean effectively ignores what many see as increasingly aggressive behavior by Beijing in the disputed waters, including the unabated militarization of islands. “China has ignored the Hague decision,” said Masashi Nishihara, president, Research Institute for Peace and Security Tokyo. “Four airbases have been built on the islands, and it’s clear that its strategy is to prevent unity in the Asean.” The regional bloc should, thus, continue its multilateral approach by forming a South China Sea Group and
maintaining its closeness with the United States and its regional partners, including Japan and Australia. Christopher Roberts, professor of international and political studies at the University of New South Wales, cited China’s energy insecurity, uneven development in the country and a “China dream” of regaining its status as the foremost Greater Asia power as the driving force behind its aggressiveness. In this light, Asean needs to serve as a central pillar among a multilevel and multitiered strategy to counter this rise, Roberts added.
Here’s how the World Bank thinks Indonesia can spur foreign investment
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ndonesia needs to ease rules requiring foreign companies to use locally produced materials to spur foreign direct investment, the World Bank said, as the government chases billions of dollars in private investment. Easier terms for foreign manufacturers and fewer restrictions on ownership in some sectors will attract more funds, Rodrigo Chaves, World Bank country director for Indonesia, said in an e-mailed response to questions. “Businesses don’t like unpredictable regulations,” Chaves said, referring to multiple changes to the so-called negative investment list since its introduction in 2007. “We would like to encourage smart regulations, which are efficient and predictable.” President Joko Widodo, known as Jokowi, has taken steps to wean the country off commodities and push investment in value-added manufacturing and services to generate more jobs and to finance hundreds of billions of dollars needed for infrastructure. Indonesia’s economy has expanded at an average of about 5 percent, below the 7-percent target set by Jokowi when he came to power three years ago. The president has said Indonesia is open to local and foreign private investors, as he seeks to ease concerns among foreign investors over the nationalist agenda. While the introduction of the negative investment list was initially greeted favorably as it “increased transparency,” a series of revisions since 2010 meant “its usefulness has been undermined,” Chaves said. The list covers a range of sectors from banking to brewing and places limits on levels of investment and ownership, and, in some cases, prohibits foreigners altogether. The local content requirement rules, which apply across industries from dairy to automotive, had seen Apple Inc.’s market access being curbed. The company has since overcome the barriers by
Widodo BLOOMBERG
building a domestic research facility. The United States, too, has taken aim at the content requirements, with its Ambassador Joseph Donovan last week blaming the regulation for a “significant and persistent trade imbalance” between the two countries. The US recorded a trade deficit of almost $12 billion with Indonesia last year, according to the International Monetary Fund.
Infrastructure
While thousands of kilometers of new roads and more than half-a-dozen new airports have been opened, the World Bank has said Indonesia still needs about $500 billion over the next five years to bridge its infrastructure gap. Chaves said that even if state revenues increase, “private-sector participation is critical to close the infrastructure gap.” Indonesia has jumped 19 places to be ranked
72 out of 190 countries in the World Bank’s ease of doing business index, but Chaves said
challenges remain “especially with respect to predictability of the rules.” Foreign direct investment into Indonesia rose 11 percent to $24 billion in the first nine months of the year, according to official data. Foreign investors also cite dominance of state-owned enterprises (SOEs) and a lack of level playing field. Finance Minister Sri Mulyani Indrawati has said it will be “impossible” for SOEs—there are 118 operating in Indonesia—to alone handle the more than 240 projects already announced by the government. The World Bank forecasts Indonesia’s economy to expand 5.3 percent next year, and Chaves said he remains “optimistic” that the country could do even better. “While many countries wish they could grow at 5 percent, Indonesia can aspire to much higher growth rates if it continues on the path of reforms to facilitate private investments and improve human capital, the two key ingredients not just for growth but for growth that will create good jobs for Indonesians,” Chaves said. Bloomberg News
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2 Asean Heritage Parks declared in Indonesia
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he Kepulauan Seribu National Park (KSNP) and Wakatobi National Park (WNP) of Indonesia joined the growing network of Asean Heritage Parks (AHPs). AHPs are protected areas of high conservation importance, preserving in total a complete spectrum of representative ecosystems of the Asean region.
Environment ministers of the Asean member-states approved the nomination of the two parks as AHPs during the 14th Asean Ministerial Meeting on the Environment held in Brunei Darussalam in September. “I would like to congratulate Indonesia’s Ministry of Environment and Forestry, for the two newly approved Asean Heritage Parks, Wakatobi National Park and Kepulauan Seribu National Park. We are elated to have new marine-protected areas as most of the AHPs are terrestrial,” said Atty. Roberto Oliva, executive
director of the Asean Centre for Biodiversity (ACB). Located in the Southeast Sulawesi Province and Kepulauan Seribu Utara Sub District, respectively, the parks have diverse f lora and fauna and rich cultural heritage.
Kepulauan Seribu National Park
Located approximately 45 kilometers from Indonesia’s capital Jakarta, the park is composed of 78 islands, and has unique vegetation and coastal ecosystem, where numerous marine and terrestrial species of high
Kepulauan Seribu National Park
conservation importance live. KSNP has four complete coastal ecosystem coastal forest, mangroves, seagrass and coral reefs. A number of the islands that comprise this national park serve as the nesting area to the hawksbill sea turtle and the green sea turtle, which stretches from Peteloran Timur Island, Penjaliran Barat Island and Penjaliran Timur Island. Additiona l ly, rehabilitation program in K SNP combats the dec l i ne of t he t hree spec ies of eagles that can be found in the park.
Wakatobi National Park
Wakatobi National Park
WNP is located in the province of Southeast Sulawesi and within the Coral Triangle, known for having the highest diversity of corals and marine resources in the world. It is also home to two endangered turtles—the green sea turtle and the hawksbill sea turtle. In 2012 the United Nations Educational, Scientific and Cultural Organization (Unesco) recognized WNP as part of the “World Network of Biosphere Reserves.”
AHP Programme
The ACB serves as the secretariat
of the AHP Programme. Protected areas benefit from being declared as an AHP through capacity-building activities for park managers and stakeholders in the form of various learning events, such as trainings and workshops. AHPs also receive technical assistance from the AHP secretariat, through ACB in-house experts and network of partners. Being an AHP also increases the protected area’s visibility as a prime ecotourism destination and model for effective protected area management through the Communication, Education
and Public Awareness program of ACB. Participation of, and collaboration among AHP stakeholders in the implementation of research and development programs and projects are also maximized and strengthened when a protected area is declared as an AHP. T he A HP Prog ra mme a l so serves as a regional platform for information sharing among AHPs by way of AHP Committee Meetings and AHP Conferences. Parks declared as AHPs are first in line for available funding through ACB programs and projects.
Climate-change summit a step further, but where to?
