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Bimp-Eaga: Eagle eyes toward 2025 By Manuel T. Cayon | Mindanao Bureau Chief @awimailbox

Part One

AVAO CITY—By May, Sulawesi is just a boat ride away. This is made possible with the launch of the first intercountry roll-on, roll-off (Roro) shipping route, an attempt to break the long lull in the connectivity issue in East Asia that has hounded for three decades this poorer side of the Asian grouping. At the end of the month, Philippine and Indonesian authorities would launch the Philippine side of the twocountry cargo shipping. The cargo shipping is a Philippine initiative to connect this city with General Santos City in the Southern Mindanao island, and with Bitung City in northern Sulawesi district of Indonesia, using the barge concept in moving cargo and businessmen. The shipping is being mounted by Cebu City-based Asian Marine Transport Corp., with a 7,000-tonnage ferry with a capacity of 100 twenty-foot equivalent units (TEUs). The ferry has a top speed of 13.5 knots. While the two countries are traditional trading partners using two known jump-off points: through their respective Continued on A2

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he National Economic and Development Authority (Neda) said it remains optimistic that President Duterte will listen to his economic managers, who have argued against imposing a ban on land conversion.

Socioeconomic Planning Secretary Ernesto M. Pernia said the President’s economic team has “strong” arguments against the issuance of an executive order that would authorize the ban. “We feel we have stronger arguments, stronger economic arguments,” Pernia said. “But it’s

still being studied by the Office of the President.” Pernia and other members of the economic team, particularly Finance Secretary Carlos G. Dominguez III, Budget Secretary Benjamin E. Diokno and Trade Secretary Ramon M. Lopez issued a joint position paper on the pro-

Monkey wrenches to fast-tracking PPPs

5.5M units

PPP Lead Alberto C. Agra

The housing backlog in the Philippines

posed ban on land conversion. The position paper was also signed by Vice President Maria Leonor G. Robredo, who was then the chairman of the Housing and Urban Development Coordinating Council (HUDCC). The joint position paper states that, “overall, the land-use conversion ban is antithetical to economic growth, job generation and poverty reduction”. According to the position paper, a two-year ban on land conversion can derail efforts to revitalize See “Neda,” A2

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Neda confident Duterte won’t ban land conversion By Cai U. Ordinario

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hat are the obstacles and pitfalls of public-private partnerships (PPPs)? Why does it take too long to award PPP projects? Why can’t our country be like other countries where government projects are implemented fast? What are the causes of delay in construction? Every country has its own priorities, leaders, systems, strategies, culture, predominant values, political, social and economic realities, and definitions of and laws on PPPs. Those countries must have something that allows them to pursue PPPs—from prioritization, selection of proponent, award and completion of construction and turnover—at a fast pace. In our country, there are several possible perceived reasons why it takes us so long to award, to get a notice to proceed and to complete construction. And this list is by no means exclusive, and not indisputable. Continued on A15

SMC TO B.O.C.: STEP UP Foreign buyers to sell PHL food expo We have tourism buyers FIGHT VS OIL SMUGGLING [interested in or already selling By Ma. Stella F. Arnaldo

By Lenie Lectura

@llectura

an Miguel Corp. (SMC) President Ramon S.Ang strongly urged the Bureau of Customs (BoC) to exert more effort to curb the smuggling of petroleum products. This, after SL Harbor Bulk Terminal Corp., a unit of SMC, has filed a case against the BoC, contesting the latter’s recent seizure of its bunker-fuel cargo, which it said was done without due process and despite the presentation of a complete set of import documents. Ang denied that his company was involved in smuggling activities. SL Harbor filed before the Court of Tax Appeals (CTA) to nullify the decision of forfeiture issued by the customs collector of the Port of Limay in Bataan. “There was no smuggling, no illegal discharge and no basis for

the warrant of seizure and detention [WSD],” Ang said, adding, “perhaps, the BoC should focus its efforts on gasoline and diesel smuggling, which is becoming more and more rampant.” Ang, in April 2013, raised the alarm that 1 out of 3 liters sold in the market was coming from smuggled sources, with government losing as much as P30 billion to P40 billion annually. “We have always stood behind the BoC in its efforts to put a lid on fuel smuggling and improve its revenue generation, but it has to be done properly. They cannot just seize produtcts without following the due process of law at the expense of law-abiding taxpayers. They should go after the real criminals,” Ang said. The BoC, last December 16, seized 44,000 metric tons (MT)

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See “SMC,” A2

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ANILA will be ground zero for Asia’s largest gastronomy event, the Madrid Fusión Manila (MFM) 2017, which rolls out from April 6 to 8 at the SMX Convention Center. With this year’s theme of “Toward a Sustainable Gastronomy Planet”, the third serving of MFM features, for the first time, a business-to-business (B2B) meeting that will bring together foreign buyers and local tour operators, and industry specialists for culinarytour packages. In a text message to the BusinessMir ror, Depar tment of Tourism (DOT) Director for Market Development Verna Esmeralda Buensuceso said: “We have tourism buyers [interested in or already selling culinary-tourism packages] coming from Japan, China, Korea, the United States

culinary-tourism packages] coming from Japan, China, Korea, the United States and the Middle East. They are meeting with Philippine tour operators, resorts, hotels and farms on April 7.”—Buensuceso

and the Middle East…around 27 of them. They are meeting with Philippine tour operators, resorts, hotels and farms on April 7.” She could not give a list of the local tour operators and establishments joining the B2B meeting, as “more are still signing up for the event”. In a news statement, Tourism Secretary Wanda Corazon T. Teo said the annual MFM has come a

long way since it was launched in April 2015, generating a loyal following among Filipino families, gourmets and gourmands alike. The New York Times, Condé Nast Traveler, and online food publications have been hailing Philippine cuisine as a major food trend in the world. Buensuceso believes MFM and Flavors of the Philippines “have been instrumental in promoting Philippine cuisine to

more foodies worldwide”. The ongoing Flavors of the Philippines, which began on March 11, is a cultural and food festival that celebrates the evolution, heritage and diverse offerings of Filipino cuisine. Activities include tutorials in native cuisines, local food festivals, gourmet fairs, dining with celebrity chefs, specialized menus in restaurants, roving food trucks, food tastings, bar crawls, cook-off challenges, food bazaars and farmers’ market tours set in captivating destinations. There will also be activities that enable participants and guests to immerse themselves and interact with local communities during these food trips. The festival lasts until April 30, with participating restaurants nationwide. Chefs from Michelin-starred establishments around the world, as well as the Philippines’s most popular culinary talents, will be speaking at the International Gastronomy Congress, which is See “Foreign buyers,” A2

n japan 0.4486 n UK 62.6070 n HK 6.4604 n CHINA 7.2865 n singapore 35.9042 n australia 38.3482 n EU 53.5921 n SAUDI arabia 13.3854

Source: BSP (31 March 2017 )

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Bimp-Eaga: Eagle eyes toward 2025 Continued from A1

capitals and through the infamous, largely unregulated and porous southern backdoor of the Philippines, referring to the southwestern island provinces of Basilan, Sulu and Tawi-Tawi, which age-old documentations point to former land bridges.

Ambitious project

THE Roro cargo shipping promised to drastically cut shipping time and consequently, the cost, of travel currently between three weeks and five weeks—through the ManilaJakarta air route and, via land, to Bitung market. Authorities have said the Roro level would lead to only one and one half-day, or 36 hours, of travel. This shipping is the biggest sea connectivity venture within the Brunei Darussalam, Indonesia, Malaysia, the Philippines-East Asean Growth Area, or Bimp-Eaga. The launching would be on April 30. The fate of this ambitious project—its sustainability, and patronage by business groups in the two countries—would be a crucial issue,

Foreign buyers. . . expected to be fully attended by local chefs, kitchen professionals, students, media and general food enthusiasts. The chef-presenters this year are a veritable who’s-who in the culinary world: Ray Adriansyah and Eelke Plasmeijer (Locavore, Indonesia); Josean Alija (Nerua Guggenheim, Bilbao, Spain); Josh Boutwood (The Test K itchen, Philippines); Rodrigo De La Calle (El Invernadero, Spain); Gert De Mangeleer (Hertog Jan, Belgium); Magnus Ek (Oaxen Krog & Slip, Sweden); Robby Goco (Green Pastures, Philippines); Gene Gonzalez (Café Ysabel, Philippines); Vicky Lau (Tate Dining Room and Bar, Hong Kong); Tatiana and Katia Levha (Le Servan, France); Kiko Moya (L’Escaleta, Spain); Sally Camacho Mueller (pastry chef, United States); Jordy Navarra (Toyo Eatery, Philippines); Paco Pérez (Miramar, Spain); Jordi Roca and Alejandra Rivas

though, as what befell the previous air links between them.

Vision 2025

LINKING the regions of each of the four countries has been one of four dreams of the founding leaders of the BIMP-Eaga in 1994. Other than strong linkage, the countries also sought to turn into an advantageous trading position the negative perception on having common food-basket products, increasing movement of people and enlivening tourism, and crafting a practical and sustainable use of its strength: environmental health. But connectivity finds a more priority seat among its leaders, for obvious reasons. The regions committed by their nations’ leaders to form the Eaga are archipelagic and considered only as satellites and production areas to their nation’s capitals. Mindanao and Palawan are the Philippines’s link to the BIMP-Eaga, as with the entire sultanate of Brunei Darussalam, the 10 provinces in the Indonesian islands of Kalimantan, Sulawesi, Maluku and Irian Jaya, and Sabah, Sarawak and Labuan of Malaysia.

Continued from A1

Gomez (El Celler de Can Roca, Spain); Simon Rogan (L’Enclume, United Kingdom); Julien Royer (Odette, Singapore); Pedro Subijana (Akelare, Spain); Kamilla Seidler and Michelangelo Cestari (Gustu, Bolivia); and Tony Yoo (Dooreyoo, South Korea). Simultaneous with the gastronomy congress is an expo of foreign and local food products, wines and spirits, agricultural produce, local delicacies, chef’s gear, food equipment, kitchen supplies and accessories, to name a few. During the expo, booths usually offer their products for samplings and tastings to MFM delegates and participants. Other exhibiting companies also conduct cooking demos, wine tutorials and food ingredients preparations. The expo will be open to the public on Sunday, April 8, with an entrance fee. Also available to MFM participants are tours to Pangasinan,

The subregion’s land area is roughly 1.54 million square kilometers and is home to about 45.6 million people, based on a 1996 survey. Being backwater regions were the biggest hurdles then. The most ambitious initiative was to turn these poor regions into productive areas and solve, at the same time, the long episodes of political conflict also hounding many underdeveloped areas. It would be understandable then, that the bulk of the activities of the next-generation development program called BIMP-Eaga Vision 2025 would find big-ticket public funding on transportation infrastructure. The BIMP-Eaga Vision 2025 is the successor plan to the Implementation Blueprint 2012-2016. The former is touted to be also another—but also bolder and better armed—long-term framework development plan for the East Asia region. Previous development plans have their own early infantile growth pains and adult bumps. These include periodic political dynamics in their respective nation’s

domestic affairs, crisis on their respective agriculture sector like the Avian flu and drought, and global economic issues, such as the Asian financial meltdown in 1997 and a global recession in 2008. For quite a longer time—discussions and debate spanned a decade, the four nations dabbled and contended with finding common ground on customs, immigration, quarantine and security of their borders. Ministers and Cabinet secretaries have to negotiate and persuade their nation’s leaders and lawmakers to accommodate certain perks on travel and cargo to their poor regions, or relax some regulations if only to inject attraction to these areas. The lack of market attraction of some destinations also kept the region from progressing further.

Pampanga, Cavite and Batangas, Bicol, Cebu, Iloilo and Guimaras, Davao and the Zamboanga Peninsula for food tastings, site visits to factories of food products and farms, demonstrations in the preparations of local area delicacies like longganisa (native sausage), bagoong (fermented fish or shrimp paste), puto (steamed r ice c a ke), m a rket v isits, a s well as escapes to popular local tourist sites. Buensuceso said the regional lunches will present the finest dishes and produce from Luzon, Visayas, and Mindanao. Carefully planned and selected by some of the most formidable names in Philippine cuisine, the menu for the regional lunches will showcase a variety of local dishes, such as lechon, longganisa, kinilaw and other local staples, cooked with the finest local produce from each region. Local delicacies and produce, such as the piaya and the different varieties of heirloom rice will also be presented, along with the Philippine cacao, pineapple, mango,

dalandan, kalamansi, chocolates, cheeses, wines, nuts, preserves, as well as alcoholic beverages. “The regional lunches will showcase different local dishes from day to day to focus on each region’s finest produce, ingredients and flavors. For day one, food varieties and ingredients found in Luzon will be presented. For day two and day three, the best of the Visayas and Mindanao will be laid out respectively,” she stressed. The Department of Agriculture will also host regional lunches, departing from the traditional regional focus for each day, and are now working around themes. On April 6 the theme is “rice”, for April 7 it’s “nose-to-tail”, and April 8 is “corn and seafood”. Creative dishes supporting each day’s theme will be served up by the country’s hottest chefs and the current “in” restaurants, along with a select array of food products and beverages from popular purveyors. For further details, inquiries, and registration, click www.madridfusionmanila.com

Well-oiled

TRADE Assistant Secretary Arturo P. Boncato Jr. said the development blueprint between now and 2025 has been well-oiled compared to its predecessor development plans. “The proposed infrastructure priorities funded by respective gov-

ernments in the Eaga is now $31 billion, the highest so far,” Boncato told the BusinessMirror. The previous recorded governmentfunded project was $1 billion. According to Boncato, designated senior Philippine government official to the BIMP-Eaga, the Roro cargo shipping is not included “because it’s an activity of the private sector”. He said data capture and database tracking of non-governmental activities in the BIMP-Eaga is being pursued this year, an initiative of the Philippine chairmanship of the BIMP-Eaga. “We need to track these important economic activities, as well,” he added. The big-ticket projects include the ongoing Internet cable interconnection, running a submarine cable connecting Brunei and the three other countries to as far as Guam.

Best project

IT was last year that the submarine cable project was announced by Romeo Montenegro of the Mindanao Development Authority (MinDA). Montenegro, chief of the MinDA public investments, international

Neda. . .

Continued from A1

agriculture, meet the housing backlog, accelerate infrastructure development and expand other economic activities. The paper nonetheless supported the Department of Agrarian Reform’s (DAR) proposal to create a task force that will assess the status of land-use conversion in the country and seek the necessary support of other implementing agencies. Instead of imposing a twoyear ban, the position paper called for the implementation of national land-use regulation and the enactment of a national land-use law. T he posit ion paper a lso underscored that the ban on

SMC. . .

Continued from A1

of bunker-fuel cargo, consigned to SL Harbor and loaded in MT Alpine Magnolia and local barge MT Malolos in Limay, Bataan. No alert notice or proceeding was conducted prior to the issuance nor an inventory was made, Ang noted. Last December 20, SL Harbor filed a motion to lift WSD. A month after, the Limay District Collector of Customs issued a decision forfeiting the entire bunker-fuel cargo and the vessels. The sole basis of the decision was that MT Magnolia allegedly unloaded directly to the barrage of MT Malolos without the payment of taxes. On February 2 this year SL Harbor appealed the decision to Customs Commissioner Nicanor E. Faeldon. However, he failed to act on the appeal within 30 days. Hence, the forfeiture decision was deemed affirmed. On March 23 SL Harbor filed a petition for review with the CTA. The case is now awaiting CTA proceedings. Meantime, the entire bunker-fuel cargo of 44,000 MT remains intact in the SL Harbor terminal storage banks. In its 28-page petition, SL Harbor said it was deprived of procedural due process of law as no notice before seizure was issued and no hearing before forfeiture took place. SL Harbor’s tank had in it approximately 6,376,282 liters of bunker-fuel oil as previous stock inventory. This was where the 996,264 liter onboard MT Malolos was loaded from. It was not from MT Alpine Magnolia. SL Harbor stressed that there was no smuggling, no illegal dis-

promotion and public affairs, explained the project was developed by a consortium of Chinese, Malaysian and Brunei firms. It was through the consortium that the submarine cables connecting Brunei with East Kalimantan of Indonesia were installed. Montenegro said the project, known as the BIMP-Eaga Submarine and Terrestrial (Best) cable project, was initiated by the information and communication technology sector of the BIMP-Eaga group in 2014. He expressed optimism the project will pressure the two Philippine telecommunication firms to upgrade their facilities “and finally serve [the] population with a fast and reliable broadband speed, currently the slowest in Asia.” On the Philippine side, Boncato said the Mindanao Railway is the biggest infrastructure project within the BIMP-Eaga. The project feasibility would be started for the Tagum-Davao del Norte passing through Davao City and to Digos City, Davao del Sur, section of a supposed Mindanao loop of the railway line. To be continued

land-use conversion will introduce more delays in reducing the government’s housing backlog, which HUDCC projects to have reached more than 5.5 million units in 2016. Real-estate developers have also warned the government that the country’s housing backlog could easily balloon to 6.5 million units by 2020, from the current 5.5 million units, if the moratorium on the conversion of agricultural lands being pushed by the DAR is implemented. The ban will also impede the development of resett lement and evacuation areas in disasterstricken areas, which are mostly agricultural. Last year the DAR proposed a moratorium on land conversion to boost the country’s bid for food security. charge and, thus, no basis for a WSD. “The problem with the WSD is that it assumed that the volume loaded unto MT Malolos was the same that was directly discharged from MT Magnolia. But this assumption completely forgets that SL Harbor’s storage tank had existing bunker-fuel stock inventory of more than 6 million liters.” SL Harbor also noted in its petition that industrial fuel oil (or bunker-fuel oil) is a low-value item. It can only be used by power plants, seafaring vessels and other manufacturing plants. The black market for it is so limited that it is a low-margin product. It is also a “dirty product in the sense that its transport and handling are fraught with environmental risks that it is not an activity that anyone would engage in unless it was absolutely necessary”. “If one were to smuggle bunker fuel, the conspiracy required would be too complex. SL Harbor would have to conspire with a big trader like Glencore, which would then risk $150 billion business to accommodate a small shipment,” the company said. “On top of this, SL Harbor would have to conspire with ship owners who would then expose their entire fleet to risks of seizure. The risks and costs of smuggling bunker fuel far outweigh the taxes to be paid, which, incidentally, was already deposited in an accredited bank, ready to be debited in favor of the BoC,” it added. For 2015, records would show that SMC paid the government a total of P125.7 billion in various taxes, including value-added, excise taxes and specific/ad valorem taxes. In the last five years, the company has paid a total of P537.5 billion in various taxes to the government.

