Issuu

Corporate corruption is alive: Can data catch the criminals?

By Henry J. Schumacher

KYPIXEL | DREAMSTIME.COM

he misbehavior of company executives endanger their companies and are inflicting billions of damages on the public. Almost all of it is preventable if a new breed of ethics and compliance software, emerging thanks to machine learning, is used, which can also scrutinize the enormous vaults of data held by the world’s large companies. Continued on A12

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n Tuesday, April 3, 2018 Vol. 13 No. 171

DTI comes to Boracay resorts, workers’ rescue By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

HE Department of Trade and Industry (DTI) has proposed to President Duterte that Boracay Island be immediately rehabilitated, but only moved for a partial closure of the island so as not to undermine the livelihood of residents, resorts and some 30,000 foreign and local workers.

So, yes to rehab, ASAP, and no to total closure.” —Sources quoting Lopez

In a news briefing on Monday at Malacañang, Senior Deputy Assistant Executive Secretary Menardo I. Guevarra confirmed the receipt of Lopez’s memo, adding that it will be considered by the President before making his final decision on the Boracay issue. “The Department of Trade and Industry

By Rea Cu

@ReaCuBM

he Bureau of Internal Revenue (BIR) has defined its priority programs to improve revenuecollection efficiency after President Duterte signed in December 2017 the first package of the government’s Comprehensive Tax Reform Program (CTRP), or the Tax Reform for Acceleration and Inclusion (TRAIN) law. Based on Revenue Memorandum Circular 6-2018 issued in January, the BIR enumerated 17 priority programs designed to improve revenue collection, taxpayer satisfaction and compliance, and to strengthen good governance within the agency. For 2018 the BIR has set a revenuecollection target of P2.039 trillion, which is 11.48 percent more than 2017’s P1.829-trillion collection goal. The figure is also 15.66 percent higher than the revised P1.763-trillion collection target under the 2018 Budget of Expenditures and Sources of Financing (BESF).

Steady amid higher inflation Manny B. Villar

For this year, I think rising inflation is among the first to come as a challenge, as far as the economy is concerned.

Continued on A2

PESO exchange rates n US 52.2500

Continued on A10

Govt doubts EO will end ‘endo’ scheme By Samuel P. Medenilla @sam_medenilla

& Bernadette D. Nicolas @BNicolasBM

The current number of BIR employees when it requires 21,634 to attain collection efficiency

Continued on A2

THE ENTREPRENEUR

obody expects the road to always be full of roses, or the skies always devoid of gray clouds. The Philippine economy is expected to continue to be a growth leader in Asia because of many factors, but it doesn’t mean no challenges will come its way to test its resilience.

9,292 In 2017 the BIR has collected revenues amounting to P1.772 trillion, missing its collection target but posting a growth of 13 percent against 2016’s total collection of P1.567 trillion. In terms of hitting its target revenue collections this year, the bureau took into account nine initiatives out of the 17 priority programs. These include updating the schedule for zonal values, intensified audit investigations, enhanced implementation of the arrears management program in regional offices, broadening of

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vacation time After the class of 2018 celebrated their graduation by the Manila Bay, these teens on their bikes enjoy the start of their vacation in a Pasay City park.

NONIE REYES

abor Secretary Silvestre H. Bello III doesn’t share the confidence of labor groups that a pending executive order (EO) meant to stop contractualization— popularly known in the country as endo—will really serve its muchhyped purpose. This, Bello said, is because while the EO’s provisions will effectively restrict contractualization in the country, the labor department’s 575 labor inspectors will be insufficient to check the compliance of the private firms. “It is expected to stop contractualization, but again, an order is an order...the problem is in its implementation. The reality is there are about 900,000 business Continued on A2

n japan 0.4918 n UK 73.2911 n HK 6.6574 n CHINA 8.3273 n singapore 39.8672 n australia 40.1803 n EU 64.4034 n SAUDI arabia 13.9334

Source: BSP (2 April 2018 )

A2 Tuesday, April 3, 2018

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DTI comes to Boracay resorts, workers’ rescue Continued from A1

has actually submitted the separate memorandum to us, saying that, maybe, this closure can be done in phases, because of the effect on businesses and livelihood in the area.” The government estimates there are about 17,000 workers directly employed in Boracay, but the numbers could run to some 30,000, which would include those in the informal economy, such as boatmen, massage therapists and tour guides, among others. Lopez could not be reached for comment as of press time, but BusinessMirror sources who are familiar with the DTI chief’s position on the issue said he recommended to Duterte that the government “must close, penalize those who violated [laws] and ask them to correct their system to comply with environmental standards.” But Lopez has stressed that establishments that have been complying and working within the rules, should be “spared. It’s just fair to these investors. And jobs, livelihood and micro, small entrepreneurs will be affected” if the island is totally closed. So, yes to rehab, ASAP, and no to total clo-

sure,” the sources quoted Lopez. Guevarra said the three government agencies in the Task Force Boracay have been asked to write a more detailed explanation to justify their proposal to totally close Boracay beginning April 26, 2018. The three government agencies are the departments of Environment and Natural Resources (DENR), of Interior and Local Government (DILG), and of Tourism (DOT). “We received the recommendation, a short letter with the very short content from the DENR, the DILG as well, and the DOT recommending that closure of Boracay starting on April 26, and, of course, six months thereafter. But we have requested—the Office of the President through the Executive Secretary’s office—has requested the three agencies to submit a more detailed memo on the justification or if there is any qualification at all to their recommendation, and I think today, we’ll be receiving those memoranda expanding, explaining and justifying their recommendation.” The interagency task force has also recommended that a state of calamity be declared on Boracay to allow national government agencies

to take over and fast-track the rehabilitation of the island. Guevarra said that, under a state of calamity, “affected people may avail themselves of calamity loans and so forth and so on, to tide themselves over.” He added that the Office of the Executive Secretary (OES) will review all these memos before making its own recommendation to Duterte. The OES, Guevarra said, will ensure that businesses on the island will be given enough time to prepare for the closure. He also said the government will likely “tap the DSWD [Department of Social Welfare and Development] for some interim relief measures [for workers to be affected by the closure], or the DOLE [Department of Labor and Employment] to help them find employment elsewhere, on some other islands or resorts perhaps, while the cleanup is going on.” He assured the media that Duterte is a “reasonable man and for that reason, I guess, he will be able to consider other points of view, as well.” The Boracay issue, he noted, is “our top priority this week,” indicating that the OES will make its recommendation to the President urgently.

Guevarra added the legal basis for closing the island is the government’s “exercise of police power. Of course, our environmental laws also play a role.... [if there are really] violations of some environmental rules and regulations.»

PCCI Boracay’s stand

The Philippine Chamber of Commerce and Industry’s (PCCI) Boracay chapter is looking at a 12- to 18-month time frame for the government to completely address the island’s problems. In a news statement issued over the weekend, PCCI’s national leadership also offered a “win-win” solution to restoring the popular resort island’s pristine quality by implementing a “three-phased geographic closure.” Samie Lim, PCCI director for tourism, suggested closing only one point of entry at a time to gradually restore the island, noting the three possible major entry and exit points to and from Boracay: the Cagban jetty port, which serves as Boracay’s main entry and exit point during most of the year; at Punta Bunga near Shangri-La Resort and Spa, which faces Sulu Sea; and the one near Lapuz Lapuz Beach, which

faces Sibuyan Sea. He said this way, the rehabilitation would “minimize the impact on the economic well-being of the various stakeholders—from airlines to travel agencies, hotels, restaurants and other tourist establishments—and the 17,000 direct employees in the travel and hospitality industry.” PCCI is the largest umbrella organization of more than 35,000 enterprises in the country. The group “has been helping develop Boracay as a world-class destination” for the past 12 years, it said. In separate news statement, the PCCI Boracay chapter, led by its President Elena Brugger, said they didn’t see how “all the [island’s] problems can be fixed and solved within six months. We are hoping that there will be a detailed action plan for the next 12 to 18 months, where the most urgent matters are tackled first.” The Boracay chapter also proposed that the government immediately “cut off and close violators.” Since the DENR has already issued notices of violations of the Clean Water Act and show-cause orders to numerous establishments, the PCCI Boracay said: “It should not

Govt doubts EO will end ‘endo’ scheme

establishments in the Philippines... We only have 570 [inspectors],” Bello said during a press conference on Monday at the Department of Labor and Employment (DOLE) main office in Intramuros, Manila. He said they requested for additional budget so they can hire an additional 2,000 labor inspectors to address this problem, but the plea was turned down by Congress. The DOLE is currently augmenting its limited pool of labor inspectors by designating members of the labor groups, employer organizations and other labor stakeholders as deputized inspectors. Bello issued the statement w it h t he e x p e c t e d me e t i n g

between President Duterte and labor groups this month on the contractualization EO. “Last time I talked to the President, he said there will be a meeting with labor groups before Holy Week or immediately after Holy Week. So anytime now,” Bello said. “Maybe during the meeting it will already be signed.” As of Monday, the Federation of Free Workers (FFW), one of the participants in Duterte’s previous meetings with labor groups, said it has yet to receive the schedule for the said meeting. “Until now, we are still waiting for the final date of the meeting,” FFW President Sonny G. Matula said. Once implemented, the EO is

anticipated to help in significantly reducing the number of local contractual workers, which the DOLE estimates may comprise 30 percent to 40 percent of the country’s 40 million work force. Among the salient points of the draft EO is a provision enabling the National Tripartite Industrial Peace Council to decide which positions could be contracted out. It is part of the DOLE’s ongoing drive against the prevalence of contractualization. Since the DOLE initiated the campaign, over 130,000 contractual workers were regularized. The DOLE is targeting to regularize 300,000 contractual workers this year.

Senior Deputy Executive Secretary Menardo Guevarra admitted this in a media briefing, noting that it’s up to the legislative branch to act on the substantial amendments on the end to contractualization. Guevarra noted that for a total ban on contractualization to take place, a law is needed to repeal or amend that particular provision on the Labor Code. “An executive order is meant only to supplement, all right, or to, you know, give the details, implementing details, of what the law provides. But it cannot add or subtract or substantially alter what the law provides. That’s really more for Congress to do. So, I hope you will understand the limitations of an

executive order,” Guevarra said. If ever a contractualization EO is issued by the Office of the President, Guevarra said it would just be more on the strict enforcement of the existing provisions of the law. “Because an executive order cannot alter what the law provides. So what the law provides strictly will be implemented under that EO. If there were more safeguards that need to be put in place, that will be done under an EO,” he said. There were three draft proposals currently being harmonized under one EO. These proposals are from the labor groups, the DOLE and the Office of the President. Asked on how the EO would be different from the existing DOLE orders calling for stricter regulations for contractual laborers, Guevarra said there’s not much difference. “Because the substantial provision, they can’t do much about it. They can only do something about implementation, strict implementation of what we already have,” he said. Labor groups have

be difficult for the DENR and the two water/sewage companies to shut down the water supply to these establishments. Without water supply, there would be no wastewater to discharge. Doing this should result in an immediate and drastic drop in the level of pollutants on the island.” The two water and sewage systems on the island are Boracay Island Water Corp., majority owned by the Ayala Group, and MacroAsia Corp.’s Boracay Tubi Systems Inc. PCCI Boracay noted the current widening of the main road on the island, and that resorts have already been addressing their respective easement violations. It said “with proper traffic management and detailed planning, there is no need to close the road or even the island. It may be necessary to eventually close certain portions, but we are ready to cooperate completely. A wider road means that infrastructure work can be easier done than with the previous narrow road.” The Boracay group stressed that its members follow all environmental laws, and had, in fact, “created the first materials recovery facility on the island and always tried to work closely with the DENR.

Continued from a1

long been hoping to put a stop to contractualization in the country, pinning their hopes on the President’s campaign promise that he will put an end to it. However, after several meetings with the President, an EO has not been signed still. Guevarra denied that they are already putting a death sentence to what has long been advocated by labor groups. “Not a death sentence. The Executive can make that, you know, an initiative—can have the initiative in making that proposal and pushing for it in Congress,” he said. Pressed on whether they have already spoken with leaders in the House and Senate on how to deal with this issue, Guevarra said they have not done it yet, as they are still trying to their best to come up with an EO that can be acceptable to the labor sector. “That is where our priority is; if the labor sector is still unhappy with an EO that we can come up with, then that’s the time that we’ll probably do our consultations with Congress,” he said.

PCC ready to flag down Uber-Grab merger if… Continued from A12

a sign of the parties’ willingness to comply with the provisions of the Philippine Competition Act, including ensuring real competition among ride-hailing options and promoting the welfare of the riding public,” Balisacan said. If the transaction is notifiable, Grab and Uber are not allowed to consummate the deal without the PCC’s approval. If the transaction does not meet the threshold and is not notifiable, the parties are not so precluded. However, Grab and Uber are urged to allow a voluntary review to take its course before consummating to minimize the need to unscramble the deal if found to have anticompetition concerns, Balisacan added. The new threshold for transactions that require notification is now set at P2 billion for size of transaction and P5 billion for size of party. Notification to the competition watchdog should be

made within 30 days after signing of the definitive agreement. “Should anticompetitive concerns arise out of the transaction review, the parties may propose commitments to remedy, mitigate or present the negative effects to competition in the market after the acquisition,” Balisacan noted. The BusinessMirror attempted to book for an Uber ride in Manila on Monday night, but miserably failed due to the lack of drivers on the road. Grab has been aggressive in taking in the drivers of Uber in its system, deploying a mobile office in Libis last week. The driver center will be available until April 7. Uber is expected to exit the Philippines on April 8. LTFRB Board Member Aileen B. Lizada has said that there are at least five companies eyeing to launch transport network company services in the Philippines, namely: Lag Go, Owto, Hype, Hirna and Micab.

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Bongbong notes ‘irregularities’ in first day of VP vote recount By Joel R. San Juan @jrsanjuan1573

ET ba l lots and missing audit logs of ballot boxes were among the “irregularities” observed by the camp of former senator Ferdinand “Bongbong” Marcos Jr. at the start of the recount for the vice presidential post on Monday. Marcos, at a news briefing, noted that ballots from four clustered precincts in Batos, Camarines Sur have recently been wet. He said these ballots could not have stayed wet considering that it’s been two years since the 2016 national and local elections were held. “We can’t understand how, but I think’s it is impossible the ballots have been wet for two years,” Marcos said. He added that the Presidential Electoral Tribunal (PET) should look deeper into these ballots, because it would indicate that someone opened the ballot boxes. Likewise, Marcos also noted that 39 out of the 40 total clustered precincts in Bato do not have audit logs. The audit logs, according to Marcos, contain the record of the times the precinct opened, closed and the time the votes were cast Marcos admitted that his camp is concerned about votes that came in

the late evening of May 9, 2016, and early morning of May 10, 2016. He said the Commission on Elections (Comelec) is to be blamed for the missing audit logs, since they have in their possession the ballot boxes. “We’re going to have to find a way to recover those audit logs somehow. Since we are using computers, maybe its possible that those audit logs are in the database,” the former senator said. Marcos filed the protest on June 29, 2016, claiming that the camp of Vice President Maria Leonor G. Robredo cheated in the automated polls in May that year. In his protest, Marcos contested the results from 132,446 precincts in 39,221 clusters, covering 27 provinces and cities. Robredo won the vice presidential race in the May 2016 polls, with 14,418,817 votes or 263,473 more than Marcos’s 14,155,344 votes. Meanwhile, Robredo’s legal counsel Romulo Macalintal dismissed Marcos’s insinuation that the wet ballots and missing audit logs indicate irregularities in the 2016 vice presidential race. Macalintal said the ballots got wet during a typhoon sometime in December. “I think Mr. Marcos should consult his representatives when the ballots were retrieved. Maybe he failed to read their report or they

hid the truth from him about the condition of the ballots,” Macalintal said. The wet ballots, according to Macalintal, are also “immaterial” considering the existence of ballot images. “That is the beauty of an automated election. Because for every ballot cast, there is corresponding ballot image, corresponding picture of the ballot,” he stated. With regard to the missing audit logs, Macalintal said Marcos should not make a big deal out of it since he can request a copy of the same from the Supreme Court or to the Comelec. “It’s not a problem. If the ballot boxes have no audit logs it does not mean that there is an anomaly. The best evidence in the recount or revision are the balots,” Macalintal said. “The credibility of the ballots will remain,” he added. Under the 2010 PET Rules, the revision shall be limited to three pilot provinces, as selected by the protestant. Marcos had selected Camarines Sur, Iloilo and Negros Oriental as pilot provinces. This covers a total of 5,418 clustered precincts. The results of the revision of the pilot provinces shall thereafter determine whether the instant protest will proceed with the remaining 31,047 protested clustered precincts, again following Rule 65 of the 2010 PET Rules.