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In this July 8 photo, a young woman with the World Wild Fund for Nature Fund carries a papiér-maché replica of the critically endangered porpoise, known as the vaquita marina, during an event in front of the National Palace in Mexico City. AP/Rebecca Blackwell
Calls mounting for end to Mexico’s capture of endangered porpoise
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EXICO CITY—Calls are mounting for the Mexican gover nment and international experts to stop an operation to capture and enclose the few remaining vaquita porpoises, after one of the animals died soon after being caught over the weekend. Experts have always acknowledged the program known as Vaquita CPR would be risky. On Monday the experts issued a statement saying Vaquita CPR scientists will work with an independent review panel and the Mexican government to review what happened and “determine how best to proceed.” The Animal Welfare Institute is calling for an immediate halt to the program involving the endangered porpoise species. It says that “these tiny porpoises do not respond well to the stress of capture, and not a single additional vaquita should be deliberately put in danger in this way.” Researchers were thrilled to have captured one of the few remaining vaquita porpoises, but announced last Sunday that the adult female died after a few hours in captivity in a floating pen, raising questions about the last-ditch effort to enclose the world’s smallest porpoises to save them from extinction. Critics, and even supporters of the international rescue
effort, knew the plan was full of risks: The small marine mammals native to Mexico’s Gulf of California have never been held in captivity, much less bred there. But with estimates of the remaining population falling below 30, the international team of experts known felt they had no choice. In late-October, researchers captured a vaquita calf but quickly freed it because it was showing signs of stress and was too young to survive without its mother. Last Saturday, the team felt its luck had turned when it caught a female in reproductive age. Mexico’s environment secretary, Rafael Pacchiano, tweeted a photo of the vaquita in a net sling late last Saturday, saying: “This is a great achievement that fills us with hope.” The vaquita was taken to a protected floating pen in the Gulf of California in the hopes that it would survive, and possibly breed if more vaquitas could be captured. But on Sunday, the team said, “Veterinarians monitoring the vaquita’s health noticed the animal’s condition began to deteriorate and made the determination to release.” “The release attempt was unsuccessful and lifesaving measures were administered,” the team wrote. “Despite the heroic efforts of the veterinary team,
the vaquita did not survive.” “ The entire rescue team is heartbroken by this devastating loss” wrote the team, which is using US Navy-trained dolphins to help find the elusive species in the upper Gulf of California, also known as the Sea of Cortez. “The risk of losing a vaquita during field operations was always acknowledged as a possibility, but it was determined that it was unacceptable to stand by and watch the vaquita porpoise disappear without a heroic attempt at rescue.” If it proves impossible to safely capture vaquitas, experts say an all-out effort will be needed to save them in their natural habitat. Vaquita populations have been decimated by illegal nets used to catch totoaba fish, whose swim bladder is prized in China. “We are deeply saddened to learn that the vaquita captured on Saturday has died. We are confident that the experts involved in the capture did their best,” said Alejandro Olivera, the Mexico representative for the Center for Biological Diversity. “However, this should be a reminder for the Mexican government that ‘Plan A’ should never be forgotten. To truly protect these incredible little porpoises, the Mexican government must once and for all get deadly gillnets out of the vaquita’s habitat.” AP
OME—The United Nations Climate Change Summit in Bonn is a step further, most experts say. Fine, but toward what? On the one hand, the organizers— the UN, Fiji and Germany—express strong hopes that it will speed up the implementation of the 2015 Paris Climate Change Agreement. On the other, a giant contributor to global warming—the United States—decided to desert that milestone agreement. Meanwhile, major European powers have been, again, prodigious in unmet promises. The UN Climate Change Conference in Bonn is the next step for governments to implement the Paris Climate Change Agreement and accelerate the transformation to sustainable, resilient and climate-safe development, said Patricia Espinosa, executive secretary of the United Nations Framework Convention on Climate Change (UNFCCC) on this major event, in the former German capital, from November 6 to 17. As such Convention, the Bonnbased UNFCCC is the parent treaty of the 1997 Kyoto Protocol and the ultimate objective of both treaties is to stabilize greenhouse-gas concentrations in the atmosphere at a level that will prevent “dangerous human inter ference” with the climate system. The Paris Climate Change Agreement entered into force in November 2017 and the era of imple mentation has begun, reminded Espinosa, emphasizing that the Bonn conference will further clarify the enabling frameworks that will make the agreement fully operational and the support needed for all nations to achieve their climatechange goals. “It is also an excellent example of the cooperation and collaboration between nations that will truly meet the global climate change challenge...This meeting is incredibly important.” The conference—known as the signatory countries, or Contracting Parties 23 session (COP 23)—is presided over by the government of Fiji with support by Germany. Prior to its opening, Espinosa encouraged governments, the private sector and civil-society organizations to be ready to work together to “accelerate implementation and take the crucial next steps toward transformative change.” “We all have a role to play, and
COP 23 will shine a light on both action under way and the many possible actions every individual and institution can take moving forward.”
Polluters do (not) pay principle
This is on the one hand. On the other, the US administration announced that it would promote coal, natural gas, fossil oil and nuclear energy as an answer to the climate-change challenge. And US President Donald J. Trump spelled out in September this year his decision to withdraw from the Paris Climate Change Agreement. In spite of this negative development, the UNFCCC executive secretary expressed optimism ahead of the last Group of Seven more industrialized powers (G7)—the web of Paris cannot be broken by one missing link, she said on July 7. The point is that is it is not about the US only. In fact, other major contributors to global warming and gas emissions, such as many European highly industrialized countries, have been heralding day after day their formal commitment to reduce gas emissions, expand the use of alternative sources of energy and a long etcetera. So far, major carmakers have been very active promoting the sale of vehicles moved by electric and hybrid engines. For now, China as a key source of pollution seems to be addressing the need to slow down the fast process of climate change in a serious manner.
Visible dangers
Meantime, the grave impacts of climate change are visible on almost all fronts. At the same time, the leaders of two top UN specialized organizations have been warning that climate-change migration is reaching crisis proportions. Another major UN organization has recently explained the reasons of the massive displacement of people. One key cause of the growing dangerous impact of climate change is the prevailing economic model consisting of voracious depletion of natural resources in both production and consumption patterns has proved to be one of the world’s main killers due to the huge pollution it causes for air, land and soil, marine and freshwater. And the United Nations Convention to Combat Desertification
(UNCCD) has warned that pressures on global land resources are now greater than ever, as a rapidly increasing population coupled with rising levels of consumption is placing ever-larger demands on the world’s land-based natural capita. On top of this and that, the United Nations weather agency announced on October 30 that the levels of carbon dioxide (CO 2 ) surged at “record-breaking speed” to new highs in 2016. Petteri Taalas, secretary-general of the World Meteorological Organization, issued this warning in Geneva, at the launch of the organization’s Greenhouse Gas Bulletin. The report indicates that CO 2 concentrations reached 403.3 parts per million (ppm) in 2016, up from 400 ppm in 2015. “We have never seen such big growth in one year as we have been seeing last year in carbon-dioxide concentration,” Taalas said. The WMO chief said, “We are not moving in the right direction at all... In fact, we are actually moving in the wrong direction when we think about the implementation of the Paris Agreement...”
A common cause, really?
The UNFCCC explained that the Paris Agreement builds upon this Co nv e n t i o n a n d — fo r t h e f i r s t time—brought all nations into a common cause to undertake ambitious efforts to combat climate change and adapt to its effects, with enhanced support to assist developing countries to do so. As such, it charts a new course in the global climate effort. The Paris Agreement’s central aim is to strengthen the global response to the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5°C. The central aim should definitely be to prevent the growing e ve r yd a y h u m a n d r a m a — s u c h as the loss of food security and means of survival, the forced need to abandon their homes and families to face death and brutality at the hands of smugglers and human traffickers, to be exploited as “modern” slaves, and to pre vent the world’s seas and oceans from being home to more plastic than fish. IPS
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MANILA WILDLIFE CONFAB OUTCOME
‘A victory for migratory species’ C Great victory
By Jonathan L. Mayuga @jonlmayuga
onservation advocates in the Philippines have reasons to celebrate these days. They considered the recent listing of the five endangered migratory species in the appendices of the Convention on the Conservation of Migratory Species of Wild Animals (CMS), also called Bonn Convention, as a big step toward their protection and conservation throughout their migratory routes or range.
