Issuu

BMReports FISHING MORATORIUM: IS PHL DOING IT RIGHT? By Jonathan L. Mayuga

Conclusion

ack of funds? The crafting of the management framework for sardines was initiated a few years back, but sources said it was later suspended because of lack of funding and a decision of Department of Agriculture (DA) officials to stick to the strategy of declaring fishing moratoriums for the meantime. Sources also said the commercial fishing industry has put pressures on the Bureau of Fisheries and Aquatic Resources (BFAR), because they are in favor of declaring closed fishing seasons as they are able to gain

The catch of the day by fishermen of San Enrique, Negros Occidental. NONIE REYES

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United nations

2015 environmental Media Award leadership award 2008

from its positive impact with no regulatory policy limiting their number of fishing expeditions or volume of fish production once the moratorium is lifted. Sources said the BFAR is not capable of monitoring the commercial fishing industry to come up with an accurate estimation of total production. According to Oceana’s concept of a management framework for sardines, it should be a comprehensive skeleton of management with all the complete elements of transparent, credible, timely science structure, plan, monitoring, setup and budget. It should also have an accountable policy and good governance structure and mechanism. Continued on A2

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

Wednesday, April 18, 2018 Vol. 13 No. 186

Traders see opportunity, risk in US-China trade tiff By Elijah Felice E. Rosales

@alyasjah

HE Chinese symbol for “crisis” also means danger and opportunity; a view Philippine exporters have taken as the United States and China rattle the sabers of a trade war. For Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. (Philexport), the looming tiff on trade between two of the world’s largest economies provides an

opportunity to break into markets that might reduce trade with Washington and Beijing for fear of taking collateral damage from their imposition of stiffer tariffs. “Well, I don’t

Ortiz-Luis: “I’m at a loss at the moment what the government can do. The government does not plan to give out additional incentives to investors. I guess we just have to wait on how big the damage is, and then you expect the government to try to find a way.”

expect that [trade war] to be negatively impacting on us,” Ortiz-Luis told the BusinessMirror. What he expects, instead, are opportunities to seek new markets. “The trade war Continued on A2

RICE PRODUCTION SEEN HITTING NEARLY 20 MMT THIS YEAR

@jonlmayuga

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Never at the expense of freedom and sovereignty Teddy Locsin Jr.

free fire I delivered this statement at the 2018 Session of the United Nations Disarmament Commission on April 3, 2018, at United Nations Headquarters, New York. “Madam President1,

‘T

he Philippines assures you of full cooperation to achieve a successful conference. It is pleased with the consensus outcome document of last year’s UNDC on conventional weapons. We share the hope of replicating this success in a more challenging environment.

PCC merger review as tool for competitive markets, consumer welfare

19.28 MMT

PESO exchange rates n US 52.0270

business news source of the year

Continued on A10

By Jasper Emmanuel Y. Arcalas @jearcalas & Bernadette D. Nicolas @BNicolasBM

h ilippin e r i c e production could rise by nearly 3.11 percent to a record-high of nearly 20 million metric The volume of unmilled tons (MMT) on the back rice produced by the of higher yield and better Philippines last year farm-gate prices, according to the Department of Agriculture (DA). Despite this, the United Nations’s Food and Agriculture Organization (FAO) projected that Philippine rice imports this year would expand by 40 percent to 1.4 MMT. “This year rice production is expected to grow by about 600,000 metric tons [MT], stimulated mainly by good palay-buying prices, favorable climate and the increase in the adoption of good quality and hybrid seeds by farmers,” Agriculture Secretary Emmanuel F. Piñol said on Tuesday. Rice output last year grew by 9.3 percent to 19.28 MMT, from 17.63 MMT recorded in 2016, according to the Philippine Statistics Authority (PSA). The 9.3-percent increase in palay output last year allowed the country to reach a 96-percent self-sufficiency in rice, according to the DA. Continued on A2

2016 ejap journalism awards

Atty. Johannes Benjamin R. Bernabe

Competition Matters

verdant island The famous Marlboro Hills of Batanes on Batan Island is a protected site. It’s also known as Racuh a Payaman, which literally means big pastureland. Its hills and mountains offer breathtaking views of the Pacific Ocean and the now dormant Mount Iraya. Water buffalo, cattle and horses roam freely on its green undulating hills. Among tourists, the area often forms the highlight of their visit. Stephanie Tumampos

House eyeing to approve BBL next month By Jovee Marie N. dela Cruz

@joveemarie

he House of Representatives has vowed to fast-track the passage of a measure providing for the Bangsamoro basic law (BBL), which seeks to abolish the Autonomous Region in Muslim Mindanao (ARMM), next month.

This, after two out of three committee approved on Monday House Bill 6475. HB 6475 is principally authored by Speaker Pantaleon D. Alvarez. It is the same as the BBL version submitted by the Bangsamoro Transition Commission (BTC) to Congress.

f all the powers vested in the Philippine Competition Commission (PCC), none has attracted as much attention as its power to review mergers and acquisitions (M&As). Large businesses have had to not only conform with new regulations but contend, as well, with novel standards of scrutiny and approval. Small- and medium-sized enterprises have looked to the PCC’s exercise of this power for assurance that competition in or for the market will be maintained. Consumers expect this review would ensure choice, reasonable price and quality of the products they use. Continued on A11

See “House,” A2

n japan 0.4858 n UK 74.6119 n HK 6.6278 n CHINA 8.2897 n singapore 39.7183 n australia 40.4666 n EU 64.4146 n SAUDI arabia 13.8735

Source: BSP (17 April 2018 )

BMReports BusinessMirror

A2 Wednesday, April 18, 2018

www.businessmirror.com.ph

Fishing moratorium: Is phl doing it right? Continued from A1

More important, it should come up with an implementation and enforcement mechanism, which is totally something new for the Philippines.

Demystify sardine beaching

Vince Cinches, Ocean Campaigner of Greenpeace Southeast Asia, said in the Philippines they also support the push for a study on sardine beaching “in order to better understand the occurrence and come up with clear regulatory and management measures.” Cinches added the reason for sardine beaching could be attributed to abundance or deoxygenation. “Greenpeace would like to

recommend for the government to review existing management measures of sardines in any part of the Philippines, such as closed fishing season. The recommendation to review is to ensure that a new measure should be multi-pronged, multi-tool approach to be more effective,” Cinches said. He added it is important that a comprehensive study is pushed to look at beaching in one specific area and look at factors on the beaching, such as pollution, climate and fishing pressures. He said the output of the national sardine measures should look at national level management, then specific area management. “It should be equitable and should not only benefit the big industry and

big commercial fishers, it should set catch limits within the context of stocks rebuilding and biological limits, e.g. mature sardine size is smaller compared to other countries,” he said. According to Cinches, sardine beaching is alarming, “because there is no science being put in place. All are anecdotal evidence that the ocean is okay because there’s a lot of fish.” “That is why we urge the BFAR, the industry and the scientific group, to pursue science and determine the causes of the beaching, which could be attributed to abundance, oxygenation, or pollution. Cinches said: “Managing sard i ne stoc k s i s i mpor t a nt i n maintaining the balance in our

Traders see opportunity, risk in US-China trade tiff Continued from A1

will not affect other products, like in agriculture. I don’t think that will trigger [an impact] alone,” he added. “We might find wider opportunities in this [possible] trade war.” The tiff on trade between the US and China started after US President Donald J. Trump ordered more stringent levies on steel and aluminum products in a move that further solidified his protectionist stance. Trump authorized the imposition of higher tariffs on steel at 25 percent and aluminum at 10 percent in the face of left and right opposition from his Republican partymates and Washington’s trading partners.

China counters

FEATHERS were ruff led after Trump’s tack as analysts see the move would take a toll on global trade since the US is the world’s largest importer of steel. In 2016 the United States accounted for about 8 percent of global steel imports, with the volume it imported at least 15-percent higher than that of Germany’s and South Korea’s, the world’s second- and third-largest steel importers, respectively. China countered Trump’s card early-April by announcing the additional tariffs it plans to slap on 106 US products. The tariffs, according to China’s Ministry of Commerce, are designed to target up to $50 billion of United States products annually. Aside from this, the Asian superpower also filed a case against the US at the World Trade Organization (WTO) for the additional duties on steel and aluminum products. China argued the levies violated the 1994 General Agreement on Tariffs and Trade and of the Agreement on Safeguards. This series of events, Ortiz-

Luis said, could scare off some of Washington and Beijing’s trading partners, and could be to the benefit of smaller economies like the Philippines. The latter boosts the Philexport’s confidence that exports can still rebound in the second quarter, even if this is when the tariffs are expected to be implemented all-out.

Worry points

IF there is one sector Ortiz-Luis is worried about, it is the country’s electronics exports, which account for more than half of Philippine merchandise exports. “There might be some opportunities [in an all-out trade war], except for certain products, like electronics, because we supply parts and we buy parts,” Ortiz-Luis said. “When China and the US—both suppliers and buyers of electronics—engage in a trade war, somehow we expect a negative impact.” The Philexport chief explained the two countries at loggerheads are top importers of electronic products from the Philippines, with the US as second and China at third last year. “However, the electronics industry might get hit, and we cannot afford that because that sector is too big of a scope in our exports,” Ortiz-Luis said. He added this should ring an alarm in government halls, as the country is banking on the electronics industry to deliver its target of hitting at least $122-billion export receipts in 2022.

Helpless, helpless

HOWEVER, Ortiz-Luis said the government cannot do anything if the fallout from an economic skirmish between the United States and China hits the Philippines. Malacañang maintained it will stand in the middle ground in the

trade conflict between the US and China given the country’s robust political, economic and military activities with the two superpowers. “Well, I guess we cannot do anything because the trade war is between China and the US. It is our manufacturers who should adjust to the situation. It is the private sector who must do interventions to the trade war rather than the government,” Ortiz-Luis said. The simplest way the government can help is do its part on making the country on a par with its neighboring countries in Southeast Asia in terms of competitiveness, according to him. “I’m at a loss at the moment what the government can do. The government does not plan to give out additional incentives to investors,” Ortiz-Luis said. “I guess we just have to wait on how big the damage is, and then you expect the government to try to find a way.” He added that currently, the sector doesn’t see “what the government can do, except for the usual improving the environment for business and making it more competitive.” As for the Semiconductors and Electronics Industries of the Philippines Foundation Inc. (Seipi), there is no need to change its strategy in reaching that 6-percent growth target for this year, unless the tariffs are implemented outside of paper. Seipi President Danilo C. Lachica said the electronics industry will not shift its gear in the face of a trade conflict, and will persist to deliver for the country’s exports. “We are not doing anything different, [but] producing the best products at competitive prices,” Lachica told the BusinessMirror. “The global market forces will take effect.”

marine ecosystem. For example, for a high-value commodity, such as tuna, sardine is a staple species in their diet. So it has economic implications aside from affecting the protein source of Filipinos,” said. This, he added, is aside from the fact that sardine, particularly tamban, is one of the most affordable fish.