Prosecutors defend fellow prosecutors

EMBERS of the State Prosecutors and Prosecution Attorneys Association Inc. (SPPAAI) on Monday came to the defense of their colleagues who came under fire for dismissing the illegal-drugs trade charges filed against businessman Peter Lim, self-confessed drug lord Kerwin Espinosa and several others. In a news statement read by SPPAAI President State Prosecutor Jolly de Claro-Mendoza during the flag ceremony at the Department of Justice (DOJ), the group branded as “reckless and malicious” the call of the Presidential Anti-Crime Commission (PACC) for President Duterte to place under preventive suspension and to file administrative charges against Assistant State Prosecutor Michael John Humarang, OIC-Senior Deputy State Prosecutor Rassendel Rex Gingoyon, Acting Prosecutor General Jorge Catalan, as

well as the conduct of a lifestyle check on former Assistant State Prosecutor and now Regional Trial Court in Lucena Judge Aristotle Reyes. “As prosecutors, we are bound to decide each case based on the evidence presented before us. We can neither take popular opinion nor public outcry as ground for filing a case or dismissing a complaint,” the group said. “Evidence submitted is the essential consideration that all prosecutors weigh in every case that we resolve. Thus, the classic image of Lady Justice with a blindfold, a balance and a sword: the evidence tilts the scales as she remains unbiased in rendering a decision, regardless of public opinion,” the statement added. The group said it is supporting the decision of their colleagues to stand by their resolution dismissing the case. “We espouse their resolve and

stand by them as testament to upholding the rule of law and in truly prosecuting crimes without fear or favor,” the group said. Humarang and Reyes earlier said the PACC’s recommendation was “premature,” considering that their resolution is still subject for review by the Office of the Justice Secretary. “We’re just doing our sworn duty and we are ready to face the allegations against us,” Humarang and Reyes said. The two maintained that they followed the law and the rules when they conducted the preliminary investigation. Justice Secretary Vitaliano N. Aguirre II has also apologized for ordering the National Bureau of Investigation (NBI) to investigate them. But Aguirre said an investigation was necessary in order to clear their names of malicious allegations. Joel R. San Juan

Group criticizes result of House probe on PSAs

consumer welfare group has expressed disgust over the results of a Lower House investigation into seven multitrillion-peso power supply agreements (PSAs) of Manila Electric Co. (Meralco), which, the group said, is mired in controversies for their alleged “onerous terms.” Rodolfo Javellana Jr., president of the United Filipino Consumers and Commuters (UFCC), described the results of the congressional investigation as “a whitewash designed to justify the Energy Regulatory Commission’s [ERC] approval of the onerous and expensive Meralco PSAs.” “The House inquiry earlier uncovered ERC irregularities that favored the Meralco PSAs. In fact, four of the five-man en banc body of the ERC had been suspended for bending their rules to accommodate the Meralco PSAs. Yet, the results of the House investigation completely ignored all these findings,” Javellana said. “The House report’s silence about alleged ERC corruption and its link to the ERC’s decision to accept the Meralco PSAs past deadline is highly suspicious,” the UFCC head added. “Meralco and the ERC will use this shameless whitewash of the

House probe to wrap a fake cloak of legitimacy in approving these PSAs,” Javellana warned. He added, “Unless the PSAs are stopped, the cost of these contracts, including hundreds of billions of pesos in embedded overprice, will be passed on to millions of Meralco customers for the next 20 to 21 years. “The two House committees that investigated the ERC and the Meralco PSAs betrayed the interest of consumers. Instead of pursuing their original vow to probe the ERC’s unwarranted favors to Meralco, our honorable congressmen adopted a subservient posture toward the ERC,” Javellana noted. “The congressmen showed their subservience to the ERC when they concluded in their report that they ‘defer to the jurisdiction of the ERC’ on the matter of the Meralco PSAs. The congressmen, likewise, manifested their bias toward Meralco when they urged the ERC ‘to immediately resolve the seven [PSAs] of Meralco,’” he said. “To hide their bias toward Meralco, the committee report provided that resolving the PSAs must comply with laws, rules and regulations and undergo hearings,” Javellana added. “But if only the ERC complied

with its own rules, these PSAs should not have been accepted by the ERC in the first place precisely for failing to comply with the ERC’s very own competitive selection process [CSP],” he said. CSP, an ERC policy in the middle of the Meralco controversy, requires distribution utilities like Meralco to get two offers for supply of electricity before awarding a PSA in order to get the least cost of electricity for consumers. But the ERC’s decision to suspend the CSP’s implementation for several months allowed Meralco to file at the last minute the applications for PSAs that the distribution utility awarded without bidding to generation companies, six of them either Meralco’s own subsidiaries, sister companies or affiliates. “We at UFCC remain convinced that if these Meralco PSAs undergo CSP, consumers can enjoy considerable savings on the cost of electricity. But Meralco does not want to bid out these PSAs through CSP because that would force them to lower charges to compete with nonaffiliated gencos [generation companies]. This would mean lower profits for Meralco and its gencos; or worse, possible loss of their gencos during the rebidding,” Javellana said.

Editor: Vittorio V. Vitug • Tuesday, April 3, 2018 A3

Marines stick to their guns in bid for ‘independence’

By Rene Acosta

@reneacostaBM

he Philippine Marines has not given up on its bid of being transformed into a separate fighting force of the Armed Forces of the Philippines (AFP), and cut its umbilical cord from the Philippine Navy, which is its mother unit, although the idea had been shot down earlier by Defense Secretary Delfin N. Lorenzana. “Every Marine personnel is in favor, however…whatever is its outcome, we will always obey the chain of command,” said Marine Commandant Maj. Gen. Alvin Parreño on Monday, adding the “separation” has no other intention, but to further improve the Marines as a unit. “This is the clamor of every Marine deployed in many areas, and I, as their representative, it is my duty to express the sentiment of men under me. Lest, I will be remiss of my duty, in my obligation as their representative in their looking out for the welfare of the men and for the accomplishment of their mission,” the Marine commandant said. The idea to detach the Marines from the Navy and count it as a separate armed service in the AFP, which is being supported and pushed by the current leadership of the Marines, had originated in the House of Representatives through Speaker Pantaleon D. Alvarez, a

reserve Marine colonel. While Parreño said that President Duterte, Lorenzana and the military leadership were addressing the “issues and concerns” of the Marines, they still have some questions on matters related to budgetary requirement. “Our first concern is personnel and equipment that are needed in order to cope with the prevailing situation and the threats that may arise… those are our first concern because the people in the front line are in need of those equipment,” he said. “We do not intend to compete with the Philippine Army, Philippine Air Force and Navy. We just want our troops, our table of organization to be filled up. The other branch of service, they may have other things, missions to do, but we also believe that we have some task to perform also in operations, especially in terms of, you know, we have built this expertise, 67 years of experience in

amphibious operation and then the culture that we have as members of Philippine Marine Corps, and the doctrine is very important to all of us,” Parreño added. Lorenzana is opposed to the separation of the Marines from the Navy, saying the Marines is basically a ground force and, as such, making it a separate service “doing the same functions as the Army will mean there will be two ground forces in the country.” “The Philippine Marine Corps claims that they have particular skills like ship-to-shore operations. The Philippine Army could easily learn these skills,” he said. “The Marines are expeditionary forces. In other countries like the US, their Marines, upon which we patterned ours, are utilized for overseas deployment. That is also true with the Royal Marines of the UK. Both units are invasion forces embedded with their navies. The Philippines, on the other hand, will not be invading foreign shores anytime soon or ever,” he added. Lorenzana also said that, when the Marines was created in 1950 by an AFP general headquarters order, “it was designed as a light, hard striking force to pursue, pirates and smugglers. It was originally part of the Philippine Naval Patrol, which was the forerunner of the Philippine Fleet.” He added: In short, “The Philippine Marines was created as an adjunct of the Philippine Navy and it was envisioned as a small force only.” Parreño assured that, while the Marines may become a separate branch of service, it will see to it that the “umbilical cord is always there.”

Economy

A4 Tuesday, April 3, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

www.businessmirror.com.ph

Power rate hike likely in April amid spot-market price spike

By Lenie Lectura

@llectura

lectricity rates this month are expected to go up, mainly due to a spike in spot-market prices, according to the Manila Electric Co. (Meralco).

“There are very strong indications that spot-market prices will register significant increases this March, which would be reflected in the April generation charge,” Meralco Utility Head for Economics Lawrence Fernandez said. Meralco is expected to announce April power rates next week. Fer nandez added t hat t he March supply month star ted with a “yellow alert” due to a constraint on the supply of Malampaya natural gas, which, in turn, forced some gas-fired plants to

reduce output or go on forced outage. A yellow alert means there are not enough reserves to cover the largest-running generating unit at the time, but does not necessarily lead to power outages. One unit of the Malaya power plant was reactivated from February 26 to March 1, again from March 5 to 10 and once again from March 12 to 14. These incidents signaled the need to add to the reserves in the Luzon grid. “As a result, we have observed

daily average prices in the spot market stay above P5.50 per kilowatt-hour [kWh] in the first two weeks of the supply month, even spiking to P8 per kWh several times,” Fernandez said. The Wholesale Electricity Spot Market (WESM) is the centralized venue for buyers and sellers to trade electricity as a commodity where prices are based on actual use, or demand, and availability, or supply. “We hope the supply situation improves in the rest of the supply month to help mitigate the potential impact on the April generation charge,” he added. Last month electricity rates increased by P0.97 per kW h. However, only an P0.85 per kWh increase was implemented in order to cushion the impact of the higher electricity rates on consumers. The remaining P0.12 per kWh will be reflected in the April bill, Meralco said. The adjustment brought the

overall rate to P10.32 per kWh from February’s P9.47 per kWh, equivalent to an increase of P170 in the bill of a residential customer consuming 200 kWh. O f t he P 0.74 24 p e r kW h increase in t he generat ion charge, Meralco said it impleme nte d a n i nc re a se of on ly P0.6414 per kWh in March. The

difference would be implemented in the April billing. From P4.6548 per kWh in February, the generation charge for March was P5.2962 per kWh. Contributing to the generationcharge increase in March were higher charges from the WESM, which increased by P1.4441 per kWh, because of tighter supply

There are very strong indications that spot market prices will register significant increases this March, which would be reflected in the April generation charge…As a result, we have observed daily average prices in the spot market stay above P5.50 per kWh in the first two weeks of the supply month, even spiking to P8 per kWh several times.”—Fernandez

conditions in Luzon. The demand for power in the grid grew by around 366 megawatts in February due to warmer temperatures, while around 1,000 MW of generating capacity went on scheduled maintenance outage. The share of WESM purchases to Meralco’s total requirement this month was 19 percent. Cost of power from Independent Power Producers (IPP) also increased by P0.2814 per kWh due to the annua l scheduled maintenance outage of Quezon Power for the whole February supply month and continued depreciation of the peso. The share of IPP purchases to Meralco’s total requirement this month was 35 percent. Me a nw h i le, c h a r ge s f rom p l a nt s u n d e r p o w e r - s u p p l y agreements (PSA) decreased by P0.3634 per kWh due to improved average plant dispatch. PSAs provided 46 percent of Meralco’s total energy requirement.

Farm-gate price of unmilled rice rises 11-week high at ₧20.40/kg By Jasper Emmanuel Y. Arcalas @jearcalas

he average far m-gate pr ice of u n m i l le d r ice has inched closer to P21 per kilogram price level as the commodity rose to an 11-week high of P20.40 per kg quotation, latest preliminary data released by the Philippine Statistics Au-

thority (PSA) showed. In its weekly price monitoring report, the PSA said the average farm-gate price of palay as of third week of March rose 0.34 percent, from P20.33 per kilogram quotation recorded in the previous week. “Moreover, it was higher by 9.74 percent compared to the same per iod in the prev ious

year,” the PSA said in its report published on Monday. For the March 14 to 20 period, the PSA said the highest average farm-gate price of palay was recorded in Davao del Sur at P24 per kilogram. Meanwhile, the lowest price quotation of palay was recorded in Compostela Valley at P17.50 per kilogram.

Meanwhile, the retail prices of well-milled rice and regularmilled rice during the reference period rose also to an 11-week high of P43.42 and P39.68 quotations, respectively. T he fig ures were 0.09 percent and 0.08 percent higher t h a n t h e i r p r e v i o u s w e e k ’s pr ice levels, respectively. T he ret a i l pr ices of we l l-

milled rice and regular-milled rice as of March third week were also 4.70 percent and 7.38 percent higher than their quotations recorded same time period last year, respectively. “ R e l at ive to t he pre v iou s week ’s level of P40.64 per kg, the average wholesale price of well- milled rice at P40.71 per kg picked up by 0.17 percent dur-

ing the week. Similarly, it rose by 5.77 percent, from a year ago quotation of P38.49 per kg,” the PSA said in the report. “The average wholesale price of regular-milled rice at P37.11 per kg went up by 0.13 percent, from previous week’s quotation. It also recorded an uptick of 7.38 percent, from a year-ago price level of P34.56 per kg,” it added.

SoKor firm proposes Port Irene modernization at no cost to govt

Secretary Raul L. Lambino (first row, left), administrator and CEO of the Cagayan Economic Zone Authority, recently sealed the memorandum of understanding with Kim Myung-hwan (right), president of the Fairbridge Overseas Development-Philippines Inc., to undertake the expansion and modernization of Port Irene in Santa Ana, Cagayan, to dredge its harbor and reinforce its pier, which would allow large and cruise vessels to dock. JOSEPH MUEGO

South Korean company, through its Philippine subsidiary, has offered to undertake the expansion and modernization of Port Irene in Santa Ana, Cagayan, in a proposal to dredge the port’s harbor and reinforce its pier that would allow large cargo and cruise vessels to dock. Secretary Raul L. Lambino, administrator and CEO of the Cagayan Economic Zone Authority (Ceza), said the proposed expansion and modernization would be undertaken by Fairbridge Overseas Development-Philippines Inc., or Fodpi, the local subsidiary of a South Korean firm of the same name. “This is a breakthrough proposal, for it is at no cost to the government,” Lambino said in news statement issued on Monday. “It will mark the beginning of the development of Port Irene to its full potential,” he added. Lambino and Fodpi President Kim Myung-hwan have signed a memorandum of understanding

(MOU) recently setting the scope of the project. Port Irene, located in Cagayan’s northernmost tip along the Northern Pacific’s major international shipping lanes, is the jewel of the Cagayan Economic Zone and Freeport, but poor port conditions and inadequate infrastructure have set back its development. The proposed modernization includes the dredging of the navigational channel, upgrading of existing piers and wharves and reinforcing the 1-kilometer concrete breakwater and repairing its stormdamaged portions. Under the MOU, Fairbridge would get the sea sand dredged from the harbor and its periphery and use the harbor for its business. Fairbridge planned to contract local labor for the manufacture of building materials made out of sea sand for its mass-housing project and for the importation and local sale of the product.