Environmental ministers, who took part in the 12th Meeting of the Conference of the Parties to the CMS (COP12 CMS), recently approved 11 Philippine-drafted resolutions, including the up-listing of a shark and a fish species; and three migratory bird species.
What are these species and what needs to be done?
Whale shark. Locally called butanding, it is an iconic marine wildlife—the largest of all known fish species in the world. The Philippines has been pushing for greater global protection of the whale shark since the 1990s, and has been promoting sustainable ecotourism with the animal as the main attraction in Donsol town in Sorsogon province. Joining the Philippines in pushing for the inclusion of the whale shark on Appendix I while maintaining its status under Appendix II of the CMS are the governments of Israel and Sri Lanka. CMS’s Appendix I lists migratory species that have been assessed as being in danger of extinction throughout all or a significant portion of their range. Appendix II, meanwhile, covers migrator y species that have a n unfavorable conser vat ion status and that requires international agreements for their conservation and management. It also includes those that have a conser vation status that would significantly benefit from the international cooperation that could be achieved by an international agreement. The conser vation status of the whale shark further became alarming—from “vulnerable” in 2000 to “endangered” in 2016 on the International Union for the Conservation of Nature Red List (IUCN) because of its global population decline of greater than or equal to 50 percent due to several factors. The whale shark was included in Annex I, or Highly Migratory Species of the United Nations Convention on the Law of the Sea, and in Appendix II of the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES), another international treaty to which the Philippines is a signatory. White-spotted wedgefish. The global population of the whitespotted wedgefish is on the decline. Listed as vulnerable in 2003 on the IUCN Red List, the global population decline of this species is estimated between 50 percent to 80 percent over the last three decades, thus, joining the IUCN “endangered” category. A highly mobile ray species, it occurs more widely from Southeast Asia and Australia, ranging from Thailand, Taiwan, the Philippines
and Indonesia to the Australian subtropics and throughout the central Indo-West Pacific, as far east as Fiji and as far west as India. There is limited information on the species’ population, structure and movements. The whitespotted wedgefish inhabit coastal areas, such as enclosed bays, estuaries and coral-reef areas. There is little to no protection for the species and their habitats in its range states. Christmas frigatebird: In her presentation, titled “Highlighting New Avian Species Nominations by the Philippines to the CMS Appendices,” Simplicia A. Pasicolan, chief science research specialist of the Department of Environment and Natural Resources’s (DENR) Ecosystems Research and Development Bureau, reported that the Christmas frigatebird, which breeds exclusively on Christmas Island, Australia, occurs widely in waters of South Asia countries, including the Philippines to Indochina and to Northern Australia. T he cur rent popu lation of the mature birds of this unique species is estimated at 2,400 to 4,800 individuals. It is capable of raising one f ledgling ever y two years. It nests in tall forest trees, particularly the Terminalia catappa and Celtis timonrensis species, and feed on f lying fish, squid and other marine creatures. Cu r re nt l y, t he C h r i s t m a s f r i g a t e b i r d ’s c o n s e r v a t i o n st at u s i s l i sted a s “c r it ic a l ” b y t he I UC N. It i s a l so l i sted i n A ppend i x I of C I T E S. CITES’s web site says that Appendix I lists species that are the most endangered among CITESlisted animals and plants that are threatened with extinction. The CITES prohibits international trade in specimens of these species except when the purpose of the import is not commercial. The population of there species is declining at 66 percent over the last three generations. Among the factors to the population decline include entanglement in fishing gear, severe marine pollution, live catching and clearing of habitat and breeding sites because of phosphate mining. Yellow bunting: This specie breeds in Japan in May, and in the Philippines in winter. The global estimate of the specie in the band range is 2,500 to 9,999 mature individuals. The yellow bunting nests in bushes or on the ground. Its known migration sites are Hong Kong, North and South Korea, China and Taiwan. It is currently classified as “vulnerable” on the IUCN Red List because of various threats, including habitat loss, poisoning owing to
Block noddies can be found in Tubbataha Reef’s smaller southern islet, Parola. Gregg Yan
out among the Range States,” he said. According to Yaptinchay, other migratory species that are also endangered or are classified as endangered must be on the list, but it must be proposed by a member-country. He said the Philippines, being a country that is rich in biodiversity, will benefit from the list of the species. “Anything that helps protect species that maintains biodiversity, ensuring ecological services for the country and the world is beneficial. NGOs [nongovernmental organizations] and advocacy groups always support government programs. This new commitment will be supported as well,” he added. The Philippines, he said, should start developing and implementing conservation programs for these species with the help of NGOs, government organizations and the communities.
Whale sharks, also called butanding, are tourist attraction in Oslob, Cebu. Mau Victa
International collaboration
White-spotted wedgefish Pierre de Chabannes
high levels of pesticide use and trapping for bird trade. As the proponent for its listing under Appendix II of the CMS, the Philippines encourages more stringent monitoring and protection of the population and their habitats. B l a c k n o d d y, s u b s p e c i e s worcester i: T he specie is classified as “endangered ” by the Philippine Red List Committee. T he committee conducted t he a s ses sme nt a nd e v a lu a tion of birds in the Philippines and prepared the draft DENR Administrative Order updati ng t he Ph i l ip pi ne R e d L i st of fauna l species based on its ver y sma l l popu lation which breeds in a tiny area on t wo i slet s w it h i n t he Tubbat a h a Reefs Natura l Park, according to the Philippine Introductor y
Statement for its listing under Appendi x II of the CMS. The adult population of the specie is 10,656 individuals, and is projected to decline by more than 70 percent over the next 10 to 15 years because of the change in ecological character of their breeding habitat and other existing and potential threats.
Stronger protection, conservation
AA Yaptinchay of the Marine Wildlife Watch of the Philippines said that being in the CMS Appendices means more conservation attention will be given to these species. “CMS is important for migratory species. A listing in this convention entails cooperation at an international level but must be started nationally and worked
We will continue to work with the parties so that these adopted resolutions will be translated into national policies by the Range States or Parties.”—Lim
For its part, Ocean conservation advocacy group Oceana lauded the leadership of the Philippine government, particularly the DENR and its Biodiversity Management Bureau (BMB) headed by Director Mundita Lim and other nonprofit groups and environment champions in making the country’s first COP12 CMS a success. Gregg Yan, a noted conservation advocate and director for communications of Oceana Philippines, said international collaboration for the protection and conservation of over 10,000 migratory species is imperative. “If an endangered whale swims through three countries but is only protected in one, then how can it escape from whalers?” he said. “The recently concluded Convention on Migratory Species got countries to sit down and discuss how best to conserve animals traveling through their routes. Among the best ‘wins’ were for sharks—particularly the inclusion of the butanding or whale shark in Appendix I. This means that the hunting of whale sharks will now be banned all over the world,” he added. Many of the endangered migratory species, he said, are worth far more alive than they are dead, citing the case of whale sharks. “The tourism revenues earned by the town of Donsol in Luzon has uplifted the lives of thousands of Filipinos. Instead of butchering butanding and earning just once from selling its parts, [Filipinos] now earn good money as long as the animals live. See? Everyone wins,” he said.