Fishermen’s standpoint

Fernando Hicap, chairman of the Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) told the BusinessMirror in an interview that sardine run is a normal occurrence but cannot in anyway be attributed to abundance. Also, Pamalakaya Information

officer Jam Pinpin also said that the decline in production of fimbriated sardines from 83,842.34 metric tons (MT) in 2015 to 79,237.05 MT in 2017 as reported by the PSA is proof of declining fish stock. While admitting that fishing moratorium somehow helps replenish the country’s fish stocks, the effect is temporary and in the end would only benefit large-scale commercial fishing companies. “Only commercial fishing companies have the capacity to catch huge volumes of fish. After a fishing moratorium, naturally, there is plenty to fish but small fishermen can never compete with commercial fishing because their capacity to catch is limited,” Hicap said. He added the gover nment

continues to allow massive land reclamation in many coastal areas, which destroy mangrove areas, seagrass beds and corals —the feeding ground of fingerlings and juvenile fish species. In the end, Hicap said the management intervention of the BFAR is all for naught unless the artisanal or municipal fishermen start to feel its benefit, through an increase in income after bringing home food on the table. “All these management interventions are useless unless our fisher ies or ientation change. The Philippines fishery sector is export-oriented. The government should focus on producing fish for local consumption rather than export,” he said.

Rice production seen hitting nearly 20 MMT this year Continued from A1

“Last year the country posted its highest rice harvest in history at 19.28 million metric tons, which reduced the country’s dependence on imported rice from over 2 million metric tons in 2010 to only about 600,000 to 800,000 metric tons this year,” Piñol said.

More imports

The FAO said in a report published recently that Philippine rice imports this year would expand by nearly 400,000 MT from the previous year’s level. This, the report noted, reflects Manila’s efforts to beef up the buffer stocks of the National Food Authority (NFA). The expected hike in Manila’s rice purchase abroad would drive its total cereal imports this year to a “near-record” level of 7.2 MMT, 5.88 percent higher than the 6.8 MMT recorded in the previous year, according to the FAO. The FAO estimated that wheat imports in the July 2017 to July 2018 marketing year, would “remain close” to last year’s high level at 5.5 MMT, “owing to continuing strong demand for both high-quality wheat for milling and low quality wheat for feed.” “Maize imports are forecast to surpass last year’s below-average level and reach 430,000 MT, reflecting expectations of a decreased output,” the FAO said. In a meeting on Monday, the NFA Council (NFAC) has given the go signal to import 250,000 MT of rice via the government-togovernment mode to replenish the stockpile of the NFA. President ia l Spokesma n

House. . .

Continued from A1

The House committee on Muslim affairs, voting 5-3, and special committee on peace, unity and reconciliation, voting 6-4, approved the motion to pass HB 6475 as the BBL version and retain all of the bill’s provisions. However, the committee on local government rejected the motion by a vote of 1-9. House Deputy Speaker Bai Sandra Sema raised the motion to pass HB 6475 as the BBL version during the joint meeting of the three panels. “The passage of this bill [at the plenary] will be quick following President Duterte’s instructions and support from Muslim legislators,” Sema said in an interview. “It [HB 6475] is the most accepted version because the BTC appointed by the President crafted that version, which came from Malacañang, submitted to Congress authored by no less than Speaker Alvarez and supported by many other congressmen,” she added. HB 6475 is among the four BBL proposals filed in the House. The other three are HBs 92,6121, 6263 and 6475 authored by Sema, Rep. Gloria Macapagal-Arroyo of the Second District of Pampanga, and Rep. Mohamad Khalid

Harry L. Roque Jr. told reporters in a media briefing in Boracay that the volume would arrive in a month and would be sold at P27 per kilogram (kg). “Subsequent importation is to be done by government-to-private [G2P] or auction and importation will be implemented or supervised by the Executive Council Committee headed by the Office of the President,” Roque said. The Executive Council Committee members include representatives from the NFA, DA and Department of Finance, as well as the Office of the President.

Instead of abolishing the NFAC, the highest policy-making body of the NFA, the council has been reorganized, according to Roque. He also announced that three agencies—the NFA, Philippine Coconut Authority and Fertilizer and Pesticides Authority—have been transferred back to the DA. “Because the NFA is under the DA anew, Cabinet Secretary [Leoncio B.] Evasco [Jr.] will no longer be part of the NFA Council,” Roque said. Asked if Piñol will head the NFAC, Roque said an executive order (EO) reattaching the three agencies back to the DA will still need to be issued first. “The composition of the board will have to be agreed upon by the council and whoever who will lead the council will still be agreed upon so let’s wait first for the EO.” But Piñol said in a separate interview “it (heading the NFAC) follows since the NFA is now under the DA.”

Roque also noted that part of the new NFA arrangements include the relief of council member Development Bank of the Philippines’s (DBP), which was approved by the President. He said this was requested by the DBP representative who noted that the bank’s representation in the council is “redundant” since the Land Bank of the Philippines is also in the NFAC. “The Department of Social Welfare and Development [DSWD] will take the place of the DBP,” Roque said in a separate statement. In a statement which was read by Roque during the briefing, Evasco said he respects the decision of the President given the encompassing nature and impact of NFA on the Filipino people and farmers. Evasco also cited the NFAC’s achievements, such as putting in place several policy guidelines to have a “more transparent, competitive, inclusive and accountable” system of procurement and distribution of NFA rice as a result of more than 20 council meetings since his designation as NFAC chairman. “With the President’s decision to transfer the governance to the next council chairman, I believe that NFA can now move forward toward ensuring that corrupt, exclusive and debt-ridden practices during the past administrations will not reign in the next transactions to pass,” he said. “I call the new chairman to take advantage of what we have started and continue the systems transformation can so that it can take root in the NFA,” he added.

Q. Dimaporo of the First District of Lanao del Norte, respectively. According to Sema, the panels will meet again when session resumes on May 15 to approve the committee report on HB 6475. For her part, Party-list Rep. Amihilda J. Sangcopan of Anak Mindanao said it is high time to uphold and pay respect to the previous peace negotiations and signed peace agreements. “The BTC-drafted BBL is the conglomeration of all these peace agreements. The BTC version of the BBL clearly holds the meaningful aspiration of the Bangsamoro people in the quest for the right to selfdetermination. Thus, our call to each and everyone to respect with high regard the substance of those agreements through the provisions of the BBL,” Sancopan said. “Thus, we reiterate and call on the legislature to: respect all peace agreements, adopt the BTC version [of the] Bangsamoro basic law, justly address the concern and welfare of the bona fide, qualified and permanent workers in the ARMM, and, finally, to maintain the stance of peace as the only option to address just and lasting peace in Mindanao and the entire country,” she added. If enacted into law, HB 6475 would repeal Republic Act 9054, titled “An Act to Strengthen And Expand the Organic Act for the Autonomous Region in Muslim

Mindanao,” and RA 6734, titled “An Act Providing for An Organic Act for the Autonomous Region in Muslim Mindanao.” The measure seeks to establish a political entity, provide for its basic structure of government in recognition of the justness and legitimacy of the cause of the Bangsamoro people and their aspiration to chart their political future through a democratic process that will secure their identity and posterity and allow for a meaningful self-governance. Under the bill, the Bangsamoro territory shall remain a part of the Philippines. The measure delineates the core territory of the Bangsamoro to be composed of 1) the present geographical area of the ARMM; 2) the municipalities of Baloi, Munai, Nunungan, Pantar, Tagolan and Tangkal in the province of Lanao del Norte and all other barangays in the municipalities of Kabacan, Carmen, Aleosan, Pigkawayan, Pikit and Midsayap that voted for inclusion in the ARMM during the 2001 plebiscite; 3) the cities of Cotabatao and Isabela; and 4) all other contiguous areas where there is resolution of the local government unit or a petition of at least 10 percent of the registered voters in the area asking for their inclusion at least two months prior to the conduct of the ratification of the basic law and the process of delimitation of the Bangsamoro.

NFA to DA

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BusinessMirror Special Feature

Wednesday, April 18, 2018 A3

Economy

A4 Wednesday, April 18, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Common OFW dream: Earn an average of ₧30K a month

By Cai U. Ordinario

@cuo_bm

he majority of Filipinos who harbor the desire of migrating are looking for an average compensation of only P30,000 or less a month, according to the Philippine Institute for Development Studies (PIDS). In a study titled “A Probe into the Filipino Migration Culture: What Is There to Learn for Policy Intervention?” PIDS Supervising Research Specialist Aubrey D. Tabuga said about 40 percent of study respondents even said they are willing to receive even less than P20,000 to work as overseas Filipino workers (OFWs). When asked about the minimum amount of monthly pay or wage that they seek in overseas work, Tabuga said the respondents replied they expect to receive compensation from as low as P3,000 to around P280,000 or $67 to $6,000. “The key motivation for wanting to migrate is economic in nature. Seven out of the 10 aspirants cited their need to improve their living condition as the main reason for wanting to emigrate,” Tabuga said. These economic reasons are based

on the underlying dissatisfaction of workers with their current incomes or salaries. The majority, or 50.2 percent, of respondents also expressed discontent with their incomes. Further, the study found 43 percent of migration aspirants do not feel satisfied with their current living condition. Only around 30 percent of the non-aspirants expressed the same dissatisfaction. The findings also showed that the majority, or 55 percent, of the prospective migrants expressed dissatisfaction at varying levels; only over a third or 36 percent of those who opt to stay expressed the same sentiment. Tabuga also said that when asked about whether their household’s livelihood improved in the past five years, the proportion of those who expressed dissatisfaction in both groups is comparable, but slightly higher for those want-

ing to migrate abroad at 34.4 percent than those who do not have any plans at 30.1 percent. “Given more secure local job opportunities, a non-negligible proportion would opt to stay. More than a quarter, or 27 percent, of those with migration plans reported that they would change their mind if only there were decent jobs around available for them,” Tabuga said. “If people do have a choice, they would rather stay and be with their families and loved ones. Familyrelated reason is most commonly cited factor that could make wouldbe migrants reconsider their migration decisions,” she added. With this, Tabuga said the government must focus on regional development to widen employment opportunities in far-flung areas in the Philippines. She added there is a need to consider policies that care for the welfare of retirees, including those that allow migrant workers to prepare for retirement. Tabuga said some 11 percent of respondents expressed the need to improve their career, while around 10 percent wanted to finance the education of their children and 8 percent wanted to join/reunite with their kin who are working/ living abroad. The rest of the respondents wanted to earn more and save for the future and for retirement at 7 percent; to build or repair their