Since taking over as Ceza chief in July last year, Lambino has eyed the rehabilitation of Port Irene as the “key in realizing the freeport’s potential as a regional transhipment hub for goods in East Asia and the Northern Pacific.” He had noted in his transition report that Port Irene has not operated at full capacity because its harbor is shallow and narrow. Lambino earlier announced that Ceza had already finished the upgrades required by the Civilian Aviation Authority of the Philippines on the Cagayan North International Airport (CNIA) in Lal-lo, 45 minutes by car southwest of Port Irene. CNIA received a few days ago its first commercial flight from Macau, a 100-seater Royal Air aircraft, and is expected to go into full operation next month. A narrow-bodied aircraft like the A320 and B737 can now land on CNIA’s 2.1-kilometer runway.

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Editor: Jun B. Vallecera • Tuesday, April 3, 2018

Moody’s dismisses growth fears

he global credit watcher Moody’s Investors Service has ruled out the likelihood of the local economy from potentially overheating, saying current inflationary pressures, while trending at years high, are only transitory. In a statement issued on Monday, the credit watcher clearly said overheating risks in the Philippines are “not yet material.” Moody’s rates the Philippines a “Baa2” stable and has

declared it one of the fastest-growing economies in Asia Pacific and the second fastest among “Baa”-rated sovereigns. “Our view is based on expecta-

tions that current inf lationary pressures are in part due to transitory factors, infrastructure investment and favorable demographics will lift potential growth to meet rapid demand growth and the external position will remain roughly balanced,” Moody’s said. The credit watcher further said that, while higher prices for food and nonalcoholic beverages pushed inflation higher in recent months, risks of a significant rise in inflation in the near term remains contained. “Trends in core inflation and

wage growth suggest the presence of slack in labor markets and the absence of imminent capacity constraints that would indicate more structural inflationary pressures,” Moody’s said. Also, over the past year, the credit watcher said both domestic and foreign demand boosted economic activity, which then helped absorbed spare capacity. “Medium term, an increasing working-age population, rising productivity and better infrastructure will lift long-term potential output and mitigate overheating risks,” Moody’s added.

Lender tool allows MSMEs to optimize operations By Rizal Raoul S. Reyes @brownindio

oosting the capabilities of the countr y’s micro, small and medium enterprises (MSMEs) has gotten a big lift when Union Bank of the Philippines recently introduced UnionBank GlobalLinker, an innovative but freely available platform designed to grow the sector’s network and operational capacity. “We are strongly committed to empowering MSMEs in the Philippines by providing business solutions and other opportunities that meet their needs. Now we are going a step further through UnionBank GlobalLinker, an innovative digital platform that helps entrepreneurs efficiently manage their businesses,” said UnionBank Vice President and UnionBank GlobalLinker Lead P roponent D i no N. Ve l a sco. “When MSMEs have access to this digital platform, it won’t be long before they find themselves in the global scene.” He said the bank’s latest offer i ng w i l l prov ide MSME s, which make up 99.57 percent of Philippine establishments, with the tools and resources to scale up, go global and contribute to

nationwide growth. T he move to empower the MSMEs started through its UREKA Forum—the lead social-responsibility project of the bank, which was able to convert 1,500 MSMEs into digital commerce. MSMEs were given opportunities to learn from i ndu s t r y g i a nt s , ju mp - s t a r t their digitization and convert their brick-and-mortar business model into brick-and-click. By using the Network feature, Velasco said MSME owners can link with other business owners who may be their potential supplier, partner or customer. They may find suppliers of products and services that can help their business. The Biz Forum, meanwhile contains news, articles and discussions on industry developments enabling users to stay up to date and share insights with others. The UnionBank GlobalLinker’s LINKER.store allows a user to put up a personalized e-commerce store for free. In just a few steps, entrepreneurs can build an online store that come with inventorymanagement and data-analysis tools, which can help make smarter data-driven decisions. Velasco said the initial challenge of entrepreneurs is to pur-

sue the digital road map followed by determining the efficiency of the solutions or tools to be used in their operations. “ That is why we made UnionBank GlobalLinker that single destination where they can be productive in the way they interact with colleagues and make use of online business solutions,” Velasco said. When companies enroll in the platform, they get a storage service called eBriefcase, where they can

upload word files, spreadsheets and slides. These files can be shared between users of the platform. Members can enjoy up to 1GB of free space, while companies have an overall cap of 4GB. UnionBank GlobalLinker also has a built-in calendar that helps users set meetings. T he calendar lets users v iew the availability of their links and set recurring weekly or monthly meetings.

Case clippings

By Justice S J Ranada Jr. DUE PROCESS–administrative/judicial sense Administrative due process cannot be fully equated with due process in its strict judicial sense, for in the former a formal or trial-type hearing is not always necessary, and technical rules of procedure are not strictly applied. The essence of due process is to be heard. In administrative proceedings, due process entails a fair and reasonable opportunity to explain one’s side, or an opportunity to seek a reconsideration of the ruling complained of. Sibayan v. Alba 17 Jan. 2018

GR 233395 Velasco, J

The ever-changing banking environment

t is generally agreed that in the years 2000 to 2007 the banks focused the most on growth, on increasing volume and profits. The gut-wrenching global crisis immediately following that evoked a morbid rea l i zat ion that change is the only permanent thing in the world, and that change is always stressful. Pronto, the banks had to undertake reforms touching on capitalization, more intensive risk management attention and better corporate governance. Almost parallel to that came rapid change engulfing the banking industry. These include disruptions in the use of technology and the rise of virtual currencies. Then came the challenge and the opportunity presented by the evolving Asean integration and the interaction between inflation and interest rate. But necessity, as they say, is the mother of invention. The banking customer has transformed into a fast-paced entity with little time and patience to spend inside banks. He has also become more demanding: wants connectivity, a here-and-now relationship with banks and is a mobile lot. Digitization provided the answer. Late-2017 the Bangko Sentral ng Pilipinas (BSP) also established the National Retail Payment System that could lead to the digitization of 20 percent of the total retail transactions in the

Finex free enterprise Zoilo ‘Bingo’ Dejaresco III country. Heretofore, 99 percent of payment transactions have been through the traditional cash and check method. This year the BSP will implement i nt rapay autom ated clear ing, which w il l be good for e-commerce with real-time, lo w - v a lu e pu s h e l e c t ron ic s . T he Securities and Exchange Commission-registered Philippi ne Pay ment s M a n a gement Inc. will begin operations this year. It a self-governing body designed to put order to the retail payment system. On ly about 4 0 percent of the population own deposit accounts. The rest would likely end up denied the lending facilities of the banks. Heretofore, loans were approved on the basis of audited financial statements or anchored on salary-based decisions even as the underground economy remains robust but under-the-surface. For this incongruence, the BSP supports a biometric-based identification system and may open up new lending markets. Virtual currencies will continue to attract the attention of the BSP. While they facilitate and lower the cost of fund trans-

fers, they can be used for moneylaundering activities and lead to pyramid types of investments. Its main character, the Bitcoin, has increased its transactions threefold in the recent past and the BSP likely forced to make a Solomonic decision on what to do with this runaway train. The year 2017 was a year replete with fraud, mainly cyberbased. The BSP is thus arming banks with technology training of best practices to combat this modern-menace the right way. On the other hand, the Asean Integration continues to present opportunities for expansion and problems from the competition as expected. Internally, banks have suffered losses due to the intervention of man rather than a weak system and from sweetheart deals involving loans and asset sales. The BSP has boosted the risk-management capability and the good-governance profile of banks. Reviews are done regularly to measure the various risks of banks. The BSP has trained banks intensely in matters touching on risk-based supervision. More and better qualified independent directors are now required in banks to ensure responsible bank behavior against known international standards. Fortunately, the Philippine banking system, though not the biggest has remained one of the strongest in the region—thanks to a very proactive management

policy of the BSP. Past due loan levels have been managed well with strengthened banking surveillance systems and enhanced analytical tools to timely identify financial-stability risks.” Moreover, the banking industry has been more than compliant with respect to capitalization based on Basel II global standards. From the nationalist view, the banks with much liquidity and stability is in a position to make a difference and contribute to the financial inclusion of the many who are less privileged, and enable them to step in cadence with the nation’s healthy GDP growth. It is not helped, however, by credit allocation mandates, such as the agri-agra law that orders banks to parcel out a fixed percentage of their total loan portfolio to help agriculture— a n a mou nt t h at fa r e xceed s the total productive financial requirements of the industry. But thankfully, our banks always resurface time and again no matter the ebb and flow of the economy and the adoption of wrong policies. Dejaresco, a former banker, is a financial consultant, media practitioner and book author. He is a Finex Lifetime Member and chairman of Broadcast Media. His views here, however, are personal and do not necessarily reflect those of Finex. dejarescobingo@yahoo.com

The strong credit growth, which could foretell overheating, also should not be taken to indicate trouble down the line. “Credit growth, while still faster than nominal GDP growth, has moderated and been more balanced economy-wide, rather than concentrated in sectors

prone to overheating,” according to Moody’s. “Banks’ strong capitalization and liquidity, alongside recent Bangko Sentral ng Pilipinas regulations, limit potential risks to the sovereign’s credit quality were nonperforming loans to materialize,” Moody’s said. Bianca Cuaresma

The World BusinessMirror

A6 Tuesday, April 3, 2018 • Editor: Lyn Resurreccion

Kim Jong Un mingles with K-pop stars in overture to South Korea

orth Korea has threatened to go to war over broadcasts across its militarized border that included the K-pop songs of South Korean bands like Red Velvet. However, last Sunday, Kim Jong Un was clapping along and posing for pictures with the music group. Kim’s surprise appearance at a rare pop concert in Pyongyang was the North Korean leader’s latest diplomatic overture as he prepares for an unprecedented potential meeting with US President Donald J. Trump next month. Kim first plans to hold a rare summit with South Korean President Moon Jae-in, who has pursued reconciliation with North Korea to avert war over the regime’s nuclear weapons program. After listening to the band belt out dance tunes including “Red Flavor” and “Bad Boy” to about 1,500 members of the North Korean elite at the East Pyongyang Grand Theater, Kim called for a similar performance in Seoul later this year. “I understand people were curious to see if I would come to see Red Velvet’s performance,” Kim said, calling the show a “present” to North Korea’s citizens. After a similar attempt at K-pop diplomacy received a frosty reception 15 years ago, Red Velvet’s members expressed surprise at the welcome they received from the North Korean spectators, who waved their hands and sang along to the songs. South Korea has in recent years added K-pop to its propaganda broadcasts across the demilitarized zone, a practice that has prompted threats of military action by North Korea.

China trip

Kim’s appearance comes a week after he shook up the Asian diplomatic landscape with an unexpected trip to meet Chinese President Xi Jinping in Beijing—his first

overseas trip since taking power in 2011. His planned inter-Korean summit with Moon on April 27 is expected to pave the way for a similar meeting with Trump, who wants Kim to abandon his nuclear weapons. “The whole purpose of cultural exchange is to open the gates for better relations between the North and the South, which have been strained for a decade,” said Kang Dong-wan, a professor at Dong-a University and a leader of the Busan Hana Center, an institute that helps North Korean defectors in the South Korean port city of Busan. “There is a strong political motive to boost the mood ahead of the summit.” Kim met with Red Velvet and other South Korean performers after the show, shaking hands with them and expressing his “deep thanks,” according to the official Korean Central News Agency (KCNA). Kim said he was “deeply moved to see our people sincerely acclaiming the performance, deepening the understanding of the popular art of the south side,” KCNA reported.

Stony stares

When South Korean boy band Shinhwa performed in North Korea in 2003 as part of a similar cultural diplomacy venture, the audience— dressed in suits and traditional dresses—greeted them with silence and stony stares. One of the band members, Eric Mun, told reporters that they looked at the singers “with eyes like shooting lasers,” according to Yonhap. That year, North Korea withdrew from the nuclear Nonproliferation Treaty and threatened to test atomic weapons.

Russia asks chemical weapons agency for answers in spy case

OSCOW—The Russian Foreign Ministry asked the international agency that monitors chemical weapons for information last Sunday about the investigation of the poisoning of a former Russian spy and his daughter in England. A list of questions submitted to the Organization for the Prohibition of Chemical Weapons (OPCW) includes what sort of assistance Britain requested from the watchdog agency and which sampling procedures were used to collect the substance that sickened Sergei Skripal and his daughter, Yulia. OPCW representatives were among a group of experts Britain asked to analyze the chemical agent involved in the poisonings. Britain claims it was the Sovietmanufactured nerve agent Novichok and has said Russia is likely responsible, which Moscow adamantly denies. The Foreign Ministry’s request came on the same day that Russian diplomats and their families returned to Moscow on two planes after being expelled from the United States, part of the international fallout from the March 4 attack on the Skripals. Following a wave of similar expulsions ordered by Britain and numerous allies, the United States

ordered 60 Russian diplomats out of the country. Russian news agencies said the diplomats kicked out of the United States returned on two flights that landed last Sunday at Moscow’s Vnukovo Airport. One carried diplomats from the Russian Embassy in Washington; aboard the other were diplomats from the Russian Consulate in New York and Russia’s United Nations mission. More than two dozen countries and the North Atlantic Treaty Organization have expelled Russian diplomats in support of Britain. Russia has ordered an equal number of most of those countries’ diplomats to leave and for Britain to reduce the staff at its Moscow embassy to the same number that Russia maintains in London. Russia consistently has complained that Britain has not provided evidence to back up its claim of Russian involvement or that the poison that afflicted the Skripals was a Russia-developed nerve agent. The Russian Foreign Ministry also submitted questions to British and French authorities last Saturday. The ministry did not say what actions Russia might take if the parties do not answer the questions or provide partial responses. AP

North Korean leader Kim Jong Un (right) talks to members of the South Korean artistic group, including the South’s pop legends and popular girl band Red Velvet, after their performance in East Pyongyang Grand Theater in Pyongyang, North Korea, on April 1. Korean Central News Agency/Korea News Service via AP

US President George W. Bush had labeled the country a member of the “axis of evil” in 2002. This time around, Kim is seeking to engage the region’s major powers after advances in his nuclear program prompted the United Nations to tighten sanctions and Trump to threaten war. After Kim’s visit to Beijing last week, China said the North Korean leader indicated he was willing to talk with Trump about giving up nuclear weapons. Meanwhile, Kim’s planned summit with Moon on the southern side of the demilitarized zone would make him the first North Korean leader to set foot in South Korea.