V ince Cinches, ocea n a nd political campaigner of Greenpeace, said the listing of the species in the CMS is a victor y “as the burden of protecting these species will be under countries within its migrator y range, not only the Philippines.” He added: “The more countries fulfilling their commitments, the more chances of survival or recovery of the listed species. The Philippines is among the countries with a high occurrence of migratory species from sharks, birds, etc. The listing will ensure that the diversity of species in our country will be protected and maintained, along with the many benefits it brings, such as a healthy ecosystem.” Groups will now have more reasons to pursue conservation mechanisms with private entities, communities and individuals, and “will serve as an additional capacity in carrying out the mandates of the government within the Convention and as stipulated under [Philippine] laws,” he said. Accord ing to Cinc hes, t he government should provide an enabling space for a multisector approach to identify steps and ways forward in the protection and conservation of species that is based on science, socially equitable, and ensure to achieve the objective of allowing endangered and threatened species to survive and maintain its functions within the ecosystem it belonged. He added that the government should move forward to eliminate existing practices that contribute to the demise of certain species, such as wildlife provisioning, unregulated and unsustainable tourism, destructive land-based activities, among others. “It is also important to note that the conservation and protection of the species should be done not in isolation of other conservation efforts, and take into account current intervention of various organizations, including the government, so we don’t have to reinvent the wheel,” he said.
Better communication
Biodiversity Communication Advocate Paolo B. Pagaduan said parties to the CMS should continue to better communicate the importance of protecting and conserving migratory species. “Perhaps, the next challenge is to effectively explain the significance of the CMS’s achievement. We don’t want to be viewed as shark lovers per se. Rather, we have to communicate that the reason we protect sharks is because they are a valuable part of the marine environment; that without sharks and other endangered species, the ecosystems could collapse and no longer provide us with the resources we need from nature. Often times we are viewed as animal lovers or tree huggers. But actually, we want to save the humans. We need the environment in a relatively good condition to survive,” he said. Lim of the DENR-BMB said more works needs to be done to ensure that the parties to the CMS will translate the resolutions adopted during the COP12 CMS into national policies and actions. She said working together, Range States will be in a better position communicating the importance of protecting and conserving these migratory species and their habitats to the communities. “We will continue to work with the parties so that these adopted resolutions will be translated into national policies by the Range States or Parties,” she said.
A10 Monday, November 13, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
A little help from friends
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resident Duterte met face to face with United States President Donald J. Trump for the first time last Saturday at the Asia-Pacific Economic Cooperation (Apec) Leaders’ Meeting in Da Nang, Vietnam, CNN Philippines reported. Presidential Spokesman Harry L. Roque said their highly anticipated meeting “was short, but it was warm and cordial.” The two leaders are expected to meet again when Trump arrives in the Philippines for the 31st Association of Southeast Asian Nations summit. This is certainly a step in the right direction to repair whatever perceived damage our bilateral relations with the US suffered at the onset of the Duterte administration, when the Philippine President resented certain criticism from the US government regarding his antidrugs crusade and human rights record, and Duterte even announced his “separation” from the country’s oldest security ally. Indeed, it’s about time we strengthen our strategic and diplomatic relationship with the US, as well as our 66-year treaty alliance. This, the Duterte administration can do even as it maintains its close ties with China. After all, we still have the 1951 Mutual Defense Treaty, something that is not an end-all solution to help peacefully resolve whatever tensions there are in the South China Sea, but a leverage nonetheless. Even Trump said he was prepared to mediate between claimants to the South China Sea. Duterte himself admitted his worries about China’s plans in the South China Sea, amid reports of its construction of facilities in some of the disputed formations in the area. He said he will raise the issue with Chinese President Xi Jinping in Da Nang and Asean should also do so, albeit in a nonconfrontational manner. We support the President in his commitment to take the lead in asserting and clarifying the maritime rights of Asean claimants in an ongoing effort to peacefully resolve longstanding and complex issues in the South China Sea. Nobody is arguing that peaceful negotiation is the only sustainable solution to conflict; nobody really believes that an actual Chinese invasion is in the offing. However, the disputed areas in the South China Sea are strategically vital to China’s economic interest, which is, perhaps, why it is bent on asserting its hegemony over the entire area. This, even as it professes wanting only a peaceful and mutually beneficial coexistence with rival claimants. Faced with China’s display of militarism, asserting its ownership of the entire South China Sea, at times shooing away the civilian vessels of its East Asian neighbors, while they were plying their own territorial waters, indeed, our collective attitude should be: Let’s get all the help we can get. The Philippines has a mutual defense pact with the US—not a provisional arrangement but a treaty—and as a sovereign nation it has an inherent right to use this treaty in the interest of peace and security. Otherwise, why have a treaty at all when we are not prepared to invoke and honor it? There is nothing wrong with exploring all possible collective security arrangements that could bolster our measly military strength, expand our defense options and divide our costs and risks against any direct or indirect aggression. This includes the Asean’s stronger show of solidarity on South China Sea issues. China seems to be taking its cue from the passive, and rather wimpy Asean responses in the past, despite the fact that four of the six claimants are its members. Individual Asean members must realize they can’t act on threats only when it directly concerns their own countries. They need to work together, to speak and act as one to project more strength, especially when dealing with a superpower like China. It is in this same light, this forward-leaning strategy, that we welcome closer cooperation and coordination between the US and the Philippines to enhance our defense capabilities under the Mutual Defense Treaty. Rather than sniveling and being skeptical about US support, we should test it and compel the US to define and concretize it, to help us boost the country’s maritime defense potentials. We should also focus on the framework and the deliverables to make sure the treaty is favorable to us, rather than quibble about its necessity. We can do this even as we pursue parallel tracks of diplomacy, like those provided by the Asean and even the constant and stable trade relations between Chinese and Filipino business groups. A vigorous national defense cannot exist without strong security alliances with other nations. Let us not deprive ourselves the assurance that those foolish enough to threaten us would be confronted not only by the Philippines but its friends.
The other side of AI Atty. Jose Ferdinand M. Rojas II
RISING SUN
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rtificial intelligence (AI) is getting all the attention these days, not only in the world of work but also in retail, communication, gaming, business and many more. The rise of the robots, as many analysts have termed it, has been largely unexpected. The advancement in AI is huge—and that might be an understatement.
It’s everywhere. From our socialmedia platforms to our e-mail providers, from our phone’s voice recognition software to our online (and offline) shopping destinations. Machine learning, which is a system that makes use of algorithms to analyze and predict outcomes based on available data, is changing the landscape in almost every conceivable field or industry. All of the technological
advances are leading to never-beforeimagined solutions that boost profits and maximize performance. Experts and scientists have been working hard to change the world for the better, through AI. But that is only half of the story. Aside from replacing humans in the labor arena, AI also presents an opening for “dark elements” to sneak in and cause disasters and chaos.
‘A culture of lying’
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he state recognizes the vital role of communication and information in nation-building (Article II, Section 24, 1987 Constitution). Consistent therewith, it is the state’s duty to provide an environment for the full development of Filipino capability and the emergence of communication structures suitable to the needs and aspirations of the nation and the balanced flow of information into, out of, and across the country, in accordance with the policy that respects the freedoms of speech and of the press (Article XVI, Section 10, ID). While traditional mass media was the means to spread and disseminate information on relevant events happening across the nation and around the globe, this has been replaced by the new media—user-specific webbased technology intended to create virtual connection—through the Internet. According to the recent Statistics Report, the Philippines has 59.2 million Internet users as of 2016, and is projected to have 80.7 million Internet users by 2021 (https.//www.statistica.com/statistics). Facebook, an online social-media site, reports 47 million active accounts in the Philippines, and is considered the most popular and highly trafficked social networking site (Lee, Raine et al. Coming and Going on Facebook, Pew Research Center [February 5, 2013]). In this digital age, Facebook and other social-media platforms play a
crucial role not only in the dissemination of information but in influencing public opinion and national discourse. The recent increase and proliferation of fake news and false information over the Internet and social-media platforms has compelled the filing of at least two resolutions in the Senate (Resolution 315 of Sen. Antonio F. Trillanes and Resolution 271 of Sen. Francis N. Pangilinan) and the filing of a Senate Bill 1492 by Sen. Joel Villanueva. A counterpart bill, House Bill 6022, was filed by Rep. Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur. Senate Bill 1492 seeks to penalize any person who maliciously offer, publish, distribute, circulate and spread false news or information or cause the publication, distribution, circulation or spreading of the same in print, broadcast or online media. To be covered under this Act, such
Reading a report on the World Economic Forum lately, I have come to realize that this new technological wonder could, indeed, be used by cyber criminals to shut down systems, create panic, or push selfish ends. According to the report, there are AI tools that are currently available as open software. The story also gave a rundown of countries that are prepared to address these kinds of attacks, together with quantitative information on how prepared they are. Expectedly, the Philippines is nowhere near that list. The pictured landscape is scary. Organized and state-sponsored cyber criminals—together with the genius hackers who work alone or in groups—and computer experts in the security industry are apparently engaged in an “escalating arms race.” As I write this, the bad guys are most likely developing some kind of intelligent software that will enable them to break into systems. The other side is, of course, involved in their own research for protection and defense.