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Congressman to block bill allowing President to appoint barangay execs By Marvyn N. Benaning Correspondent

IBERAL Party Rep. Teddy Brawner Baguilat of Ifugao on Sunday vowed to block the passage of the bill that would allow President Duterte to declare all elected barangay positions vacant and authorize him to appoint barangay officials. Baguilat slammed the crafting of the bill as “a gimmick straight out of an authoritarian playbook, a plan to mock the legislature’s sworn duty to defend democracy, and a scheme that destroys the right of citizens to choose who should lead them”. The lawmaker assailed the planned legislation as currying favor with a President who is by law entitled only to a single sixyear term, “but who is apparently lusting for far longer stay in Malacañang”. Baguilat described the justification for handpicking barangay officials as far worse than the listing of public officials who were supposedly in on the drug trade, many of whom have never been investigated, much less proven to be protectors of drug lords. Duterte earlier claimed that about 40 percent of barangay officials are linked to the illegal-drugs trade, but he has not offered evidence to back up his claim. “What is the basis for saying that 40 percent of [barangay] officials are connected to drugs? It does not make sense. And even assuming that some are, can’t we trust the Filipino people to vote for those who they believe will be the right

candidates for them? We are a free people, and we must be free to elect our own leaders,” Baguilat said. “If this administration is so convinced that these barangay officials are into drugs, then it should file cases. That is certainly more efficient than vetting more than 200,000 people who will fill the barangay posts. Doing so will not address the problem, if there really is one as serious as the administration makes it out to be,” Baguilat added. Baguilat warned his colleagues at the House of Representatives that doing away with a vital political exercise, like the barangay elections, would put the Duterte administration even closer to a dictatorship, with the President’s control over the two chambers of Congress practically reducing them to a rubber stamp. “Barangay officials are supposedly non-political and supposedly nonpartisan. With this move, the President wants even the barangay officials to be beholden to him and that will put us even closer to a dictatorship,” Baguilat said. “Doing so will deprive the people of their fundamental right to choose their leaders,” he added. Baguilat added that the barangay is the smallest political unit, and the leaders are those closest to the people, especially those far from the center. “By controlling these local leaders, the President will further strengthen his hold on the political system, preventing that healthy check-and-balance so essential to a democratic system that seeks to prevent abuse of power,” he also said.

DND looking for more equipment to boost external-defense capabilities By Priam F. Nepomuceno Philippines News Agency

ITH the delivery of the South Korean-made FA-50PH “Fighting Eagle” jet fighters nearing completion and more modern equipment coming in line, Defense Secretary Delfin N. Lorenzana said the Philippines is now looking for more platforms that will further boost its external-defense capabilities. “As we are now in the Second Horizon of the Armed Forces Modernization Program, we are looking into the acquisition of more equipment for our external-defense missions,” Lorenzana said. While he did not give specifics on what kind of equipment the Department of National Defense is looking to acquire, he said it is possible that these include missile-armed frigates,

antisubmarine helicopters, as well as multi-role fighters, long-range patrol aircraft, to name a few. On March 29 two more FA-50PH jet fighters were delivered in Clark Air Base, Angeles City, Pampanga, increasing the number of Mach 1.5 jet aircraft in the Air Force inventory to eight. Another four more are expected to be delivered within the year, completing the country’s 12-plane order from Korea Aerospace Industries, worth P18.9 billion. The Armed Forces Modernization Program is divided into three horizons, with the first lasting from 2013 to 2017, the second from 2018 to 2022 and third 2023 to 2028. The Second Horizon calls for the acquisition of equipment more attuned to external-defense missions and has a programmed funding of around P100 billion.

CPP dumps declaration of unilateral cease-fire

N a tit-for-tat with the Duterte administration, the Communist Party of the Philippines (CPP) did not declare a unilateral cease-fire in time for the fourth round of peace talks in the Netherlands from April 2 to 6. The newly elected CPP Central Committee opted not to issue any directive about the cease-fire that the New People’s Army (NPA) has been waiting for even before its 48th anniversary on March 29 after President Duterte said no unilateral cease-fire will be declared for the duration of the talks. A joint statement issued by the National Democratic Front and the government peace panel on March 11 said the cease-fire declarations would be issued reciprocally. The CPP earlier expressed its willingness to comply with the agreement, but Duterte had to consult his national security and military officials before he could even consider issuing a reciprocal ceasefire declaration. “It can only be surmised that he [Duterte] heeded the advice of Armed Forces officials on the matter,” CPP said. The party noted that the military has intensified the campaign against the NPA, and is even conducting aerial strikes against suspected NPA lairs in Luzon and Mindanao. As a result, the CPP in a statement called on the people to “rally and protest the extra-judicial killings, aerial bomb-

ings, occupation of communities, forcible evacuations, hamletting and other attacks perpetrated by the Armed Forces”. The CPP also held out the possibility of the NPA’s establishing more guerrilla units “to protect the people from the Armed Forces”. “The NPA must open its doors wide open in order to accommodate the large numbers of people who want to join the armed struggle in their aspiration to attain justice and work to end the prevailing social system,” the CPP said. Nevertheless, the party said it fully supports the scheduled fourth round of government-NDF peace negotiations that started on Sunday despite the nonissuance of a ceasefire declaration by either side. “CPP looks forward to fruitful discussions and positive steps towards forging an agreement on socioeconomic reforms, as well as political and constitutional reforms. The CPP anticipates that the question of free land distribution to the tillers, the most pressing social-justice issue in the country, will be fully addressed in the talks,” the party added. Moreover, it also anticipates “intense discussions and debates on the people's demand for national industrialization, as well as expansion of public services, versus the insistence of the government to pursue liberalization, privatization and deregulation”.

Editor: Dionisio L. Pelayo • Monday, April 3, 2017 A3

APO-PU erred in e-passport subcontract–Palace official

By Recto Mercene

@rectomercene

ALACAÑANG has strongly hinted that state-run APO-Productivity Unit Inc. (APO-PU) may have committed grave abuse of discretion and could be held criminally and administratively liable for engaging the services of a privately owned printing company for the implementation of the e-passport project of the Department of Foreign Affairs (DFA). Short of recommending the immediate repeal of the existing contract between APO-PU and the United Graphic Expression Corp. (Ugec), Chief Presidential Legal Counsel Salvador S. Panelo said APO “should refrain from engaging, subcontracting or assigning the printing of passports to private entities, including Ugec.” In his legal opinion executed on the e-passport controversy, Panelo said if abrogation of the joint-venture agreement (JVA) between APO-PU and Ugec would render APO-PU incapable of performing its contractual obliga-

tions under a memorandum of agreement (MOA) with the DFA, the DFA “may then have sufficient basis to terminate the same in accordance with its terms and conditions”. Panelo junked the APO-Ugec JVA as invalid or “void for being ultra vires”, meaning it is “an act committed by an entity beyond the powers conferred upon it by law”. The Palace official pointed out that under the MOA forged between APO and the DFA on October 5, 2015, APO is “required by law and regulations to use its own facili-

ties, equipment and machinery in printing the passports for the DFA.” Curiously, the JVA was executed by APO and Ugec on November 14, 2014, indicating that the government-owned printing facility had already anticipated the e-passport contract almost one year ahead of the formal signing of the MOA with the DFA. Prior to the execution of the MOA, printing of passports was handled by the Bangko Sentral ng Pilipinas. The DFA reportedly vetted APO, a corporation attached to the Presidential Communications Operations Office, then headed by Secretary Herminio B. Coloma Jr., as an authorized supplier-service provider for the production and printing of “accountable forms and sensitive high quality-volume” documents, including passports and tax stamps. It turned out, however, that APO-PU did not have the technical capability or the state-of-the-art equipment to perform its contractual obligations to the DFA, hence, it hired the services of Ugec. Panelo clarified that the outsourcing scheme by APO-PU resulted in a breach of a resolution by the Government Procurement Policy Board, as well as pertinent General Appropriations Act and Republic Act (RA) 9184 prescribing the rules on public bidding.

Economy

A4 Monday, April 3, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

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PHL firms eye $2-trillion halal market

By Catherine N. Pillas

@c_pillas29

hirty Philippine companies, including San Miguel PureFoods, Century Pacific and Fisher Farms will join a trade show which will be staged in Malaysia to tap the trilliondollar halal market, according to an official of the Department of Trade and Industry (DTI). The DTI said the local firms will join the Malaysia International Halal Showcase (Mihas)—one of the largest global halal events—which will take place this week.

“This is the first major engagement that will let the world know the Philippines is interested in making our mark in the halal market,” Perlada said in an interview

with the BusinessMirror. Representatives from Zamboanga economic zone will also be making a pitch to Malaysian investors to encourage them to invest in the Philippines. The Department of Agriculture and the Philippine International Trading Corp. will

join the presentation. “We will also be engaging with Malaysian authorities on halal accreditation and certification, and visits to halal hubs there to benchmark their practices and standard,” Perlada added. Perlada said the Philippines is

keen on making its mark in the Asean region via trade exhibits, such as Mihas. The Mihas will run from April 5 to 8. He said the 30 companies have set a sales target of $3 million from the Mihas. The global halal industry is currently estimated at $2 trillion. The halal market is projected to expand to $10 trillion by 2030, according to the DTI. The halal industry spans sectors such as food processing, food service, cosmetics, personal care, pharmaceuticals and logistics industries. Other related industries include travel and hospitality services. The Mihas was organized by the Malaysia External Trade Development Corp. (Matrade), Malaysia’s trade promotion agency. It was first introduced in 2004 to promote the

world’s halal sector. Mihas 2017 will highlight segments within the global halal industry supply chain, such as halal food and beverages products, non-food products, such as halal pharmaceuticals and halal cosmetics products, as well as Syariah-compliant services, namely, financial services, halal logistics, e-commerce and tourism. Complementing Mihas 2017 will be the inaugural Malaysia International Islamic Lifestyle Exhibition (MILE), an event organized in parallel with Mihas to promote Islamic lifestyle sector. The MILE’s objective is to promote clusters, such as modest fashion, Islamic education and literature, Islamic arts, information-technology and multimedia, jewellery and ornaments, as well as social and community development.

Underemployment in PHL expands by 2% annually–PSA $5-B economic hub shapes up in Clark Freeport Zone

DOLE/JOB FAIR DABAW PINOY

By Cai U. Ordinario @cuo_bm

nderemployment in the Philippines grew 2 percent annually in a span of over 20 years, according to the latest data from the Philippine Statistics Authority (PSA). Data from PSA’s Decent Work statistics showed there were around 102,000 new underemployed workers every year. This means there were 7.18 million underemployed Filipinos in 2015, a 2.04-million increase from the 5.137 million in 1995. “[This] is the number of total employed who wanted additional work or employed persons who wanted additional hours of work in their present job, or to have additional jobs, or a new job with longer work-

ing hours as a percentage share of total employed,” the PSA said. However, as a percentage to total employed, the underemployment rate exhibited a declining trend from 20 percent in 1995 to 18.5 percent in 2015. The PSA said underemployment rate reached its peak in 2006 at 22.6 percent, with the least recorded at 17 percent in 2002 and 2003. In terms of sector, most of the underemployed worked in agriculture. The underemployment rate over the years constituted more than one-fourth, or 25.7 percent, of total employed in agriculture in 2015. The PSA said, however, that this is 1.2 percentage points higher than the 24.5-percent underemployment rate posted in 1995. The industry sector followed

with an underemployment rate of 20.3 percent. The least share was recorded in the services sector at 14.2 percent. Among classes of workers, selfemployed workers posted the highest underemployment rate of more than one-fifth, or 21.7 percent of the total self-employed workers in 2015. The underemployment rates for the rest of the workers in 2015 for unpaid family workers was at 17.6 percent; wage and salary workers, 17.4 percent; and employers, 14.8 percent. “To date, the highest underemployment rate for self-employed workers was posted in 1997 at 23.8 percent and the lowest in 2001 at 17.2 percent,” the PSA said. The decent-work data was obtained in accordance with the In-

VACC: Tadeco must pay ₧2 billion yearly for use of government lands

he Volunteers Against Crime and Corruption (VACC) is urging the Duterte administration to revisit the terms of the consolidated joint venture agreement signed between banana exporter Tagum Agricultural Development Co. Inc. (Tadeco) and the Bureau of Corrections (BuCor) over the long-term lease of 5,308-hectare property in Davao Penal Colony. VACC Founding Chairman Dante Jimenez said the terms on land rentals and profit share signed in May 2003 were grossly disadvantageous to the government. He said the State should be getting at least P1 billion in rent and P900 million in profit share annually from Tadeco. Under the 25-year joint venture agreement ending in 2028, Tadeco has committed to give BuCor P26.541 million per year, or a lease rate of P5,000 per hectare. Tadeco also pegged the

JIMENEZ

government’s share from Tadeco’s banana exports at P1.3258 per box, or just 0.22 percent of a box of bananas with an average price of P600 per box. With estimated annual sales of 30 million boxes per year, the government would only be getting P40.584 million annually versus Tadeco’s annual

revenues of P18 billion. Jimenez said the terms were clearly skewed in favor of Tadeco, which has already been exploiting the Davao Penal Colony property since 1969. Jimenez said similar developed agricultural lands would fetch as much as P200,000 per hectare. In Tadeco’s case, Jimenez said it should be paying the government up P1.061 billion per year. He added the government deserved a bigger share from the revenues of Tadeco. He believes that the government’s fair share should be pegged at 5 percent, or P900 million a year, based on Tadeco’s estimated annual sales of P18 billion. Jimenez noted Tadeco has more than recouped its investments in the banana plantation after nearly five decades in operation, and that it was only fair that it gave the government more share.

ternational Labor Organization’s (ILO) Decent Work Agenda. The ILO said decent work involves opportunities for work that is productive and delivers a fair income. Also, the ILO said these jobs provide security in the workplace and social protection for workers and their families, and also give people the freedom to express their concerns, to organize and to participate in decisions that affect their lives. Decent work is also key to achieving the new 2030 Agenda for Sustainable Development, or the 17 Sustainable Development Goals (SDGs). SDG 8 called for the promotion of sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.

he head of a 177-hectare mixed-use estate in the Clark Freeport Zone said his company will pour $5 billion into the development of a world-class economic hub in the former US military base. Michael Russell, president of Glob a l G at e w ay D e ve lo pme nt Corp. (GGDC), said he sees the Clark Freeport as a viable investment destination. “It will be a seven- to 10-year build out. We expect a good return on investments and generate 300,000 jobs once the economic hub is fully operational,” Russell said in an interview. GGDC, founded by The Port Fund, is a private equity fund managed by the Kuwaiti firm KGL Investment Co., with the Kuwaiti government and other countries as lead investors. GGDC’s anchor project called Global Gateway Clark offers office and retail spaces for leasing to its investors, accommodating businessprocess outsourcing (BPO) firms, modern transportation facilities and healthcare industries. Russell said American investors in Clark are unfazed by US President Donald J. Trump’s American First policy, and the latter’s pronouncement that he will “cut regulations and taxes to make it more attractive for business to operate in the US”. Russell said they will stay in the Clark Freeport to fulfill their vision for the estate property. Once completed, the Global Gateway Clark will be divided into four zones: Aeropark, Business Park, Town Center and Logistic Park. It is an ultra-

modern city and at par to Metro Manila’s Bonifacio Global City. The One West and Two West buildings inside the Aeropark are set for completion in July this year, according to Russell. Global Gateway Clark sits at the crossroads of North Luzon Expressway and Subic Clark Tarlac Expressway and only 30 minutes away from the newly expanded Subic Bay deep-water port and is directly adjacent to Clark International Airport. Russell said the Logistic Park is master planned to house several warehousing and distribution facilities. Businesses doing light manufacturing, according to Russell, can also operate out of this zone with ease. The Business Park is where prime space will be located, along with complimentary retail, pocket parks and residential space supporting a true live, work-play environment. The Aeropark will be home to research and development, modeling and simulation, as well as information-technology center, BPO campuses and educational facilities. The Town Center will host several retail establishments. Russell said the future of the Philippine economy is just outside Metro Manila, where space and the people are available to lead the next wave of growth. “In the next few years, international businesses and workers will be catering to even larger markets and will require proportionally larger, more efficient and better connected environments to keep up with the country’s growing economy,” said Russell.