Bootleg K-pop

But it’s the shifts in technology since the early-2000s that may be giving this year’s musical extravaganza

I understand people were curious to see if I would come to see Red Velvet’s performance.”—Kim more impact, Dong-a University’s Kang says. K-pop—characterized by its manufactured melodies and slick approach to marketing—has penetrated into North Korea over the past 10 years. Smuggled across the border on USB sticks and bootleg DVDs, K-pop has spread widely among the families of North Korea’s political elite, Kang said. Red Velvet—which performed an invite-only concert at Credit Suisse Group AG’s Asia investment conference last month—is being joined in Pyongyang by South Ko-

rean singer Baek Ji-young and rock band YB. A second show on Tuesday will be a joint performance featuring acts from both Koreas and will take place at a stadium in Pyongyang that can hold 12,000 people. The theme of the joint concert will be “Spring is Coming,” Hwang Seongun, a spokesman for South Korea’s culture ministry said at a briefing in Seoul on March 27. “Spring literally has arrived and it also presents our wishes for spring to come over our relationship between the North and the South.” Bloomberg News

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Thais help boat with Rohingya back to sea

ANGKOK—A boat with 56 people claiming to be Muslim Rohingya refugees from Myanmar was helped back to sea by Thai fishermen and navy craft after being damaged in a storm and stopping temporarily last Sunday in southern Thailand. Adisorn Chormai, a local official in Thailand’s Krabi province, told The Associated Press that those aboard, who moored at an island there, said they were seeking to go to Malaysia when their boat was damaged last Sunday morning. “We found that they have been traveling for about 23 days from Rakhine to escape their situation in Myanmar,” he said. About 700,000 Rohingya have fled western Myanmar’s Rakhine state to neighboring Bangladesh since a brutal counterinsurgency campaign by Myanmar’s army launched after Rohingya militants staged attacks on security forces last August. Rohingya, treated as undesirables in predominantly Buddhist Myanmar, used to flee by sea by the thousands each year. The numbers peaked in 2015, sparking a crackdown on their escape route. The boats also leave from Bangladesh, and their passengers are not always all Rohingya. “I can’t remember the last time we saw such boats. It has been a while,” Adisorn said. “Their boat is a small fishing boat with partial cover,” he said. “There must have been around 20 children on board. They are tired but no one had medical issues or emergencies that needed hospital treatment. They seem to want to keep on going.” Adisorn said Thai villagers supplied them with food and fuel before sending them on their way. Thailand has an official policy of pushing back boat people from its shores. Most Rohingya prefer to head to Malaysia, whose dominant Malay Muslim population makes it a more sympathetic destination. There have also been many cases of Rohingya landing in Thailand being taken by human traffickers and forced into near-slavery, held for ransom or otherwise abused. AP

Trump admin backs PLO in victims’ SC appeal

ASHINGTON—Despite its bumpy relationship with the Palestinians, the Trump administration is siding with the Palestine Liberation Organization (PLO) in urging the Supreme Court to reject an appeal from American victims of terrorist attacks in the Middle East more than a decade ago. The victims are asking the high court to reinstate a $654-million verdict against the PLO and Palestinian Authority in connection with attacks in Israel in 2002 and 2004 that killed 33 people and wounded hundreds more. The case was scheduled to be considered at the justices’ private conference on Thursday. A decision to reject the appeal could come as early as Monday. If the court decides to hear the case, it could say so by the middle of this month. The federal appeals court in New York tossed out the verdict in 2016. It said US courts could not consider lawsuits against foreign-based groups over random attacks that were not aimed at the United States. The victims sued under the AntiTerrorism Act, signed into law in 1992.

The law was passed to open US courts to victims of international terrorism, spurred by the killing of American Leon Klinghoffer during a 1985 terrorist attack aboard the Achille Lauro cruise ship. The victims argued that offices the Palestinians maintain in the nation’s capital to promote their cause in speeches and media appearances and to retain lobbyists were sufficient to allow the lawsuit in an American court. The appeals court disagreed. In late-June the justices asked the administration to weigh in on the case, as they often do in cases with foreign policy implications. The Justice Department filed its brief eight months later, saying there was nothing in the appeals court ruling to “warrant this court’s intervention at this time.” In unusually strong language for a Supreme Court filing, Theodore Olson, the lawyer for the victims, wrote, “The government is not being square with the court.” Olson said the administration was being cagey about its view of the law, even after the lower court cut back on its use

by attack victims to try to hold groups financially liable. If the appeals court decision is left in place, it would close the courthouse door to US victims of “many acts of terrorism overseas in which terrorists maim and kill indiscriminately, without regard to nationality,” Olson said. He pointed to recent attacks in Belgium, Britain, France and Spain as examples. Even Klinghoffer’s relatives would have no case, unless they could prove he was killed because he was American, rather than Jewish, he said. The administration said it is “far from clear” that so many claims would be kept out of court. Democrats and Republicans in both houses of Congress also are calling on the court to take up the victims’ case. “The Trump administration had the opportunity to stand with American victims of terrorism by defending and restoring the law. But it failed to do so. The Supreme Court should not,” Sen. Chuck Grassley, Republican-Iowa, a sponsor of the law, wrote in an essay on medium.com. The jury award in February 2015

came during President Barack Obama’s administration. The Justice Department at that point took no position, but urged the judge to take into account the financial implications for the Palestinian Authority, which could be hurt by enforcement of the judgment against it. A US official wrote in court papers that the United States has provided billions of dollars to strengthen Palestinian institutions, promote security in the West Bank, expand Palestinian economic growth and help create conditions for peace. Since taking office, President Donald J. Trump has infuriated the Palestinians by recognizing Jerusalem as Israel’s capital and announcing plans to move the US Embassy to Jerusalem from Tel Aviv. The Palestinians also have called on the court to reject the appeal. The attacks occurred in and around Jerusalem during a wave of violence, known as the second, or Al-Aqsa, intifada. The jury found the PLO and Palestinian Authority liable for six attacks and awarded $218 million in damages. The award was automatically tripled under the law. AP

French workers’ 2-day strike to disrupt train service

ARIS—France’s national train company is warning that a workers’ strike will disrupt train service within France and elsewhere in Europe on Tuesday and Wednesday. SNCF said in a statement last

Sunday that only 15 percent of high-speed trains and 25 percent of regional trains would be running on April 3 and 4 due to the strike. The company says 1 in 3 trains between France and Germany and

75 percent of Eurostar trains between Paris and London will be operating. Four labor unions have called on rail workers to strike for two days every week until the end of June. They are protesting a govern-

ment plan to prepare SNCF before the service is opened to competition and to end some worker benefits. Thalys trains between France, Belgium and the Netherlands should be running normally. AP

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Tuesday, April 3, 2018

In warning shot to Trump

China slaps tariffs on pork, other US products

he Chinese government hit back on Monday at President Donald J. Trump’s tariffs on steel and aluminum by acting on a threat to put tariffs as high as 25 percent on imports of 128 USmade products, including pork and seamless steel pipes.

The Chinese Ministry of Commerce indicated that the tariffs, which it first publicly suggested almost two weeks ago, were intended to pressure the Trump administration to back down from a simmering trade war. In addition to imposing additional tariffs on steel and aluminum from China and other countries, Trump has threatened to put protective duties on other Chinese-made products worth $60 billion. “ We hope that the United States will rescind its measures that violate World Trade Organization [WTO] rules as quickly as possible,” the ministry said in an online statement about China’s retaliatory tariffs. “China and the United States are the world’s two biggest economies, and coop-

eration is the only correct choice. Both sides should use dialogue and consultation to resolve their mutual concerns.” The Chinese retaliation was no surprise. But Beijing appeared to go a step beyond its initial threat last month to counter the United States’s tariffs on steel and aluminum. The Ministry of Commerce said then that it could impose tariffs in two stages: first, a 15-percent duty on 120 products, including fruit and wine, and then, after further assessing the impact of the US’s tariffs, a 25-percent tariff on eight other products, including pork, an important moneymaker, especially in farming regions in states that voted for Trump. But the latest announcement said the tariffs that will take

effect on Monday covered all 128 products, including the 25 percent charge on pork. The ministry said it had Chinese public opinion on its side after asking for views about the trade measures. Over recent weeks, China’s state-run news media has condemned the Trump administration’s protectionist steps and presented China as the innocent defender of open trade. In fact, China imposes relatively high barriers on many imports and on foreign investment in many sectors. “Many members of the public voiced their support for the measures and the product list through telephone calls, e-mails and other means,” the ministry said. “After an assessment, it was decided to implement the measures described on 128 products imported from the United States.” Trump’s threatened tariffs on $60 billion worth of other Chinese-made products are likely to prompt more retaliation from China, which could single out more valuable US exports, such as soybeans and hurt Apple and other companies that rely heavily on Chinese consumers. Liu He, a Chinese vice premier and economic adviser to President Xi Jinping, told Steven Mnuchin, the US treasury secre-

Imported nuts from the United States are displayed for sale at a supermarket in Beijing on April 2. China raised import duties on US pork, fruit and other products on Monday in an escalating tariff dispute with President Donald J. Trump that companies worry might depress global commerce. AP/Andy Wong

tary, in a phone call just more than a week ago that the two countries should “stay rational and work together to maintain the overall stability of their economic and trade relations.” But Sen. Elizabeth Warren,

Democrat-Massachusetts, who has been visiting Beijing, said last Saturday that Chinese officials she met, including Liu, “have not deviated from their talking points” about the Trump administration’s tariffs.

Trump: ‘No more Daca deal,’ threatens Nafta

ALM BEACH, Florida—President Donald J. Trump, blaming Democrats and the Mexican government for an increasingly “dangerous” flow of unauthorized immigrants, unleashed a series of fiery tweets last Sunday in which he vowed “NO MORE DACA DEAL,” referring to the Deferred Action for Childhood Arrivals program, and threatened to walk away from the North American Free Trade Agreement (Nafta). Minutes after wishing the nation a happy Easter Sunday, Trump denounced “liberal” laws that he said were preventing Border Patrol agents from doing their jobs. He said that Republicans should use the “nuclear option” to sidestep Democratic opposition in the Senate and enact “tough laws NOW.” It was unclear whether the president’s tweets represented any change in his immigration policy, or were just the sort of venting he is known to do after reading a newspaper article or seeing a television program. The president, who spent much of his holiday weekend golfing with supporters and watching television, was apparently reacting to a Fox and Friends segment on immigration that had aired minutes before. Whatever his intention, Trump’s Twitter outburst captured the fickle tendencies that have driven his policy positions on immigration. On the one hand, he has suggested at times that he is open to extending citizenship to millions of unauthorized people. On the other hand, he has denounced those who have entered the country illegally as brutal criminals and raged about lax enforcement that he said had allowed immigrants to pour into the country. In his tweets, Trump referred to “caravans” of immigrants heading north toward the US-Mexico border—a subject that was addressed on the Fox program. A group of hundreds of Central Americans has been traveling through Mexico toward the United States, where some hope to seek asylum or sneak across the border. A reporter for BuzzFeed has been traveling with the group as it makes its way north. As he walked into church in Palm Beach last Sunday morning, Trump did not respond to a question from reporters about whether his tweets meant that he would no longer support any deal for the young immigrants protected by the Daca program. But he said that “Mexico has got to help us at the border, and a lot of people are coming in because they want to take advantage of Daca.” Daca gave protected status to hun-

President Donald J. Trump and first lady Melania Trump at Bethesda-by-the-Sea Church to attend Easter Sunday service, in Palm Beach, Florida, on April 1. Tom Brenner/The New York Times

A true leader preserves and offers hope, doesn’t take hope from innocent children who call America home.”—Kasich dreds of thousands of young immigrants brought to the country illegally as children. The program requires immigrants to have resided in the United States since 2007, meaning any crossing the border now would not be eligible. Trump announced last year that he was ending the program, but courts have blocked his decision. He has said he is open to negotiating with Democrats on it, but has repeatedly backed away from potential deals that he argues do not include immigration changes that are tough enough. Outside the church last Sunday, the president said the Democrats “blew it” after having “had a great chance.” “But we’ll have to take a look,” he added. Several Democrats challenged the idea that they were at fault for a breakdown in negotiations. “‘NO MORE DACA DEAL’?!!” Rep. Keith

Ellison of Minnesota wrote on Twitter. “You were never doing a DACA deal. Your actions gave you away: cancelling DACA with no plan, making racist comments about Black/Brown immigrants, ejecting several by bipartisan deals. You didn’t fool anybody.” Rep. Dwight Evans, Democrat-Penssylvania, said on Twitter that Daca recipients were “students, military service members, teachers, scientists, doctors, and lawyers—they are integral members of our community.” Evans said the president’s comments were “simply unacceptable.” The president’s remarks also drew a rebuke from a high-profile member of his own party. Gov. John Kasich of Ohio wrote on Twitter: “A true leader preserves & offers hope, doesn’t take hope from innocent children who call America home.” Trump directed an equal measure of

anger at Mexico, saying the country was “doing very little, if not NOTHING, at stopping people from flowing into Mexico through their Southern Border, and then into the US.” He said Mexican leaders “must stop the big drug and people flows, or I will stop their cash cow, NAFTA.” “NEED WALL!” he added. It was far from the first time that Trump has threatened to scrap Nafta as he pushes to change American trade policies that he says have hurt the US economy and cost the country large numbers of jobs. The United States, Mexico and Canada are locked in difficult negotiations over a revamping of the trade pact. The president’s tweets seemed at odds with some unifying steps taken last week by members of his administration: The homeland security secretary, Kirstjen Nielsen, met with President Enrique Peña Nieto of Mexico to discuss ways to work together on security and trade issues, according to a description of the conversation released by the Department of Homeland Security. But Trump may have been hearing a harder-line administration voice over the weekend. He was accompanied to his Palm Beach resort, Mar-a-Lago, by Stephen Miller, a senior policy adviser who has shaped much of the administration’s tough stance on immigration. The president, in his tweets, criticized what he called “Catch & Release,” a practice in which detained unauthorized immigrants are sometimes released as they wait for a hearing before an immigration judge. In some cases, they are released because the government has nowhere to house them. Critics say the practice—which, contrary to the president’s tweet, is not enshrined in law—gives the immigrants an opening to skip their hearing and settle undetected in the country. The Trump administration has declared an end to the practice, though it may take a while before significant changes are carried out. Trump’s tweets last Sunday echoed remarks on Fox and Friends by Brandon Judd, president of the National Border Patrol Council, whom the president has praised in the past. “Our legislators actually have to stand up, and the Republicans control the House and the Senate, they do not need the Democrat support to pass any laws they want,” Judd said on the program. “They can go the nuclear option, just like what they did on the confirmation. They need to pass laws to end the catch-and-release program that’ll allow us to hold them for a long time.” New York Times News Service

“America is waking up to the loss of its technological advantage through China’s restrictions on access to its internal markets,” she told reporters. “That is now a place where policy is beginning to change.” New York Times News Service