Looking at all the stories and reports, HAL 9000 comes to mind. Clarke, who saw the whole thing coming, popularized the line that brings shivers down the spine: “I’m sorry Dave, I’m afraid I can’t do that.” We are in this situation and time when anything is possible, including computers growing so intelligent that they could actually go beyond man’s control. When we tinker, invent, build on things we don’t completely understand yet, it could get dangerous. All we have to rely on are the intelligent humans who are hopefully capable of protecting our own race and systems against possible attacks. We could only hope that the bad guys don’t gain control of critical systems—think national security and defense, nuclear missions, banking and stock trading, the list goes on. This is one type of global development that could go to both extremes: good results or bad. Let’s think positive, but continue to be cautious.
false news or information must cause or tend to cause panic, division, chaos, violence, hate or must exhibit or tend to exhibit a propaganda to blacken or discredit one’s reputation. In addition, the person doing any of the foregoing acts must have full knowledge that such news or information is false, or have reasonable grounds to believe that the same is false. Any person who will be found guilty of committing any of the foregoing acts will be punished by a fine ranging from P100,000 to P5 million and imprisonment ranging from one year to five years. Stiffer penalties will be imposed if the offender is a public official. In addition, this bill proposes to penalize any mass-media enterprise or social-media platform that fails, neglects or refuses to remove false news or information within a reasonable period after having knowledge, or having reasonable grounds to believe, of its falsity. Violators will be punished by a fine ranging from P10 million to P20 million and imprisonment ranging from 10 to 20 years. If the offender is a corporation, the president, CEO and other responsible officers will suffer the penalty of imprisonment. Ironically, a major broadsheet reported on September 1 that President Duterte already signed the senate bill filed by Villanueva. As it turns out, this was fake news. What the President enacted into law was Republic Act 10591, which adjusted fines for 199 crimes in the Revised Penal Code, including the crime of publishing false news. The “false news” that is deemed a crime under Article 154
of the Revised Penal Code refers only to “false news which may endanger the public order or cause damage to the interest or credit of the state.” (By lawyer Pachico A. Seros, posted on September 8, Sunstar.com.ph) The Villanueva/Villafuerte bills have wider coverage. What to me is more important is why, almost overnight, a whole culture of lying has reared its ugly head? Why has fake news, false information, character assassination become the norm not the exception? Are we now a nation that cultivates a culture of lying? As aptly stated by Sen. Grace Poe in her opening statement at the inquiry in aid of legislation by her Committee on Public Information and Mass Media: “If purveyors are allowed to get away with their lies, they embolden government officials to also lie in order to escape accountability, crush dissent and commit illegal acts with impunity.” The Senate inquiry was aimed at identifying the role of government in addressing the lack of news literacy. Should news literacy be recognized by schools to teach children media literacy to help them identify news from hoaxes, similar to the Taiwan experience? I do not think we need to teach news literacy in schools. “Thou shalt not lie” has been ingrained in us since we were taught our 10 commandments. Perhaps, it is not the media but our leaders, public officials, policymakers who need a refresher course on the 10 commandments. As to fake news and false reports by traditional means or online, as the saying goes, “sunlight is the best!”
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Piece of advice to the soon-to-be CPAs
PPP for Marawi City and Tacloban City By Alberto Agra
PPP Lead
Filbert Tsai
DEBIT CREDIT
C
ongratulations to the passers of the recent October 2017 Certified Public Accountants (CPA) Licensure Examination conducted by the Professional Regulatory Board of Accountancy. After their oath taking in the next few weeks, they will become members of the Philippine accounting profession. I am not here to tell you what it’s like to work in an accounting firm—it’s better for you to experience it yourself. What I’m going to tell you today are a few reminders. The profession in the country is a muddy scene. As new professionals, don’t forget what you’ve learnt in school, in review and at home. I believe in the new generation of CPAs to uphold the highest ethical standards. Don’t be afraid to speak up when you know things are going wrong. It’s easy to follow the norm, but do you really want to be the same old crook? Let this be a challenge to you: challenge the norm and establish the standards. It’s not about you being the most junior member of the team or firm that you have to shut up in the obvious scenario of unethical practice. Stand up and be proud that you made a stand. It’s better to lose a job than to corrupt yourself. Only the worst firm will fire an employee who upholds an ethical standard. You’ve thought that the CPA exam was hard? Life is harder after getting the title. Investing in your continuing education is critical to differentiate yourself from others. Your scores in the examination is meaningless and if you’re a topnotcher, that’s not worth anything after getting great offers from accounting firms. Let this be my challenge to you —take your firm-provided course seriously, but learn more outside the firm-training sessions. Don’t give crappy excuses for yourself, life won’t be easier after getting into Big 4 other than a familiar name in the future for your resume. Say that you’re busy and the joke’s on you. Don’t give me the “I’m busy” crap. Only ineffective people are busy enough not to have time. There’s nothing greater than being able to use your new title to help the society. Help nonprofit organizations in developing their business, help charities account better
their spending—these little things are quick wins, don’t let them just go away. Contributing to the society doesn’t only mean doing pro bono or charity work—it’s also about working more effectively in your firms to provide better value to your customer. At the end of the day, the better a company performs, the better the economy grows. So here I have to give you another challenge—make yourself busy during weekends and holidays, and do something worthwhile. You can share inspiration to future CPAs, do some pro bono work, help refute fake news, among others. You can be a better citizen of the country and the world. We all have our own roles in making the world better for our next generation. The accounting profession is fast changing and at a high risk of being replaced in the future by automation and robotics. At this early stage, invest in developing your business acumen and integrity to become a trusted business advisor—our judgement and wisdom will take a longer time before being replaced by machines. Integrity is about a high level of personal standards. Integrity is earned, and it takes a long time to establish. It’s more than being good at what you do, but being honest and truthful. It’s establishing a high baseline for yourself. Filbert Tsai is a Filipino accounting advisor formerly working in the United Kingdom with global and public-sector experience. His key areas of interests are start-ups and micro, small and medium enterprises (MSMEs). His blog and page, Ask the accounting advisor, provide relevant insight for start-ups and MSMEs in the Philippines. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.