own house, 5 percent; and to see the world, experience life in another country. “Many Filipino migrant workers spend so many years of their life working abroad. This finding reflects the possibility that households are not able to sustain their standard of living once they return from overseas job, they are then encouraged to back overseas to sustain their lifestyle. They eventually retire in the place of origin but it is not clear whether they have spent enough for retirement or if that is even something that they have considered,” Tabuga said. Tabuga, likewise, urged the government to undertake a more aggressive information campaign about migration and implement programs on financial literacy not only for current overseas Filipino workers (OFWs) but also those aspiring to work abroad. She said based on the study, only 3 percent of former OFWs or returnees said they obtained their information from government entities. The rest obtained information from personal and social networks, which could be an indication that the lack or absence of government information on labor migration nationwide, despite the thousands who emigrate daily. The data collection was carried out through face-to-face interviews of all the 365 households in barangay Camachile, Orion, in the province of Bataan, a migrant-sending village in the Philippines. The main criteria for selecting the area of study are being rural, having high migration prevalence based on data from the communitybased monitoring system database of the municipality and accessibility from the capital for feasibility of field research. The personal interviews conducted on all 365 households in the study area yield a dataset of 1,555 individuals, including minors. The typical household ’s per capita income is P59,990, or $1,421. The standard deviation is P87,625, or $2,075. Except for one, all the households have access to electricity. Meanwhile, among the 1.4 million land-based Filipino migrants in 2015, around one-third are newhires; while the remaining twothirds consist of rehires. The bulk of OFWs deployed in 2015 went to the Middle East (63 percent) and various Asian countries (28 percent). The rest (9 percent) went to Europe, the Americas, Africa and others. The top 3 country destinations of Filipino workers are Saudi Arabia (406,089), the United Arab Emirates (227,076) and Singapore (141,453).

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Tesda conducts deeper probe vs ‘errant’ TVIs By Claudeth Mocon-Ciriaco Correspondent

he Technical Education and Skills Development Authority (Tesda) has warned at least 85 technical-vocational institutions (TVIs) after some, if not all, were allegedly found to have committed several violations on the implementation of guidelines in the scholarship programs of the agency. Tesda Director General Guiling A. Mamondiong ordered the creation of a Validation Committee (VC) to conduct an investigation into the alleged violations of the 85 TVIs. He, likewise, sought for the immediate cancellation of these TVIs’ certificates of program registration and the possible filling of charges against them should the initial findings be confirmed. “The Validation Committee is tasked to verify the findings of the National Inspectorate for the Scholarship Programs [NISP] starting April 16, 2018, to April 30, 2018, and shall submit a report, thereto, with its recommendation on May 7, 2018,” Mamondiong said. The NISP earlier said it has found possible corrupt practices among TVIs and training centers with registered Tesda courses from 2017 up to the present. The five-man VC is headed by Director Angelina M. Carreon, Director III of the Tesda’s Planning Office and, as directed by Mamondiong, will be supported by the concerned Tesda regional and provincial/district offices. In a report submitted by NISP

Project Team under Director John D. Simborios, the closure of 43 TVIs and the cancellation of Tesda program registration for 42 others were recommended. Of these TVIs recommended for closure, four are in the National Capital Region (NCR); Cordillera Administrative Region (CAR), two ; Region 3, 21; Region 4A, 12; Region 10, three; and Region 1, one. Among the 42 TVIs that have been warned, one is in the NCR; CAR, two; Region 1, four; Region 2, two; Region 3, 11; Region 4A, 7; Regions 5 and 6, one each; Region 7, four; Region 10, six; Region 11, two; and Region 12, one. Tesda also said that 467 more TVIs will still have to undergo “spot inspection” to determine their compliance in the implementation guidelines of the scholarship program. The agency’s NISP said it hopes to finish the inspection by April 30. The violations committed by the TVIs include hard-to-locate or erroneous school addresses; unreported change of location; unauthorized collection of fees; no students in attendance; and unreported closure of the program or training center. Simborios said that it is important to safeguard the funds and ensure proper utilization, especially as these have been allocated for the poor through the Tesda scholarship grants. On February 1, 2017, Mamondiong formed the NISP to ensure that government funds for the scholarship program channeled through private vocational training centers are being utilized in accordance with the rules of Tesda.

Pinoy vapers laud new US FDA policy on e-cigarettes

he president of a local vapers group on Tuesday hailed the recent US Food and Drug Administration’s (FDA) push for “innovative and less harmful” tobacco products. “We laud the US FDA for the agency’s strong push for nicotine regulation, which paves, the way for the development of innovative and less harmful tobacco products. It is our hope that local policy-makers and regulators would follow the lead of the US FDA,” said Tom Pinlac, president of The Vapers Philippines. Last month the US FDA issued an advance notice of proposed rule making where FDA Commissioner Dr. Scott Gottlieb sees nicotine reduction as “a historic opportunity” to convince smokers to switch from conventional cigarettes to products that provide nicotine without the serious health hazards posed by burning tobacco. “In order to successfully address cigarette addiction, we must make it possible for current adult smokers who still seek nicotine to get it from alternative and less harmful sources,” Gottlieb said. He added: “The agency's regulation of both novel nicotine delivery products, such as e-cigarettes and traditional to-

bacco products, will encourage the innovation of less harmful products.” “This latest FDA move could be a game changer in public health and help save millions of lives. It will help more currently addicted smokers to quit or switch to potentially less harmful products, such as e-cigarettes,” said Joey Dulay, president of the Philippine E-cigarette Industry Association. The FDA advance notice has been published in the Federal Registrar, the daily journal of the US government, and will be open for public comment until June 14 this year to obtain information for consideration in developing a tobacco product standard to set the maximum nicotine level for cigarettes. It includes new data from an analysis funded by the agency and published in the March 2018 issue of the New England Journal of Medicine. The study, which evaluated a possible policy scenario, found that lowering nicotine levels could reduce the US smoking rate to 1.4 percent, from the current 15 percent of adults potentially resulting in 8 million fewer tobaccorelated deaths through the end of the century. This is “an undeniable public health benefit,” Gottlieb said.

CMRPI in NCR posted 2.3% growth in March

he country’s retail construction material prices averaged 2.1 percent in the first quarter of the year, according to Philippine Statistics Authority (PSA). Data showed that in March, the Construction Materials Retail Price Index (CMRPI) in the National Capital Region (NCR) posted a growth of 2.3 percent. This is the highest since October 2016, when the index also posted a year-on-year growth of 2.3 percent. The highest growth in the series was 4.6 percent, recorded in June 2008. “Its [CMRPI] annual rate in the previous month was pegged at 2.1 percent, while in March 2017, it was recorded at 1.7 percent,” the PSA added. The increase in March 2018 was largely due to more expensive carpentry materials, which increased to 2.8

percent, from 0.8 percent in 2017, and masonry materials, which grew to 2.8 percent, from 2.2 percent in 2017. There were also slower increases in electrical materials, and plumbing materials, which grew 1.1 percent, and 1 percent. These rates, however, are slower than the 1.6 percent recorded for electrical materials and 2.5 percent for plumbing materials in 2017. “The index of miscellaneous construction materials posted a slower annual rate of 8.7 percent. Annual movements in the indices of painting materials and related compounds remained at 1.8 percent and tinsmithry materials, 1.4 percent,” the PSA said. Measured from a month ago level, the CMRPI in NCR went up by 0.4 percent in March 2018. In the previous month, its rate was registered at 0.1 percent. The indices of electrical materials rose by 0.2 percent

and plumbing materials, 0.6 percent after they recorded negative rates in the previous month. “Upward adjustments were posted in the prices of lumber, plywood, lawanit, common wire nails, electrical switch, PVC [polymerizing vinyl chloride] pipe, cement, hollow blocks, GI [galvanized iron] pipes, corrugated GI sheets and plain round steel bars. Lower prices were, however, noted in hinges and lockset during the month,” the PSA said. Higher increments were also observed in the indices of carpentry materials at 1.1 percent; painting materials and related compounds, 0.4 percent; masonry materials and miscellaneous construction materials both at 0.3 percent. On the other hand, the increase in tinsmithry materials index slowed down to 0.1 percent. Cai U. Ordinario

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Banking&Finance BusinessMirror

Editor: Jun B. Vallecera • Wednesday, April 18, 2018 A5

BTr caps 10-year bond rate to 6.213 percent

he Bureau of the Treasury (BTr) on Tuesday reported a full award on its 10-year Treasury bond (T-bond) sale characterized by robust bids from the various government securities eligible dealers (GSEDs).

de leon

“[There was strong participation by our dealers. The rate steepening bias also continued but it’s really more the demand right now because we haven’t really seen a lot of demand on the long end,” National Treasurer Rosalia V. de Leon told financial reporters. The auction committee reported bids totaling P17.278 billion for the security but decided on

investors would also need to fill their requirements for the yield pick up and also for the longer maturity.” De Leon also said external events were seen likely to drive the uptrend in rates for government securities such as inflation and the anticipated policy adjustments by the Federal Reserve System (the Fed). “At the same time we have a

capping the 10-year rate to 6.213 percent. The coupon rate set for the IOUs settled at 6.250 percent, or an increase of 3.7 basis points compared to the average annual rate. According to de Leon, there was a demand from the institutional investors on the long end of the yield curve that allowed them to recognize their participation in the auction: “The institutional

Digital financial firms pursue Central Bank T backed ‘cash-lite’ goal

lot of other concerns like what happened in Syria. But then the steepening bias w ill continue given that inflation is a persistent issue for our investors. We also see the new appointments at the Fed. They would have to be watchful in terms of what would be the pronouncements coming out of these new Fed [governors],” she added. As for government securities maturing next month, de Leon said the Treasury’s bond sinking fund has ample funds to address maturing IOUs. She further said more and newer government securities sales are not urgently needed for now. “Remember we have a bond sinking fund. We have already been making contributions in anticipation of the chunky ones [maturities] because it would be imprudent on our end if we just leave it to the auction sales to fund the maturing [obligations]. That’s already been taken care of,” she added. Rea Cu