Japanese businesses plan more investment even as sentiment slips

apan’s large companies plan to increase investment this year, even as a stronger yen may be undercutting their confidence, which slipped a little from the highest level in more than a decade. Sentiment among large manufacturers fell to 24 from three months ago (forecast 25), according to the quarterly Tankan survey released by the Bank of Japan (BOJ) on Monday. The outlook among large manufacturers fell to 20 (forecast 22). Large nonmanufacturers’ sentiment fell to 23 (forecast 24). Large companies across all industries say they plan to raise fixed investment by 2.3 percent in the year through March 2019 (forecast 1 percent). Despite a stronger yen, which cuts into profits, large companies said they plan to increase capital spending more than economists forecast. The yen was the second-biggest gainer among major currencies in the first quarter and its continued appreciation could damp pay raises this year, hurting the BOJ’s efforts to end deflation. “The strong yen appears to have put a small dent in sentiment of Japan’s big manufacturers,” Yuki Masujima of Bloomberg Economics wrote. But “steady-to firmer readings on gauges for small companies—which make up the bulk of the economy—sent a positive message on domestic business conditions.” “I think this is actually a pretty good Tankan result with a lot of positives,” Izumi Devalier, head of Japan economics at Bank of America Merrill Lynch, said on Bloomberg TV after the release. Manufacturers faced a bit of yen appreciation and there was some protectionist noises coming out of Washington, so it’s not surprising that they are not feeling as optimistic as they did three months ago, she said. The investment forecast is “impressive” and unless some downside risks materialize, it’s likely to be revised up over the coming quarters, she added. “Japanese companies have become a bit cautious, and the strong yen and weakened momentum in production are contributing to that,” said Takashi Shiono, an economist at Credit Suisse Group. “They are still looking at the yen being weaker than the current level so I think there is room for the sentiment to decline further.” Given the cautiousness, it’s hard to imagine we’ll have strong wage growth, Shiono said. Large manufacturers forecast the yen will trade at 109.66 per dollar in the fiscal year ending in March 2019. Among small companies, manufacturers’ sentiment was unchanged at 15, while that of service firms rose to 10 from 9. The Tankan was conducted from February 26 to March 30, surveyed 10,020 companies. Bloomberg News

Tuesday, April 3, 2018 • Editor: Efleda P. Campos

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Govt begins review of mine sites closed by Lopez By Manuel T. Cayon

@awimailbox Mindanao Bureau Chief

AVAO CITY—An interagency mining body has started its “fact-finding and science-based” review of an initial batch of 26 mine sites ordered either suspended or shut down last year by former Environment Secretary Regina Paz L. Lopez. The Mining Industry Coordinating Council (MICC) started its review with on-site visits to these locations, the Department of Finance (DOF) said in a statement sent to reporters. Finance Secretary Carlos G. Dominguez III sits as the cochairman, along with

Env i ron me nt S e c ret a r y R oy A. Cimatu. Undersecret a r y Baya n i H. Agabin represented the DOF at the MICC meeting on March 7. He said the first phase of the review covers legal, technical and environmental concerns and would be completed

within a three-month period. The social and economic aspects of the study would be conducted after three more months as requested by the technical review teams (TRTs). “When we began looking at this, we set the period for review for three months. But when the teams were formed, the concern, especially on the economic study, was that they would need the input from the technical, the legal and the environment,” Agabin said during the recent MICC meeting. On the social and economic aspects, the review team said it wanted to do a household survey. “The teams that we got were quite strict. In fact, they didn’t want to continue on if there would not be an honest-to-goodness scientific survey done within the affected communities. That’s how meticulous they were,” Agabin added. Dr. Marian de los Angeles, the overall coordinator of the TRTs,

said “the experts comprising the teams are now in the field and commencing their review of the 26 mine sites.” De los Angeles said the second phase of the review would include a “social cost-benefit analysis and an evaluation of the changes in the ecosystem, as well as a more indetail look into the equity aspects of the mining operations.” Agabin said 25 experts would comprise the five TRTs that would conduct the review of the 26 mining operations. Finance Assistant Secretary Maria Teresa S. Habitan said the MICC has tapped the Development Academy of the Philippines to implement and manage the “fact-finding and science-based” review process on the 26 mining operations. The review would come up with recommendations on mining-related methodologies and procedures to maximize the benefits of mining

and avoid damages. It would also come up with the list of inefficiencies, violations and damages by mining companies that were difficult to address by the DENR alone, and the appropriate penalties for such violations and damages. The TRTs were also expected to recommend measures to avoid the recurrence of such inefficiencies, violations and damages “and to improve mining operations with a view to effectively safeguard the environment and protect the rights of resource-dependent communities,” Assistant Secretary Mercedita A. Sombilla of the National Economic and Development Authority said. The TRTs must also list the provisions in any laws, rules and regulations that need revision or amendment to improve mining operations and ensure the development of a responsible mining sector. “The final report would be a

consolidated one. We will not see individual reports for each of the mines. It’s going to be consolidated. It’s going to be general, the key results that will come out of the 26 mining sites,” Sombilla said. Agabin said the clustering of the mines for review was based on the type of minerals and locations: TRT Team 1 for gold, copper and nickel mines in the Cordillera Administrative Region (CAR); Cagayan Valley (Region 2) and Mindoro, Marinduque, Romblon and Palawan (Region 4B); TRT 2 for iron and nickel mines in Central Luzon (Region 3); TRT 3 for chromite, nickel and iron mines in Eastern Visayas (Region 8) and Caraga; TRTs 4 and 5 for nickel and chromite mines in Caraga. The MICC also agreed to a proposal last year by Dominguez to conduct another review in 2019. There would be succeeding reviews to be conducted every two years.

Bello: Resumption of peace talks with NDF remains unlikely Bangon Marawi to decide on plan to build ecozone, military camp

OVERNMENT peace panel Chief Negotiator Labor Secretary Silvestre H. Bello III said the resumption of the peace process with the National Democratic Front (NDF) remains unlikely after its reported string of new attacks in Mindanao. In a news briefing, Bello said he is not inclined to recommend the continuation of the peace talks after the NDF allegedly torched eight heavy equipment in Davao City during the Holy Week. “Not yet, because they burned pieces of equipment in Mindanao. This shows they still lack the necessary sincerity,” Bello said. Presidential Peace Adviser Jesus Dureza issued a statement condemning the NDF for the incidents in Barangay Callawa in Buhangin District, Barangay Fatima, Paquibato District, Barangay Dalagdag in Calinan town. “This unnecessarily squanders whatever gains we have been quietly getting lately in our common efforts with the Communist Party of the Philippines/New People’s Army/National Democratic Front leadership to achieve just peace through the negotiation table,” Dureza said. L ast week Bel lo sa id t hey will only return to the negotiating table with the NDF if it could provide them the necessar y “enabling env ironment,”

ORGANIC PLATES Young boys from Quezon, Nueva Vizcaya, enjoy their meal on a chopped banana trunk serving as their plates during a native kanyaw, when a carabao is slaughtered to feed rural folks attending a cultural festival. LEONARDO PERANTE II

like stopping further attacks against government forces or private firms. If the NDF could comply with this condition, he said, President Duterte may finally order them to resume the talks with the communist group.

Island resorts help El Nido transform into world-renowned tourist destination

N 2017 readers of luxury and lifestyle travel magazine Condé Nast Traveler ranked Palawan’s El Nido as the fourth most beautiful island beach in the world. While El Nido is home to nearly 50 white-sand beaches set around majestic limestone formations, the island’s locals used to know a different side to this paradise. El Nido was a fifth-class municipality without a hospital and sufficient power and water systems. Most of the locals used to make a living through birds’ nest gathering, fishing and cashew farming, which were not enough for them to make ends meet. In 1992 the opening of Ten Knots Development Corp. (TKDC) created opportunities built on the skills and provide livelihood for the members of El Nido’s communities. Now that El Nido is a firstclass municipality and a booming tourist destination, most residents are now part of the tourism supply chain that TKDC helped put in place. TKDC operates resorts in El Nido’s Miniloc, Lagen, and Pangulasian Islands. Another resort, the Apulit Island, is located in Taytay, Northeastern Palawan. Collectively, the four resorts known as El Nido Resorts, have a presence in 14 out of 18 El Nido barangays and three

barangays in Taytay. The resorts promote environmental sustainability, engage local community members, and foster their personal and career growth, while being financially profitable. To hit all these targets, TKDC implements an inclusive business model that taps partners, suppliers and employees from local communities. By engaging the members of these communities, improving the quality of life and providing livelihood opportunities become central to TKDC’s business. Nearly 90 percent of TKDC’s 341 employees come from local communities. To ensure employees receive opportunities for promotion and their skills remain relevant to the hospitality business, TKDC targets to provide 15,000 hours of training annually, a number they always exceed. One of the training programs they receive is the American Hospitality Association’s Certified Gold Service Provider for improved customer service. The in-house “Be GREEN” program, which stands for Guard, Respect, Educate El Nido, trains the staff on managing ecological waste, conserving water, energy and biodiversity, and upholding environmental laws.

“If there is reason to resume the talks because of the sincerity of the other party, this will be based on the sole judgment of the President,” Bello said. Despite a previous statement from the NDF saying it is interested in the resumption of the

peace process, Bello said it has yet to submit a formal position to the government. To recall, the government peace panel stopped its negotiations with the NDF last year due to the latter’s persistent attacks against military forces. Samuel P. Medenilla

ENIOR Deputy Executive Secretary Menardo I. Guevarra said in a briefing they leave it to Task Force Bangon Marawi to decide on the proposed plan of to establish an economic zone and a military camp in the war-torn City of Marawi. The Palace issued this statement following the appeal of a Maranaoled civilian group to President Duterte to put a stop to the plan. “I think it’s too early to say whether or not the President will act on that request. We’ll leave it to Task Force Bangon Marawi to consider that and to evaluate whether or not the existence or nonexistence of a military camp inside Marawi City is advisable and whether converting it into an economic zone will be for the betterment of the city or not. That’s all for the task force to evaluate and decide on,” Guevarra said. In a statement, Ranaw MultiSectoral Movement said the plans to rebuild Marawi City were made without the participation of the Marawi people. The group said the plan was presented to them by Task Force Bangon Marawi Chairman and Housing and Urban Development Coordinating Council Secretary Eduardo del Rosario and National Economic and Development Authority Undersecretary for Regional Development

Adoracion Navarro during the multisectoral consultation on March 21 and 22. The group further claimed the presenters even “dismissed our comments, recommendations, and protestations as though we knew nothing and have no business getting involved in rebuilding our very own city.” “We appeal to you to let Marawi be rebuilt the way our ancestors did: one house at a time, one masjid at a time, one village at a time. We welcome those who are willing to help us in this endeavor, for the challenges are daunting and the costs are high. We appeal, though, to please help us rebuild according to our will in pursuit of the will of Allah. Stand with us, help us. Please, be one of us,” the group said in a statement. “Mr. President, please put a stop to the proposed ecozone and military camp plans until we have been heard, until our dreams and aspirations, our cultural sensitivities and our faith find expression in the rebuilding of Marawi City, our home.” Asked for the Palace reaction to this, Guevarra said there might be some sort of misunderstanding. “I’m sure that residents themselves will be given an opportunity to make their own proposals on how to rehabilitate their own city,” he said. Bernadette D. Nicolas

Lucban residents welcome visitors to Buhusaya music fest with buckets of water By John Bello Correspondent

UCBAN, QUEZON—An estimated 15,000 participants gathered to be splashed and soaked wet with water, while swaying, dancing and merrymaking at the Buhusaya Music Festival here on Easter Sunday. The festival kicked off around 8 a.m. on April 1, with a multisectoral grand parade led by Mayor Celso Olivier T. Dator accompanied by Rep. Trina Enverga of the First District of Quezon, Vice Mayor Armando Abutal and Sangguniang Bayan member Arnel Abcede were also present when the parade went around the town proper. Water was being splashed and poured from everywhere on the participants who gamely took it from residents standing and waiting on the roadside with their buckets, water containers and water toy guns as the grand parade passed by. Dator, Enverga, Abutal and Abcede were soaking wet along with thousands of parade participants who ended at the town plaza in front of the municipal building. The participants, some of them

THE festive crowd at the town plaza of Lucban, Quezon during the height of the Buhusaya Music Festival last Sunday.

from the neighboring provinces of Laguna, Batangas and Metro Manila, rapidly grew in number as the party started in earnest around noon with water gushing from the water hoses of three firetrucks and artificial foam being emitted from a device with nonstop dance music pounding and adding to the ex-

citement and frenzy of the crowd. The festival is named this year as Buhusaya Festival 2018. It started four years ago as an event after the weeklong observance of Holy Week. Named then as Buhusan Festival, it is now being considered as an addition to the town’s main tourist draw called Pahiyas Fes-

JOHN BELLO

tival, a monthlong cultural event in May, here which, helped make the town included in the country’s tourism map. “Lucban has become the number 7 pilgrim site worldwide as per information of the Department of Tourism for 2018,” Dator, 38, told the BusinessMirror.

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Rolls-Royce 787 engine snag extends to Airbus new A330neo By Benjamin Katz | Bloomberg

litches with Rolls-Royce Holdings Plc. engines that have dogged Boeing Co.’s 787 wide-body jet are also an issue for the competing A330neo model from Airbus SE. Rolls-Royce’s Trent 7000 turbine, the only one available on the Airbus plane, shares durability problems afflicting the Trent 1000 from which it was developed, according to people familiar with the matter, who asked not to be identified discussing concerns that haven’t been made public. A Rolls-Royce spokesman confirmed the A330neo issues in response to questions from Bloomberg. The upgraded version of the Trent 1000—the Trent 1000 TEN— that Rolls is offering as a replacement for the original turbine is also affected, the manufacturer said. The earlier Trent 1000 snag has led to unscheduled shop visits for dozens of 787s at carriers including Virgin Atlantic Ltd. and British Airways, costing the engine maker more than £220 million ($310 million) in charges last year. While the A330neo hasn’t entered service, the Trent 7000 glitch is of concern to Airbus because it could deter buyers, one of the people said. Parts of the A330neo engine are being redesigned, though most fixes won’t be available until about six months after the first plane is due for its first delivery this summer, according to one of the people.

Trent 1000 TEN

It’s “possible that a population of early Trent 1000 TEN and Trent 7000 engines may benefit from proactive maintenance to embody parts in their first shop visit that weren’t available at the point of production,” Rolls-Royce said by e-mail. “This is normal practice at the very start of a new engine production program.” A redesigned turbine blade that is being rolled out with the 787 will also be used on the Trent 7000, and will be ready to ship with the A330neo’s first delivery, Rolls said. The blades have been the biggest area of distress for Rolls and the most expensive to fix. Other parts will take longer. Airbus, based in Toulouse, France, had no comment. Shares of Londonbased Rolls-Royce closed down 2.3 percent last Friday to 861.20 pence. Airbus fell 1.8 percent to €92.92 in Paris. The turbine issue is a setback for Airbus as it seeks to win new deals for the already slow-selling A330neo, a plane distinguished from the original A330 chiefly by its upgraded engines. The model is already six months late due to earlier engine-design problems and a lack of testing capacity at Rolls-Royce. Bloomberg News reported last Friday that the European manufacturer’s talks with American Airlines Group Inc. on a possible A330neo order had ended, clearing the way for Boeing to win the business. For Rolls, the glitch comes as CEO Warren East redoubles restructuring efforts to help revive profits and the company grapples with the introduction of three new models, including the Trent 7000 and the updated Trent 1000.

Editor: Angel R. Calso • Tuesday, April 3, 2018 A9

A $54-trillion miss highlights India’s bond disconnect, unlearned lessons

By Andy Mukherjee | Bloomberg

ndia has much to learn from the opening of China’s onshore bond market.