Continued from A1
O
ne Way. Using government resources, appropriated or donated, and building facilities, either through procurement or by administration, Marawi can be “modernized” and Tacloban rebuilt. For Marawi and Tacloban then, P5 billion and P26 billion have been initially earmarked, respectively. However, this is not the only approach available. The alternative. The other way, which can be undertaken with the first, is to pursue public-private partnerships (PPPs). “Build, Build, Build” can also happen through this alternative developmental approach whereby the private sector can codesign, cofinance, codevelop, coimplement, coconstruct, comanage
M
any public schools in the country today have yet to adopt advanced technology, which can improve the way educators teach, and help produce competitive students ready for the global. Given this, the government needs to invest in technology for our public education system. Advanced technology can revolutionize the country’s education system. For example, teachers can collaborate to share resources and ideas online. At the elementary level, technology gives teachers and pupils access to an abundance of quality educational resources. In a recent survey on the world’s best education system, the Philippines is nowhere in sight, while the United States was listed at No. 20. Finland and Japan are the top 2 countries, respectively. What does this mean to us? It means we must work harder to cope with the fast-changing world of technology, especially when it comes to teaching and learning. We may have good teachers, but if we fail to use what advanced technology can offer to educators and our students, our graduates may remain uncompetitive in the global market.
Needless to say, our education department must work harder to improve our country’s education system, and adopt advanced technology as a tool in our education system. Below are the top five countries based on a survey conducted by New Jersey Minority Educational Development (NJMED) a nonprofit organization formed in 1995. The poll’s purpose was to gather information on how countries are preparing their youths for the 21st century global knowledge-base economy. Here are the world’s top 5 education systems: 1. Finland Finland has held the unofficial title as the country with the world’s best education system, since 2000. After adding five new key indicators to the educational ranking system, Finland is projected to take the official title in 2017. By outperforming Japan and the three-time winner of NJMED’s ranking system, South Korea. Finland ranked higher in three of the new indicators—secondary children in school, and teachers to student ratio for both primary and secondary schools. Power Ranking Score of 114 2. Japan Second-place finishers for the last three years in the World Top 20 Education Poll. Japan is projected
and coown a project. PPP Projects. In these two cities, PPPs can be undertaken for hospitals, roads, bridges and socialized housing. Other than rebuilding and rehabilitating what was destroyed, new projects can be implemented. Reclamation, monorail and other public transport systems, market
The Farm Siegfred Bueno Mison, Esq.
THE PATRIOT
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Y friends know that I have a small leisure farm in Cavite. It has a few farm animals—turkey and chickens, to name a few—and lots of fruit-bearing trees like pineapple and calamansi. I finished writing my book on servant leadership while I was at that farm. I write more challenging law exams every time I am there. Together with my dogs, I always find peace whenever I visit the farm. Amidst the cool breeze and fresh air, one particular verse always comes to mind, Psalm 62:1-2, which says, “My soul finds rest in God alone; my salvation comes from Him. He alone is my rock and my salvation; He is my fortress, I will never be shaken.” My communication lines to Him appear to be stronger when I am at my farm. Of course, I get added relaxation when I see my dogs at play! But this article is not about my farm in Cavite. Let me tell you about a different kind of farm, one that provides a holistic kind of sanctuary. Some say that The Farm in San Benito is a place where you can detoxify and jump-start a weightmanagement program. Some say it is where you can embark on a wellness journey (spa and yoga, among others) to rediscover vitality and regain energy. Others say The Farm is where you can find serenity, and ultimately escape the stress and pressure of the outside world. Ac-
Best education systems in the world By Irene D. Dalire
Monday, November 13, 2017 A11
to finish second for the fourth year in a row. Japan education system continues to be rated has one of the best. With its excellent development of students from the ages of 5 to 14. Power Ranking Score of 104 3. South Korea South Korea, the three-time winner of the World Top 20 Education Poll ranking system, is projected to finish third in 2017. South Korea only performed well in the completion rate of students 5 to 14, in the five new indicators. However, it should be noted, South Korea, for the last three years was projected to finish second or third, but after the annual fall test scores and graduation rates of high school and college students, they finished first in the annual poll. Power Ranking Score of 101 4. Denmark Denmark, perhaps the most underappreciated country in the world, is again among the elite in educational development. Finishing last year at No. 8 in the World Top 20 Education Poll, Denmark rated in all five of the new indicators. Finishing fifth in secondary age students in school, and seventh and ninth for teachers to student ratios for primary and secondary schools. Power Ranking Score of 94
commodations at The Farm can be pricey, but I truly believe that every business leader or corporate executive should try the many programs offered. With about 47 hectares of lush plantation and virgin forest, any tired and restless person will be able to reconnect with his spirit, reinvigorate his body, and reenergize his mind. I have been at The Farm a few times. It works! I had the fortunate opportunity of meeting one of the owners of The Farm—Naresh Khattar. Having experienced the indescribable
5. Russia After finishing with its highest ever in the World Top 20 Education Poll—No. 3—Russia remains one of Europe’s top countries in preparing its students for the work force. Their student to teacher ratio for students 14 to 18 (one teacher for every ninth student), is the third highest ranked in the world. This makes Russia a favorite to finish in the top 5, for the third year in a row. Power Ranking Score of 91 From No. 7 last year, the US fell to No. 20 this year, which means more and more countries are now refocusing their priorities, and are now investing hard on their education system and structure, bringing on the spotlight the best teaching technology for their students. Given the above information, the Philippines must reinvent our education system to align ourselves with the best in the world. We must know what are the necessary skills to succeed in the 21st century if we want our students to become globally competitive. Advanced technology can help Filipino students succeed. The author is a Teacher 3 at San Juan Elementary School in Buguey, Cagayan.
development, bulk water supply and water distribution can also happen through PPPs. These hard and soft projects can be done singly or as part of a bigger whole, a bundled project. Public side. Within the territory of Marawi and Tacloban, there are various government agencies that can enter into PPP arrangements for the benefit of the city governments and their respective constituencies. For example, if these two cities would want a monorail project, aside from the city governments themselves, their respective provincial governments, the Department of Transportation, the Philippine National Railways and Light Rail Transit Authority can partner with the private sector. PPP ordinance. A comprehensive PPP ordinance, which allows the choice of 24 modalities can be adopted by Marawi and Tacloban City governments. They could use the PPP template ordinance attached to Memorandum Circular 120, series of 2016 issued by the Department of Interior and Local Governments
(DILG MC). In said template, joint ventures, long-term leases and local concessions can be explored. “Skin in the game.” To enhance the trust of private-sector proponents in partnering with government, Marawi and Tacloban, and other agencies, must cocontribute and cosupport the projects. Participation can come in the form of financial support, minimum revenue guarantees, use of government land, tax exemption, incentives and award of concession. Long-term solution. Having the private sector as partner in a long-term PPP arrangement could ensure continuity and sustainability of projects. Solutions must be strategic, not “band-aid” and palliative. “True North.” Regardless of the strategy, the core of all government projects and initiatives must be advanced. Under the DILG MC, the true north is captured by another “P”—the People, or P4—PPP for the People. Enough talk.