DOH backs govt efforts to boost tobacco tax revenues By Rea Cu

@ReaCuBM

he Department of Health (DOH) is backing the government’s campaign to run after tax cheats in the cigarette industry, adding that an additional P1 billion in unpaid taxes could have been spent to procure medicines and pay for the medical treatment of some 5.7 million indigent Filipinos afflicted with hypertension and diabetes, according to the Department of Finance (DOF). Finance Secretary Carlos G. Dominguez III has assured Health Secretary Paulyn Jean RosellUbial that Mighty Corp. would get no special treatment from the DOF or the Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC). “The rule of law must be applied equally. All kinds of crime must face swift and sure justice, and Mighty Corp. is no exception. These fraudulent tax stamps represent billions of pesos worth of theft from the Filipino people,” Dominguez said. Last month the BIR filed a

DOMINGUEZ: “The rule of law must be applied equally. All kinds of crime must face swift and sure justice, and Mighty Corp. is no exception. These fraudulent tax stamps represent billions of pesos worth of theft from the Filipino people.”

tax-evasion case of P9.5 billion before the Department of Justice against the local tobacco firm for unlawful possession of articles subject to excise tax without payment of the tax, and for possession of false, counterfeit, restored or altered tax stamps. The use of fake tax stamps was uncovered during a series of inspections that the BOC had conducted on warehouses housing Mighty Corp. cigarettes in different areas of the country. “The current ‘sin’ tax law was passed to help devote more resources to health care. It is alleged that Mighty has evaded P9 billion worth of taxes, if not more. Imag-

ine how many hospitals, how many surgeries, how many vaccines, how many prescriptions could have been administered with that money and how many lives could have been saved,” he added. According to Dominguez, Mighty Corp. executives will have their “constitutional opportunity to prove their innocence”. In a statement it issued through its legal counsel, Sigfrid Fortun, Mighty Corp., said, “the company welcomes the filing by the BIR of the complaint as it provides us an opportunity to clear our names and show we violated no tax laws. We will continue to cooperate with the government in its continuing effort at tax collection.” Initial estimates made by the DOH show that the P1-billion revenue loss could have been used to pay for daily maintenance medicines, laboratory work and medical care for deadly diseases caused by tobacco use. The DOH said the amount would be able to treat 3.975 million patients with hypertension and 1.705 million with diabetes.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Monday, April 3, 2017

Q1 rice output up 5.34% Opportunities in agriculture

By Jasper Emmanuel Y. Arcalas

@jearcalas

hilippine rice production in the first quarter expanded by 5.34 percent to 4.14 million metric tons (MMT), from 3.93 MMT recorded in the same period last year, according to the Department of Agriculture (DA). Agriculture Secretary Emmanuel F. Piñol said the increase in production could be attributed to good weather and the use of high-yielding hybrid rice seeds. “The country’s rice farmers harvested 210,668 metric tons [MT] more in the first quarter of 2017 than they did during the same period in 2016, according to the satellite and ground validated data provided by the Philippine Rice Satellite Monitoring [PRiSM],” Piñol said in his Facebook post over the weekend. “According to the PRiSM satellite data, which were validated on the ground, a total of 4,142,960 MT was harvested from an area of 997,687 hectares in the first quarter, compared to only 3,932,292 MT, from a bigger area of 1,081,096 hectares during the same period in 2016,” he added. PRiSM is an online databasesystem initiative between the DA and the International Rice Research Institute (IRRI) to support the DA’s national rice program by providing accurate and real-time monitoring data on the country’s rice production, according to the IRRI.

Citing Philippine Rice Research Institute (PhilRice) Executive Director Sailila E. Abdula, Piñol said the country’s average yield per hectare per harvest has breached 4 MT. “Abdula also confirmed that for the first time in the history of rice farming, the country’s farmers posted a 4.15-MT average yield per hectare per harvest, breaking the previous average of only 3.9 MT per hectare,” he said. “Higher rice production was achieved even with the destruction caused by Typhoon Nina in the Bicol region, which harvested only 159,611 MT from an area of 44,336 hectares out of the regional rice area of 101,000 hectares with a low average yield of 3.6 MT per hectare,” Piñol added. Earlier, the DA chief said he expects a bumper rice harvest in the January-to-March period based on his “visual appreciation” during his trips around the country. Piñol visited central Mindanao, Iloilo, Aklan, Antique, Capiz, Quezon and Bicol. “I am upbeat that we will have a bumper harvest this year, considering that we didn’t have any

major typhoon, no rat infestation or outbreak of diseases,” Piñol said. Citing data from PRiSM, Piñol said Central Luzon—comprised of Nueva Ecija, Pampanga, Tarlac, Bulacan, Aurora, Zambales and Bataan—was the top rice-producing region, with the highest average yield pegged at 4.84 mt/hectare. “The higher average yield in the Central Luzon area is credited mainly to the increasing number of farmers who are using hybrid-rice seeds,” he said. “In Nueva Ecija, where almost 50 percent of the farmers are already using hybrid-rice seeds, the average yield per hectare is 6.09 MT,” he added. Other top rice producers in terms of average yield were the Ilocos region (4.71 MT/hectare) and Davao region (4.55 MT/hectare), according to Piñol. Rice-producing regions that also breached the 4 MT/hectare-level were: Northern Mindanao (4.39 MT/hectare); the Cordillera Administrative Region (4.10 MT/ hectare) and Zamboanga Peninsula (4.07 MT/hectare). “All the other regions failed to breach the 4-MT average yield per hectare, including Western Visayas, which includes Iloilo province, where the national record yield of 16 MT per hectare was posted by a farmer in Pototan town who used hybrid-rice seeds,” Piñol said. “The hybrid-rice seeds utilization among rice farmers in Western Visayas is only 10 percent,” he added. Barring any major climatic disturbances, the DA chief said the country’s rice output would also be higher in the April-to-June period.

or decades we have been talking about opportunities in agriculture. Each administration starts with the great resolve to modernize the country’s agriculture. Everybody understands that investment in agriculture not only reaps benefit directly, but—more important—helps improve the lives of millions of Filipino farmers and their families nationwide. But little is really happening. However, it is worth remembering that the agriculture industry does not stop at the farm. Very much part of the agricultural system are the agricultural processing enterprises, the packaging industry, the agricultural input manufacturers and importers, trade, storage (including cold storage) and transportation (including refrigerated containers) sectors. The effective integration of these various elements of the agricultural system within a competitive market environment continues to loom large in the country’s unfinished agenda. If we want to achieve change, we have to focus on agri-food supply and value chains. But seizing the opportunities in agriculture entails not only creativeness and daring on the part of the private investors; in also involves a great deal of political will—both national and local—to effect long-needed changes in the sector’s institutions, from access to finance to access to extension work, from mechanization to land titles, from allowing land-reform beneficiaries to consolidate their small landholdings into viable land sizes that will allow competitive agri production. Agri-business is a key component of economies across the Euro-

Henry J. Schumacher pean Union and Asean. The foodand-beverage industry is Europe’s largest manufacturing sector, while agriculture accounts for more than a quarter of GDP in several Asean member-states. In the Philippines agri-food or agri-businesses have a great future if success is built on successful models like Nestlé (coffee) and La Frutera (fruits), creating “win-win” alliances between farmers and industrial companies that can process the produce and have access to markets. There are more good examples that can be highlighted in future columns, examples in cacao, abaca, onions, vegetables, etc. We will have to think in terms of trading and buying stations close to farmers; we have to look at intercropping and severe reductions in postharvest losses. Why Europe as a destination for Philippine food/fruit/seafood products? The EU offered the Philippines GSP+, allowing a large number of products to enter the EU at zero duty. No other Asean country has been offered this advantage. Given this scenario, it is recommended that the EU and Philippines strengthen cooperation in the following key areas: n Trade-related capacity-building support to regulatory and enforcement institutions in Asean; n Product safety, labeling and

technical standards and SPS acceptance; n Mutual recognition of food product registrations and of export establishments certified by the national competent bodies; n Export-quality infrastructure, which includes testing laboratories and inspection agencies; and n Best practice customs valuation and transfer pricing frameworks for related party transactions. Why does it make sense to focus on these key issues and key recommendations? Asean has a large agricultural base with over 60 million hectares of arable land. Agriculture accounts for over 25 percent of GDP in several Asean member-states, such as Myanmar, Cambodia and Lao PDR. Businesses in the EU agri-food chain generate a turnover of €2.2 trillion and provide direct employment to more than 33 million Europeans. Together, the European food and drink industries are the largest manufacturing sector in the EU in terms of turnover, value added and employment. Cooperation between Filipino and European small and medium enterprises in this important sector can easily create win-win situations, in which the Filipino farmer becomes part of a supply and value chain. In other words, plenty of work to do, preparing for increased production and trade of agri-food products, allowing the farmers to create income, which will keep their children on the farm rather than moving into urban centers. Poverty reduction in the Philippines is only possible if the revolution in agri-food succeeds. The time to do it is now!

The World BusinessMirror

Monday, April 3, 2017 • Editor: Lyn Resurreccion

www.businessmirror.com.ph

China dam project puts Myanmar in a bind

UNG MYIN THA, Myanmar—For six years, Daw Kaw Bu has waited to return to the village she was forced to leave to make way for a dam that has yet to be built. “I pray to God to let me work on my own land again,” she said on a recent afternoon, sitting outside the wood-shingled home in Aung Myin Tha, where she was resettled in early 2011. She may get her answer soon, when a government-appointed commission makes a recommendation on the fate of the $3.6-billion, Chinese-financed Myitsone Dam. The decision is a daunting test for Myanmar’s leader, Daw Aung San Suu Kyi, who risks angering China, the region’s economic powerhouse, if she cancels the project, or the public if she lets it go forward. Analysts say the commission’s report would provide her the political cover to kill an unpopular white elephant that she inherited from Myanmar’s former military government. But getting out of the deal would be difficult. If her government cancels the project outright, it could have to repay some $800 million the state-owned Chinese developer says it has already spent on the project. If Myanmar offers China other dam projects in return, a compromise her government has floated, they are likely to impinge on disputed ethnic areas where they could threaten the peace talks she has championed since her political party came to power last year. “If she is the leader she claims to be, I think she should cancel” the dam, said Yun Sun, a specialist on China-Myanmar relations at the Stimson Center, a nonpartisan think tank in Washington. “But then she has to somehow deal with an $800million disbursed investment: It

90%

The percentage of the dam’s electricity that could go to China

cannot be swept under the carpet without giving China something major, and I cannot think of anything that she could give to China without generating a bigger pushback.” The Myitsone Dam is among the largest of many Chinese-financed energy and mining projects approved by the military junta that ruled Myanmar until 2011. It is especially contentious because it would be the first dam to cross the Irrawaddy River, the mythic cradle of civilization for Myanmar’s ethnic Burman majority. But as Myanmar moved toward democracy, and controls loosened on public expression, rising antiChinese sentiment burst into the open, and the dam became a focus of protest. While officials said the dam would provide Myanmar much-needed cash and electricity, critics said it would cause irreparable harm to the river, destroy fish stocks downstream and displace thousands of villagers. But perhaps the most incendiary objection was that under the deal struck by the ruling generals, 90 percent of the dam’s electricity could go to China. As protests spread to Myanmar’s cities, Suu Kyi, the country’s revered prodemocracy leader at the time, spoke out against the dam.

People do road work along the Irrawaddy River, where the Chinese-backed Myitsone Dam project is located in Myitkyina, Myanmar, on March 22. The project would be the first dam to cross the Irrawaddy, the mythic cradle of civilization for Myanmar’s ethnic Burman majority. Minzayar Oo/The New York Times

In 2011 the military-backed transitional government yielded to public pressure and suspended the project. The decision, widely seen as a victory for the forces of democracy, shocked Chinese officials and businessmen. Many remain incredulous that the dam was delayed at all in a country that needs more electricity to power its fast-growing economy. Although the contract has never been publicly disclosed, details have leaked out over the years. A person who supports the dam and is familiar with the contract, who spoke on the condition of anonymity, said Myanmar was guaranteed 10 percent of the dam’s electricity at no cost and

could buy more on request. The government’s 15-percent stake in the dam would earn it about $18 billion over a 50-year concession period, analysts and local news reports said. Asia World, a domestic conglomerate with deep ties to the military and roots in the heroin trade, owns 5 percent and also stands to profit handsomely, they said. Asia World is subject to US sanctions because of its ties to the junta. The Chinese developer owns the remaining 80 percent. The Myitsone was meant to be the first and largest of seven dams planned by the Chinese developer.

It would generate more power than the entire country produces now, according to some estimates, but would still not cure the country’s chronic energy shortages. One reason for that, experts say, is that there is no grid connecting the dam to Myanmar’s major towns and cities. “Does Myanmar need electricity? Yes, for sure,” said David Dapice, an economist at Harvard who has studied Myanmar’s hydropower sector. “Does it need Myitsone? No. There are many other hydro sites that could be developed. And in the country’s south, gas generation would be cheaper than transmitting hydro

Gulf between Trump’s talk, actions on trade widens anew

A SH I NGT ON — I n creasingly, when it comes to foreign trade, the Trump administration is talking loudly and brandishing a small stick. The widening gap between President Donald J. Trump’s bellicose talk and the modest actions of his administration was again on display last Friday afternoon as he presided at the ceremonial signing of two executive actions. They would, he said, “set the stage for a great revival of American manufacturing”. “Under my administration, the theft of American prosperity will end,” he said. But the new actions, authorizing a large research study and strengthened enforcement of an existing law, are unlikely to effect a major change in the nation’s fortunes. Instead, the ceremony highlighted an emerging pattern on trade. Trump blasted the Trans-Pacific Partnership (TPP) as a “potential disaster” and made a great show of removing the US from the ratification process. Last Friday one of Trump’s top advisers on trade said the Trump administration planned to use the scorned agreement as a “starting point” for its own deals. Trump described the North American Free Trade Agreement (Nafta) with Mexico and Canada as history’s worst trade deal and vowed to overhaul or replace it. The White House is now planning to seek relatively modest changes in the agreement, according to a draft document provided to key

members of Congress. Trump also chided China on Twitter ahead of President Xi Jinping’s visit to his Mar-a-Lago estate in Florida, declaring that the US “can no longer have massive trade deficits”. But the Trump administration has not articulated specific plans to shrink that deficit; the Treasury Department has not moved to keep Trump’s promise of declaring China a currency manipulator. The gap reflects the difficulty of keeping some of Trump’s specific promises. There is, for example, no evidence that China is manipulating its currency. The Trump administration also is under considerable pressure from congressional Republicans and industry groups to avoid costly economic disruptions. But the gap also exposes a basic divide on trade policy within the Trump administration. One group, largely campaign veterans like economist Peter Navarro, still favors the kind of dramatic measures Trump promised on the campaign trail. This view resonates deeply with the president, who noted last Friday that tough talk about trade is “probably one of the main reasons I’m here”. Another group, which includes many of the economic advisers Trump has added since the election, like Gary D. Cohn, the director of the National Economic Council, are convinced that measured actions on trade will produce better results. And so far, that second group appears to be winning most of the

internal skirmishes. At Friday’s signing ceremony, Trump was joined by representatives of both camps: Navarro and Wilbur L. Ross, the commerce secretary, who is becoming an increasingly important figure on trade policy and who tends to favor the more pragmatic approach. The gap between the administration’s language and its actions so far is maintaining support both from proponents of stronger action on trade and from those who favor restraint, as each side hopes its views will prevail. “For folks who hoped Trump would rip up trade agreements, this is an indication he won’t take that approach,” said Scott N. Paul, the president of the Alliance for American Manufacturing, an advocacy group. “But if you’re a working-class voter in Indiana, you want to see real changes in your life. There is a potential that these orders will help satisfy those voters.” Union leaders applauded the president’s executive order last Friday directing the government to study in detail the reasons for the nation’s trade deficits. The second executive order increases the government’s ability to collect financial penalties from foreign firms that violate trade rules. “A serious and effective response to our growing trade deficit is long overdue,” said Robert Martinez Jr., the president of the International Association of Machinists and Aerospace Workers. For manufacturers in the US who depend on customers in Mexico and other foreign markets, the

administration’s more conciliatory signals were welcome. “I don’t think the mentality is that we are going to shoot trade deals in the head,” said Drew Greenblatt, owner of Marlin Steel, a small Baltimore manufacturer of specialized metal baskets. “My take is that they want to freshen these deals up.” He was among a dozen executives from small- to medium-size companies who sat down with Trump last Friday morning in a meeting at the White House with the National Association of Manufacturers. Greenblatt and other leaders of small manufacturing firms also met several weeks ago with Vice President Mike Pence and discussed trade policy. “The vice president looked at his cell phone and said, ‘This wasn’t around 23 years ago,’” Greenblatt recalled. “Pence said Nafta is from a different time and the world has changed massively.” Both sides are unlikely to stay happy, however, as the administration charts its course. Ross is leading conversations with two congressional committees over the wording of a letter that will formally start the renegotiation of Nafta after a 90day period. A recent draft of the letter does not directly address several of the issues Trump raised on the campaign trail, including currency manipulation and the balance of trade. It also echoes provisions of the TPP, the abandoned trade deal negotiated by the Obama administration, with a group of

Pacific Rim nations, including Canada and Mexico, in part with the explicit goal of modernizing Nafta to address the rise of new technologies and to improve the treatment of issues, like worker and environmental protections. “We’re obviously not going to throw the baby out with the bath water,” Ross told Bloomberg TV last Friday. “We view the concessions in the TPP as the starting point from which we are going to build.” Trump is also using tougher language than his lieutenants in the run-up to his meeting next week with Xi. “The meeting next week with China will be a very difficult one in that we can no longer have massive trade deficits and job losses,” Trump wrote on Twitter on Thursday evening. In contrast, Secretary of State Rex Tillerson, visiting China in March, echoed China’s description of the relationship as guided by “nonconflict, nonconfrontation, mutual respect and win-win cooperation”. In mid-April, the administration must confront Trump’s pledge to designate China as a currency manipulator when Treasury releases a biannual evaluation of the currency policies of China and other foreign nations. And in roughly three months, Trump will very likely gain the legal authority to renegotiate Nafta at roughly the same time he receives the results of the report on trade deficits commissioned by Friday’s executive order. New York Times News Service

over long distances.” Canceling the dam, however, would upset relations with China, Myanmar’s biggest trading partner. Recognition is growing among Chinese officials and experts, analysts said, that the diplomatic and business strategies that worked well when Myanmar was ruled by generals are no longer viable. “We’ve learned our lesson from focusing too much on the elites, and now we know that deals and agreements are not solid if they are not based on people-to-people relations,” said Fan Hongwei, a Myanmar specialist at Xiamen University in China. New York Times News Service

Scotland’s Sturgeon insists on referendum for independence

cottish First Minister Nicola Sturgeon said the UK’s refusal to negotiate a date for an independence referendum is untenable as she vowed to keep pushing for a vote. The Scottish National Party leader last week wrote to Prime Minister Theresa May seeking the power to hold one once the terms are known for Britain’s departure from the European Union, something that Scots opposed. In an interview with Bloomberg Television, Sturgeon said the UK plan is to wrap up talks by spring 2019 so Scots should have their vote by then. The Scottish Parliament voted last week to allow Sturgeon to pursue the referendum, which would come a little over four years after the last one, based on her timetable. The UK government’s response was swift, reiterating May’s position that it’s not up for discussion while Britain gets on with Brexit. “I don’t think the position of the prime minister, which at the moment appears to be to stand in the way of the will of the Scottish Parliament, is a sustainable one,” Sturgeon said. “I’ll seek to discuss this with the UK government in a constructive manner. The will of the parliament has to be and must be respected.” The standoff adds another question mark over Britain’s future after May set the clock ticking last week on two years of negotiations with the EU to unravel 44 years of membership. Sturgeon spoke before heading to the US to drum up investment in Scotland and said it was even more important now to show the country was open for business. She also noted her political differences with President Donald J. Trump, who owns golf resorts in Scotland. During the election campaign, the Scottish government stripped Trump of his role as business ambassador for the country. “The links between Scotland and America are deep and long standing, and frankly, are much deeper than any transient political disagreements between any administrations or leaders of the countries at any one time,” Sturgeon said. Bloomberg News

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The World BusinessMirror

Monday, April 3, 2017 A7

Conservative split over import tax imperils Trump’s reform goal

ne conservative group produced colorful flow charts warning millennials that a “border-adjustment” tax proposed by Speaker Paul D. Ryan would raise prices on “the Jose Cuervo tequila that’s in your happy-hour margarita”.