Last year Beijing allowed overseas investors to access local-currency securities via its so-called Bond Connect. Last Friday Bloomberg LP announced the inclusion of Chinese government and policy-bank debt in the Bloomberg Barclays Global Aggregate Index. Over a 20-month period starting in April next year, as many as 386 bonds will enter the $53.73-trillion benchmark, giving China a weight of 5.49 percent at full inclusion. Yuandenominated notes will end up with the fourth-largest presence, after those in US dollars, euros and yen. Contrast this with India, which has been on a path of gradual debtmarket globalization for more than two decades. Yet, by limiting foreign participation to 5 percent, authorities have crimped the prospects of India’s admittance to global gauges compiled by JPMorgan Chase & Co. and Bloomberg. This is an odd policy choice. China has more than ample domestic savings to power its economy, but it

wants to share credit risk meaningfully with foreigners. India, meanwhile, runs a current account deficit, implying a perennial reliance on overseas savings. So why doesn’t the central bank allow more borrowing in domestic currency, which it can freely print, rather than cling to riskier dollar inflows? It isn’t an idle query. The country’s basic balance of payments— the sum of the current account deficit and net foreign direct investment—has turned negative. This is when crude oil, which India needs to import, is at only $66 a barrel. Should oil prices firm further, and foreign portfolio investment in stocks and bonds ebb, the rupee would need to weaken to make Indian assets attractive again. While currency values can and do adjust relatively freely in developed economies, excessive exchange-rate volatility in emerging markets tends to lead to a hard choice between capital controls and high local interest rates. That’s what happened during

the destabilizing taper-tantrum episode of 2013. This time around, the reserve Bank of India is buying dollars to make sure the rupee doesn’t strengthen to a point where investors lose confidence in its value. But foreign money has already started leaving the Indian bond market; in the face of rising US interest rates, especially a surging dollar Libor, India needs a new category of bond buyers. That’s where aiming for index inclusion could help. Sovereign credit rating is the one benchmark Indian authorities obsess over endlessly. Indexes—both equity and debt—don’t get as much attention. The disregard that local stock exchanges demonstrated for India’s 9-percent weight in MSCI Inc.’s emerging-market gauge when they came together to ban index providers

from supplying local securities data to foreign bourses is reflective of that cavalier mind-set. A comparison with China, which courted MSCI until it won a place for yuandenominated stocks in the measure, is once again instructive. The difference is starker in debt. Nomura Holdings Inc. has estimated that a 1-percentage point increase in the limit on foreign participation would lead to 800 billion rupees ($12.3 billion) of inflows. What’s more, becoming a part of an index would mean access to a certain assured sum from funds merely looking to replicate the benchmark. The risk of so-called sudden stops would be lower. “Masala” bonds, or rupee-denominated credit offshore, are only viable for large, mostly state-linked Indian issuers. Where will single-B

rated borrowers go? The RBI won’t let them offer high interest rates even on rupee notes in international markets; the onshore debt market is already in trouble because of a 1-percentage point jump in 10-year sovereign bond yields since July. Over the past several years, the world’s attention has been focused on China’s excessive credit buildup. But the number of steps Beijing has taken to prevent an accident—from shuttering excess capacity in steel and aluminum and stopping a oneway bet on yuan appreciation to squeezing easy liquidity and going after sales of wealth management products masked as insurance—have all helped maintain a semblance of calm. Underneath, there still are fault lines, for instance in rapid growth of consumer credit. But the mess in India’s banking system, hobbled by more than $200 billion in stressed assets, is many times more pressing than any challenge facing China. One of the solutions for making banks healthy in the long run would be to let active, deep onshore bond markets put a price on credit risk. The price tag need not be prohibitive, provided India drops its historical aversion to being in debt to foreigners. Mimicking China’s playbook on index inclusion would be a good starting point.

Only a technology revolution will restore Internet privacy By Leonid Bershidsky Bloomberg View

ir Timothy Berners-Lee, credited with inventing the World Wide Web, tweeted up a storm last Thursday, reassuring Internet users that they could reassert control over their data—and the Web’s future—after the Cambridge Analytica-Facebook scandals. He’s right, but not necessarily in the way he imagines. “W hat can Web users do? ” Berners-Lee wrote. “Get involved. Care about your data. It belongs to you. If we each take a little of the time we spend using the Web to fight for the Web, I think we’ll be ok. Tell companies and your government representatives that your data and the Web matter.” I understand his agony about what has happened to his invention, and I envy his optimism about the efficiency of activism and regulation. Both are, of course, useful in rolling back the massive invasion of privacy we have all suffered, not quite knowingly, in recent years. But even if we get “woke” to the invasion, there’s not much we can do about it. Sure, one can go into Facebook settings, shut off every possible kind of data-based ad targeting and kill, one by one, all the “interests” Facebook has ascribed to you on the basis of your online and offline behavior. (If you don’t know how it’s done, don’t worry, most people are like you; click “Settings,” then “Ads”). One can do the same on Twitter (it’s under “Your Twitter data”). One can delete all one’s previous activity from a Google

IN this August 6, 2015, file photo Facebook Elections signs stand in the media area in Cleveland before the first Republican presidential debate. The head of Trump-affiliated data-mining firm Cambridge Analytica was suspended last Tuesday, while government authorities are bearing down on both the firm and Facebook over allegations the firm stole data from 50 million Facebook users to manipulate elections. AP Photo/John Minchillo

account. But one can’t so easily disable the constant data sharing that occurs on every web site that uses programmatic advertising (and lots of sites do). These sites get all sorts of information about a visitor—above all, the browsing and search history —and make it available to advertisers (or, rather, to algorithms that “represent” them) so that they can bid for your eyeballs. Nor is there any easy way to purge the detailed dossiers collected about each of us by data brokers, companies that collect information for resale; Cambridge Analytica, too, essentially served as a data broker, acquiring information from a Cambridge professor to package and resell it to election campaigns. Most apps that we use

on mobile phones collect and share our data, too. Is it really possible to reassert control? That’s easier said than done. Our data are no longer ours, and it’s used in ways we’d reject—if we had the chance to weigh in on the matter. Berners-Lee’s invention has been subverted by a belief that Facebook CEO Mark Zuckerberg exhibited in a recent New York Times interview. He said this: Our mission is to build a community for everyone in the world and to bring the world closer together. And a really important part of that is making a service that people can afford. A lot of the people, once you get past the first billion people, can’t afford to pay a lot. Therefore, having it be free and have a business model

that is ad-supported ends up being really important and aligned. Since the Web’s early days, it’s been full of freebies, and entrepreneurs have learned to offer them in a standard way. They misrepresent data collection to users as something that shouldn’t bother a sane person and sold advertisers on the idea that the data collection could translate into more precise ad targeting than that of traditional media. That’s not just the Facebook model —it’s that of Google, Twitter and even traditional publishers who have introduced programmatic advertising to their web sites and apps. One can argue whether it really works for advertisers or whether all the services it funds are equally useful to society. But regardless of one’s opinions on those counts, what we users need to understand is that this is not the only model. Right now, the world is watching the biggest initial coin offering in history—that of the messenger Telegram. It has already attracted $850 million, and is in the process of doubling the amount. The idea behind it is to create a blockchain-based economy inside Telegram’s 170 million-strong user community, using a cryptocurrency to transfer value and buy stuff. This planned ecosystem— which, one must admit, hasn’t been built yet—will have room for advertising, too, but it will be more akin to traditional media advertising than to the microtargeting offered by the Googles and Facebooks. Telegram has public channels, whose owners can sell ads in them to advertisers interested in their audience. Neither

Telegram nor the channel owners need to collect any personal data in order to monetize the community. Telegram can live off a percentage of transactions in its ecosystem. The “media” based on the platform just needs to attract large audiences for narrowly targeted content. Telegram says it doesn’t share users’ data with anyone at all. My hope—perhaps as heedlessly optimistic as Berners-Lee’s —is that newer, privacy-respecting business models, like the one envisioned by Telegram, will naturally supersede the old model, at least in the socialmedia arena. Messengers have a natural synergy with fintech and niche media, and pretty much any of it can be monetized without selling data to the highest bidder. It’s harder, however, to imagine this happening to search or to the strongest traditional publishers, capable of collecting both subscription and advertising revenue. That’s where the Berners-Lee method— pressure and regulation—is probably the best. It would be fair to allow those users who don’t want to give up data or see ads, targeted or otherwise, to pay a subscription fee—the way they do on Spotify, for example—and to have others actually sell their data by giving them a percentage of the ad revenue they generate. If platforms refuse to offer these opportunities, regulators can force them. We don’t have to be suckers or chattel in the Internet economy. Berners-Lee’s message is about clawing back our power is an important call to action in a world where true privacy is no longer possible.

Egypt’s King Farouk Patek watch sets Middle East auction record By Claudia Carpenter Bloomberg

A A Rolls-Royce Trent 1000 aircraft engine, produced by Rolls-Royce Holdings Plc., stands on display during the Microsoft Corp. Future Decoded Conference at the ExCel London conference center in London, on November 1, 2016. Simon Dawson/Bloomberg

Patek Philippe watch made for King Farouk of Egypt in 1944, sold to an unidentified buyer for $912,500 at Christie’s in Dubai last month, a record sum for a timepiece auctioned in the Middle East. The 18-carat gold Patek Philippe Ref. 1518 was estimated to be worth as much as $800,000 by the auction house, which concluded its 23rd auction season in the region.

A Rolex GMT-Master made for Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum fetched $162,500, surpassing the estimate of $120,000 to $160,000. The sales total for the auction was $7.1 million, compared with an estimate of $5 million to $8 million. “It’s very clear there’s an appetite for watches across the region,” Michael Jeha, managing director of Christie’s Middle East, said in an interview. Five artists from Lebanon, Iraq,

Iran, and Egypt set world auction records at Christie’s postwar and contemporary art sale last Thursday, even though the sales total of $2.97 million fell short of the low estimate of $3.1 million. The most expensive work offered, Une vie singuliere by the late Shafic Abboud of Lebanon, didn’t sell after bids came in below the low estimate of $220,000. Iranian artist Sohrab Sepehri’s Untitled, painted circa the 1970s, was the top lot of the night, selling for $287,500 against an estimate of

$150,000 to $200,000. The piece is from the artist’s Abstract series, which has been kept at the Tehran Museum of Contemporary Art, among other places, since Sepehri’s death in 1980. The 2009 Good Luck by Huguette Caland, born in Lebanon, fetched $162,500 (estimate: $80,000 to $120,000). Another Lebanese painter, Hussein Madi, set a record with his 1998 Baghdad Landscape, which went for $75,000, well above the high estimate of $18,000.

A10 Tuesday, April 3, 2018 • Editor: Angel R. Calso

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editorial

Mercy over judgment

id Pope Francis really imply there is no hell? The Vatican’s communications department has been working double time to deny the pope’s remark to Eugenio Scalfari, an Italian journalist at the newspaper La Repubblica, that hell does not exist. Scalfari quoted the pope, saying of those who die in a state of mortal sin: “They are not punished. Those who repent obtain God’s forgiveness and take their place among the ranks of those who contemplate him, but those who do not repent and cannot be forgiven disappear. A hell doesn’t exist, the disappearance of sinning souls exists.” The Catholic Church’s own catechism “affirms the teaching of hell and its eternity,” although it says that “The chief punishment of hell is eternal separation from God.” This is not the first time though that Pope Francis has stressed mercy over judgment in his concept of God and his interpretations of the Catholic faith’s teachings. We cannot help but love his pronouncements. While Francis, the former Cardinal Jorge Mario Bergoglio, leads a staunchly traditional and conservative Catholic Church, he has so far proven to be more a liberal reformer than a defender of the old order. Since his election in March 2013 as the first non-European pope in 1,300 years, the Argentinian and Jesuit has several times condemned the “idolatry of money” and said it was a depressing sign of the times that a homeless person dying of exposure on the street was no longer news but a slight fall in the stock market is. In his message for the Roman Catholic Church’s World Day of Peace in 2014 (titled “Fraternity, the Foundation and Pathway to Peace”), he called for the sharing of wealth and for nations to shrink the gap between rich and poor, more of whom are getting only “crumbs.” The document, which was largely seen as a manifesto of his papacy, attacked unfettered capitalism as “a new tyranny,” saying an “economy of exclusion and inequality” had proven to be deadly for many people around the world. Pope Francis also took a nonjudgmental tone toward homosexuals and tried to persuade Church leaders to support his more merciful attitudes toward gay and divorced people. In a lengthy interview that was published by several Jesuit publications including La Civiltà Cattolica and Thinking Faith, he called on the Catholic Church to love gays and lesbians, whom he said “must be accepted with respect, compassion and sensitivity.” “Religion has the right to express its opinion in the service of the people, but God in creation has set us free: it is not possible to interfere spiritually in the life of a person,” the Pope said. In a Rappler report, Manila Archbishop Luis Antonio Cardinal Tagle said a journalist once asked him point-blank if he thinks Pope Francis is conservative or progressive (or liberal). “He is what he is,” Tagle responded. It is hard to simply put anyone, much more the pope, into either one of the two categories, he explained. “This is my personal view. I just don’t want to classify anyone as conservative, as progressive, because a person goes beyond those labels, especially a person who works in the area of faith and pastoral life,” Tagle said. “When you have a religion of Catholicism, you receive a lot. A pope has no liberty to invent his own teaching so there’s an element of receiving from the past,” he said. “But he is attentive to society, he has a desire to see how the tradition of the faith can be further explored. In the process, I don’t see that as an activity of a liberal or a conservative.” Tagle is right. It is hard to be the leader of a church that is much too steeped in tradition and dogma. And it is hard to say and even wrong to categorize the pope as simply conservative or liberal. Are we all simply black or white, good or bad? Conservative or liberal, it doesn’t matter. What is more important is that this is a pope who is willing to listen more than antagonize, more willing to show mercy rather than judge. Because of this, Pope Francis could only lead the Catholic Church to be a more accepting, transparent and less tarnished institution. And there are perhaps millions of people around the world—Catholics and non-Catholics alike—who would not be the least disappointed and indeed find comfort in his controversial statements.

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Manny B. Villar

THE Entrepreneur Continued from A1

nflation was recorded at 3.3 percent last December, which brought the average for the whole of 2017 to 3.2 percent, well within the government target range of 2 percent to 3 percent.