Asia IPO bankers continue game of musical chairs with BofA moves

By Lorenz S. Marasigan @lorenzmarasigan

IGITAL payments provider PayMaya Philippines Inc. has struck a partnership agreement with Bounty Agro Ventures Inc. (Bavi) to offer a new mode of payment to customers of roasted chicken chain Chooks-to-Go. PayMaya Chairman Manuel V. Pangilinan said this partnership would allow the group to take a step closer to its vision of creating a “cash-lite” society, as, under the deal, more than 2,000 branches of Chooks-to-Go will be powered by PayMaya QR technology. The cash-lite program seeks to shift from predominantly cashdriven transactions in the country at present to all-digital payment systems and has the full backing of the Bangko Sentral ng Pilipinas. “With partners like Bavi helping build the ecosystem in the country, we’re confident that a cash-lite Philippines is now taking off,” he said. For its maiden service, an initial 50 Chooks-to-Go stores in Metro Manila will be deployed with PayMaya QR technology. The wider rollout of close to 2,000

outlets nationwide is scheduled in the coming months. “Innovation is in our DNA, and we are glad that we once again have an opportunity to revolutionize the experience of our customers through PayMaya QR,” Bavi President Ronald R. Mascariñas said. This means customers only need their mobile phones with the PayMaya app whenever they buy roasted chicken at Chooks-to-Go stores. Chooks-to-Go is the latest local retail brand to adopt PayMaya’s QR-based payment system, which has already been deployed in some of the country’s biggest brands as The SM Store, Robinsons Department Store, Robinsons Supermarket, Robinsons Appliances, and other Robinsons Retail Holdings brands, including brands under Robinsons Store Specialists Inc., such as Topman, Topshop, Topman, Dorothy Perkins, Burton Menswear, Miss Selfridge, Warehouse and G2000. It is also available in Ministop, Southstar Drug, and The Generics Pharmacy, Mercury Drug, Fully Booked and Surplus Shop, among many others. PayMaya Philippines is the digital financial arm of PLDT Inc.

he recent game of musical chairs is continuing for bankers selling initial public offerings in Asia, with Bank of America Corp. (BofA) the latest to announce changes. The United States firm hired 13-year Credit Suisse Group AG veteran Tucker Highfield as cohead of Asia Pacific equity capital markets (ECM), it said on Tuesday in an internal memo obtained by Bloomberg. He will work alongside Shu Nagata, who was promoted to Asia Pacific cohead after leading Bank of America’s Japan ECM coverage. UBS Group AG announced on Monday that it appointed Hannah Malter as Asia head of equity capital markets syndicate, an internal memo obtained by Bloomberg shows. Malter, who formerly worked as Asia-Pacific chief of staff at the bank, is getting the new role just weeks after rejoining the ECM team to focus on Asia-into-US initial public offerings (IPOs). The moves come at the beginning of what’s expected to be a banner year for listings in the region, driven by share sales from Chinese technology companies. Smartphone maker Xiaomi Corp. is preparing an IPO in Hong Kong with a target valuation of as much as $100 billion, while food review and delivery app Meituan Dianping is planning a listing at a valu-

ation of at least $60 billion, people with knowledge of the matter have said. UBS is making changes as the bank also fights a ban on sponsoring IPOs in Hong Kong. They’re not the only moves. Sunil Dhupelia, who was an executive director at UBS, is joining Credit Suisse’s equity capital markets syndicate team, people familiar with the matter said last week. Dhupelia will assume some of the responsibilities that were held by Highfield, they said. It was only last month that UBS restructured its capital markets group in Asia, combining the businesses that handle stock offerings and debt sales under a single leader. UBS also announced on Monday that it’s promoting former syndicate head Andrea Casati to vice chairman of Asia Pacific ECM, the memo shows. A spokesman for UBS confirmed the contents of the memo. BofA also promoted Kevin Su, its Greater China ECM chief, to vice chairman of Asia ECM, the memo shows. Anvita Arora was named head of South Asia ECM and Asia Pacific equity-lined origination. She will relocate to Hong Kong from London, where she led equity-linked origination for Europe, the Middle East and Africa, the memo shows. A representative for BofA declined to comment. Bloomberg News

BOE has big governing job to fill before Carney goes

ank of England (BOE) staff are close to finding out who will help the next governor settle in after Mark Carney steps down. Anthony Habgood is due to retire in June as chairman of the Court of Directors, the BOE’s governing body. Interviews for his replacement have already been carried out, according to a job posting on the Cabinet office web site, which states that an announcement is pending. The role usually goes to grandee of the City of London, the financial district. Habgood sits on the board of several large companies. His predecessor, David Lees, had served as chairman of sugar magnate Tate & Lyle. The bank has received criticism from lawmakers on the Treasury Committee for its lack of diversity. The successful candidate—of “undisputed integrity and standing”— will lead the panel responsible for setting the bank ’s strategy. The Cabinet office

describes the role, which comes with a salary of 48,000 pounds ($68,000) for about two days a week, as “pivotal”—not least because the successful applicant will be expected to take the lead in ensuring a smooth transition when Carney leaves in June 2019. The chairman of the court is rarely in the news, though Habgood’s name featured last year when he was impersonated by an online prankster who briefly hoodwinked Carney. Habgood also found himself embroiled in some controversies. Those included Deputy Governor Charlotte Hogg’s failure to declare a potential conf lict of interest on her appointment, which ultimately led to her resignation, and investigating potential staff misconduct in currency-rigging and crisis liquidity auctions. The web site states that “appointment to the Court is expected to commence in Spring 2018, with the successful candidate taking over as Chair on 1 July 2018.” The panel meets at least seven times

Do you need to be a genius to be rich?

omeone recently asked me, “Do you need to be a genius to be rich?” This question got me thinking, which eventually prompted me to start my own search for the answer. Fortunately, I found what I was looking for. But before I share what I discovered, I’d like you to ask yourself the same question and think about the answer: Do you need to be intelligent to become wealthy?

Intelligence and wealth

We all know that some of the wealthiest people on earth are college dropouts. Personalities such as Bill Gates, Steve Jobs, Ralph Lauren, Michael Dell and Richard Branson, have shown the world that one can be rich without having a degree. Nevertheless, one could simply attribute their failure to finish formal education from economic and social circumstances and not because of low academic aptitude. And thus, we are left with a still an unanswered question. At the Center for Human Resource Research in Ohio State University, Jay Zagorsky had the same question in mind. He then conducted a study to find out how important intelligence is to financial success. In his paper entitled, “Do You Have To Be Smart To Be Rich? The impact of IQ on wealth, income and financial distress,” he reveals his findings after following more than 7,000 Americans from their teen years to their early-1930s. He gathered the financial status of these baby boomers by asking several questions about their credit history, monthly spending, accumulated assets and liabilities. Furthermore, these same group participated in an IQ test which covered word knowledge, paragraph comprehension, math knowledge and arithmetic reasoning. These information was then analyzed for correspondence. So, what was his conclusion? Intelligence provides more earning power but not nec-

Fitz Gerard Villafuerte

personal finance essarily more accumulated wealth. He further explains, “ The smarter you are, the more income you have, but for wealth, there is no relationship. “

Income and wealth

Zagorsky defines wealth as the difference between a person’s assets and liabilities. So, wealth is income plus home value plus investments and personal assets minus mortgages, credit-card debt and other individual liabilities. In his study, he found out that a higher yearly income does not necessarily translate into higher wealth. In fact, people with slightly above average intelligence (105 IQ score) had an average net worth higher than those just a bit smarter (110 IQ). “There are some very smart people who get into financial difficulties,” he notes. “Even smart people don’t save.” Moreover, he tried to analyze the data for variables like race, education, job status and even personal habits. Still, the gap between IQ and wealth remained the same. So what does this mean? Zagorsk y conc ludes, “If you’re an individual with relatively low intelligence, you shouldn’t really believe that you’re handicapped in achieving wealth. Similarly, if you’re intelligent, you shouldn’t think you have an advantage in living the rich life.” Fitz Villafuerte is registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 69th RFP program this July 2018. To inquire, e-mail info@rfp. ph or text <name><e-mail> <RFP> at 0917-9689774.

a year, and other nonexecutive directors include UNISON General Secretary Dave Prentis and former TalkTalk CEO Dido Harding. Appointments are made for up to four years, and there is the possibility of reappointment at the end of the term. Habgood is chairman of RELX Group Plc. and By Justice S J Ranada Jr. Prequin Ltd. He previously held similar positions at ADMINISTRATIVE LAW–definition of inefficiency Whitbread Plc. and Bunzl Plc. Inefficiency involves specific acts or omission on the part of the Carney is also a member employee, which results in the damage to the employer or to the latof the Court, as are the ter’s business. It is akin to neglect of duty, which is the failure of an bank ’s deputy governors, employee or official to give proper attention to a task expected of making the ability to build and maintain “close him or her, signifying a disregard of a duty resulting from carelessand effective working ness or indifference. partnerships with senior executives while holding OCA v. Saguyod AM P-17-3705 nonexecutive positions” another sought-after 06 Feb. 2018 Perlas-Bernabe, J quality. Bloomberg News

Case clippings

A4 Wednesday, April 18, 2018 • Editor: Lyn Resurreccion A6

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US bans ZTE from tech for 7 years of ‘hell’

he United States government said Chinese telecommunicationsgear maker ZTE Corp. violated the terms of a sanctions settlement and imposed a seven-year ban on purchases of crucial American technology needed to keep it competitive.

The Commerce Department determined ZTE—which was previously fined for shipping telecommunication equipment to Iran and North Korea—subsequently paid full bonuses to employees who engaged in the illegal conduct, failed to issue letters of reprimand and lied about the practices to US authorities, the department said. “Instead of reprimanding ZTE staff and senior management, ZTE rewarded them,” Commerce Secretary Wilbur Ross said in the statement. “This egregious behavior cannot be ignored.” The ZTE rebuke adds to US-China tensions over trade between the world’s two biggest economies. President Donald J. Trump threatened tariffs on $150 billion in Chinese imports for alleged violations of intellectual-property rights, while Beijing vowed to retaliate on everything from American soybeans to planes. Trump on Monday accused China,

along with Russia, of devaluing their currencies, opening a new front in his argument that foreign governments are exploiting the US. China’s Ministry of Commerce rapidly responded to the ZTE ban, saying it would take necessary measures to protect the interests of Chinese businesses. It said the Shenzhen-based company has cooperated with hundreds of United States companies and contributed to the country’s job creation. For ZTE itself, the latest US action means one of the world’s top makers of smartphones and communications gear will no longer be able to buy technology from American suppliers, including components central to its products. ZTE has purchased chips from Qualcomm Inc. and Intel Corp., and optical components from Acacia Communications Inc. and Lumentum Holdings Inc. A seven-year ban would effectively cover a critical period during

Attendees pass by the ZTE Corp. stand during the opening day of the Mobile World Congress in Barcelona, Spain, on February 26. Simon Dawson/Bloomberg

Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored.”—Ross which the world’s telecoms carriers and suppliers are developing and rolling out fifth-generation wireless technology. “All hell breaks loose,” wrote Edison Lee and Timothy Chau, analysts at Jefferies, after the export ban was announced. They downgraded ZTE shares to underperform and cut their price target on its stock by more than half. Trading in ZTE shares was

suspended in Hong Kong. The company’s suppliers in Asia tumbled in response, with Mobi Development Co. down 13 percent and Zhong Fu Tong Co. off 7.9 percent. Shares in Acacia and Lumentum plunged in the US. ZTE faces tough options in particular due to the ban on buying Qualcomm’s processors and modems, the main components in smartphones. China’s Huawei Technologies Co.