feeling of being one with himself and Mother Nature, he decided to invest much of his savings and buy The Farm with his long-time friend from India. An engineer by profession, Naresh recently introduced more wellness facilities, such as aqua therapy equipment (Vichy shower, floatation chamber, etc.), and will soon launch a hyperbaric oxygen therapy (HBOT) chamber. In a recent talk at the Asian Institute of Management, Fr. Lucien Larre, a Catholic priest with a doctorate degree in clinical psychology, explained the benefits of allowing high-grade oxygen to circulate all over our bodies while inside a hyperbaric chamber. Initially, HBOT was developed as a treatment for diving disorders, such as decompression sickness. While HBOT is also considered as a good way of treating brain damage, people who work in stressful environments can reap the benefits of breathing almost 100 percent oxygen. I have tried HBOT several times at the Advance Hyperbaric Life Support Center along 11 Tagdalit Street in Quezon City. It truly works! During our stressful moments, we need to find peace in Him. We were physically designed to have some rest. The Bible tells us of a Sabbath day of rest for us to draw near to Him and rest in His holy presence. Psalm 23:2-3 says, “He makes me lie down in green pastures;
He leads me beside quiet waters. He restores my soul; He guides me in the paths of righteousness for His name’s sake.” Hebrews 4:9-11 says: “So there is a special rest still waiting for the people of God. For all who have entered into God’s rest have rested from their labors, just as God did after creating the world. So, let us do our best to enter that rest.” Regardless of religion or spiritual orientation, leaders must find time to rest. Spending a few vacation days outside the workplace does wonders to our physical and mental health. Reading a book or meditating can be a good way to rest our minds. Having a good massage is my favorite way of relaxing my body. Watching a movie marathon is another way to relax and rest. Resting gives us quiet quality moments. Silence, some say, is the difference between happiness and joy, between fear and faith. Silence allows us to step back and appreciate what we are given. The noise we hear due to our busy schedules distracts us so much that we fail to hear His voice. Christian author Mark Batterson said, “God speaks loudest when we are quietest.” Psalm 46:1 says, “Be still, and know that I am God.” The Farm is not a luxury resort, and is way beyond being just a health spa. For me, being at The Farm is simply the best way to rest. Rest in silence. It really works!
SMI clarifies news reports MAIL
This has reference to the BusinessMirror article of Jonathan L. Mayuga dated November 7, entitled “Groups protest MICC ‘reversal’ of Lopez’s open-pit mining ban.” The statement from KalikasanPeople’s Network for the Environment linking the alleged 12 cases of killings to the victims’ alleged opposition to the Tampakan Copper-Gold Project is irresponsible and clearly without basis. Sagittarius Mines Inc. (SMI) has not been invited to any formal investigation concerning any violent incident within the project area, and we believe that it remains incumbent upon the proper authorities to determine the perpetrators and the real motive behind those violent incidents.
We do not condone violence in any form. We have always respected and will continue to respect human rights and the rights of stakeholders to express their views about the Tampakan Project. We have spent many years working in Mindanao, and acknowledged the long and complex history of conflict that predates SMI’s involvement in the region. We have formally adopted the Voluntary Principles on Security and Human Rights to manage our security risks, and ensure high ethical standards in our dealings with the public security forces, private security agencies and local communities. Further, we also categorically deny Alyansa Tigil Mina’s continuing and malicious report that Finance Secretary Carlos G. Dominguez III has investments in SMI. Dominguez does not have nor has he ever had any financial or other interest in SMI. This is an incontrovertible fact, which is supported by the required filings submitted by the company to pertinent government agencies as required by law. Roy D. Antonio Sagittarius Mines Inc. Corporate Linkages Manager
2nd Front Page BusinessMirror
A12 Monday, November 13, 2017
Trans-Pacific Partnership to further boost PHL economy, experts say
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By Cai U. Ordinario @cuo_bm & Elijah Felice E. Rosales @alyasjah
espite the absence of the United States, experts said the Duterte administration should consider hopping on the Trans-Pacific Partnership (TPP) train, as this would provide opportunities to bolster the country’s economy.
“I believe the Philippines will benefit from further economic integration and it should continue to explore regional and multilateral trade and investment agreement options,” Ateneo School of Government Dean Ronald U. Mendoza told the BusinessMirror in an interview. “The TPP offers opportunities for the country, potentially expanding its exports, attracting more foreign direct investments [FDI] and taking part in cross-border value chains,” Mendoza added. He said the TPP can lead to as much as a 42-percent increase in Philippine exports, contributing to economic expansion by almost 60
percent of GDP. He added exports can grow by up to $3 billion. “Most critically, TPP signatories, like Vietnam, will stand to gain if the Philippines does not join TPP, as the former will likely outstrip the latter in FDI due to TPP membership,” Mendoza added. However, the Ateneo dean warned these gains would not take effect if grassroots reforms are not applied. “However, TPP and trade integration more broadly, will only bear fruit if these are matched by deep institutional reforms in the Philippines, including those that further boost competition policy in the country, enhance the com-
petitiveness of the energy sector, liberalize key economic sectors and enhance ease of doing business,” Mendoza said. “Recent years have also emphasized that economic integration that is too deep and too fast risks leaving behind vast groups in society, so the challenge is to match the ambition of integration with robust reforms. If reforms fail to catch up with our ambition, then we risk a potential blowback from sectors that have failed to adjust to the new economic environment,” Mendoza added. To the government, Mendoza has one advice: “The correct response here is to boost reforms rather than retreat toward protectionism.” Even without the US, the Philippines should still join the TPP and consider it as an “investment,” according to former Tariff Commissioner George Manzano. Manzano admitted, however, that without the US, the TPP is a Table 1.interesting” ASEAN Comparative Statistics “less trade agreement for the Philippines. But the absence of the US could also be beneficial to Manila. “[If], eventually the US [decides to] join the TPP, then you’re already part of the agreement. I think we should consider it as an investment. We should make the investment now,” Manzano said. Manzano added joining the TPP
now may be “less taxing” on the part of the Philippines, especially where trade concessions are concerned. He said under the US-led TPP, some of the proposed provisions were “difficult” to comply with. He added some of the TPP’s initial provisions required the Philippines to change the 1987 Constitution. This will require not only strong political will but also a significant amount of time. The chairman of the House Committee on Banks and Financial Intermediaries also agreed with the experts and said it is time for the Philippines explore all the economic opportunities presented by the TPP. “I believe [we shou ld join the TPP]. We should explore all trade opportunities to expand our market and investments,” Rep. Ben P. Evardone of Eastern Samar, the panel chairman, told the BusinessMirror. “I just hope there won’t be unreasonable conditions in joining the TPP, which could displace Filipino workers,” he added. With this, Evardone supported proposals to relax the restrictions in the economic provisions of the 1987 Constitution. “Our Constitution should adapt to the changing times.” “We will be overtaken [by] other See “Trans-Pacific,” A2
www.businessmirror.com.ph
HIGH PORK PRICES SEEN AS‘NEW NORMAL,’ LURE BACK FARMERS TO TRADE By Jasper Emmanuel Y. Arcalas
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@jearcalas
OCAL hog production this year could expand by 9 percent to 2.4 million metric tons (MMT), from 2.231 MMT recorded output last year on the back of higher pork prices, according to the Pork Producers Federation of the Philippines (ProPork). “More farmers are coming back into production because of better prices,” ProPork President Edwin G. Chen told the BusinessMirror in a recent interview. “Usually, if you have better prices; it will really encourage people to invest.” Chen added that pork producers continue to invest as they deem the current economic climate favorable as the government seeks to curb smuggling, particularly in agricultural goods. “Once the government turns a blind eye on the rampant smuggling and allows smuggling again, then people will start to hurt and not invest anymore,” he said. “It really depends on the policy. So far, we think that smuggling has been curbed.” Still, Chen said local pork prices inch higher due to the continued weakening of the peso against the greenback. “Inherently, the price of pork abroad is higher because of the dollar-peso exchange rate. So, the landed cost of pork is quite high,” Chen said. “Who will not invest, if you have a good price?” Chen said the seasonal farmgate peak price of hogs is now
the “new normal.” “Before, the P121 per-kilogram price was our peak level for the longest time. But now, it is our low price,” he said. “And people start to invest again, both backyard and commercial farmers, because of that price change.” Chen added they expect the hog sector to sustain a 5-percent to 10-percent annual growth in the following years, driven by higher purchasing power. “Our economy is growing at 6.5 percent and, if that continues, then the requirement for protein will also increase yearon-year,” he said. If the Philippines breaches the 2.4-MMT hog-output level then it would the country’s highestrecorded production since 1980, data from the Philippine Statistics Authority (PSA) showed. PSA data also revealed that local hog raisers produced 1.087 MMT in the first half, 1.02 percent higher than the 1.076 MMT recorded output during the January-to-June period of 2016. The figure was also the country’s highest first-half hog production since 1980, according to PSA data. The value of the local hog sector’s production in the first half at current prices rose by 12.09 percent to P113.7 billion in the first half of the year due to the increase in farm-gate price, according to the PSA. The PSA said the average farm-gate price of live hogs went up by nearly 11 percent to P104.55 per kilogram, from P94.22 per kilogram last year.