Three days later, a second conservative group kicked off a lobbying campaign saying it would amount to a $1.2-trillion tax on seniors and the working poor. The next day, still another group weighed in, issuing a news release that highlighted how Latinos would be “among those hardest hit” by the new tax on imports. All three organizations share a common lineage: They are part of the political network overseen by Charles D. and David H. Koch, the billionaire conservative businessmen. Now they are among a host of conservative organizations mounting a furious campaign against a new tax on imports proposed by House Republicans, imperiling what is supposed to be a centerpiece of the Republican tax-overhaul effort. Their opposition threatens yet another rupture with President Donald J. Trump, some of whose advisers see the provision as a critical way to bring about tax reform while

$1.2T The possible amount the proposed “borderadjustment” tax would impose on seniors and the working poor

protecting US manufacturers. The battle could not only jeopardize Trump’s second major legislative initiative, but also redefine the boundaries of conservative economic policy. Much like the failed repeal of the Affordable Care Act (ACA), the import tax is dividing conservatives, the business sector and some of the deepest-pocketed groups funding conservative politics. Along the way, it is exposing the broader ideological divide between

IN this October 22, 1986, photo, lawmakers watch closely as President Ronald Reagan signs into law a landmark tax overhaul on the South Lawn of the White House in Washington. From left are: Senate Majority Leader Bob Dole of Kansas; Rep. Raymond McGrath, Republican-New York; Rep. Dan Rostenkowski, Democrat-Illinois; Rep. Frank Guerini, Democrat-New Jersey; Sen. Russell Long, Democrat-Los Angeles; Rep. William Coyne, Democrat-Pennsylvania; and Rep. John Duncan, Republican-Tennessee. The fundamentals of tax overhaul were strong some 30 years ago. Reagan pushed the landmark 1986 measure. Powerful and experienced congressional leaders shepherded the legislation with bipartisan support. Key players had established, trusting relationships. The situation facing President Donald J. Trump features none of those advantages. AP/Bob Daugherty

nationalist policies embraced by Trump and the traditional smallgovernment movement that his election ejected from the driver’s seat of Republican policy-making. “Trump ran on a different set of economic issues than traditional conservative Republicans have,” said Stephen Moore, a fellow at the Heritage Foundation who favors the border tax on intellectual grounds, but said he had come to see it as a

“poison pill” for broader tax reform. “The baton has been passed on from Reagan to Trump,” Moore continued, “and there’s no doubt he ran on a much more populist economic message.” The idea of a border-adjustment tax has percolated among academic economists and in think tanks since the 1970s, as the US has considered ways of harmonizing its tax code with countries that use value-added taxes.

Central to the plan is a provision that would tax imports at a rate of 20 percent while exempting exports from taxation. In theory, this would buttress domestic manufacturing, make US products more competitive with foreign goods and encourage US companies to bring home cash they have been parking overseas. “It is a simple and elegant way to get good tax compliance,” said Douglas Holtz-Eakin, a Republican economist and president of the rightleaning American Action Forum, a nonprofit tied to a “super PAC [political action committee]” that backs House Republicans. Some conservatives oppose it for the same reason: In their view, such a tax would be too easy to increase, with the potential costs to Americans hidden behind rising prices. Groups like Americans for Tax Reform—headed by Grover Norquist, perhaps Washington’s most famous antitax crusader—have praised the border-tax proposal, saying it would put US businesses “on a level playing field” with foreign competitors. Retailers that import many of their goods are lobbying against the idea, while domestic manufacturers, like Boeing and Caterpillar— whose interests figure heavily in Trump’s economic thinking—are supporting it. The Koch network and groups, like the Club for Growth, which for years have targeted what they call “crony capitalism” in Washington,

have opposed the border tax as an unnecessary tax increase and a form of favoritism that would hurt the economy. But Trump and his team have pledged to target what they see as a more insidious kind of cronyism, including unfettered free trade that some Trump advisers say benefits wealthy elites at the expense of US workers. The dispute echoes Trump’s battles with his party last year, when the Club for Growth, a group of wealthy conservatives that backs antitax candidates in Republican primary races, financed a multimillion-dollar advertising campaign against him. The Koch network, uncomfortable with Trump’s proposals on trade and immigration, sat out the presidential election entirely, turning its advertising dollars and activists to down-ballot races. Both the Club for Growth and the Koch network also played a critical role in killing a proposal backed by Ryan and Trump to repeal and replace the ACA. In March as the repeal vote approached, two Koch-aligned groups pledged to spend upward of $1 million on ads defending any Republican who voted against the replacement legislation. Now, some of the same groups are organizing visits to lawmakers and paying for an online advertising campaign, attacking the border-tax proposal. New York Times News Service

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Business

A8 Monday, April 3, 2017

BusinessMirror, provinci to uplift lives of marginalize

HE BusinessMirror, the Publishers Association of the Philippines (Papi) and the National Federation of Provincial Press Clubs (NFPPC) launched today the Community Press Network, a movement for the empowerment of the most neglected and impoverished sector of national society. cabangon: “It is unfair and sad that, while the Philippines is now one of the most progressive nations in Asia, such progress has not filtered down to the marginalized and poorest sector of the nation.”

most progressive nations in Asia, such progress has not filtered down to the marginalized and poorest sector of the nation,” he added. Cabangon also challenged the leaders of the press community to spearhead the movement to help narrow the gap between the rich and the poor, describing the poverty incidence in the country as “severe and shameful”. Papi President Emeritus Johnny Dayang said the movement will make the BusinessMirror and its affiliated publications in the provinces the biggest media cooperative whose combined circulation will be bigger than most of the national dailies. High-ranking government officials invited to the event included Cebu Gov. Hilario Davide III, Vice Gov. Agnes Magpali, Cebu City Mayor Thomas Osmeña, Rep. Pete Calderon, Mandaue City Mayor Eduardo Gullas, and Provincial Board Members Razi Franco and Celestino Martinez.

Joyfull | Dreamstime.com

In a media forum at Casino Español in Cebu City this morning, BusinessMirror Publisher T. Anthony C. Cabangon said the movement will endeavor to bring to the attention of the government and the leaders of the business community the needs and sentiments of the disadvantaged and poor people, particularly those from the rural areas. He said the movement will enlist the cooperation of local government officials whose reports on developments in their constituencies will be given priority by the BusinessMirror and the local press. Papi President Nelson Santos described the launching as a watershed media event. He said the combined circulation and listenership of the BusinessMirror and the provincial publications and radio stations will be bigger than the combined reach of the national dailies. NFPPC President Allan Sison expressed confidence that the sister-publication arrangement between the BusinessMirror and the media establishments in the provinces will enable the national government to have a feel of the people’s sentiments and needs. Cabangon said at the launch that the media “should now help our less fortunate fellowmen receive their just share of the fruits of progress and development.” “It is unfair and sad that, while the Philippines is now one of the

nCebu

sMirror

cial press launch movement ed, impoverished sector

www.businessmirror.com.ph | Monday, April 3, 2017

Cebu biz groups call for sobriety

EBU business leaders have warned that criticism against President Duterte and his war on drugs may slowly erode the political stability the country enjoys. The Cebu business community, the Cebu and Philippine Chambers of Commerce, the Cebu Furniture Industries Foundation and the Philippine Exporters Confederation in Cebu “are still confident that transparency and the rule of law in administering sanctions and legal proceedings against individuals who have violated the ideals of the Constitution will be held accountable for illegal activities regardless of stature in the society and government”. “In consideration of the national interest of the country, we, the business leaders of Cebu, are calling on the political leaders and the public to act in sobriety and vigilance,” the groups said in a statement over the weekend. These leaders agreed that the continued attack by a few elements of society in this part of the country and elsewhere on the war on drugs, which has been linked to so-called extrajudicial killings now reaching international concerns, puts other Duterteinitiated programs at risk. The business leaders, nevertheless, agreed the country’s economy is still robust and continues to show significant improvements. Cebu business leaders have joined together and pledged unconditional support over the weekend to Duterte, Cebu City Mayor Tomas R. Osmeña and Cebu Gov. Hilario P. Davide III, believing that, although there are still threats to alleged economic sabotage, Cebu and the country are still winning in efforts to fasttrack economic developments. “Our economic gains under these three leaders are still achieved, not derailed, as some sectors would like people to believe,” the business leaders said. Financial institutions still have high respect on the performance of the Philippine economy, despite calls for political upheavals, thus business confidence in Cebu and elsewhere in the country is still very transparent, they added.

A10 Monday, April 3, 2017

The World BusinessMirror

www.businessmirror.com.ph

EU engages: Tusk sets draft guidelines on Brexit

ing if the EU has its way. “The union will act as one” and “there will be no separate negotiations”, the guidelines said. Even so, capitals do plan to have a say when negotiator Michel Barnier starts his work.

or nine months, European Union officials declared “no negotiation without notification” when asked for informal insights into their Brexit strategy. Now that British Prime Minister Theresa May has formally notified the bloc of the United Kingdom’s intention to leave, EU officials on Friday began outlining their plans for the negotiations. Here are the takeaways from the draft guidelines that EU President Donald Tusk circulated: n The EU loves the EU Brexit means a mistake in the eyes of the EU because Britain is turning its back on a project of peace and prosperity. There will be no need for punishment though, because as Tusk argued “Brexit in itself is punitive enough”. However, the UK was rapped on the knuckles for a decision which posed “significant uncertainties”, threatened the rights of citizens and undermined businesses’ confidence in the regulatory environment. The inference was that Britons were hotheaded and the people of the 27 other countries now deserve some calm or, as the EU put it, a “phased approach” and “orderly withdrawal”. No matter how much May would like to race ahead to forging her new “deep and special partnership” she’s going to have to bide her time while the split is conducted in measured fashion. n Divorce terms first The priority is to “settle the dis-

entanglement.” This means paying the infamous bill EU officials have pegged at around €60 billion ($64 billion), though no sum was given last Friday. “The settlement should cover all legal and budgetary commitments as well as liabilities, including contingent liabilities”. Also to be determined are the rights of EU citizens already living in the UK and those Britons residing on the continent. And while some Brexit campaigners wanted an earlier cutoff, those rights should be guaranteed to anyone moving between now and Brexit and extended to their family members future and present, according to the EU. Businesses will need to be assured there’s no “legal vacuum” and the Irish border will need addressing, with “the aim of avoiding a hard” one.

the single market” and no “cherry picking” will be tolerated. The UK has the best possible trade arrangement right now and it won’t be allowed to replicate it is the message.

n Pay to play Only when “sufficient progress” has been made on those matters can a chat about trade begin. Tusk said that could be by the Fall, but only if common ground can be found first. That means May might get a crack at the commercial relationship she needs for her exporters, but she has to do some legwork first and some money may need to change hands. Her preference for debating trade and the breakup in tandem won’t be entertained. And, of course, any trade deal won’t “amount to participation in

n Trade deals take time While May speaks of a “bold and ambitious” deal wrapped up in two years, the EU speaks merely of starting work on a “framework”. To underscore its preaching of patience, the EU said any deal couldn’t be concluded until Britain formally left the bloc in March 2019. At that point, it also becomes a third country, without access to the many international deals the EU has struck. Also, if talks on trade don’t begin until the Fall then the two sides realistically have just a year left given the need to have the divorce

n Calling May’s bluff May chose not to repeat her threat last week that “no deal is better than a bad deal”, but the EU is ready if talks do collapse. The bloc promises to be “constructive,” but it also noted “it will prepare itself to be able to handle the situation” if the “negotiations were to fail”. Walk if you want to, prime minister. And as for May’s tying of trade to security provisions, the EU showed it could needle its opposite number too. The suggestion that Spain have a determining say on whether any Brexit deal will apply to the British territory of Gibraltar sparked a wave of grumbling from London.

European Union (EU) President Donald Tusk reacts as the United Kingdom triggers Article 50 to leave the EU. Bloomberg

deal worked out by the end of 2018 to ensure parliamentary approval. Canada and the EU took seven years to strike a deal and financial services didn’t feature as much in that one as May would like in hers. Unlike the divorce deal, a trade agreement also requires the approval of national parliaments. Belgium alone has six of them. And even if miracles happen and every lawmaker in Europe backs the agreement, it takes time for full ratification.

paying money, accepting free movement of EU labor and observing EU law for its duration. That may be hard for May to stomach as the 2020 general election nears. Those who were the most voracious in campaigning for Brexit could make the case that she hasn’t really delivered it. She might have to ignore them if she wants to avoid the sweeping tariffs and spike in uncertainty that would result from not having a stopgap.

n Transition at a cost All that leaves Britain needing a transition to “bridge” the divide from Brexit to the new relationship. While the EU said that might be possible, it noted it would be “time limited” and require the UK to keep

n No divide and conquer May could think again if she wants to play the 27 capitals and the European Commission off each other. Last week she wrote op-eds in seven newspapers across the bloc, but such efforts will come to noth-

n What’s next The guidelines circulated by Tusk on Friday are just a draft. National government representatives, known as sherpas, will meet to discuss potential revisions on April 11 and 24. On April 27 European affairs ministers will sign off to the final document for the 27 leaders to adopt on April 29. The European Commission will then circulate more detailed negotiating directives on May 3, which will also be discussed and potentially revised by government representatives. Ministers will adopt the final negotiating directive on May 22, giving the go-ahead for substantial talks to begin. Until then, any discussions between Barnier and the British government will be about process, not substance. Bloomberg News

Colombia death toll reaches 200, as quest for survivors resumes

OGOTA, Colombia—Rescuers prying through piles of rocks and wooden planks left by floodwaters from three rivers that surged through a Colombian city vowed to resume their search at first light on Sunday as the death toll from one of the worst disasters in the country’s recent history neared 200. With no electricity to light Mocoa, authorities were forced to suspend the search last Saturday night almost a day after heavy rains caused the rivers to overflow and send a wall of water through the city near the Ecuador border around midnight, sweeping away homes, cars and trees while residents slept in their beds. President Juan Manuel Santos said 193 people had been killed and authorities said as many as 220 were feared missing. The bodies were being placed in a temporary morgue where three teams of medical examiners were working around the clock to swiftly identify the remains. “They are going to work 24 hours a day,” said Carlos Valdes, director of the National Institute of Legal Medicine and Forensic Science, the agency leading the medical team working to identify the deceased. Authorities and residents in the city tucked between mountains along Colombia’s southern border spent Saturday tending to victims, trying to find homes on streets reduced to masses of rubble and engaged in a desperate search to locate loved ones who disappeared in the dark of night. Authorities expect the death toll to rise. Eduardo Vargas, 29, was asleep with his wife and 7-month-old baby when he was awoken by the sound of neighbors banging on his door. He quickly grabbed his family and fled up a small mountain amid the cries of people in panic. “There was no time for anything,” he said. Vargas and his family huddled with about two dozen other residents as rocks, trees and wooden planks ripped through their neighborhood below. They waited there until daylight, when members of the military helped them down.