Biz says no to second Brexit vote

he plot to reverse Brexit is missing a key ally: United Kingdom business. Companies have been among the most outspoken critics of the split from the European Union (EU), and many have much to lose from the divorce. But as a group of lawmakers tries to engineer a second referendum, business leaders are recoiling. Worse than Brexit is prolonged uncertainty. “Business likes certainty, and I can’t see how discussion of a second referendum helps create that certainty when the negotiations are not even concluded,” Miles Celic, CEO of TheCityUK, said in an interview with Bloomberg News. The campaign for a popular vote on the final divorce deal that Prime Minister Theresa May brings back from Brussels later this year is gaining traction. Two recent polls have indicated there may be popular support for a vote on the terms of Brexit. It is still not clear, though, whether there would be a majority in Parliament to send weary voters back to the ballot box, nor indeed if the result would be different the second time around. “Calls for a second referendum, and indeed rehashing the debates we had in the run up to the Brexit vote, now almost two years ago, will do little to move us forward,” said Allie Renison, head of Europe and trade policy at the Institute of Directors. “Our focus must be on building a global Britain.”

Preparation time

Businesses have been encouraged by the agreement last month that a 21-month transition period will come into effect on Brexit day in March next year, giving companies more time to prepare. According to a Deloitte survey of CFOs, corporate uncertainty has fallen to a two-year low and concerns about the effects of leaving the EU on hiring and spending has receded. “Businesses are uninterested in politics. They want commercial predictability,” said Paul Hardy, Brexit director at law firm DLA Piper. “Those who have spent a lot of money on it are ready to deal with it.”

A demonstrator waves a European Union flag and a Union flag, also known as a Union Jack, during an anti-Brexit demonstration outside Parliament in London on March 28. Simon Dawson/Bloomberg

Pound investors are also wary. With the currency reaching a postBrexit high on Tuesday and volatility easing, another plebiscite would bring major price swings. There would be “a knee-jerk move lower on the back of a referendum announcement,” said Viraj Patel, a currency strategist at ING Groep NV. But “it’s all down to the outcome. One which sees the UK reverse Brexit would see the pound back at prereferendum levels.” As things stand, Parliament is

due to vote on the divorce deal at the end of this year or early next. The government says it’s a binary vote—lawmakers can accept the deal or vote for the much-feared chaos of leaving without a deal. But the Institute for Government, an influential think tank, says lawmakers would probably be able to force the government to change direction at that stage. And that’s the point where anti-Brexit campaigners are hoping to force a second plebiscite.

A referendum would take time. Labour lawmaker Chuka Umunna, who is leading the campaign, says the EU would grant the UK an extension to the negotiating deadline in order to have another vote. The European Union has made clear it would like the United Kingdom to change its mind, and would welcome the country back. But all this would prolong the uncertainty for companies trying to plan. Bloomberg News

makes those chips for use in its own handsets, while MediaTek Inc. is Qualcomm’s largest rival in offering chips on a so-called merchant basis. ZTE may have to either buy from a competitor or get chips from a Taiwanese company whose products generally lag those of its US rival’s in performance. ZTE said it was aware of the sanctions and is evaluating its impact while talking with related parties. Qualcomm declined to comment. Separately, the United Kingdom’s National Cyber Security Centre warned the country’s telecommunications companies and regulator that national security risks from using ZTE equipment and services “cannot be mitigated.” A senior official with the US Commerce Department Bureau of Industry and Security told reporters that the ZTE decision was unrelated to the administration’s threats to impose tariffs on Chinese imports, saying the actions against the Chinese company are part of an investigation. The official, speaking on the condition of anonymity, said the timing of the ZTE action was unfortunate because it could seem related to United States steps to stop alleged theft of intellectual property. ZTE agreed in March of last year to plead guilty and pay as much as $1.2 billion for violating US laws restricting sale of American technology to Iran. The agreement called for the company to pay $892 million in

fines and forfeitures and be subject to an additional $300 million in penalties if it violates the terms of the settlement. It was the largest criminal fine for the Justice Department in an export control or sanctions case. “ZTE acknowledges the mistakes it made, takes responsibility for them, and remains committed to positive change in the company,” ZTE’s Chairman and CEO Zhao Xianming said at the time. The company is making personnel changes and instituting new compliance procedures, he added. Denying ZTE export privileges prevents the company from “participating in any way in any transaction” subject to the US government’s Export Administration Regulations, which govern sales of sensitive technology abroad. It’s also illegal for other businesses or individuals to participate in transactions with a company that has been denied export privileges, according to the department. China International Capital Corp. (CICC) predicted the Commerce ban would have a significant effect on ZTE’s business—and perhaps on the building of wireless networks. “If they can’t operate normally because of the US export ban, that will clearly impact global and Chinese network construction and could affect future 5G rollouts,” CICC analysts, including Wang Xinglin, wrote in a research note on Tuesday. Bloomberg News

New missile attacks reported in Syria’s Homs region

EIRUT—Syrian state-run media reported that the country’s air defenses confronted a new “aggression,” shooting down missiles over the central region of Homs early on Tuesday. The reports did not say who carried out the pre-dawn strikes. The government-run Syrian Central Media said the missiles targeted the Shayrat air base in Homs. Earlier this month, four Iranian military personnel were killed in an air strike on Syria’s T4 air base, also in Homs. Syria and its main allies Iran and Russia blamed Israel for that attack. Israel did not confirm or deny mounting the raid. The reports came just a few days after the United States, Britain and France conducted air strikes targeting alleged chemical-weapons facilities in Syria, in retaliation for a suspected chemical-weapons attack that they blamed on the Syrian government. Experts from the international chemical-weapons watchdog are now in Damascus and have been waiting to visit the site of the suspected chemical attack in the town of Douma, just east of Damascus. On Monday, Syrian and Russian authorities prevented investigators from the Organization for the Prohibition of Chemical Weapons (OPCW) from going to the scene, the head of the OPCW said, blocking international efforts to establish what happened and who was to blame. The US and France say they have evidence that poison gas was used in the April 7 attack in Douma, killing at least 40 people, and that Syrian President Bashar Assad’s military was behind it. But they have made none of that evidence public, even after they, along with Britain, carried out air strikes last Saturday, bombing sites they said were linked to Syria’s chemical weapons program. Syria and its ally Russia deny any chemical attack took place, and Russian officials went even further, accusing Britain of staging a “fake” chemical attack. British Prime Minister Theresa May accused the two countries—

whose forces now control the town east of Damascus—of trying to cover up evidence. The lack of access to Douma has left unanswered questions about the attack. OPCW Director General Ahmet Uzumcu said Syrian and Russian officials cited “pending security issues” in keeping its inspectors from reaching Douma. “The team has not yet deployed to Douma,” Uzumcu told an executive council meeting of the OPCW in The Hague on Monday. Instead, Syrian authorities offered them 22 people to interview as witnesses, he said, adding that he hoped “all necessary arrangements will be made...to allow the team to deploy to Douma as soon as possible.” Russian military police were ready to help protect the OPCW experts on their visit to Douma, said Maj. Gen. Yuri Yevtushenko of the Russian military’s Reconciliation Center in Syria. Igor Kirillov, a Russian chemicalweapons protection expert in The Hague, said the team is set to visit the site on Wednesday. Earlier Monday Russian Deputy Foreign Minister Sergei Ryabkov said the inspectors could not go to the site because they needed approval from the UN Department for Safety and Security. He denied that Russia was hampering the mission and suggested the approval was held up because of the Western air strikes. “As far as I understand, what is hampering a speedy resolution of this problem is the consequences of the illegal, unlawful military action that Great Britain and other countries conducted on Saturday,” he said. However, UN Spokesman Stephane Dujarric said the United Nations has “provided the necessary clearances for the OPCW team to go about its work in Douma. We have not denied the team any request for it to go to Douma.” Until Saturday Douma was the last rebel-held town near Damascus, and the target of a government offensive in February and March that killed hundreds and displaced tens of thousands. AP

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Wednesday, April 18, 2018

Trump scraps new sanctions vs Russia, overruling advisers

ASHINGTON—President Donald J. Trump rejected, for now at least, a fresh round of sanctions set to be imposed against Russia on Monday, a course change that underscored the schism between the president and his national security team.