The new year, however, opened with a 3.4-percent headline inflation rate in January, which rose further to 3.9 percent in the succeeding month. This brought the year-todate average to 4.2 percent, which is above the government’s inflation target of 2 percent to 4 percent for the year. In its latest policy-making meeting, the Monetary Board observed that inflation could climb further, owing mainly to price pressures emanating from pending petitions for adjustments in minimum wages and transportation fares. Higher prices are expected as a result of increasing global oil prices, as well as the Tax Reform for Acceleration and Inclusion Act (TRAIN), signed into law by President Duterte last December, and took effect on January 1, which imposed new excise taxes on oil, cigarettes, sugary drinks and vehicles, among other goods. The Bangko Sentral ng Pilipinas (BSP) expects inflation to average 4.3 percent this year and breach

the 2-percent to 4-percent target range due to the impact on consumer prices of the first tax reform package, as well as expected global oil price hikes. The Monetary Board, the BSP’s highest policy-making body, kept the policy rate steady at 3 percent, while also maintaining the prevailing rates for the overnight lending and deposit facilities. BSP Governor Nestor A. Espenilla Jr. said in a statement that the Central Bank’s latest baseline forecasts show higher inflation outturns this year, such that its 2018 forecast was raised from 3.4 percent during the previous policy meeting in December. So, the general worry is that higher inflation could dampen consumer spending, one of the economy’s major growth drivers, and eventually, dim the economy’s prospects. Espenilla has noted that the higher inflation rate was the result of transitory factors, and is expected to decelerate back to within the target range in 2019. Nevertheless, the BSP, in line with

its mandate to keep prices stable, is not being complacent. Specifically, the monetary authority has reiterated that it remains watchful against any signs of second-round effects and inflation becoming broader-based. The Monetary Board says it stands firm in its intent to take immediate and appropriate measures to ensure that the monetary-policy stance continues to support the BSP’s price and financial stability objectives. Thus, during its March 22 meeting, the Monetary Board decided to maintain its policy rate, the interest rate on the BSP’s overnight reverse repurchase (RRP) facility, steady at 3.0 percent. The policy rate serves as a guideline for banks in setting their lending rates. True, inflation may be something to worry about, but the Philippine economy still has a lot of strengths to sustain its upward trajectory. Overseas Filipino workers, our ever-dependable modern heroes, keep precious foreign exchange flowing into the economy. Cash remittances for the whole of 2017 increased by 4.3 percent to reach $28.1 billion, up from $26.9 billion in 2016. In January cash remittances further accelerated to 9.7 percent, bringing in a total of $2.4 billion. The exchange rate seems steady at around P52 to a dollar, as the BSP maintains a watchful eye on speculative changes under a market-determined exchange regime. Our dollar reserves are okay. As of end-February 2018, the country’s gross international reserves stood at $80.4 billion, more than ample liquidity buffer and is equivalent to 7.9 months’ worth of imports of

Anticipating a stock market crash

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

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Steady amid higher inflation

John Mangun

OUTSIDE THE BOX

his coming weekend, the TGFI (The Global Filipino Investors) Financial Literacy Summit will be held at the SMX Convention Center at the Mall of Asia. On Sunday afternoon, I will be addressing the question of “How to Determine a Possible Stock Market Crash”. Having been accused of starting a “crash” for publicly saying stock prices were going to go down—back to before the 1997 financial crisis— maybe somebody figures I might know something about the topic. Of course, I never get credit for calling a stock market rally when it happens, obviously proving that life is not fair. Being a big fan of those trying to increase the “financial literacy” of the public, I strongly support events such as TGFI is holding. However, I

am not a big fan of what is usually rolled up in the concept and presentation of this “literacy” thing. For example, if you truly want to be financially literate, you should know what the impact is and will be of the London Inter-bank Offered Rate (Libor) having increased for 37 consecutive sessions, the longest streak of advances since November 2005. Further, the genuine financially literates are concerned why global bank deposit and money

market rates have not moved higher with Libor rates. Does that depth of financial literacy matter to you? Not any more than simply knowing the “medical literacy” of laying off the sugar and salt and having a medical check-up once a year. However, this summit will expose you to many diverse investment possibilities and that is good. The key is that you will learn about many various business opportunities, as well as some passive investment options. Whether that should be placed under financial literacy is not really important. When you attend the summit, you would do well to keep the following in mind. Any business that sells a product or service is only successful if the public buys that product or service. That depends on how well (read profitably) you run the business and also how much demand there is for your product or service. Owning and operating a business can give you a great opportunity to become wealthier.

goods and payments of services and primary income. Another source of foreign exchange, the business-process outsourcing industry, remains robust, while the tourism industry continues to gain from the Philippines’s improved relations with other countries, particularly China. The new tax-reform package may have contributed to higher inflation, but it also reduced the tax burden on millions of workers, which effectively increased their purchasing power. In explaining the decision to keep policy rates unchanged, Espenilla noted that the Monetary Board considered that prospects for domestic activity continue to be firm on the back of robust domestic demand, strong growth in credit and liquidity, and sustained recovery in global economic growth. The Annual Consultation Report on the Philippines published by the Asean+3 Macroeconomic Research Office (Amro) in Singapore on March 16 said that, after expanding by 6.7 percent in 2017, the Philippine economy is expected to grow by 6.8 percent in 2018, and 6.9 percent in 2019, as exports remain buoyant while budget execution gradually improves. The report was prepared on the basis of Amro’s Annual Consultation Visit to the country in September 2017, and data availability as of February 15, 2018. In simple words, the odds are still in our favor. We just have to remain vigilant to keep our gains and stay on the fast growth track. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

Passive investments—those which you have no control over price movement—such as the stock market is different. With your business, you control price and can create demand by lowering the price. That is because even if SM has many dozen department stores and supermarkets, total sales are made of millions of individual transactions one by one. If it were feasible, SM would like to know why you walked out of the department store last Saturday without buying something because you as an individual are critical to the retail business model. The same is true of real estate— one buyer and one seller at a time. With the stock market, cryptocurrency, and foreign exchange, there are countless buyers and sellers transacting at the same time. If you decide to lower the price at which you are willing to sell your stock market shares, it means nothing to the overall stock market. Conversely, if one seller in a large condominium See “Mangun,” A11

Opinion BusinessMirror

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Graft-ridden Road Board to be abolished

Federalism is a system of government Ernesto M. Hilario

Cecilio T. Arillo

database

efore adjourning for the Lenten and summer break, the House of Representatives has approved on second reading House Bill 7436 meant to abolish the Road Board due to grave allegations of misappropriation and graft and corruption of its multibillion-peso revenues. The Road Board oversees the funds from the Motor Vehicle User’s Charge (MVUC) collections, which are used exclusively for road maintenance and improvement of road drainage, installation of traffic lights and road-safety devices and air-pollution control. The Commission on Audit (COA) reported irregularities in the use of the MVUC funds amounting to P90.7 billion, including unauthorized, unnecessary and irregular expenses, excessive contract costs for projects, delayed and uncompleted projects and technical deficiencies and defects in projects that could jeopardize motorists and pedestrians. “ The abolition of the Road Board and the amendments to the MVUC law would ensure the prudent management and efficient utilization of the MVUC,” said Rep. Xavier Jesus D. Romualdo of the Lone District of Camiguin and chairman of the House Committee on Government Reorganization, who sponsored the measure. The bill also seeks to amend Republic Act (RA) 8794 on how the MVUC funds are distributed and managed. Under the bill, the MVUC collections shall be used only for construction, upgrading, repair, and rehabilitation of roads, bridges and road drainage, pollution control, including the establishment and improvement of solid-waste management programs and facilities, and vehicle-pollution control. The collections shall be apportioned and deposited in four special trust accounts in the National Treasury, to wit: 40 percent in the Special National Road Support Fund; 40 percent in the Special Local Road Support Fund, which shall both be managed by the Department of Public Works and Highways (DPWH); 10 percent in the Special Pollution Control Fund, which shall be managed by the Department of Environment and Natural Resources; and 10 percent in the Special Vehicle Pollution Control Fund, which shall be managed by the Department of Transportation (DOTr). “We remove an opaque and intricate layer of the bureaucracy and put the funds directly in the hands of the implementing agencies. We clear up who is responsible and accountable for the use of the funds, which would lead to proper and better use of the funds. We also ensure that projects funded out of the MVUC collections, particularly for construction and improvement of local roads, which is badly needed in the countryside, will be distributed equitably throughout the country,” Romualdo said. The measure, as approved on second reading, provides that 80 percent of the Special Local Road Support Fund will be distributed among the DPWH District Engineering Offices, to be apportioned

Mangun. . .

continued from A10

complex lowers the price of a unit, it can affect the selling price of all the other units. Therefore, the way to understand price movement on the stock market is to see the big picture of how total—not a particular individual’s —money is moving in and out. This

Speaker Pantaleon D. Alvarez said earlier that there was a “pattern of anomalies” for the past decade where COA uncovered the illegal use of the Road Fund estimated to have amounted to a total of P90.7 billion from 2001 to December 2012. State auditors also noted large discrepancies amounting to P1.4 billion in the total collection of Road User’s Tax between the collections declared by the Land Transportation Office and the amount certified by the Bureau of Treasury. based on equal sharing, population and land area. The House is expected to approve the measure on the third and final reading when it resumes session on May 15. The question is: What happened to the huge funds of the Road Board lost to corruption and other scams and the officials involved in it? Speaker Pantaleon D. Alvarez said earlier that there was a “pattern of anomalies” for the past decade where COA uncovered the illegal use of the Road Fund estimated to have amounted to a total of P90.7 billion from 2001 to December 2012. State auditors also noted large discrepancies amounting to P1.4 billion in the total collection of Road User’s Tax between the collections declared by the Land Transportation Office and the amount certified by the Bureau of Treasury. Another P515.5 million of the Road Fund was used in 2004 to 2008 for payment of salaries, allowances, maintenance and other operating expenses normally chargeable to the regular budget, Alvarez said. In 2011 some P62.5 million of the Road Fund was spent as overhead expenses for the Road Board’s engineering, and this was on top of the P1.6-billion irregularities discovered in 2013, Alvarez also noted. Suspected by many to have been a source of massive corruption and other scams, the Road Board quietly operated under RA 8794, which imposed a MVUC on owners of all types of motor vehicles. This law was enacted on June 27, 2000. The Speaker said all Road Fund collections must be remitted to the National Treasury and properly appropriated to government agencies such as the DPWH and the DOTr. The Road Board was supposed to ensure prudent and efficient management of special funds known as the Road User’s Tax (or Road Fund) exclusively for road maintenance and improvement of road drainage, installation of efficient traffic lights and road-safety devices, and air-pollution control. To reach the writer, e-mail cecilio.arillo@ gmail.com.

also applies to specific stock-market issues. The question then is, what do you look for to measure this money flow? When you know that, then you can anticipate a coming stock market crash. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Tuesday, April 3, 2018 A11

ABOUT TOWN

N the ongoing debate on what type of government is better suited for the country, many people interchangeably use the terms “federal form of government” and “federal system of government” to refer to what should be the alternative to the current unitary system. “Form” and “system” may indeed be used interchangeably but, if we’re to be strict about it—and accurate— we should be using the latter when referring to both the unitary and federal types. The dictionary defines a system as a “group of interrelated, independent or interacting elements forming a collective entity,” or “a methodical arrangement or assemblage of parts, facts, concepts,” while a form is the “particular shape or configuration of something as distinct from its color, texture, etc.; the particular mode or appearance in which a thing manifests itself.” If that’s the case, the federal system can have a presidential-unicameral parliamentary form, or a presidential-bicameral parliamentary form. What’s the best form under a federal system? That’s what the consultative committee (Con-com) tasked to come up with a draft Charter will have to decide. That is, if there’s already agreement that a federal system is more preferable than the unitary system. But that’s another story that should be tackled at another time.

Anti-dynasty move gains support

While on the subject of Charter change (Cha-cha) that seeks, among others, to shift to a federal system of government, another key issue

is whether we should put our collective foot down on political dynasties. These dynasties, according to political scientists, have been responsible for perpetuating poverty in the provinces they control through the deft use of the tried-and-tested formula of “guns, goons and gold.” The 1987 Constitution expressly provides for a prohibition on political dynasties but left it to Congress to come up with an enabling law. Not unexpectedly, various bills in Congress seeking to give flesh to the constitutional provision ended up in the trash can. After all, would the members of political families that have dominated the legislature commit hara-kiri by voting in favor of anti-dynasty measures? But the winds of change have started blowing in the right direction, that is, in the faces of entrenched political families, as there is a growing clamor for an end to political dynasties in this country. That political dynasties may soon be a thing of the past is evident in the collective stand of leaders of the premier schools of government and development management in the country against it. Among the institutions are the Ateneo School of Government, University of the Philippines National College of Public Administration and Government, AIM Stephen Zuellig Graduate School of Development

Management, Philippine Institute for Development Studies and Jesse M. Robredo Institute of Governance. In a statement, the heads of these academic and research institutions recently expressed full support for the stand of 13 lawmakers who signed the Senate committee on electoral reforms and people’s participation’s report banning political dynasties. The senators, they said, “have broken an over 25-year-old impasse on a key reform by supporting political dynasty regulation. This is a reform that the 1987 Constitution called for our leaders to pass into a law in order to prevent the monopoly of political power.” The Senate bill seeks to prohibit immediate and extended relatives from running for public office to succeed or replace or simultaneously seek a post as an incumbent relative in the same area, among others. The Con-con on Cha-cha convened by President Duterte to come up with a draft Constitution that would be deliberated upon by Congress acting as a constituent assembly has already recommended a ban on political dynasties. These all represent a big step forward, from where we sit, in having a level playing field in Philippine politics and governance. We really hope the days of political dynasties in this country are already numbered. We can’t wait to give them a decent burial.

An exercise in futility

Should the peace talks between the government and the communist-led National Democratic Front be restarted? Defense Secretary Delfin N. Lorenzana recently slammed the door on any resumption of talks with the NDF as he lamented that the rebels were far from serious in talking peace and interested only in what advantages they can get across the negotiating table. Even as Duterte and the defense

and military establishments appear to be firm in their position that the talks with the NDF should not be resumed as the Communist Party of the Philippines (CPP) and its military component, the New People’s Army (NPA), are already “terrorist organizations,” members of the House of Representatives recently crossed party lines to urge the President to “listen to the clamor of the people” and to return to the negotiating table. House Resolution 1803 is supported by 61 lawmakers who said agreement on comprehensive agreements on socioeconomic and political reforms would “lay the basis for a just and lasting peace.” “Continuing the peace talks would benefit the Filipino people, most of whom are poor peasants and workers, as the agreements on agrarian reform and national industrialization may address their issues and concerns and help provide relief for their economic hardships,” the lawmakers pointed out. Will Duterte heed the call of the lawmakers? Or will he stick to his earlier stand that the talks are off unless the CPP-NPA stops attacks on government forces and its so-called “revolutionary taxes,” and are willing to lay down their arms? The resumption of the talks should be contingent, we think, on the willingness of the NDF to declare a temporary cease-fire for the duration of the negotiations. A mutual declaration of temporary cease-fire would send a clear message to the public that both sides are sincere and acting in good faith to discuss the root causes of armed rebellion and how to solve them. Talking while government troops and NPA rebels are engaged in deadly combat on the ground is an exercise in futility and a colossal waste of time, resources and energy that will not bring us closer to the attainment of a just and lasting peace.

E-mail: ernhil@yahoo.com.