When he reached the site of his home last Saturday, nothing his family left behind remained. “Thank God we have our lives,” he said. Santos traveled to Mocoa and declared the city a disaster zone last Saturday. The Air Force transported 19 patients to a city further north and said 20 more would be evacuated soon. Medicine and surgical supplies were being sent to the city as the area’s regional hospital struggled to cope with the magnitude of the crisis. Herman Granados, an anesthesiologist, said he worked throughout the night on victims and that the hospital doesn’t have a blood bank large enough to deal with the number of patients and was quickly running out of its supply. Some of the hospital workers came to help even though their own relatives remained missing. “Under the mud,” Granados said, “I am sure there are many more.” Santos blamed climate change for triggering the avalanche, saying that the accumulated rainfall in one night was almost half the amount Mocoa normally receives in the entire month of March. With the rainy season in much of Colombia just beginning, he said local and national authorities need to redouble their efforts to prevent a similar tragedy. The crisis is likely to be remembered as one of the worst natural disasters in recent Colombian history, though the Andean nation has experienced even more destructive environmental catastrophes. Nearly 25,000 people were killed in 1985 after the Nevado del Ruiz Volcano erupted and triggered a deluge of mud and debris that buried the town of Armero. As rescuers shifted through debris, many residents in Mocoa were conducting their own searches for lost loved ones. Oscar Londono tried in vain throughout the night to reach his wife’s parents, whose home is right along one of the flooded rivers. He decided it was too dangerous to try to reach them in the dark. So he called over and over by phone but got no answer. AP

Editor: Efleda P. Campos • news@businessmirror.com.ph

The Regions BusinessMirror

Monday, April 3, 2017 A11

Ayala vows to improve Naia if it wins rehab bid

By Lorenz S. Marasigan

@lorenzmarasigan

HOULD it win the public bidding for the modernization and expansion of the Ninoy Aquino International Airport (Naia), a public-private partnership deal that has been put on hold since last year, Ayala Corp. can improve the state of the decades-old air hub in two years, a senior officer said.

Jose Rene D. Almendras, who sits as president at AC Infrastructure Holdings Corp., said his group is ready to take on the challenge of enhancing the state of the main in-

ternational gateway in Manila, and is anticipating its tender. “We’re very interested in the Naia. We have a consortium ready for the Naia,” he said in an inter-

view. “We are actually excited if the government ever decides to push through with the Naia.” Almendras said his group can improve the operations of the airport in just two years. “We think we can improve the Naia in 24 months,” he said. The public tender for the redevelopment of the airport was deferred, as the government studies the “best configuration” for the tender. It was also put on hold, as the government focuses on the bidding for contracts to modernize five airports in the region. Under the initial terms of the P74.56-billion Naia redevelopment deal, the private partner will improve, upgrade and enhance the operational efficiencies of all existing terminals of the Naia covering

both land side and air side (except air-traffic services), to meet the International Civil Aviation Organization (Icao) standards and develop the main gateway airport of the Philippines. Almendras hinted his group may make a counter offer on an unsolicited proposal for the development of an outside city airport, depending on what the government decides to pursue. When asked if Ayala is interested in joining the Swiss Challenge for any of the two unsolicited proposals for the development of an airport to complement the Naia, he replied: “I guess we’ll make the decision when the time comes.” He added: “In all the big cities, there’s always a city airport and an outside-the-city airport. So that’s the school of thought—that is the

more ideal solution for the Naia.” There are two parties that have submitted their unsolicited proposals for the development of a new international gateway. On one hand, Solar Group-led All-Asia Resources and Reclamation Corp. and partners Belle Corp. and China Communications Construction Co. announced they plan to spend $20 billion to build an airport in an area in Sangley Point, Cavite. Its plan involves the reclamation of 2,500 hectares of land near a naval and air base at Sangley Point. The project includes a new airport for up to 90 million passengers per year. The existing Naia airport will be replaced by new urban development. According to a study conducted by Danish consulting engineering

company Ramboll Group, the new airport, when built, will have two parallel runways to secure future capacity, three terminal spaces, a reserved space for cargo and maintenance facilities. San Miguel Corp.’s $10-billion proposal, on the other hand, involves the construction of a 1,600-hectare international gateway somewhere in the south of Metro Manila. The airport, which would have doubled the capacity of the Naia, would have included the construction of a low-cost carrier terminal, a train system and a dedicated tollway. The government has yet to make a decision on which of the two proposals it will likely accept. Nonetheless, any of the two will have to undergo a competitive challenge, as provided by law.

Urban poor reclaims housing area after almost a year in gutters By Catherine Joy L. Maglalang Correspondent

HE Kalipunan ng Damayang Mahihirap (Kadamay) with community leaders in Apollo, Tandang Sora, Quezon City, led last Sunday the residents to reclaim the area where their houses were demolished from just days before President Duterte’s inauguration last year. The President had declared there would be no demolition without relocation. However, the residents of Apollo were offered no such arrangement and have been homeless for nearly a year. “These people were made homeless through the policies espoused by the National Housing Authority and the Quezon City Hall. Their community was declared a fire hazard despite not having any reports of a fire for more than 30 years. City Hall has made no secret of its intention to forcefully and violently evict thousands of urban-poor families in favor of big businesses and realestate projects.

“Apollo’s residents, now faced with eviction, are now rightfully claiming their housing rights and stand ready to defend their community,” Kadamay Secretary-General Carlito Badion said. Badion said the practice of arbitrarily declaring areas to be fire hazards was made possible by the provisions of the Urban Development and Housing Act (Udha) of 1992. Udha has been responsible for allowing and enabling widespread demolitions and the design of the socialized housing system which Kadamay had exposed by occupying idle houses in Bulacan. “Because of laws like the Udha, many local governments are given license to mediate and implement widespread evictions nationwide. The supposed safeguards provided are rarely executed and urban-poor Filipinos are routinely tricked with promises of financial assistance in relocation,” Badion said. Despite of the national government’s perceived commitment to completing the 5.5 million housing

backlog in the country, Kadamay said it has failed to account for the growing number of homeless and evicted Filipinos. During the Aquino administration, the Presidential Commission for the Urban Poor estimated 1.4 million Filipinos were displaced by demolitions. In the first few months of the Duterte regime, 4,209 families were evicted in Metro Manila alone. “You cannot solve the housing problem by adding to the number of homeless Filipinos and making more housing units without any occupants. Ang panawagan namin ay on-site development. Manatili sa komunidad at tumugon ang pamahalaan sa batayang karapatan at pangangailangan ng mga maralitang residente. Napakaraming probisyon at paraan sa Udha na ginagamit ng NHA [National Housing Authority], LGU [local government unit] at mga kasosyo nila para hirapan ang maralita. Dapat ibasura ang Udha. Lalo lamang matutulak ang mga maralita sa mga papalakas na pagkilos para sa libre at pangmasang pabahay,” Badion said.

Controversy hounds Balog-Balog Dam project in Tarlac By Marvyn N. Benaning Correspondent

HE Balog-Balog Dam and irrigation project in Tarlac has not been completed, more than five decades after it was broached by the late Sen. Benigno Aquino Jr. as the best way to make the province the food basket of Central Luzon. This, despite the fact that a brother-in-law of the late senator, Antolin “Len” Oreta, husband of former Sen. Tessie Aquino Oreta, won the simplified bidding for the construction of the north main canal of the project in 2000 with the approved agency estimate at P701 million. The businessman also happened to be the presidential adviser on economic zones when the bidding was conducted on November 15, 1999, barely four days after the National Irrigation Administration (NIA) under Manuel Arevalo told construction companies the project was still under negotiation with the Japan Bank for International Cooperation (JBIC) under the special yen-loan package financing portfolio. Strangely, President Joseph Ejercito Estrada poured in an additional P1 billion for the project on July 29, 1999, exactly one month after Arevalo requested additional money. Awarding the project for the construction of the north dam canal was rushed, detractors said, since there was actually no need to a “simplified” bidding that could wrap up the award within 60 days, compared to the 300 days it takes for any contractor to be named winner.

Arevalo and other Palace officials, like Assistant Secretary Jesus Crispin Remulla of the Presidential Management Staff (PMS), now the governor of Cavite, justified the “simplified” bidding by arguing the Agricultural and Fisheries Modernization Act (Afma) allows it, making it legal and above board. However, the dam itself had not been built, detractors argued, and constructing the north dam canal could wait. Such an award was also deemed improper by other players in the construction industry since Len Oreta, who headed the winning company, AM Oreta Co. Inc., was with the government as presidential adviser on economic zones. The award raised ethical issues, along with allegations the Estrada administration rushed the simplified bidding despite calls from other companies to defer the bidding while the project was being reviewed and the engineering and design issues analyzed thoroughly. Worse, critics insisted that undue haste and utmost secrecy attended the simplified bidding process initiated by NIA. Moreover, the NIA actually bloated the AAE for the project from the P435 million in September 1999 to P701 million, when the tenders were made two months later. It meant that in less than 60 days, NIA found it necessary to raise the AAE by P266 million, or a whopping 60.4 percent, without any explanation. Aside from this, the NIA did not give any leeway for other companies to join the bid, with the agency

eventually asking the Philippine Constructors Association (PCA) a list of possible bidders out of the 304 accredited members of the PCA. In the end, the NIA had to reduce the number of potential bidders to only five, with A. M. Oreta Co. Inc.; R. D. Policarpio & Co. Inc.; D. M. Wenceslao & Associates, Domson (Manila) Inc.; and Basic Construction joining. M. Oreta Co. Inc. won the bidding war with a bid of P701,215,734.30, beating Dimson (Manila) Inc. w it h P8 39, 9 8 4 , 50 8 . 8 0 ; DM Wenceslao and Associates with P839,210,733.83; and RD Policarpio & Co. Inc. with P832,990,675.88. The last bidder, Basic Construction, was disqualified since its license was not current. Aside from this controversy, which erupted nearly 16 years ago, analysts from the Philippine Institute of Development Studies (PIDS), the in-house think tank of the National Economic Development Authority (Neda), warned that design problems and the adequacy of sustained water supply for the BalogBalog Dam poses serious challenges to the viability and efficiency of the project for irrigation services, as well as other uses. In their study “Appraisal of methodology in estimating irrigable areas and processes of evaluating feasibility of irrigation projects” that appeared on PIDS Policy Notes, November 2014-13, Guillermo Q. Tabios III and Dr. Cristina David of PIDS said the cost of the Balog-Balog Dam itself at P8 billion for a height of 105 meters and a crest length of 1.4 kilometers is “underestimated”.

INAUGURAL FLIGHT Onboard a hot-air balloon, Cauayan City Mayor Bernard Dy, Miss Earth 2016 Katherine Espin of Ecuador and Isabela Vice Gov. Tonypet Albano take the ceremonial flight to launch the weeklong celebration of Gawagaway-yan Festival 2017 in the city. Young Nonie was the first kid to go onboard a test flight. LEONARDO PERANTE II

Bohol’s 1st ‘Green District’ rising soon By Charles R. Pepito Correspondent

HE Office of Bohol Rep. Erico Aristotle Aumentado and the National Economic and Development Authority (Neda) in Region 7 are now brainstorming to make Bohol’s Second District the first “Green District” in the province. Aumentado, Neda-7 Director Efren Carreon, Assistant Director Dionisio Ledres and their staff met last week with the municipal planning and development coordinators (MPDCs) of the Second District’s 14

towns at the JJs Seafood Village in Tagbilaran City to discuss solar energy. Carreon, Ledres and staff answered questions posed by the MPDCs on the advantages of solar energy, the partners to tap for the implementation and the wherewithal to purchase the panels. Solar energy does not discharge waste or effluents to the environment, hence, “green”. For starters, the development workers plan on using solar energy to power their lights and small appliances during the day, and switch to energy from power distributor

Bohol Electric Cooperative (Boheco), if needed, for overtime work at night if required. The towns also have the option to purchase batteries. Plans are afoot for piloting San Isidro town for the project. The scheme proposes for the town to get all its power requirements from solar energy for the next four to 10 years. The solar panels will be installed on the rooftops of the municipal building and other government structures. The rest of the towns are expected to follow suit before the year is over, hence the first Green District.

Green Monday BusinessMirror

A12 Monday, April 3, 2017

www.businessmirror.com.ph • Editor: Lyn Resurreccion

How a mining firm protects the environment

By Butch D. Enerio | Correspondent

mining company, wary of the huge responsibility to protect its immediate environment, has been proactive in accounting the stock on natural capital within its concession and neighboring areas with the aim of leaving a sustainable habitat once its mining operation ceases.

School children benefiting from Philsaga’s education program.

Philsaga workers inspect tree seedlings to ensure their growth.

The Philsaga Mining Corp. (Philsaga) in Agusan del Sur operates below ground of the lush vegetation at its thriving mining complex in Coo, Bunawan town. It has rehabilitated a 120-hectare denuded forest with premium tree species seven years ago, after it inherited the mine site that was already disturbed by unrestrained small-scale logging activities. The timbers were sold to gold mining-tunnel operators for mining portals. Philsaga is certified by the International Standard Organization, giving it the serious tasks to strictly adopt the environment management system in its work places. An environmental management system helps organizations or companies identify, manage, monitor and control their issues in a “holistic” manner. The mining firm has already planted thousands of dipterocarp and other tree species for carbon sequestration. It is determined to expand its tree plantation and continue to extend its support to tree farmers living near the mine area, where the beneficiaries are provided fruit-tree seedlings and financial assistance. Most of the identified farmerbeneficiaries own at least 3 hectares of sloping land where they grow grafted fruit trees, an endeavor under the technical supervision of the company’s foresters to ensure project viability. A 225-hectare reforestation project was established in Kalingayan village, mostly inhabited by indigenous peoples (IPs). The project is in support of the National Greening Program of the government. The company, which is harmoniously coexisting with the IPs belonging to the Manobo tribe of

barangays Cabantao, Marfil, Maligaya, Pamintigan, Caulisihan and Masabong in Bunawan town, undertook massive reforestation activities for the rehabilitation of the endangered watershed area in Sitio Kalingayan in Bayugan 3 and planted 90,000 dipterocarp and fruit trees.

Reforestation beneficiaries as planters

The success of Philsaga’s reforestation project could be attributed to its hiring of the reforestation beneficiaries as planters, and paying them for activities like site clearing, planting, propagating and replacing dead seedlings with new ones. Latex production from rubber plantations supported by Philsaga is benefiting farmers in the municipalities of Rosario and Bunawan, who are enjoying the fruits of the livelihood project. Part of the company’s environmental advocacy is also focused on bringing back to life the waterways in the nearby villages through the Adopt-A-Creek program. The Agsao Creek, which is crisscrossing the mountainous areas at Upper Coo, was restored with a concrete rip-rap, thus, preventing siltation and keeping the creek garbage-free. T he c ree k ’s m a i nten a nce and-cleanliness drive has been sustained with the community monitoring its upkeep. The United Nations General Assembly Resolution 70/1 states, “Development must be sustainable, and sustainable development requires healthy ecosystems”. In Sustainable Development Goal 15, States committed to “protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat

Connecting communities through the construction of bridges and roads.

desertification, and halt and reverse land degradation and halt biodiversity loss”.

Mangrove planting

Philsaga’s commitment to massive tree planting is not only confined within and near the mining areas, but also in the villages of nearby province. The company ventured into marine-habitat-protection program by planting mangrove propagules along the fish-rich coastal town of Barobo in Surigao del Sur. Of the more than 12,000 propagules planted, 90 percent survived. Some members of the communities are paid to ensure that the propagules grow and replace dead ones. The Barobo project was the company’s corporate initiative through the Adopt-A-Mangrove Plantation program in support of the local marine-conservation effort to address the condition of the 5-hectare coastal area, which has been critically disturbed. The mangrove in this area has been vulnerable to indiscriminate cutting by fishermen to clear the way for boat passage and later for firewood and commercial charcoal production. Rehabilitation of mangrove areas will slowly bring back the biodiversity in the once endangered coastal areas. Mangrove forests stabilize the coastline, reducing erosion from storm surges, currents, waves and tides. The intricate root system of mangroves also makes these forests attractive to fish and other organisms for food

and shelter from predators. Philsaga is bent on reforesting more mangrove areas and rehabilitate the endangered coastal areas in the Caraga region. To date, it has planted and is maintaining 338,097 forest trees of various species; 198,813 rubber trees; and 75,287 fruit-bearing trees in 1,085.82 hectares of land in Rosario town and neighboring towns in the province. “Our reforestation projects and other endeavors are ways to show the company’s resolve to really become a true advocate of environmental causes, notwithstanding that it is our contribution in mitigating the effects of climate change,” Philsaga President Raul C. Villanueva said. Often overlooked in policymaking decisions is the value of the benefits and services derived from the nation’s natural assets, such as freshwater, timber and forests. This situation has significant implications on economic policies and consequent impacts on communities, especially those that are highly dependent on natural resources for their sustenance.

Bamboo plantation

Ahead of all other companies in Mindanao and the government’s efforts, Philsaga has recently embarked on giant bamboo-plantation project within its mine site and mill site. About 6,000 young bamboo plants have been planted. The giant bamboos, like the mangrove propagules, are excellent in carbon sequestration.

Villanueva estimates that the company has sequestered almost 1 million tons of carbon with all its reforestation projects, while the company’s annual carbon footprint is estimated to be below 50,000 tons. Relying on GDP alone as gauge of development ignores the important role of natural capital in the economy and human well-being. Nobel laureate Joseph Stiglitz said GDP, the leading economy measurement, is outdated and misleading. “It’s like grading a corporation based on one day cash flow and forgetting the depreciation of assets and other costs.”

Corporate social responsibility

In its effort to alleviate poverty in communities, Philsaga was instrumental in organizing cooperatives and funded livelihood projects that are now an economic success for the beneficiaries and communities. The company’s corporate social responsibility on health, education, construction of school buildings, response to calamities and disasters and others exceed expectations. Regular and volunteer teachers are given honoraria; school supplies are distributed to 23 elementary schools for use by the teachers and pupils; scholarships are given to secondary and collegiate students; companytrained responders and rescue personnel are on standby in cases of emergencies and disasters, among others. The company was able to rehabilitate four school buildings with 10 classrooms in earthquake-devastated Loon town in Bohol and schools in Leyte after Supertyphoon Yolanda in 2013.