Sources: International Monetary Fund’s January 2017 estimates, Asian Bonds Online and ASEAN Website
It’s a small world after all: The case for Asean banking integration And what have we to show for this? Since the founding of the ASEAN in 1967, and with the implementation of the priority measures to establish an ASEAN Economic Community (AEC), the region has been transformed into an increasingly well-regulated, dynamic and creative platform for trade and commerce across what many regard as the world’s fastest-growing economic region (Charts 2 and 3).
Continued from A1
Charts 2 and 3
One market of limitless possibilities
Amid this Vuca world, it should make sense to enhance the scope for cooperation with our Asian neighbors and hold hands with “ brothers” so to speak. But, what does Asean have as a region that is potent against Vuca? One might ask, why pursue integration during a period of heightened uncertainty where populism and prisoner’s dilemma type of outcomes are increasingly prevalent? We have seen the United Kingdom opt out of its membership with the European Union, and more recently we are witnessing the unfolding of a similar crisis in Catalonia. In my view, the pursuit of stronger regional integration presents a viable opportunity as a natural hedge against the protracted difficulties from the global economy. The integration of the 10 economies of Asean into one market offers limitless benefits and opportunities (Table 1). By integrating 10 economies into a single bloc, Asean provides members greater market access to a market of approximately 640 million people. This is roughly equivalent to 9 percent of the world population. More important, the region offers a market that is considered the third largest in Asia and the fifth largest in the world in terms of economic size, or GDP. Asean is fuelled by a vision of a single market and production base that is highly competitive and integrated into the global economy. This is slowly happening with free movement of goods, services, investment, skilled labor and freer flow of capital. Against other countries and economic blocks, Asean is stronger in the negotiating table as a block.
The necessary backbone
Of course, achieving a fully integrated single Asean market requires financial integration that allows freer flow of financial services and Page 3 of 5 capital. We should recognize that facilitating intra-Asean trade and investment will be implemented through increasing the role of Asean indigenous banks. To do this, Asean central banks have crafted the Asean Banking Integration Framework (Abif). With the framework in place, well-capitalized banks will start to become more visible across the Asean region. But Asean is also mindful of the diversity across Asean members in terms of economic conditions, as well as legal and structural limitations. These realities make Table 1. ASEAN Comparative Statistics the task of integrating the banking sector more difficult and complex, and that is why the Abif was created to operate under the principles of readiness, reciprocity, bilateral negotiations, capacity building and financial stability. Reciprocity and bilateral negotiation in particular, should address the fear of some that big banks from the big Asean economies could impose undue dominance in the smaller jurisdictions. You do not ask for something that you are not ready to give. Thus, the framework seeks to guide and facilitate the entry and operation of qualified Asean banks (QABs) in Asean member countries to promote equal access and treatment among Asean banks. QABs refer to high-quality banks that are strong and well-managed and meet specific qualifications, including the prudential requirements of both home and host countries. Under Abif, Asean members will aim at concluding reciprocal arrangements to create opportunities for establishing QABs Sources: International Monetary Fund’s January 2017 estimates, Asian Bonds Online and ASEAN Website Sources: International Monetary Fund’s January 2017 estimates, Asian Bonds Online and in each jurisdiction and provide market access and operational flexibility. Asean web site Thethe extent of such concessions and flexibilities will depend on the bilatAnd what have we to show for this? Since the founding of the ASEAN in 1967, and with eral negotiations of the concerned Asean members. While Abif facilitates implementation of the priority measures to establish an ASEAN Economic Community (AEC), the region Andhas what have we to show for this? Since the founding of the Asean in banking integration, it fully respects domestic prudential requirements. been transformed into an increasingly well-regulated, dynamic and creative platform 1967, and with the implementation of the priority measures to establish Imposition of a template-approach is a no-no in the Asean. for trade and commerce across what many regard as the world’s fastest-growing economic an Asean Economic Community, the region has been transformed into an region (Charts 2 and 3). increasingly well-regulated, dynamic and creative platform for trade and Where do we stand commerce To fully support the Abif, the Philippines amended an existing law (RepubCharts 2 and 3across what many regard as the world’s fastest-growing economic region (Charts 2 and 3). lic Act [RA] 7721) by enacting RA 10641 on July 15, 2014. This allowed
foreign banks to operate in the Philippines through any one of the following modes of entry, subject to relevant licensing and other requirements prior to actual entry: 1) establishment of foreign bank branches with full banking authority; 2) acquisition of up to 100 percent of the voting stock of an existing domestic bank; or, 3) investing in up to 100 percent of the voting stock of a new locally incorporated banking subsidiary. With this law, we are now on a par with the rest of the Asean-5 in terms of legal frameworks for access in the banking system. Moreover, this allowed the Bangko Sentral ng Pilipinas (BSP) to conclude negotiations with Bank Negara Malaysia (BNM) in April 2017. The BSP also initiated talks with Indonesia and Thailand. Last year OJK Indonesia and BNM also concluded bilateral negotiations. The concluded negotiations will become effective once the internal ratification processes of the negotiating countries are completed. The next steps include actual application, assessment and licensing of QAB candidates. The race is now on for the first QAB in Asean.
Embracing Vuca world
The region, including the Philippines, has everything to gain from banking integration. Foreign bank penetration results in improved financial services quality and availability following the increase in competitive forces. In addition, an increase in the depth and breadth of domestic financial market tends to enhance efficiency in the financial sector. Greater financial integration leads to increased foreign direct investments. Foreign investors tend to leverage on financial institutions from the same jurisdiction and therefore positive externalities can be reaped in the process of banking integration. This in turn helps facilitate transfer of technology and managerial know-how to a recipient country. Additionally, financial integration enhances macroeconomic policy discipline and reduces frequency of policy mistakes. Financial openness signals a commitment to sound macroeconomic policies. Last, but not least, financial integration also reduces volatility through more efficient capital allocation. Financial integration expands the market, which can be accessed by regional players in the region, hence facilitating diversification. But, of course, it is recognized that, despite the benefits, interdependence of financial markets could increase the risks of spillovers and contagion. Notwithstanding the risks and benefits, with the rapid pace at which globalization is proceeding, it can be expected that the world will grow more complex and connected in the future. This is the reality we need to face but, at the same time, we should be prepared to manage. Hence, as countries in the region open and integrate their financial markets, it is important to establish the necessary capacities and pursue sound and consistent macroeconomic policies. In this way, Asian member-states will fully maximize the benefits and outweigh the risks of an increasingly integrated financial market. The task at hand may be challenging, but with greater cooperation, no challenge is insurmountable—after all it’s just a small world. 1 This index measures the average spillover in the global equities market consisting of 21 emerging and advance economies. See Fernandez, J. et al. “Measuring Philippine Financial Markets Connectedness: A Variance Decomposition Approach.” Forthcoming BSP paper.