Only the US can sustain the peace in Taiwan By Hal Brands Bloomberg View

ecent weeks have seen significant developments in the awkward three-way relationship between Taiwan, China and the United States. First, President Donald J. Trump signed the Taiwan Travel Act, which made it American policy to encourage greater high-level contacts— including defense and national security ones—with Taiwan, despite the displeasure those contacts will surely incur from China. Second, Taiwan’s spy chief warned that a more empowered and assertive Chinese government, under the leadership of President Xi Jinping, is now relying on “more sharp-elbow rhetoric and tactics” to deal with an island it considers a renegade province. North Korea and the South China Sea may be the Asian hot spots getting the most attention today. But the waters are getting choppy in the Taiwan Strait, as tensions rise and the threat of crisis grows. Hostility between Taiwan and the mainland dates back to 1949, when the remnants of Chiang Kai-Shek’s Nationalist regime took refuge on the island after losing the Chinese civil war to Mao Zedong’s communists. For more than two decades, the US protected Taiwan and recognized Chiang’s government as the sole representative of China before shifting its allegiances and diplomatic recognition to Mao’s regime in the 1970s. Since then, Taiwan has continued to exercise de facto sovereignty but not de jure independence, and all but a small number of countries have transferred diplomatic recognition to Beijing. The United States has pursued an equally ambiguous policy of not recognizing Taipei diplomatically but selling it weapons for selfdefense. It has also pledged—albeit in very hedged and murky terms—to prevent China from using force to bring Taiwan to heel. This situation has never been comfortable, but it has nonetheless

endured longer than almost anyone would have predicted. And, from 2008 to 2016, China pursued the goal of unification primarily through carrots rather than sticks, by working with the comparatively friendly government of Ma Ying-Jeou to increase economic, cultural and political ties. The idea animating this policy was that weaving a denser web of interactions between Taiwan and the mainland might lead to the eventual peaceful reabsorption of the island. For years, Chinese leaders could reassure themselves that Taiwan’s anomalous status was tolerable because, in the long run, unification was simply a matter of time. Now, however, they have to face the possibility that time is not on their side after all. In Taiwan, the tide is increasingly turning away from the idea of unification with China. Polls show that a large majority of the population now considers itself Taiwanese rather than Chinese. Moreover, as Taiwanese democracy has matured and its citizens have seen how China has slowly squeezed the life out of Hong Kong’s political institutions, public support for unification has dropped sharply. These trends were offset for much of the past decade by Ma’s generally conciliatory policy. But the election of Tsai Ing-Wen in 2016 brought to power the Democratic Progressive Party, which traditionally supported outright independence. For Beijing, any declaration of Taiwanese independence would cross a bright red line, perhaps triggering the use of force. And although Tsai has since pledged to respect the status quo, suspicions persist in Beijing that she will maneuver Taiwan toward a formal break. China’s incentives for a sharper policy have simultaneously been growing. The awesome rise of Chinese power over the past few decades has given Beijing better options for coercing— whether economically or militarily—a wayward Taiwan. Most analysts still agree that China would face enormous difficulties in invading and conquer-

ing Taiwan, especially if the US intervened in Taipei’s defense. But Beijing’s increasingly impressive naval, air and missile capabilities have nonetheless given it a bigger stick to wield, and its development of anti-access/area denial, or A2/AD, capabilities have raised the prospect that United States forces coming to Taiwan’s defense might suffer enormous losses. As a 2015 Rand Corp. study concluded, the United States is approaching, if it has not already reached, the point at which the defense of Taiwan might be too costly to contemplate. Rising Chinese nationalism is also making it more difficult politically for Beijing’s leaders to defer the question of Taiwan’s status indefinitely. And then there is Xi Jinping. China’s supreme leader clearly aspires to claim great-power status for his country, something that is incompatible with the continuing humiliation imposed by Taiwan’s separation. He and other Chinese officials have stated that they will not wait forever for Taiwan to return to Beijing’s control. A leader who seems to believe that both he and his country have a great historical destiny to fulfill might very much like to have unification with Taiwan become part of his legacy. After Tsai’s election, Beijing thus restricted tourism to Taiwan and imports of key Taiwanese goods, such as fish, in an effort to punish the island economically. Beijing has upped its military presence in the waters and airspace around the island, and ostentatiously sent its aircraft carrier through the strait as an unsubtle reminder of Chinese military power. Retired Chinese military brass have urged the government to plan for an invasion of Taiwan. Experts still believe an outright military showdown is unlikely, but the cross-strait relationship nonetheless appears to be entering another period of heightened tensions. Those tensions will pose a challenge for the US. In the years after the opening to Mao’s regime in 1971, United States officials initially saw

Taiwan as an unwelcome irritant to a budding geopolitical relationship with the mainland. But China was a tacit Cold War ally back then. Today, China represents perhaps the greatest threat to American interests and influence, both in the Asia Pacific and globally, and Taiwan is a critical frontline state. It would not serve US interests for Taiwan to provoke a military crisis with the mainland; it would also be a strategic disaster were Beijing to successfully coerce or compel reunification with Taiwan. These competing pressures dictate a careful balancing act. The United States should continue to caution Taipei against making destabilizing moves toward independence. It should probably not inflame the situation by once again extending formal diplomatic recognition to Taiwan or otherwise revisiting the “one China” policy, as incoming national security adviser John Bolton has sometimes suggested. Yet, it should nonetheless help strengthen the island against aggression or coercion. This means investing in the US military capabilities necessary to burst China’s A2/AD bubble should conflict erupt. It means pushing Taiwan to acquire and emphasize its own A2/AD capabilities to frustrate any Chinese military operations until the United States can intervene. It means helping to strengthen Taiwan diplomatically and economically by encouraging stronger ties with other US allies and partners in the Asia Pacific. Finally, it means pushing ahead with the expanded high-level contacts and visits called for by the Taiwan Travel Act. Beijing will fulminate against those contacts and try to punish Taiwan economically or diplomatically in their wake. But they will give United States officials better insight into the state of Taiwanese politics and security, and they will send the crucial message that more aggressive Chinese behavior will not weaken but strengthen America’s relationship with a democratic Taiwan.

2nd Front Page BusinessMirror

A12 Tuesday, April 3, 2018

PCC ready to flag down Uber-Grab merger if… G

By Lorenz S. Marasigan

@lorenzmarasigan

IVEN that the merger between tech companies Uber and Grab have potential “far-reaching impact” on the market that will significantly dampen competition, the antitrust body said it is determined to put the deal under review. Philippine Competition Commission (PCC) Chairman Arsenio M. Balisacan said the deal could give Grab a “virtual monopoly” should it push through. “The Grab-Uber acquisition is likely to have a far-reaching impact on the riding public and the transportation services,” he said.

To recall, Grab’s founders announced in Singapore last week that they are acquiring Uber’s Southeast Asia units, namely: the Philippines, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand and Vietnam.   Under the deal, Grab is taking all of Uber’s shares in Southeast

Balisacan: “The PCC is looking at the deal closely with the end view of potentially reviewing it for competition concerns, as a notified transaction, or by opening a motu proprio case.”

Asia with Uber receiving a 27.5-percent stake in Grab, which is reflective of the companies’ respective market shares. “The PCC is looking at the deal closely with the end view of potentially reviewing it for competition concerns, as a notified transaction, or by opening a motu proprio case,” Balisacan said. This means that the antitrust body may launch a probe even without an official notification from

the parties involved in the deal. “A merger or acquisition review using competition lens will determine whether the merger of two players in the ride-sharing market will substantially lessen competition,” Balisacan explained. T he competition watchdog is mandated to protect competition in the market and prohibit anticompetitive conduct, including mergers and acquisitions of businesses and companies that may substantially prevent, restrict or lessen competition. Among those that will be determined by the antitrust agency are the post-acquisition effects to the market, including price increases, service levels, options and fair entry of new competitors. “The PCC recognizes that the exit of Uber in the Philippines will put its rival Grab in virtual mo-

nopoly in the ride-sharing market until the new players come into operation,” Balisacan said. Consumers earlier voiced out fears on increased prices, lack of options and a potential worsening of the service. Grab Philippines Country Manager Brian Cu has since allayed fears on the said issues, saying that services will continue to improve and that fares will remain at the levels set by the Land Transportation Franchising and Regulatory Board (LTFRB). The PCC met with the representatives of the parties on Monday to determine if the transaction will meet the merger-notification thresholds, and thereby verify if the Grab-Uber transaction is notifiable. “The consultation is taken as Continued on A2

bir: Understaffed but still reaching for the sky Continued from A1

taxpayers’ base, review all pending cases under its Run After Tax Evaders (RATE) program, strengthening sanctions under its Oplan Kandado program, cleaning up its Taxpayer Account Management Program, improving excise tax collections from its Large Taxpayers Service and developing electronic sales reporting, invoicing and receipting in the bureau. Bureau of the Treasur y data showed that, for the whole month of January 2018, the BIR collected P175.6 billion, which is 19.13 percent higher than revenues collected in January 2016 amounting to P147.4 billion. “The growth was mainly driven by the implementation of the TRAIN, which took effect on January 1, 2018,” the BTr said. Under its intensified audit-investigation program, the BIR expects to collect an amount equivalent to 3 percent of the bureau’s total collection goal with the implementation of voluntary compliance collection from withholding tax on compensation income, Tax Remittance Advice, Withholding Tax of local government units, Special Allotment Release Order and One-time Transactions. On the implementation of its arrears-management program, the BIR expects to increase collection by 6 percent of potentially recoverable arrears. For its RATE program, the BIR targets to review all pending cases with the Court of Tax Appeals and the Department of Justice, and to strengthen the program by filing a minimum of one significant case per semester per

construction boom Crane towers are set up at a reclaimed section in Parañaque City in preparation for another construction in the area. Latest economic reports said the country’s GDP growth to be above 7 percent in the first quarter, boosted by the construction and manufacturing sectors. NONIE REYES revenue district office (RDO). For its Oplan Kandado program, the BIR aims to strengthen the imposition of prescribed administrative sanctions, through enforcement of at least one closure per semester, per RDO. To improve taxpayer compliance and satisfaction, however, a massive tax-education campaign is being mounted by the BIR, along with the implementation of Information and Communications Technology Solutions for improved taxpayer services. Six programs were included un-

der its efforts to strengthen good governance in the bureau: Expediting the recruitment of new personnel, as well as the promotion of its qualified employees; implementation of capacity building for its officials and personnel; improving its attendance and leave-management program; attaining a 100-percent utilization rate for the BIR in line with the budget-utilization program; encouraging at least one RDO to submit an appropriate budget proposal for the acquisition of one building; and

acting upon administrative cases filed against erring revenue officials and employees. The agency’s dilemma is how to attract honest, top-of-the-line professionals given its salary scale. Finance Secretary Carlos G. Dominguez III favors giving higher salaries to enable the agency to attract highly skilled workers. However, the finance chief said exempting BIR employees from the salary-standardization law should come with the lifting of security of tenure among its employees.

To help the agency transform into a center of excellence and attain collection efficiency, at least 21,634 employees are needed. Unfortunately, the BIR currently has only 9,292 employees, way below the number of required personnel. A budget of P20.193 billion will enable the agency to hire professionals to complete its needed staff of 21,634 employees. “The government has to provide more competitive compensation and benefits to BIR examiners who are currently earning a net income of P14,000 a month. How can we hire the best and the brightest to join the so-called“most corrupt”government agency if we don’t invest in hiring the right people who can provide good and honest public service?”Abrea Consulting Group President Raymond A. Abrea said. Notwithstanding its manpower shortage, the BIR is expected to do its job. Dominguez has directed the BIR to zero in on ways of properly collecting taxes from the tax-reform packages that the Duterte administration will push in Congress this year to make the current tax system simpler, fairer and more efficient. “This year we expect to get the succeeding packages of the tax-reform program through the legislative process. Included in these packages are cuts in the corporate income tax-rate, which we expect to balance with the modernization of the many incentives given out to investors. This early, I hope the BIR will begin studying the ways and means to properly collect the taxes due under this new law,” Dominguez said.

www.businessmirror.com.ph

Manufacturers show recovery signs in March Not only did export sales return to expansion, the rate of growth was the fastest since the end of 2016.”—Aw By Bianca Cuaresma @BcuaresmaBM

he country’s manufacturing sector finally picked up its pace in March, capping the first quarter with a recovery from its muted performance in the first two months of the year, based on the latest results of the country’s Purchasing Managers Index (PMI). On Monday regional business media organization Nikkei and international think tank IHS Markit announced the performance of the Association of Southeast Asian Nations manufacturing sector, with the Philippines ranking third among seven economies in the region. The Philippines’s PMI, in particular, rose to 51.5 in March, indicating overall improvement in the health of the sector. The PMI is a composite index aimed to gauge the health of the country’s manufacturing sector. It is calculated as a weighted average of five individual subcomponents. Readings above the 50 threshold signal a growth in the manufacturing sector, while readings below 50 show deterioration in the industry. The local manufacturing sector’s performance recovered from its sluggish record in February, when Philippine PMI hit 50.8 and ranked fifth out of the seven countries in the region. The improvement in the country’s PMI during the month was attributed to the fading effects of the impact on demand of the new excise taxes.The Philippine government in early-2018 moved to implement the first package of its tax-reform law. “Other survey indicators also suggest a brightening outlook. Order book growth hit a three-month high, supported by revived export growth. Not only did export sales return to expansion, the rate of growth was the fastest since the end of 2016. The upturn triggered firms to step up purchasing activity and buildup stocks. Optimism also improved to an eight-month high,” IHS Markit Principal Economist Bernard Aw said. “One area of concern is the extent to which sharp cost increases will feed through to consumer prices, which, in turn, would affect future monetary policy. Input cost inflation reached a new survey-record high during March, matched by a sharp rise in selling prices, as companies scrambled to protect their margins,” he added. The report further indicated signs of further strengthening of client demand, as inflows of new business picked up to its highest in three months. Overseas sales also returned to growth after two months of decline. The sector is also buoyed by higher confidence, encouraging companies to scale up input and accumulate more stocks. During the month, Myanmar’s manufacturing sector grew the fastest to hit a PMI of 53.7, followed by Vietnam’s 51.6 and the Philippines’s 51.5. Singapore was at the bottom of the list, with a PMI of 47.5.

Corporate corruption is alive: Can data catch the criminals? Continued from A1

Lapses like Caterpillar’s alleged $2-billion tax fraud exposed by a whistle-blower in 2013. Or Volkswagen’s decision to c he at on d iese l- em i ssion tests for 11 million cars (its settlement tab is $14.7 billion and growing/its reputation is badly affected). And Wells Fargo’s ploy to open as many as 3.5 million potentially fake bank and credit-card accounts in customers’ names since 2002, incurring a $142-million national class action settlement. Ethics and compliance software can plug into corporate digi-

tal infrastructure, from e-mail to contact management, ingesting gigabytes of data about employees and company transactions. Machine-lear ning a lgor ithms are turned loose to look for suspicious patterns of behav ior. Software can hand companies a self-portrait, fair or foul, painted with their own data. Given the data-privacy legislation in many parts of the world, including the Philippines, complying by using software is walking away from a bad decision, walking toward doing the right thing, preventing data breaches. One ethics software developer is a company called Convercent

which has raised $78 million, according to Pitchbook. It is joined by other start-ups, such as AIpowered chat bot Spot, aimed at pointing powerful algorithms at company’s data to clean up their corporate messes, or help companies to do gap analysis and risk assessment, and recommend appropriate solutions like the software developed by Straits Interactive Pte. Ltd. of Singapore. For decades, compliance was not taken that seriously, but that’s yesterday. Market pressure and legal pressures are increasing and forcing companies to create ethical corporate cultures that attract talent and shade out rivals.

Studies suggest that more ethical companies that create ethical supply chains outperform the market with higher returns, faster growth and lower volatility. Some companies I have visited recently have created substantial compliance departments and are ahead of regulators’ standards. Many companies are attempting to catch bribery, corruption and fraud by using rules-based tests pulling on spreadsheets. But these are easily evaded. In response, the companies mentioned above, but also competitors like Naves and Metricstream, have moved their reporting systems online, automating the processes.

Predictive analysis will eventually head off ethical issues. The new software solutions are ingesting data from the whole organizational structure of companies, their national or international affiliates, and are supervising their supplychain management. Data alerts can go directly to board members ensuring that suspicious reports are not hidden. However, new data integrations have to stick to using data that was legally collected. Companies will have to tread cautiously in new territories to ensure privacy while allowing them to root out malfeasance. Defining what that will look like as new

data streams come online is less certain. But this will certainly evolve over time, with hopefully one clear objective in mind: no ethical breaches. What makes data protection with the use of software truly unique is that it helps organizations manage organizational data-privacy compliance, with the enhanced automation, collaboration and productivity. As Straits Interactive says: “Our platform contains intelligence to generate policies and recommendations tailored to your organization.” Comments are welcome/assistance is available—contact me at Schumacher@eitsc.com.