The president’s ambassador to the United Nations, Nikki Haley, had announced last Sunday that the administration would place sanctions on Russian companies found to be assisting Syria’s chemicalweapons program. The sanctions were listed on a menu of further government options after a United States-led air strike on Syria, retaliating against a suspected gas attack that killed dozens a week earlier. But the White House contradicted her on Monday, saying that Trump had not approved additional measures. “We are considering additional sanctions on Russia and a decision will be made in the near future,” Sarah Huckabee Sanders, the White House press secretary, said in a statement. Speaking later with reporters aboard Air Force One as Trump headed to Florida, Sanders added that “the president has been clear that he’s going to be tough on Russia, but at the same time he’d still like to have a good relationship with them.” Another White House official, who spoke on condition of anonymity to describe internal deliberations, said Trump had decided not to go forward with the sanctions. Trump concluded that they were unnecessary because Moscow’s response to the air strike was

mainly bluster, the official said. Russia analysts said the whipsaw policy shift once again highlighted an administration struggling to find a coherent and consistent voice in dealing with Russia, which in the past four years has annexed Crimea, intervened in eastern Ukraine, sought to influence the US election in 2016, allegedly poisoned a former Russian spy living in Britain and propped up the murderous government of President Bashar al-Assad in Syria. Trump has mostly spoken hopefully of his efforts to forge a friendship with President Vladimir Putin of Russia, including congratulating him on a reelection widely denounced as a sham and even suggesting a White House meeting. At the same time, the Trump administration has imposed two rounds of sanctions against Russia in the last month, expelled 60 of Moscow’s diplomats and closed a consulate in retaliation for the poisoning attack in Britain. “Trump seems to think that, if he accepts what his advisers recommend on even days of the month and rejects their recommendations on odd days, the result will be a strategy,” said Stephen Sestanovich, a scholar at the Council on Foreign Relations and Columbia University who served as ambassador to former Soviet states in the 1990s. “By and large, other governments

don’t know whether to laugh or cry at all this,” Sestanovich said. “But in Russia, laughter is getting the upper hand.” Trump was annoyed with Haley for getting out in front of the policy, the administration official said, and the president’s decision to reject sanctions left her hanging in public with her credibility on the line. Haley has been one of the strongest critics in the administration of Russia’s behavior around the world, often speaking far more harshly than Trump would, but she has rarely been reined in publicly this way. She made no comment on Monday. Administration officials said new sanctions could be imposed at some point if Russia takes further action justifying them. But absent such a scenario, the officials could not explain how Trump would make Russia pay a “big price” for enabling Syria’s use of chemical weapons, as he promised to do last week after a suspected gas attack killed more than 40 people and sickened scores more outside Damascus on April 7. The strike against Syria that Trump announced late last Friday in Washington was limited to a single night and to three targets linked to chemical weapons facilities. It sought to punish Assad for the suspected gas attack but avoid provoking Russia into a response. Russian forces stationed in Syria have helped Assad gain the upper hand in the country’s seven-year civil war. Russia responded harshly to the news of sanctions before learning that Trump had canceled them. “The sanctions drive against Russia is becoming an obsession,” Dmitry S. Peskov, the Kremlin spokesman, told reporters at his daily briefing in Moscow. “We’re convinced that any economist can see open attempts to squeeze Russian companies out of global markets.” Critics said the president’s decision not to follow through on Hal-

American Ambassador to the United Nations Nikki Haley listens as Syrian Ambassador to the United Nations Bashar Ja’afari speaks after a vote on a resolution during a Security Council meeting on the situation in Syria on April 14 at United Nations headquarters. AP/Mary Altaffer

I am outraged that President Trump pulled back sanctions on Russia for its support of the Assad regime. This sends a message to governments around the world that they can support brutal, criminal behavior without serious consequences.”—Engel ey’s announcement would sap US authority around the world. “I am outraged that President Trump pulled back sanctions on Russia for its support of the Assad regime,” said Rep. Eliot L. Engel of New York, the senior Democrat on the House Foreign Affairs Committee. “This sends a message to governments around the world that they can support brutal, criminal behavior without serious consequences.

“President Trump is out of step with the American people, American values—and as this situation has made clear, his own administration,” Engel said. The about-face on sanctions came a day after ABC News broadcast an interview with James Comey, the former Federal Bureau of Investigation director fired by Trump last year, in which he said he thought “it’s possible” that the president had been compromised

China’s consumers vie to check P slowdown as US threat lingers

by Russia. A protester waiting for Trump in Florida on Monday held a large banner that read, “Russian stooge.” Trump has heatedly and repeatedly denied any collusion with Russia during his 2016 campaign, calling such suggestions a “hoax” perpetrated by Democratic sore losers desperate to explain an election defeat. Russia did not respond militarily to the Friday strike, but US officials noted a sharp spike in Russian online activity around the time it was launched. A snapshot last Friday night recorded a 2,000-percent increase in Russian troll activity overall, according to Tyler Q. Houlton, a spokesman for the Department of Homeland Security. One known Russian bot, #SyriaStrikes, had a 4,443-percent increase in activity while another, #Damsucs, saw a 2,800-percent jump, Houlton said. New York Times News Service

Nafta deal slowed by persistent divide

hina’s steady first-quarter expansion masked a tug-ofwar between struggling old industries from mining to textiles, and booming new-economy sectors, including e-commerce and health care. The key question: As President Xi Jinping strives to curb debt and jousts with Donald J. Trump over trade, how much of the potential drag can the new growth drivers offset? For now, t he new eng ines are taking up the slack with the economic expansion matching the 6.8-percent pace for the last three months of 2017. A mong the drivers, online retail sales soared 35.4 percent in the first quarter from a year earlier, while investment in education jumped 26.9 percent, the statistics bureau said. Consumption contributed 77.8 percent to the quarterly expansion, slightly up from a year earlier. Old engines are laboring. Industrial production missed estimates for March amid anemic performance in segments including mining, metal products and textiles. As consumption’s contribution to growth typically surges in the first three months, Tuesday’s data isn’t likely to be indicative of the outlook for the rest of the year. Indeed, economists forecast a slowdown from 2017 to 6.5-percent growth in 2018, as Xi’s financial-risk campaign gains further

Shoppers exit a Nike Inc. store at the Sanlitun Village shopping mall in Beijing, China, on March 23. The trade conflict between China and the United States escalated, with Beijing announcing its first retaliation against metals levies hours after President Donald J. Trump outlined fresh tariffs on $50 billion of Chinese imports and pledged there’s more on the way. Gilles Sabrie/Bloomberg

traction. And if trade tensions with the US escalate, it may be asking too much of China’s new economy to take up all the slack. “The good news is that consumers are taking it all in stride, offering a welcome buffer against potential tariffs externally, and policy curbs on construction locally,” said Frederic Neumann, cohead of Asian economics research at HSBC Holdings Plc. in Hong Kong. The not-so-good news is that “China will likely cool further in the coming months as Beijing’s policy restrictions are starting to bite. Construction in particular is feeling the brunt,” he said.

Another driver of activity was investment in environmental protection and cleanup, which surged 34.2 percent in the first quarter, according to the statistics bureau. What our economists say: “The steady expansion in GDP shows the economy staving off threats from deleveraging and protectionism,” according to a note from Bloomberg economists Tom Orlik and Fielding Chen. “Even so, a lower reading for nominal growth is a warning sign that the industrial reflation cycle that drove profits higher and made debt repayment more manageable in 2017 is turning down.” Industrial output by the min-

ing sector decreased 1.1 percent in March, compared with a 0.9-percent drop last December, while output for power supply increased 5.8 percent, less than the 8.2 percent increase last December. “March data point to nascent signs of a growth slowdown underway, led by old economy sectors,” said Rob Subbaraman, chief economist for Asia ex-Japan at Nomura Holdings Inc. in Singapore. “We don’t expect growth in new economy sectors to fully offset the slowdown in the old, heavily-indebted sectors of the economy in the quarters ahead. This is a necessary adjustment to improve the quality of China’s growth.” If the world’s second-largest economy does ease to a pace of 6.5 percent this year, it’ll be the slowest pace since 1990. That’s all part of the plan though, as policy-makers have been signaling that they’re prepared to pay a price in headline performance in order to clean up the parts of the economy that are clearly unsustainable. “ This shows us that China can attain the growth target easily in 2018 even with slightly slower expansion in the second half,” said Raymond Yeung, chief greater China economist for Australia & New Zealand Banking Group Ltd. in Hong Kong. “It provides a good window to address some structural issues, especially deleveraging.” Bloomberg News

resident Donald J. Trump’s push for a quick resolution to North American Free Trade Agreement (Nafta) talks is being stymied by persistent differences among the United States, Canada and Mexico over a handful of makeor-break issues. After seven rounds of talks rotating between the three countries, negotiators have entered what they’ve called a permanent round in Washington and are expected to keep going until a deal is struck. Digging in for more technical talks starting on Monday, they remain at loggerheads over regional content rules for automobiles and other sticking points, even as US Vice President Mike Pence and Canadian Prime Minister Justin Trudeau said over the weekend that an agreement could be wrapped up in weeks. A meeting between Cabinetlevel trade officials planned for last week to deal with the toughest issues was canceled when US Trade Representative (USTR) Robert Lighthizer skipped a regional summit in Peru. On Monday Mexican Economy Minister Ildefonso Guajardo told reporters that he spoke to his Canadian counterpart and plans to talk with Lighthizer on Tuesday about rescheduling their meeting for Thursday in Washington. He repeated his assessment that the nations may reach a deal in the coming weeks. Guajardo said it’s important for Lighthizer to look for solutions with Mexico and Canada so that he can turn his attention to China and tariff decisions. “The faster that he resolves one of these various issues, the better,” Guajardo said. While talks are continuing on less contentious topics—such as

the environment and financial services—they weren’t the catalysts that spurred Trump to call for a renegotiation of the decades-old trade deal in the first place. And on key topics—from cars to government procurement—the US is sticking with demands that its partners consider untenable. Although leaders of the countries say a deal could be completed within weeks, that won’t be possible if the sides remain as far apart on the most important points as they are now, according to people familiar with the talks. “The only way that this thing gets done, frankly, is if Donald J. Trump capitulates,” Jerry Dias, head of Unifor, Canada’s largest private-sector union representing auto workers, said last Friday after meeting with Canada’s lead Nafta negotiator, Steve Verheul. “Ultimately, he is going to have to find a way to claim a victory while backing off of a whole host of US proposals. I don’t know how you do both,” Dias added. Emily Davis, a spokesman for USTR, declined to comment. Trump’s negotiating team is pushing for a deal by early-May. That’s in order to meet US timelines for having an agreement approved, at the latest, by the lame-duck congressional session following midterm elections in November, according to two people familiar with the negotiations. While Mexico has a presidential election in July, the nation has fewer legal timing requirements, and a potential deal reached as late as August could probably be debated and voted on before the nation’s next Senate is seated in September. Mexico’s new president will take over in December; President Enrique Peña Nieto isn’t eligible for another term. Bloomberg News

The Regions

Wednesday, April 18, 2018 • Editor: Dennis D. Estopace

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Yolanda-hit families given UCTs recovered fully–PIDS study

By Cai U. Ordinario

@cuo_bm

NCONDITIONAL-cash transfers (UCTs) distributed to households affected by Supertyphoon Yolanda (international code name Haiyan) were able to help half of the beneficiaries fully recover from the disaster, according to a study by the Philippine Institute for Development Studies (PIDS).