Modern technologies

Philsaga, the leading gold-mining company in Mindanao, continues to upgrade and introduce modernized mining approaches with new technology to increase production and heightened safety at work for its miners. The mine’s tailings ponds are well-built and covered by civilworks plans and designs, which have been recently audited and

found to withstand earthquakes below Intensity 7. Mine tailings, before stored at the ponds, are detoxified by chemicals to make them cyanide-free. Excess water is contained in dams for further treatment. All effluents pass the Env i ron ment a l M a n a gement Bureau (EMB) and other legal standards. Philsaga strictly adheres to well-sanitized wastewater treatment that it installed a silt-recovery plant equipped with filter presses and decanter. These are used to separate solid materials from liquids to improve the quality of wastewater from the slurry that strains the silt and make the water clean and then sent back to underground tunnel operation. The technology has significantly reduced the wastewater concentration way below the threshold limits set by the EMB of the Department of Environment and Natural Resources that periodically monitors mine facilities. Clean water for undergroundtunnel support will boost mine production to the maximum of 2,500 tons of ore per day.

Income for the community

More production means more work opportunities, and ensuring income for the community. Philsaga infuses considerable revenue to the local economy, such that it pays P30 million to the province for Environment Sustainability Fee; P30 million to Bunawan for Ore Transport Fee; about P40 million to the municipalities of Rosario and Bunawan for business permits; and almost P40 million in real-property taxes. Under the new collective bargaining agreement, the company will be providing its workers six sacks of rice yearly, monthly house allowance of P200; monthly light allowance of P200; cash-convertible vacation leave (12 days); and sick leave (five days) per year, plus an across-the-board increase of P25 per day, on top of the workers’ existing benefits. More than P80 million is paid for the monthly salaries and wages to regular work force and contract workers and miners. Philsaga’s compensation package is way more than the minimum wage set by the government, excluding other benefits—reason enough that industrial peace in the company is well-established. Philsaga also spends almost P100 million to P150 million monthly for the purchase of materials from local suppliers, while it awards almost P100 million in civil-works project yearly. “We will make this mine live longer, so that a lot of people can work here. A lot of parents can send their children to school. A lot of families can build their own houses. And we, in Philsaga, will continue to act as catalysts and bring opportunities to the lives of our workers and their families, including the communities and realize a well-being they never thought possible,” Philsaga said.

DENR chief signs order to promote ‘green economy models’ By Jonathan L. Mayuga

@jonlmayuga

he Department of Environment and Natural Resources (DENR) is eyeing the promotion of “green economy models” (GEMs) to provide transition to the agency’s programs and projects to give premium to the environment while providing well-paying and decent jobs. DENR Administrative Order (DAO) 2017-08, signed by Environment Secretary Regina Paz L. Lopez, contains the guidelines

for the shift to GEMs, where community members could create sustainable goods and services for the rehabilitation of degraded ecosystems. Lopez, a staunch environmental advocate before her top DENR post, said shifting to green economy will create opportunities for inclusive growth, job creation and poverty reduction. The directive, she said, is pursuant to Republic Act 10771, or the Philippine Green Jobs Act of 2016, and her promise to move the DENR from a mere regulatory

agency to a developmental one. DAO 2017-08 aims to create viable community enterprises where households are the focal members and players in creating value-added environmental products and services and accelerate the rehabilitation of degraded ecosystems. Among the development and rehabilitation activities to be undertaken under the GEMs are the Enhanced National Greening Program, with focus on the expansion of bamboo and mangrove plantations, the biochar program, the Sustainable Coral

Reef Ecosystems Management Program, the Coastal and Marine Environment Program and the National Ecosavers Program. Other activities include ecotourism, mining rehabilitation, pollution mitigation and bioremediation, which is a natural technique in waste management that utilizes the organisms to remove pollutants from a contaminated site. GEMs are open to all interested households located within and adjacent to existing and potential project sites, as well as organized

community enterprises composed of grouped households who are interested in various development and rehabilitation projects of the DENR. Under the GEMs, participant member-households (PMHs) will get the chance to have tenurial rights and access to all DENR-controlled resource-based programs and projects. The transition to GEMs has three main stages, namely, focus group discussions for community enterprise; legal organization of the community enterprise; and

detailed but brief operating policies of the enterprise, including pricing, quality standards, handling, rejects and penalties. Lopez sa id through FGDs, PMHs would be able to discuss the process of “va lue-add ing chain” which, according to her, is the “method that the poor does not know how to do, and also the reason behind their poverty”. “Poverty is the reason the environment is desecrated, and if we can invest in such a way that the community keeps the money, why not do it?” Lopez said.

Biodiversity Monday BusinessMirror

Asean Champions of Biodiversity Media Category 2014

Monday, April 3, 2017 A13

Editor: Lyn Resurreccion • www.businessmirror.com.ph

‘FISH FOREVER’

Fisheries reform, one coastal town at a time

Story & photos by Jonathan L. Mayuga

@jonlmayuga

nternational non-governmental organization (NGO) RARE is making its mark in promoting sustainable fishing through local fisheries management in the Philippines. Through social marketing, local fisheries reform is taking place in RARE’s project sites, one coastal town at a time. With this, the protection and conservation of the country’s important fishing grounds, including the Tañon Strait, the country’s largest protected seascape, is getting the much-needed boost. Pitching the call for stronger protection measures for the Tañon Strait Protected Seascape (TSPS), RARE and Oceana led a three-day event recently in Negros Occidental and Cebu provinces to highlight the benefits and people’s appreciation of their marine ecosystems. The advocacy in Tañon Strait is part of the $53-million, fivey e a r pro g r a m to b o o s t f i s h population under the Vibrant Oceans Initiative of Bloomberg Philanthropies in Brazil, Chile and the Philippines.

‘Fish Forever’

Fish Forever campaigns are being held in Belize, Brazil, Mozambique, Indonesia and the Philippines, where there is “high level of marine biodiversity, important coral reef habitat and the dependence of coastal communities on their fisheries for food and livelihoods.” Under the program, local government leaders are trained to manage their municipal waters more sustainably by setting up managed access areas around sanctuaries, which give fishers exclusive rights to fish in the area in exchange for compliance with more sustainable fishing practices. It is RARE’s flagship program, which started in the Philippines in 2010 in partnership with 37 local government units (LGUs). The group is currently working with communities in 93 LGUs across the country, making it the NGO with the widest and farthest reach in terms of development work focused on sustainable fisheries management. “We partner with local governments to help improve their management of their marine and fishery resources. Our goal is to train them and provide support to staff of local governments so that even after we leave, they have the capacity to do it themselves,” said Rocky Sanchez-Tirona, RARE vice

president for the Philippines.

Conservation fellows

Part of capacity building, Tirona said, is providing opportunities to learn about fisheries and fishers in the communities through higher education and learning. RARE administers a master’s degree program in the Philippines and is currently training 12 conservation fellows recruited from 12 different municipalities. “ They are going through a three-year program. Their thesis is the campaign they are running in the community. They are doing a research to understand the fishery and profile of fishers. They work with the communities to step up the managed access areas,” Tirona said. The conservation fellows encourage the communities to support sustainable fishing by doing social marketing. “They make posters, conduct activities, use mascots to inspire people to do the right thing. Its part of our behavior-change campaign,” Tirona explained.

Managed access areas

Developing managed access areas is a strategy of RARE to encourage communities to take part in the protection and conservation of marine-protected areas (MPAs). Adonis Sucalit, senior director for programs of R ARE, said this is done to give communities a sense of ownership of the program or project. Speaking in mixed English and Filipino, Sucalit said a managedaccess areas is a combination of “no-take zones” and areas around it. Under the setup, the communities decide who can have access to the fishing grounds. “Because the communities are the ones protecting the marineprotected areas, it is only right for them to determine policies, including when or where to fish, and who can fish in those designated areas,” Sucalit said. San Carlos City in Negros Occidental is part of the Fish Forever program. The fishers of Sipaway Island in San Carlos City, which is an island covered by two local MPAs, will get preferential use of their waters around their MPAs “if they stay out of the no-take zone,

RARE and Oceana leaders, along with San Carlos City stakeholders, discuss ways to better protect the municipal fishing ground.

A parrot fish mascot is one of the attractions developed by RARE and its partners as part of its social marketing to effect behavior change.

use only approved fishing gears, participate in meetings and report their catch.”

Behavioral change

RARE said the purpose of social marketing is to instill behavioral change among stakeholders. “We know that, ultimately, conservation is really about how people behave; its about human behavior. So, in the end, it is what every fisherman does. Fish at the right place, fish the right species, use the right gear,” Sucalit said. Tirona said its partnership with Oceana under the Vibrant Oceans Initiative attacks two problems that beset the fisheries sector. “The policies are needed. They are important at the national and provincial levels, but without community support, [and if] their behavior is not aligned with the policies, it will not work. Compliance is important. In our partnership with Oceana, the idea is that Oceana helps drive policies at the national level while RARE drives the community-level change,” Tirona said. In areas where Fish Forever is implemented, it targets the old and young alike, such as in San Carlos City, where children take part in activities in ocean conservation.

Tañon Strait campaign

In Tañon Strait, in partnership w it h t he Bloomberg Vibra nt Oceans Initiative (VOI) and the SmartSeasPH project led by the Department of Environment and Natural Resources (DENR), RARE is working directly with 21 LGUs. Five of the LGUs—San Carlos

City, Bindoy, Ayungon, Tayasan and Manjuyod—now have or are about to legalize the managed access areas around key MPAs. Other Negros and Cebu LGUs started in September last year and are now launching socialmarketing campaigns and are conducting fisheries profiling and education activities. Bloomberg Ph i l a nt h ropies launched the VOI in 2013, with the belief that advocacy, policy and enforcement at the national and regional levels, combined with local engagement and management, are critical to addressing the issues of illegal and overfishing. Oceana, w ith its ex pertise in driving critical fisheries reforms, will create the needed enabling environment for local municipalities to manage and protect their resources, while R A R E prov ides t he t ra i n i ng and coaching support needed by the LGUs.Besides Tañon Strait, R ARE has partnership with Fish Core and the Philippine Rural Development Program.

Strong LGU support

Strong LGU support is an essential ingredient in the Fish Forever campaign. Mayor Gerardo P. Valmayor of San Carlos City and Calatrava Mayor Araceli Somoza are supportive of the campaign as they recognize the importance of changing the behavior of their constituents. Valmayor and Somoza have committed to sustain support to fishers’ organizations in San Carlos City, which, in turn, vowed to help protect their respective

MPAs against destructive fishing, including commercial fishing that raid their municipal fishing grounds. With the mayors’ support, the communities are likely to follow and comply with the rules, Tirona said. “Behavior-change campaigns are a key ingredients of R ARE’s approach. Local teams are trained to conduct social-marketing activities that inspire and support the community to manage their resources properly—there are festivals, mascots, murals and materials designed to change knowledge and attitudes and spark conversations. All stakeholders, from the mayor, the municipal council, teachers, students and fisher households are involved,” she said.

Maintaining a healthy fishing ground is anchored on keeping the spawning areas secured through MPAs.

Director Theresa Mundita S. Lim of the DENR’s Biodiversity M a n a ge me nt Bu re au u nde r scored the need to strengthen existing MPAs to ensure sustainable fish production. Lim said MPAs help enhance the recovery of damaged marine ecosystems by providing recruits for coral reef recovery, important coral reef fishes and other marine species essential to maintaining a balanced marine ecosystems. “These MPAs provide protection for small fishes. Here is where they eat, play and grow, in effect, helping replenish our fishing grounds with fish stocks faster,” Lim said. A major fish producer in the world, the Philippines generates around $3.3 billion in revenues from fisheries alone, according to R ARE. A round 47 percent of fish caught in the Philippines are caught by municipal fishers, and 85 percent of fishers in the Philippines are municipal fishers who depend on the abundance of their 15-kilometer fishing ground. According to R ARE, considered the center of global coral ecosystem biodiversity, the Philippines’s waters contain almost 10 percent of the world’s coral reefs, large swaths of mangrove forests and more MPAs than any other country in the world. More than 1.6 million smallscale Philippine fishers and their families rely on coastal waters to provide income and sustenance. They are among the poorest and most vulnerable sectors in the country. Their average catch per day has been declining steadily for decades. Fishers now spend more time at sea, going further and further from home, but with smaller yields. T hrough t he Fish Forever prog ram, R A R E is hoping to turn the tide of coastal and marine ecosystem degradation, to make the oceans’ bounty thrive once more.

contributions to the celebration of the United Nations Decade on Biodiversity 2011-2020—an excellent opportunity to increase public awareness of the values of biodiversity and promote actions at the national, regional and local levels to conser ve and sustainably manage the world ’s

rich natural heritage. The award is supported by the Philippines’s Department of Foreign Affairs, Hari Foundation Inc., and the European Union through the Biodiversity Conservation and Management of Protected Areas in Asean project. The ACB serves as awards secretariat.

Increased fish catch

Tirona said RARE’s Fish Forever sites have experienced positive change over the past several years. “We saw results in terms of fish biomass and fish abundance inside no-take zones. This was reported by our partner, Philippine Marine Science Institute, which conducted the surveys,” Tirona said. T i r o n a s a i d f i s h e r s a l s o claimed abundance of fish even outside no-take zones. “This means that increased k n o w l e d g e o f c o m m u n it i e s and positive behavioral change works,” she said. In the communities where RARE work, it is believed there is need to really change how things are done, she added. “Most areas in the Philippines have MPAs, but not all of them are well-managed. We work with the communities to improve it. Either to expand it to enhance coverage, or strengthen the enforcement,” she said.

Economic opportunities

Asean to recognize biodiversity heroes W

hat is biodiversity? Ask people what they think it means, and chances are only a few can accurately define it. Fewer still can explain its significance to human survival. The immense communication gap between the biodiversity conser vation communit y and the general public is a major factor hampering efforts to achieve biodiversity-conservation goals in the Asean region and elsewhere in the world. To help bridge this gap, Asean will recognize 10 Asean Biodiversity Heroes during the 50th anniversary of Asean on August 8. The awards ceremony will be held in Manila.

The Asean Biodiversity Heroes is designed to recognize outstanding individuals from the Asean member-states who have contributed significantly to biodiversity conservation and advocacy efforts in their respective countries and the region. “The Asean Biodiversity Heroes are individuals that people can identify with and will inspire others to take action for biodiversity in their own spheres of influence,” Secretary-General of Asean Le Luong Minh said. “As Asean member-states continue to work on national development and sustainability goals and collaborate on regional initiatives to conserve Asean’s shared natural wealth, Asean Biodiversity Heroes

play the crucial role of spreading awareness for the urgent need to conserve biodiversity.” He added that efforts to generate a greater awareness for biodiversity conservation help the region move closer toward achieving the Asean Community Vision 2025, a framework for community building and cooperation to attain common goals and aspirations for a politically cohesive, economically integrated and socially responsible Asean. “ These heroes may be forest rangers, researchers, park managers, ta xonomists, biodiversit y infor mation management specialists, media practitioners, scientists, biodiversity policymakers, academics,

conservation workers and other individuals—young and old— working in the biodiversity conservation arena. They are silent heroes devoting themselves to the sur vival of humanity,” said Atty. Roberto V. Oliva, executive director of Asean Centre for Biodiversity (ACB). Each Asean Biodiversity Hero shall receive a cash prize worth $5,000, a special hero medal and a certificate. They will also receive special prizes from Hari Foundation Inc. The heroes from the 10 Asean member-states will also be known as the faces of biodiversity conservation in the Asean region. The Asean Biodiversity Heroes is one of the Asean region’s

A14 Monday, April 3, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Don’t call a millennial

hen you have a medical problem, you go to a doctor. When your sink is clogged, you call a plumber. Certain situations require a person of a particular skill to solve the problem. New research indicates that you might even want to consider the person’s age.

Millennials—also known as Generation Y or the Net Generation—are those individuals generally born between 1982 and 2004. According to some self-perception surveys, this demographic considers themselves to be the best and the brightest. They tend to look at those who came before as “less smart” and themselves as the leaders for the march into the glory days yet to come in the 21st century. However, they may be spending too much time on social media reading each others’ comments. Millennials are generally well educated and skilled when it comes to using technology—most of which was invented by past generations—but when it comes to “street smarts” and even common sense, not so much. If you need the ringtone on your smartphone changed, call a millennial. For other practical tasks, don’t call a millennial. Researchers in Britain have uncovered some disturbing facts. Twenty percent of those under the age of 35 must seek help from their parents with common household tasks. From the Financial Times: “The study found that more than half of millennials today are unable to put up wallpaper by themselves, and one in eight admitted to not knowing how to change a light bulb”. And while women are empowering themselves, a study by British maintenance company Corgi HomePlan found that 80 percent of younger women rely on their male partners to fix things and for basic home repair. While putting up wallpaper may not seem like a critical life skill, if you cannot change a light blub, you may have to depend on the glow from your laptop to find your way. Of course, this may just be a clever way to make “Earth Hour” more permanent. But, “The problem, according to Dr. Sandi Mann, a senior lecturer in psychology at the University of Central Lancashire, is that young people are no longer seeing the importance of being hands on”. While we can appreciate that almost all the information you need to know is available on the Internet, another survey done last October found that 25 percent of those between 25 and 34 years old were actually not capable of boiling an egg without assistance. Nineteen percent said that an egg can be hard-boiled in less than two minutes. But unless they intend to rely on disposable batteries for their computer and smartphone, they are going to be in big trouble. Almost 70 percent said they had no idea how to replace and wire an electric plug. While they are concerned about “saving the planet”, 77 percent could not figure out how to replace a tire tube on their bicycles. Technology is wonderful, but each improvement relies in part on prior technology to work. The amazing Robotwist Hands Free Jar Opener—“Hands-free technology grips, twists and opens stubborn jar lids with the simple press of a button”—runs on batteries. If this trend of depending on something or someone else continues, Generation Y may find itself at the mercy of upcoming generations just to survive. They might have to change a lot of ringtones in return for getting someone to boil an egg for them. Since 2005

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THE PATRIOT

hen one utters the phrase bahala na before taking any action, the speaker can be said to be either naïve or careless. Bahala na generally connotes something negative, as the doer leaves the success of his action to chance, to fate or to something he fails to take into account. However, author and University of the Philippines professor F. Landa Jocano says bahala na can be a powerful enabler, as it allows people to move forward despite manifest difficulty or seeming impossibility.