The researchers found that 61 in every 100 beneficiary households of the UCTs by the United Nations Children’s Fund (Unicef) were able to recover from the disaster, according to PIDS. These households represent about half of the beneficiary households, while the other half have partially recovered. “Most often people have a condescending view of cash assistance, whether conditional or unconditional, and think that such assistance may only be misused for vices,” the authors said. “[However] it appears that the UCT has actually been a big help to beneficiary households who were Yolanda victims.” They added: “Not all households, however, have fully recovered

almost a year after Yolanda. Six months of assistance may not have been long enough for some households to get back on their feet.” The study, titled “Lessons on Providing Cash Transfers to Disaster Victims: A Case Study of Unicef’s UCT Program for Super Typhoon Yolanda Victims,” was authored by PIDS President Celia M. Reyes, senior research fellow Jose Ramon G. Albert, and US-based pediatrician Charina Cecille M. Reyes. The Unicef implemented an emergency UCT to bring quick relief to thousands of Yolanda-affected households in Leyte. Around 10,000 vulnerable families in Tacloban City and neighboring municipalities of Burauen, Dagami, Julita, La Paz and Pastrana

in Leyte received a monthly grant of $100 or P4,370 for a period of six months from February 2014 to July 2014. The three survey rounds found that households with female heads who received at least high-school level education were more likely to fully recover, while households with additional dependents were less likely to recover. The authors also found households who merged, engaged in agriculture/coconut farming were less likely to recover and households were more likely to recover if the assistance was prolonged. “Households who have assets to start with are generally likely to recover compared to those who do not have assets,” the authors said. “Household respondents who lost a job are less likely to fully recover.” Data also showed households used half the UCT for their food needs. Less than 20 percent were spent for miscellaneous expenses and less than 10 percent for savings. This led to a significant decline in the prevalence of malnutrition. From 5.3 percent malnourished children less than 5 years old, the UCT was able to bring this down to 1.3 percent by the third round of the survey. However, there were 21 children located in areas outside of Tacloban who were not malnourished in the first round of the survey but were classified as malnourished by the third round of the survey.

The remaining UCT was used for medicines, diapers, housing repair, livelihood and education-related expenses. The funds were also used to buy vitamins, especially for children. In education, the authors found there was an overall improvement from round one to round three of the survey, but a slight decrease in school attendance from round two to round three. There were more males who were out of school than females among children aged 6 to 15. At least 6 out of 10 children who were skipping school are in the 6 to 11 years old age group across the three survey rounds. The authors said the presence of an illness or disability, lack of interest and lack of allowance were the top three causes of poor school attendance. “Savings also became increasingly an important use of the assistance. Proportion that went to savings was highest during the first round since families saved part of [the] transfer to be able to buy materials for repairing their houses. However, utilization for miscellaneous expenses and savings has continuously declined over time,” the authors said. Some beneficiaries used the UCT to start or expand livelihood activities such as pig-raising, sarisari stores and food vending. This led to an increase in the average monthly income of house-

holds during the entire duration of the six-month program. However, after the program, average monthly income declined with the largest drop recorded in Dagami where income declined by an average of P3,076 per month. There was also a reduction of unemployment rate among the beneficiary households from 13.4 percent in round one to 10.3 percent in round three of the survey. Further, the proportion of children who were engaged in economic activity reduced during the second round of survey, but there was a marked increase during the third round of survey (even slightly higher than that of the first round) after the end of the UCT program. “Considering that the cash transfer constituted a significant portion of total income of the households, the end of the UCT program meant a significant reduction in the total income of the households. This explains why some households fell back into poverty during the third round.” The UCT was also used for household expenses relating to clothing, shelter, debt, income-generating activities, transportation, agriculture, water and communication. The authors said the spending for shelter almost doubled between the first and third rounds of the survey. Utilization for incomegenerating expenses increased by 1.2 percent since the first round. “Many of the FGD [focus group

discussion] participants reported that this was the first time they were able to ‘hold’ and spend such a large amount of money, which allowed beneficiaries to smooth their food consumption [and even to purchase food items that they usually were not able to purchase, such as apples, oranges and other imported fruits],” the authors said. The National Disaster Risk Reduction and Management Council reported there were 6,293 reported deaths, 28,689 injured and 1,061 missing individuals as a result of Yolanda. Nearly 3.4 million families, or about 16.1 million persons, were affected by the super typhoon. Out of these numbers, 890,895 families, or 4.1 million persons, were displaced by Yolanda with about 20,924 families staying in 381 evacuation centers for emergency shelter. Overall, the cost of damage was recorded at about P40 billion, nearly half, or 49 percent, of which was classified as damages to infrastructure. Yolanda affected nine of the country’s 17 administrative regions, covering 12,122 barangays in 44 provinces, 591 municipalities and 57 cities. T he nat iona l gover nment, however, identified only 171 municipalities (located within the 50-kilometer storm track) across 14 provinces and six regions for priority assistance.

SUMMER FUN

A man prepares to soak himself in the waters of Sagay, Negros Occidental, to escape from the heat of the sun. Sagay is the largest marine reserve in the Philippines, covering an area of 32,000 hectares. According to a study by a government think tank, Sagay’s marine reserve is a protected area of mangroves, marine species and reefs that are found in the city’s coastal and island barangays. NONIE REYES

NEA taps Nishizawa for rehab of Mindanao power co-ops

HE National Electrification Administration (NEA) and Nishizawa Ltd. of Japan entered into a contract for the procurement of distribution line materials and brand new boom trucks that will be used to rehabilitate the power distribution system of six electric cooperatives in Mindanao. The project will be financed through a grant aid worth ¥771 million extended by the Japan International Cooperation Agency (Jica). Nishizawa bested four other Japanese participants in the bidding for the “Project for improvement of equipment for power distribution in Bangsamoro area.” As winning bidder, Nishizawa will supply and deliver the powerdistribution equipment and materials, such as boom trucks (16 units), transformers (425 units), poles and wires to the six electric cooperatives in Mindanao. The Japanese firm will also be in charge of the implementation of training focusing on the handling of insulated wire and operation training of the boom trucks. The project recipients are Lanao

del Sur Electric Cooperative Inc. (Lasureco), Maguindanao Electric Cooperative Inc. (Magelco), Basilan Electric Cooperative Inc. (Baselco), Sulu Electric Cooperative Inc. (Suleco), Tawi-Tawi Electric Cooperative Inc. (Tawelco) and Siasi Electric Cooperative Inc. (Siaselco). “ T he Philippine government [through] NEA expresses deep appreciation to the Japanese government through Jica for its immediate response to the call of President Duterte to help the country’s electrification program in the rural ARMM [Autonomous Region in Muslim Mindanao],” NEA Administrator Edgardo Masongsong said. “The assistance will further the development of the ARMM, especially the Basulta [Basilan, Sulu and Tawi-Tawi] areas, which had been identified by the President as a priority for socioeconomic development,” the NEA chief added. NEA Deputy Administrator for Technica l Ser v ices Eng r. A r tis Nikki Tortola and Nishizawa Project Manager Sumio Fujioka signed the contract on April 3 in Tokyo, Japan. Lenie Lectura

DTI Central Luzon office cites services to MSMEs

HROUGH its One Town, One Product Next Generation (Otop Next Gen) and the Brand Equity Development (BED) programs, the Department of Trade and Industry Region 3 (DTI-3) has helped a total of 157 micro, small and medium enterprises (MSMEs) in Central Luzon in 2017. Of this total, 39 enterprises are in the food sector, while 118 are in the nonfood sectors, according to DTI Information Officer Region 3 Warren T. Serrano. Serrano said the Otop Next Gen program provided assistance to small businesses in the region in terms of product-development assistance, improvement in product design, packaging and labeling, and the improvement or development of brands to increase value added and make them more saleable and make their mark in the local and global market. He added that a total of 734 prototypes of local products were developed through the engagement of design and branding experts. Of this, 153 were food products, while 581were nonfood products like furniture and handicrafts for which the region is known for. In terms of branding, a total of 74 new brands were developed with the help of brand experts engaged by DTI-3 to assist Central Luzon MSMEs. Catherine Joy L. Maglalang

ExportUnlimited BusinessMirror

Editor: Efleda P. Campos • Wednesday, April 18, 2018 A9

PHL joins Startup Genome project

S part of its effort to help promote and scale up Philippine start-ups, the Department of Trade and IndustryExport Marketing Bureau (DTI-EMB) facilitates the country’s first-time participation in the Startup Genome project, which released the 2018 Global Startup Ecosystem Report (GSER).

Recently released at the Global Entrepreneurship Congress in Istanbul, GSER 2018 features strategic start-up, investment and policy insights from over 10,000 founders in 45 cities, including Manila. Two more major Philippine cities— Cebu and Davao—will be covered

in future reports. “We are keen on supporting the growing start-up ecosystem in the Philippines as we implement programs that will create high-growth and high-impact start-ups that would contribute to sustainable economic growth and generate

more employment opportunities,” DTI Undersecretary for Trade and Investments Promotion Group Nora K. Terrado said. Startup Genome’s mission is to empower cities all over the world to capture their fair share of the new economy by accelerating the economic growth of start-up ecosystems through benchmarking, networking and exposure. Fueled by primary research with over 10,000 start-ups annually—the Voice of the Entrepreneur—Startup Genome supports local ecosystem leaders with building consensus for action on key challenges. Produced in partnership between Startup Genome and the Global Entrepreneurship Network (GEN), this year’s GSER signals a strong commitment to advancing a greater understanding of start-up ecosystems and the global network of capital and connections that drive them.

“We’ve now entered the third wave of innovation—where our global start-up community is disrupting industries by combining technology with deep industry expertise. This is creating a potentially game-changing opportunity for smaller, less mature start-up ecosystems that can now build out competitive advantage at a global level by focusing on their DNA and legacy strengths,” Star tup Genome CEO and Cofounder JF Gauthier said. A fitting occasion for the launch of this collaborative report, the Global Entrepreneurship Congress gathered thousands of entrepreneurs, investors, researchers, policy-makers and other start-up champions from more than 170 countries to identify new ways of helping founders start and scale new ventures around the world. “Research in the field is vital to

shaping the interventions necessary to empower entrepreneurs around the world,” said Jonathan Ortmans, president of the GEN. “As thousands of start-up champions gather this week to explore innovative approaches, efforts such as the Global Startup Ecosystem Report help us become better informed about what is needed.” Incorporating data from Crunchbase and Orb Intelligence, as well as the voices of over 10,000 founders from 24 countries worldwide and counting—including some of Manila’s start-ups like Serve Happy Jobs and Qwikwire Billing Systems—GSER 2018 presents an incisive look at over 60 ecosystems. Through an analysis of start-up output and legacy traits, it identifies the industries where each ecosystem has the most potential to build the vibrant economy for which it is uniquely positioned.