Civil Service Institute (CSI) Director Arturo “Turok” Florentin aims to share a Public Service Values Program (PSVP) at the highest level of the government bureaucracy to help inculcate the values of Patriotism, Integrity, Excellence, Spirituality (PIES) in all public servants. Some advocates of the doctrine of separation of Church and State may consider the idea of sharing the value of spirituality to government leaders as violative of the Constitution. But while the PSVP will definitely make reference to some biblical passages, it is never about any religion. According to Turok, the PSVP is about the spirituality within us, which ought to strengthen our shared values as Filipinos. As some volunteers were brainstorming as to the final content of the PSVP curriculum, someone said the speakers and facilitators should minimize mentioning the word God, as the audience might think that the seminar is about religion. The lawyer

in the group, however, pointed out that no less than the Constitution, the supreme law of the land, implores the aid of Almighty God, “in order to build a just and humane society”. Further, as recited in all government agencies during their respective flagraising ceremonies, the Oath to the Flag (Panunumpa sa Watawat) makes reference to a Philippine society that is makadiyos, makatao, makakalikasan at makabansa. Making reference to a “God” in our Constitution, in the Oath to the Flag, and in the recently approved Oath of Public Servants is a clear declaration of our nation’s trust in a good, loving and all-powerful God. However, our systemic and institutionalized corruption illustrates this disconnect between the faith of some of our public servants and their dismal and sometimes “unholy” performance in public office. Hence, the PIES seminar, as part of the PSVP, will hopefully jump-start the

process of resolving this disconnect that has prevented the sustainable development of our country in recent years. Based on Transparency International records, the Philippines has remained at the bottom half of 176 countries being ranked, averaging at 115th (Least Corrupt) from 2007 to 2016. Denmark consistently occupied the top spot, with Somalia at the bottom. In 2016 the Philippines (101st) trailed Sri Langka by six points (95th), while surpassing Palestine (107th) by six points. Of the four values in PIES, the one that struck me the most is spirituality. To attest to the success of a spirituality-based leadership in government, Turok presented the case study of Parañaque City. Without mentioning specific names, Turok said the transformation of that city started with a simple Bible study sponsored by a certain pastor from Christ Commission Fellowship as approved by the city mayor. The pastor supposedly even hosted the meals of the participants in the Bible study. As narrated by Turok, bringing the workers in City Hall closer to God miraculously got rid of the ipis in the city. Ipis, or cockroach in the vernacular, stands for Inggit, Poot, Intriga, Selos (Greed, Hate, Intrigue, Jealousy) as per Director Florentin. As soon as the ipis in Parañaque City was exterminated, revenues dramatically improved in terms of tax collection (from P900 million to P3.2 billion), and the morale of the workers exponentially soared. The transformation story in Parañaque City in 2010 is similar to the makeover story in New York City in 1990 as narrated in Mal-

Montano urges fair news reporting MAIL

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

‘Bahala na!’

This is in reference to your news articles about the Tourism Promotions Board (TPB), especially the article entitled “Tourism stakeholders urge Montano to resign” that was published on your web site on March 23, 2017. TPB Chief Operating Officer (COO) Cesar D. Montano noted that these news articles were written by Ma. Stella F. Arnaldo. Based on these published articles, Montano acknowledged the effort of the BusinessMirror and

Ma. Stella F. Arnaldo in obtaining the views and opinion of other personalities, like Sen. Nancy Binay, Tourism Secretary Wanda Corazon T. Teo, Undersecretary Katherine de Castro, Aileen Clemente, among others, regarding the allegations of the “concerned employees of TPB”. However, it appears that these articles were published highlighting only one side of the story. Montano was not personally asked on the veracity of the issues notwithstanding that he is the one being accused in these allegations. As of this moment, the office of the COO has not yet received any formal complaint from the “concerned employees of TPB”. While there is no truth to the allegations in the complaint, it also bears noting that the complaint filed before the Presidential Action Center on March 1, 2017, was not signed. The filing of unsigned and unverified complaint was intended solely to

malign the image and reputation of Montano, as well as the TPB. TPB management and employees fully support the leadership of Montano in promoting and marketing Philippine tourism domestically and internationally as a major global tourism destination. While the COO respects and values the right of every person to free speech, expression and of the press, where people can exchange ideas, acquire knowledge and information, confront public issues, or discuss matters of public interest, without fear of reprisals, it is also but proper that the right to freedom of speech and expression must be exercised to the extent that it shall uphold the truth. In the interest of fair play, Montano encourages that fair news reporting must be upheld at all times by getting both sides of the story. Justice Oliver Wendell Holmes once said that the marketplace of

colm Gladwell’s book Tipping Point. Gladwell theorized that certain individuals who simply exerted the effort to clean and fix the broken glass windows in several buildings in the city contributed greatly to the reduction in the crime rate in New York City. In his Law of the Few, similar to the Pareto principle, Gladwell states that roughly 80 percent of the work will be done by only 20 percent of the organization. This is what, I think, happened in Parañaque. The agents of change were a handful of people in City Hall who tried to know God through regular Bible study classes. “God in City Hall” led to a Parañaque phenomenon where both city workers and residents somehow became holier, as in more law-abiding and more tax-compliant, to the extent that the city official seal now has a caption that says “Dedicated to God”. Meaningful change is heavily dependent on the involvement of people with a rare set of social gifts. Florentin is one of these people who will soon embark on this audacious journey of spreading the Patriotism Integrity Excellence Spirituality virus to government leaders. Instead of being hesitant, Florentin remains confident that this PIES virus will eventually lead to a social epidemic to the point of making the country’s leaders less corrupt and more holy. CSI Director Arturo Florentin, whose nickname Turok means “inject” in English, has injected the letter “T” in bahala na. Having that letter T, which I surmise stands for “Trust” and not for “Turok”, all in government ought to proclaim, not bahala na, but Bathala na—whose vernacular translation means God.

ideas is still the best alternative to censorship. The marketplace of ideas makes freedom of speech robust and allows people to be more tolerant of opposing views. It has been said that freedom of speech is not only to freely express oneself within the context of the law, but also to hear what others say, that all may be enlightened regardless of how obnoxious or erroneous the views may be. We hope that Ms. Arnaldo and the BusinessMirror will uphold journalistic integrity in handling this delicate matter. The TPB is looking forward to working with the tourism stakeholders and the press in promoting and marketing the Philippine destinations worldwide. Arnold T. Gonzales Officer in Charge, Marketing Communications Atty. Venancio C. Manuel III Head, Legal Department

Opinion BusinessMirror

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The President’s appointing power

Monkey wrenches to fast-tracking PPPs By Alberto Agra

PPP Lead

Atty. Lorna Patajo-Kapunan

legally speaking

ho President Duterte can or cannot appoint has become relevant in view of the move of the President to reset this year’s synchronized barangay and Sangguniang Kabataan elections scheduled on the fourth Monday of October 2017. The President said he does not want those financed by drug lords to win and that, if the barangay elections would proceed as scheduled, the winner might be financed by drug money. The President’s plan is to declare all village positions vacant, because “narcopolitics” has “entered into the mainstream of Philippine politics” and “40 percent of the total barangay captains are into drugs”. The President’s legal/political advisers should remind the President that he cannot appoint barangay officials because neither the Constitution nor the law allows him to. Thus, under Section 16, Article VII of the 1987 Constitution, there are four (groups) of officers whom the President shall appoint. These are the following: 1. First, (a) the heads of the executive departments; (b) ambassadors, other public ministers and consuls; (c) officers of the Armed Forces from the rank of colonel or naval captain; and (d) other officers whose appointments are vested in him in the Constitution, such as the chairman and members of the Commission on Elections, Civil Service Commission, the Commission on Audit. These appointments require the consent of the Commission on Appointments (COA). 2. Second, all other officers of the government whose appointments are not otherwise provided by law; 3. Third, those whom the President may be authorized by law to appoint; and 4. Fourth, officers lower in rank whose appointments Congress may by law vest in the President alone. Only appointments in the first group require the consent of the COA. The second, third and fourth groups do not require such consent. While the appointing power is basically an executive prerogative, the Constitution contains provisions restricting or limiting such appointing power. Apart from the power of review of the COA over appointments requiring the latter’s confirmation, the other limitations on the President’s appointing power are the following: 1. The limitations provided in Article VII of the Constitution in Section 14 (appointments by an Acting President) and Section 15 (Midnight Appointments), which read: “Section 14. Appointments extended by an acting President shall remain effective, unless revoked by the elected President within ninety days from his assumption or re-assumption of office. “Section 15. Two months immediately before the next presidential elections and up to the end of his term, a President or Acting President shall not make appointments, except temporary appointments to executive positions when continued vacancy therein will prejudice public service or endanger public safety.” 2. The President can only appoint members of the Supreme Court and judges of lower courts from among the list of at least three members for each position prepared and recommended by the Judicial and Bar Council (Section 9, Article VII, Constitution). 3. The President cannot appoint officials and employees of the Judiciary, as the power to appoint them belongs to the Supreme Court in accordance with the civil service law (Section 5(6) Article VIII, Constitution). Neither can he appoint officials and employees of the Civil Service Commission, Commission on Elections and Commission on Audit, as the power to appoint them belongs to these respective commissions in accordance with the civil service law (Section 4, Article IX-A, Constitution). 4. The President cannot appoint any person who lost in any election within one year after such election to any office in the government or any government-owned or -controlled corporations or in any of their subsidiaries (Section 6, Article IX(B), Constitution). 5. The President can only appoint the Ombudsman and deputies persons from among the list of at least six nominees prepared and recommended by the Judicial and Bar Council (Section 9, Article XI, Constitution). 6. The officials and employees of the Office of the Ombudsman, other than the deputies, shall be appointed by the Ombudsman according to the civil service law, and not by the President (Section 6, Article XI, Constitution). 7. The Commission on Human Rights shall appoint its officers and employees in accordance with law, precluding the President from doing so (Section 17 (10), Article XIII, Constitution).

8. Congress may, by law, vest the appointment of lower in rank in the courts, or in the heads of departments, agencies, commissions or boards (Section 16, Article VII, Constitution). 9. Another constitutional limitation on the President’s appointing power is Section 7 of Article IX-B of the Constitution. An elective official may be appointed by the President to another position, but he has to vacate his elective post. He cannot be appointed to another position and, at the same time, maintain his elective position. On the other hand, an appointive official may be appointed or designated by the President to another appointive position, thus occupying two or more appointive positions, if a specific law so allows or where his primary functions so require in an ex officio capacity (Flores v. Drilon, 223 SCRA 268[1993]). 10. Except as may be expressly provided by the Constitution, (i.e., the Vice President may be appointed Cabinet member) Section 13, Article VII of the Constitution prohibits the President from appointing a Cabinet member, any of his deputies or assistants to another position(s). However, such constitutional provision does not prohibit these executive officials from holding additional positions in ex-officio capacities and as required by their primary functions but without additional compensation or per diems in whatever form (De la Cruz v. COA, GR 138489, November 29, 2001). 11. Administrative Code of 1987 (Section 31, Executive Order 292) expressly grants the President continuing authority to reorganize the Office of the President in order to achieve simplicity, economy and efficiency. 12. The President, during his tenure, cannot appoint his or her spouse and relatives by consanguinity or affinity within the fourth civil degree as: a) Members of the Constitutional Commission b) Ombudsman c) Secretaries or Undersecretaries d) Chairman or heads of bureaus of offices, including government-owned or -controlled corporations and their subsidiaries (Section 13, Article VII, Constitution) As can be clearly seen from all the above enumeration, the appointing power of the President is clear, subject to such restrictions and/or limitations provided by the Constitution or by law. Several House bills and Senate bills have been filed postponing the synchronized barangay and Sangguniang Kabataan elections in October 2017 to the fourth Monday of May 2020, and subsequent synchronized elections is proposed to be held on the second Monday of May 2023 and every three years thereafter. Under these House/Senate bills, it is proposed that “all incumbent barangay officials shall be deemed terminated upon the approval of the bill, and qualified persons will be appointed by the President.” Election watchdog groups National Movement for Free Elections and Parish Pastoral Council for Responsible Voting oppose the postponement on the ground that “postponing elections undermine a democratic process instituted to ensure every individual’s right to choose their leaders and make them accountable”. While I concur with the President in his desire for a “drug-free Philippines” and his belief that “the drug problem begins at grassroot level, therefore, that is where we should start the cleansing”, I am not convinced that appointing OICs is the way to go. Does the President have the wisdom and impartiality to appoint “untainted” OICs for more than 42,036 barangays? Do we even have such number of “untainted” countrymen who genuinely desire to serve their communities and not their personal ambition, desire for power, greed for money? I am still believing that “The Philippines is a democratic and republic State. Sovereignty resides in the people and all government authority emanates from them” (Section 1, Article II, Constitution). Let the Constitution speak for itself!

Monday, April 3, 2017 A15

Continued from A1 (1) Turf clashes. A lot of projects can be implemented by more than one government agency. For example, the Department of Transportation, the Light Rail Transit Authority and a provincial government can implement a monorail project in a province. If they do not come to terms, all these three will assert their respective mandates. When jurisdictional issues are not resolved, either there is no project or there are redundant projects or white elephants.

(2) Paralysis-by-analysis. While master plans must come ahead of projects to ensure integrated development, master plans take time to prepare and not all aspects, arguably, are doable. There are some agencies that may have several plans and some features of macro plans are off tangent from micro or local plans. The obvious result is inaction or conflict. (3) Layers upon layers of preaward approvals. Depending on the PPP modality, governing law, project cost or amount of govern-

ment contribution, there are levels of approval. Aside from the implementing agency, the go signal from the National Economic and Development Authority may be required. There could also be instances when positions of implementing agencies do not jive with those of the PPP Center and regulatory agencies. Without these approvals, there is no PPP contract. (4) Interventions galore postaward. Regulatory approvals may also stall the start-up or implementation of project or provisions of PPP contracts. Provisions for automatic adjustments in rates are not automatic. Disallowances in expenditures may be ordered. Issuance of environmental compliance certificates may not be issued. The effect is a paper award of projects but no project or no project as envisioned. (5) Penchant for litigation.

Despite the law against injunctions, restraining orders are still issued by regular courts. Cases are filed by losing bidders, taxpayers, or members of Congress. Those who are pre-disposed to stonewalling PPP projects also file graft cases against public officers and winning bidders. The resulting outcome—no project or fear of having one. (6) Protester’s risk. One of the 50 or so risks that could attend a PPP is resistance from civil-society organizations. Some may have legitimate grievances, some may oppose for opposition’s sake, while claiming infallibility or monopoly of righteousness. If not addressed, there could be nonuser of projects or use below expected targets. If you know of other reasons, let this columnist know. Please send feedback via e-mail to alberto.c.agra@gmail.com.

Putting sanity into our South China Sea policy Ricardo Saludo

DIPLOMASIA

ne president said we will defend Recto Bank like Recto Avenue. His successor admits we can do nothing to stop China doing as it wishes in the South China Sea.

Who’s telling the truth here? Let’s take this step by step. First, what’s the State’s paramount task? The Constitution, Article II, Section 4, states: “The prime duty of the Government is to serve and protect the people.” Everything the State does, including asserting sovereign rights at sea, must comply with that supreme duty. Now, let’s consider the different approaches of then-President Benigno S. Aquino III and incumbent Rodrigo R. Duterte. Five years ago this month, Aquino confronted China at Scarborough or Panatag Shoal, sending the country’s largest warship against a flotilla of Chinese marine surveillance vessels. With no help from Uncle Sam, we lost. Aquino then mounted an international campaign against “Chinese bullying”, even likening it to Nazi aggression. At The Hague’s Permanent Court of Arbitration (PCA), he contested Beijing’s “ninedash line” claim over nearly all the South China Sea. The Chinese refused to participate, and the PCA ruled in our favor. Perhaps most significant, through the Enhanced Defense Cooperation

Agreement (Edca), signed during then-President Barack Obama’s visit three years ago this month, Aquino allowed US forces to escalate rotations and use of military bases in the country. Washington wanted to move 60 percent of its naval assets to East Asia, from Hawaii and bases farther away.

The confrontation approach

Where did Aquino’s strategy get us? First, China became more hostile, barring Filipino fishermen from Panatag and curbing trade, aid and investment. Chinese vessels also briefly barred boats resupplying our marines on a derelict ship at Ayungin Shoal, just weeks before Obama’s 2014 visit. Washington’s expected buildup under the Edca threatened China and its shipping, including fourfifths of its oil imports passing the South China Sea. So, Beijing erected military-capable facilities on reclaimed land at Fiery Cross Reef and Mischief Reef. The latter was seized from Philippine control in 1995, also absent US intervention. And China ignored the PCA decision invalidating the nine-dash line, as other big powers did with inter-

national rulings, including the 1986 International Court of Justice decision against the US Navy’s mining of Nicaragua’s main harbor. As for the Edca, if it were implemented, American forces would move into bases beside Cebu, Cagayan de Oro, and Puerto Princesa, and in Pampanga and Nueva Ecija provinces in our leading rice-growing region. Such regional air bases would be prime targets, along with aircraft carriers, in a war between America and China, which can erupt over North Korea, Japan or Taiwan. So said the US Army-sponsored RAND think tank report, “War with China: Thinking Through the Unthinkable,” published last year. It also warned that American and Chinese forces are so devastating, both have an incentive to strike first without warning.

The friendly approach

Now, the Duterte way. He squabbled with America and announced an “alliance” with China and Russia during his October visit to Beijing. Filipino fishermen are back at Panatag, prompting even Western analysts to concede that Duterte got China to obey the PCA. Beijing offered $24 billion in aid, and we might buy Chinese and Russian arms. Japan too offered defense and economic assistance, wary of the Philippines falling under Chinese influence. President Duterte is quick to avoid tensions with China. He stopped naval patrols with the US, and bristled when Defense Secretary Delfin N. Lorenzana announced in January that the Americans would erect base facilities over the next three years. When Lorenzana raised concerns

Traveling 40,000 kilometers Joel L. Tan-Torres

DEBIT CREDIT Conclusion

he final phase of my trip abroad to attend to several Board of Accountancy (BOA) matters were my engagements in faraway Vienna in Austria. Coming from several meetings in New York in the United States, I had the unique experience of flying the Russian airline Aeroflot (and being served by the beautiful and tall Russian stewardesses) and a layover of about three hours in the Moscow airport on my flight to Vienna on March 12.

My first meeting in Vienna was on March 14, with Dr. Rafaelle Petruzzi and Jeffrey Owens of the Vienna University of Business and Economics. Petruzzi is managing director of the WU Transfer Pricing Center of the Institute for Business and International Tax Law. Owens is the director of the WU Global Tax Policy Center. We discussed various items, including transfer pricing developments, tax academy, international tax and others. We all agreed that we

will explore what collaborations can be pursued in the future with their university and the Board of Accountancy. March 15 and 16 I attended the Audit Training for Trainers (AToT) held in the Joint Vienna Institute. This training was conducted by the Centre for Financial Reporting Reform (CFRR) headed by Jarett Decker, who has visited us in Manila a number of times in the past. The AToT was attended by over 35 people, from 14 countries,

mostly from Eastern Europe and the former Russian states. I was the only Asian among the participants. The AToT is a series of lectures and workshops that focus in particular on the needs and challenges of small- and medium-sized practices and aim to increase the audit profession’s capacity to deliver high-quality training and continuing professional development programs based on International Auditing and Assurance Standards Board standards. This AtToT that I attended focused on audit execution. We were engaged in a number of practical exercises covering testing controls and substantive audit procedures. We also had a number of group exercises and cases to enhance presentation and soft skills and to simulate reallife business situations. Our group emerged as the best presentor of a case on presentation of our engagement offerings to a client. We had an excellent group of resource persons, including Piotr Pyziak, Kalina Sukarova, Aneta Wolk-Lys and Bonnie Sirois, all from the World Bank; Paul Thompson of the European Federation of Accountants and Auditors, and Mats Olson of the International Federation of Accountants.

over Chinese vessels in Benham Rise in the Pacific, where the Philippines has exclusive economic rights over the seabed, the President said he gave Beijing permission for marine research. Not even a Supreme Court justice’s urgings to defend sovereign rights and subtle warnings of impeachment stopped Duterte’s conciliatory approach. Neither did an actual ouster petition, charging betrayal of public trust for allegedly allowing Chinese violations. There are fears that friendly relations spur China to erode our sovereign rights. The foreign affairs and justice departments recently spoke of filing strong protests over a reported plan to erect a Scarborough monitoring station, which Beijing promptly denied. Meanwhile, amid warm BeijingManila ties, there are hopes of signing a binding Asean-China Code of Conduct in disputed areas, at regional meetings in the Philippines this year. Over the long term, as massive infrastructure and investment, heavily funded by China and Japan, boost national wealth, the Philippines may finally acquire anti-access/ area denial weapons—marine surveillance planes, anti-ship missiles, and air defense systems—urged by Washington defense analysts to deter encroachments. Indeed, former National Security Adviser Roilo Golez says, we can already buy 200 Indo-Russian BrahMos missiles to protect offshore oil deposits—a P35-billion energy-related expense, which the P150-billion-plus Malampaya gas royalties can fund. So, which is the safer, saner way to secure our sovereign rights?

I brought along the AToT materials that included the documentation templates and samples and a Trainers Guide. I will be making these available for schools, professional accountancy organizations and other stakeholders to use for the training of their students or audit staff. The Board of Accountancy will be organizing a learning activity based on the AToT program. After these successful meetings in the United States and Austria in nine days and traveling for about 43,400 kilometers (which is more than the round the world distance of 40,000 kilometers), I returned to Manila on March 17 enriched with the learning, experience and a network of new colleagues in the profession.

Chairman Joel L. Tan-Torres is the chairman of the Professional Regulatory Board of Accountancy. He is a Certified Public Accountant who placed No. 1 in the May 1979 CPA Board Examinations. He is concurrently a tax partner of Reyes Tacandong & Co., CPAs. He was the former commissioner of the Bureau of Internal Revenue from 2009 to 2010. 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.

2nd Front Page BusinessMirror

A16 Monday, April 3, 2017

www.businessmirror.com.ph

Pasay City wins property C tax dispute with PRA

By Joel R. San Juan

@jrsanjuan1573

HE Court of Appeals (CA) has thwarted a bid by the Philippine Reclamation Authority (PRA) nullifying a compromise agreement with the Pasay City government that ended a dispute over real-property tax obligations amounting to P1.63 billion. A decision penned by former CA Associate Justice and now Supreme Court (SC) Associate Justice Noel Tijam held that the agreement approved by the Regional Trial Court in Pasay City on May 25, 2005, was not contrary to law or public policy. The PRA sought to annul the compromise agreement more than 10 years after on the basis of a Supreme Court ruling in PRA v. Parañaque City, declaring all PRA reclaimed properties as exempt from real-estate tax. Under the agreement, the PRA agreed to cede 3.5 hectares of reclaimed land in Central Business Park-1A in Pasay City as settlement of its tax liabilities from 1992 to 2002, totaling P1,630,072,407. The property is now subject of a memorandum of agreement between the Pasay City government and SM Development Corp. (SMDC), represented by its vice chairman and CEO, Henry Sy Jr. SMDC has proposed to turn the property into a mixed residentialcommercial complex through a joint-venture undertaking. The parties agreed that revenues generated by the condominium project would be used for the construction of a new building for the Pasay City University.

The Pasay City government was obliged to contribute its title, ownership, rights and interest to the property, and deliver the physical possession of the same to SMDC ready for development. The city government also assured that no person or entity will compete with the right and interest of the city, preventing the SMDC from taking full possession of the property. In upholding the PRA and Pasay City agreement, the CA held that various government agencies, such as the Office of the Solicitor General, Department of Public Works and Highways and the Office of the President, through the Department of Finance, approved of the compromise agreement. It added the order of the trial court already constituted a judgment on the merits of the compromise agreement, and “has upon the parties the effect and authority of res judicata”, or matter already judged. “In this case, there was no issue as to the fact that the parties freely entered into the compromise agreement. The PRA did not proffer a shred of evidence to prove that, indeed, the agreement was void, obtained through fraud, mistake or any vice of consent, or

SYMPOSIUM ON COLON-CANCER SCREENING In celebration of Colorectal Cancer Awareness Month, premier health institution The Medical City (TMC) held a symposium, titled “Advances in the Screening and Management of Colorectal Cancer”, at the Augusto Barcelon Auditorium in TMC Ortigas in Pasig City on March 14. The event was organized by the TMC Cancer Center, the Colorectal Clinic and the Center for Patient Partnership. Photo shows (from left) Dr. Jun Ruiz, gastroenterologist, TMC; Dr. Manuel Francisco T. Roxas, chairman of TMC Department of Surgery and director of the Colorectal Clinic; Dr. Daniel Alonzo, director of the TMC Cancer Center; Dr. Enrique Tayag, Department of Health assistant secretary; and Dr. Eugenio Jose F. Ramos, senior vice president for medical services group, TMC.

would disrupt substantial justice,” the CA said. “There was also no dispute about the clarity of its terms. One of the parties simply did not wish to abide by the compromise agreement’s terms by alleging, without proving, that the same was contrary to law and public policy,” the CA added. The CA said even the Office of the Government Corporate Counsel, in its February 8, 2008, opinion, advised the PRA it was duty-bound to comply with the terms of the compromise agreement, despite a Supreme Court ruling on July 20,

SRA: Only food exporters have access to ‘D’ sugar By Jasper Emmanuel Y. Arcalas @jearcalas

ood exporters in economic zones accredited by the government are usually given an allocation of “D” sugar, which is cheaper than those sold locally, according to the Sugar Regulatory Administration (SRA). SRA Administrator Anna Rosario V. Paner said the government-owned and -controlled corporation only allows manufacturers in the export-processing zones to access D sugar, or those bound for the export market. The SRA issued the statement after Coca-Cola Femsa Philippines Inc. (CFPI) has expressed its intention to tap D sugar to hike its local sugar procurement. “The SRA gives D sugar to exporters in export-processing zones than let them import from Thailand, for example. In the case of Coke, it is not an exporter,” Paner told the BusinessMirror. She also said Agriculture Secretary Emmanuel F. Piñol instructed her to study the request of CFPI if it would be possible to grant the beverage firm access to D sugar. In a separate interview, Piñol said CFPI wanted access to D sugar, because it is cheaper by P350 per 50-kilogram bag (lkg) than the “B” sugar, or sugar allocated for the domestic market, currently priced at P1,300/lkg. Piñol also said the SRA should consider the request of CFPI to tap D sugar, as it is a “multinational”. CFPI, a Mexico-based company, is the local bottler and distributor

PANER: “I have never encountered a situation wherein ‘D’ sugar was given to an entity that is not an exporter.”

of Coca-Cola soft drinks in the country. Pending the results of the SRA and the SRA board’s study on the proposal of CFPI, Paner noted that, based on her initial analysis, no nonfood and beverage exporter has gained access to D sugar in the past. “I don’t want to preempt the [SRA] board, but historically, at least based on my experience while I am in the sugar industry, I have never encountered a situation wherein D sugar was given to an entity that is not an exporter,” Paner said. “I already instructed my employees to study if there’s a history in the SRA wherein a sole entity was allowed to access D. But I feel there’s none, because it [D sugar] is really for world market,” she added. The SRA chief said she is also not keen on allowing CFPI to buy D sugar, as it would put other beverage firms at disadvantageous position. “Others could question why we allowed them [CFPI] to use D sugar, while the SRA did not allow other companies. That’s what I don’t want to happen, to make it appear that I’m favoring one beverage firm over the others that also make use of high-

fructose corn syrup [HFCS], like Pepsi, URC and RC Cola,” Paner said. “Also, the access to D sugar is something I cannot decide alone. If there is a request, like any other requests, the concerned party writes us a letter, then the board will calendar the concern in our meeting,” Paner said. “In this case, it is premature for CFPI to write a letter, because we are still studying the proposal, and the board has not met yet,” she added. The SRA board is comprised of Piñol and Paner serving as its chairman and vice chairman, respectively. Two other members from the sugar industry—one from the planter’s sector and another from the miller’s sector—complete the SRA board’s composition. Paner also clarified that CFPI is the lone beverage firm seeking access to D sugar, contrary to earlier reports indicating that listed beverage firm Pepsi-Cola Products Philippines Inc. also wants to buy sugar bound for the export market. “Pepsi uses more sugar than HFCS. Industry sources said Pepsi’s operations utilize more than 50 percent of sugar than HFCS,” she said. “We have data showing that in the last three years, Pepsi purchased local sugar three times more than what Coke bought in the Visayas region,” Paner added. Pending the decision on the access to D sugar, Piñol said CFPI has already committed to hike its purchase of locally produced sugar. He said the company will hike the HFCS-local sugar utilization ratio to 80:20, from the previous 90:10.

2006, in Manila International Airport v. Court of Appeals, et al. In that case, the Office of the Government Corporate Counsel reminded PRA the mere change in the state of law does not relieve a party to a judgment upon compromise from compliance sans evidence showing fraud. “For one thing, there is no stipulation in the compromise agreement, or any agreement for that matter, that the PRA’s tax settlement would be subject to any reservation arising from any supervening change in the law or legal interpretation, in view of the eventual

ruling of the Supreme Court in the Parañaque case,” the CA ruled. It pointed out the events surrounding the Parañaque case already existed, even before the PRA and Pasay City’s execution of the compromise agreement. It added the SC ruling in the Parañaque case cannot be applied retroactively to the properties of the PRA subject of the compromise agreement. Since the agreement is considered valid and binding, the CA said it only follows that the memorandum of agreement entered into between SMDC and Pasay City is also valid.

Oil stockpiles dropping in sign that Opec cuts are working

rude stockpiles are starting to decline in a sign that the production cuts implemented this year are bringing the market to balance, according to Organization of the Petroleum Exporting Countries (Opec) Secretary-General Mohammad Barkindo. An overhang of an estimated 285 million barrels of oil in storage has been a drag on crude prices, even as the Opec and some nonmembers producers curbed output. Six members of the Opec and Oman back extending production cuts beyond June, with Saudi Arabia and Kuwait saying oil stockpiles need to fall to the five-year average. Oil had its biggest weekly increase this year last week amid speculation the Opec will extend its deal to curb output, and after a USgovernment report showed the nation’s refineries boosted crude use by the most in almost three years while fuel supplies fell. Morgan Stanley said in a report that “less visible” crude stockpiles, including in China, Japan and floating storage around the world, have declined 72 million barrels this year. “I remain cautiously optimistic that the market is already rebalancing,” Barkindo told reporters on Sunday in Baghdad. “We have started seeing stock levels coming down.” Iraq, which initially sought an exemption from Opec’s output cut, was 98-percent compliant in March, after production data were revised last Saturday, Iraqi Oil Minister Jabbar Al-Luaibi told reporters on Sunday in Baghdad. Last Thursday, with one day left in the month, Iraq’s production was 4.46 million barrels a day for March, Falah Al-amri, director general of Iraq’s State Oil Marketing Organization, told reporters. According to the Opec, Iraq agreed to cut production by 210,000 barrels a day to 4.351 million barrels a day. Barkindo said he has been “assured they will comply fully.” Bloomberg News

Trump family still benefiting from business

vank a Trump and Jared Kushner, President Donald J. Trump’s daughter and son-inlaw, will remain the beneficiaries of a sprawling real estate and investment business still worth as much as $740 million, despite their new government responsibilities, according to ethics filings released by the White House last Friday night. Ivanka will also maintain a stake in the Trump International Hotel in Washington, D.C. The hotel, just down the street from the White House, has drawn protests from ethics experts who worry that foreign governments or special interests could stay there in order to curry favor with the administration. It is unclear how Ivanka would earn income from that stake. Kushner’s financial disclosures said that Ivanka earned between $1 million and $5 million from the hotel between January 2016 and March 2017, and put the value of her stake at between $5 million and $25 million. The disclosures were part of a broad, Friday-night document release by the White House that exposed the assets of as many as 180 senior officials to public scrutiny. The reports showed the assets and wealth of senior staff members at the time they entered the government service. Those disclosures included the assets of Gary Cohn, the former president of Goldman Sachs who now leads the National Economic

Council; Kellyanne Conway, the pollster and counsel to Trump; and Stephen Bannon, the chief strategist to the president. Bannon disclosed $191,000 in consulting fees he earned from Breitbart News Network, the conservative media organization; $125,333 from Cambridge Analytica, a data firm that worked for the Trump campaign; and $61,539 in salary from the Government Accountability Institute, a conservative nonprofit organization. All three are backed by Robert Mercer and his daughter Rebekah, financiers and major Republican donors. Bannon’s most valuable asset was Bannon Strategic Advisors Inc., a privately held consulting firm into which income from his other investments appeared to flow. It was valued at between $5 million and $25 million. He also held bank accounts valued at up to $2.25 million, and rental real estate worth as much as $10.5 million. Conway earned at least $842,614 last year, and perhaps slightly more, the filings show. Her assets are valued at between $11 million and at least $44.2 million. Cohn is far wealthier, with assets valued between $253 million and $611 million, and income last year as high as $77 million. Another White House official, Reed Cordish, who heads up technology initiatives, accumulated assets as a Maryland developer valued as high as $424 million. Trump’s administration is con-

sidered the most wealthy in US history, with members of his senior staff and Cabinet worth an estimated $12 billion, according to a tally by Bloomberg. The Friday filings will add voluminous detail to that top-line figure. The White House chief of staff, Reince Priebus, for example, earned at least $1.18 million—nearly half of which came from the Republican National Committee, which he formerly led. His assets totaled between $604,008 and at least $1.26 million. “I think one of the really interesting things that people are going to see today—and I think it’s something that should be celebrated— is that the president has brought a lot of people into this administration, and this White House, in particular, who have been very blessed and very successful,” said Sean Spicer, the White House press secretary. The officials “have given up a lot to come into government by setting aside a lot of assets,” he said. Until January, Kushner was chief executive of Kushner Cos., a family-run real-estate investment firm with holdings across the country. It is a growing business that has taken part in at least $7 billion of acquisitions during the past decade. Late Friday, the White House released details of the plan devised by his advisers to avoid conflicts of interest between Kushner’s government role and the wide-ranging business empire he ran with his father. NYT Service