This year GSER takes a close look at key subsectors, such as advanced manufacturing and robotics, agriculture technology, artificial intelligence (AI), big data and analytics, life sciences and cybersecurity, as well as new technologies in education, health, advertising and finance. The subsectors in focus point toward imminent entrepreneurial revolutions. Thanks to SpaceX, we may already have a car in space—but will we have greater diversity and value distribution on the ground and in our start-up ecosystems? These are among key qualitative issues that GSER 2018 also looks at. In the Manila ecosystem in particular, GSER provides a detailed look at the following subsectors: fintech, enterprise solutions and AI/machine learning. To download the full report, visit www.startupgenome.com/report2018.

DTI gears up for 67th edition of Manila FAME 1st PHL Natl Halal

HE Department of Trade and Industry (DTI), through its Center for International Trade Expositions and Missions (Citem), is set to showcase high-quality, designdriven and Philippine-made home décor and houseware products at the 67th edition of the Manila FAME happening from April 19 to 21 at the World Trade Center in Pasay City. Highlighting the country’s creative enterprises, Manila FAME continues to project the Philippines as a reliable source of premier and worldclass home furnishings through the highlights of the international trade show, which include Design Commune: Patterns and Palettes, Artisans Village, Gender Responsive Actions for the Transformation of Women (Great Women) Project 2, Regional Interactive Platform for Philippine Exporters Plus (Ripples Plus) and Manila Wear. “Manila FAME has been a platform where the Philippines showcases our country’s best, from acclaimed artisans to budding young designers. This is among the many platforms provided for local and international buyers to experience Filipino designs and source their next home décor and furnishings in Manila. With our strengthened programs of enhancing the capacity of Filipino enterprises, the Philippines is ready to attract more foreign buyers and assist more Filipino exporters in penetrating the lucrative international market,” DTI Trade and Investments Promotion Group Undersecretary and Citem Officer in Charge Nora K. Terrado said.

Continuing the success of its maiden appearance during the 66th edition, Design Commune: Patterns and Palletes will be returning to the 67th edition to present a curated display of Philippine aesthetics and materials proudly produced by 70 micro, small and medium enterprises (MSMEs) who worked with designers Tes Pasola, Detleft Klatt, Reine Shih and Josef Crisanto under the thematic guidance of worldrenowned designer Tony Gonzales. Design Commune is framed in five unique themes inspired by design trends of 2018: Ethnic Nomad Spring and Autumn, Neutral Metals, Neutral Blues and Tints of Green. Meanwhile, Artisans Village will showcase regional crafts from featured Philippine destinations, such as Zamboanga City, South Cotabato and Ifugao. Manila FAME also supports the country’s initiative of assisting women entrepreneurs through t he showc a se of t he GR E AT Women Project 2. As part of the highlights of this edition, DTIDesign Center of the Philippines provided product development and management mentoring to 30 women-led enterprises under the GREAT Women Project 2 initiative. Products under this category range from handwoven bags to handcrafted home décors. Sixteen of the leading enrollees of the DTI-Export Marketing Bureau’s Ripples Plus will also join the trade show highlighting artisanal accent pieces and wearable products. Ripples Plus is a signature program of the

Conference slated By Raison D. Aborinto

Halal Section, DTI-EMB

PRODUCTS are displayed under Design Commune: Patterns and Palettes directed by Creative Director Tony Gonzales during the 66th edition of Manila FAME.

DTI that aims to increase the number of internationally competitive local product and services through capacity building and trainings. “True to DTI’s mandate of assisting Filipino enterprises, the heart of our initiatives is the goal of increasing the number of MSMEs in the Philippines exporting their products to key markets and buyers. We are not just supporting them through platform provision in accessing markets; we are also assisting them in product development, capacity building, marketing and enterprise development as a whole,” Terrado said. Manila FAME also caters to the fast-growing fashion industry through Manila WEAR. The trade show will host a collective of the country’s fashion designers with their innovative and trendy designs.

Manila WEAR aims to advance the country’s fashion industry by advocating ingenious designs that combine artisanal crafts with contemporary and trendy sensibilities. In its effort to encourage and inspire Philippine exporters and designers to continue to provide excellent and competitive product offerings and elevate the Philippine brand to the world market through innovation, Manila FAME serves host to the awarding of best products exhibited at the said trade show through Katha Awards. “Above all these highlights, we aim to recognize outstanding products and designers who continue to innovate and redefine the Philippine design imprint,” Terrado said.

Kate Bondoc, Espie Ancheta

HE Philippine Halal Export Development and Promotion Board, composed of nine government agencies led by the Department of Trade and Industry (DTI), will hold its first-ever Philippine National Halal Conference on May 2 and 3 at the Marco Polo Hotel, Davao City. With the theme “Towards Making the Philippines a Respectable Player in the Global Halal Ecosystem,” the conference will feature the unveiling of the comprehensive Philippine Halal Export Development and Promotion Strategic Road Map, a result of a series of consultations and extensive work collaborations among all major stakeholders concluded last year. The strategic road map includes the launch of the approved Philippine National halal Certification Scheme and the Accreditation Guidelines, two of the most important components of halal in the quest to be recognized as a major player in the global halal ecosystem. During the sixth Halal Export Board meeting held on March 21, the Board emphasized the need for the Philippine standard-setting bodies, such as the DTI, Department of Agriculture and Department of Health to develop the necessary standards for Philippine halal to be recognized in the global halal ecosystem. The conference will also gather some of the major halal global players to share their experiences and best practices in establishing a respectable and sustainable Halal ecosystem in their respective countries. This will be done through holding of lecture sessions with resource speakers from the well-known experts in the Halal international community. Also happening during the conference is

the Assembly of the Philippine Muslim Religious Scholars, where information sessions and lectures on development of the halal industry with respect to the Sharia aspect in particular will be conducted. The assembly would also aim to identify from among these Muslim scholars one resource person who will perform the religious components necessary to strengthen the Philippines integrity for halal. As the Philippines opens its door for the global halal market, it also widens its horizon as it pursues several cooperation instruments for Halal from the global halal community. In April last year, the Philippines, represented by Trade Secretary Ramon M. Lopez, and Brunei Darussalam, represented by Pehin Dato Dr. Mohammad Yasmin Umar, the minister of Energy and Industry at the Prime Minister’s Office, signed a memorandum of understanding (MOU) on the Halal Industry and Halal Export Development and Promotion. The Philippines also signed a membership with the International Halal Accreditation Forum in December 2017. Ihaf is an independent, non-government network of accreditation entities that are mandated to enforce halal standards in their countries and territories. The Philippine affiliation to Ihaf is expected to pave the way for the entry and acceptance of Philippine halalcertified products to the member markets of the organization. A similar instrument will also be signed between the Philippines and the United Arab Emirates Standardization and Metrology Authority on mutual recognition for halal accreditation. The MOU was already agreed upon by the two parties in February, however, the actual signing of the agreement would take place during the conference as one separate side event.

ABAC PHL ADDS DIGITAL INNOVATION, INFRASTRUCTURE TO ITS PRIORITY AREAS T

HE Apec Business Advisory Council (Abac) Philippines has added digital innovation and infrastructure to its priority areas. Along with its thrusts on micro, small and medium enterprises, nontariff barriers and services, Abac Philippines seeks to tackle the impact of digital technologies on education and future jobs and take advantage of regional opportunities that may complement the national government’s ambitious infrastructure push. The broadened scope of work was announced following the conclusion of the first Abac meeting for 2018 in Auckland, New Zealand in February, where these issues emerged as highly important for the Philippines. Specifically, Abac Philippines is organizing a public-private task force, which will lead in formulating the strategic road map for digital innovation. The envisioned road map will be linked to government policies, educational

ABAC Philippines headed by ChairmanTomas Alcantara (center, left) discusses the group’s work plan with Trade Secretary Ramon M. Lopez (center, right) and Department of Trade and Industry (DTI) Undersecretary Ceferino S. Rodolfo (second from left). They are joined by (from left) Naisy Abastillas of the DTI’s Bureau of International Trade Relations; Benedict Uy of the DTI’s Foreign Trade Service Corps; and Bill Luz and Renato Salud of Abac Philippines.

system and training programs. This effort is critical given that 48 percent of the activities of Filipino employees—equating

to 18.2 million jobs —could be automated, based on a paper by international consulting firm McKinsey. Sectors most affected

include agriculture, retail trade and manufacturing. Abac Philippines Chairman Tomas Alcantara said, “Digital inno-

vation will bring us to the future. However, many of the jobs we have today will disappear 20 years from now. What are the skills and the competencies that a Filipino worker must have to ‘survive’ in the future? What kind of educational system will we need to prepare our children? These are critical questions that must be answered to ensure that the Philippines will not be left behind.” The council also aims to tap into international Islamic funds, which are currently estimated at $70.8 billion. It will facilitate the establishment of bilateral arrangements of the Philippines with economies like Malaysia to secure successful financing of infrastructure projects. “Adequate financing is the lifeblood of infrastructure development in the region. I see the potential of Islamic investments in unlocking infrastructure-development hurdles, especially in Mindanao,” Abac member Joanne

de Asis said. Meanwhile, Trade Secretar y R amon M. Lopez ex pressed his continued support for the work of Abac Philippines and shared va luable inputs on d ig ita l innovation. “We are excited for the outcomes of A bac Ph i l ippi nes’s initiatives. As the government consistently pushes for innovation, DT I is committed to assisting the council to ensure that their projects are aligned with our efforts and priorities,” Lopez said. The DTI has assigned counterparts to each of the council’s work program. The agency will also assist in the implementation of Abac Philippines’s local projects. As the voice of Philippine business in the Asia-Pacific Economic Conference, the council will continue to represent the private sector in the second Abac meeting to be held in Tokyo, Japan, this April.

A10 Wednesday, April 18, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

A recurring problem

he challenges now confronting the Duterte administration in ensuring the availability of affordable government rice reflects the failure of some bureaucrats to heed the lessons of the past. The problem that the National Food Authority (NFA) is currently grappling with is nothing new, especially for the Duterte administration. The NFA was also in a bind last year, when the food agency warned that it could not beef up its stockpile because average farm-gate prices breached the P17 per kilogram (kg) support price of the government. The food agency failed to hit its procurement target for the summer harvest because traders offered higher prices for local palay. There were calls to raise the support price of the NFA so it could buy more unmilled rice from local farmers. But the NFA Council, the highest policy-making body of the NFA, rejected the proposal of the Department of Agriculture (DA), as it could cause the retail price of rice to go up. The council had also reasoned out that more rice imported via the minimum access volume would arrive in the third and fourth quarters of 2017. Despite this announcement, the farm-gate price of rice remained high, and again made it difficult for the NFA to increase its purchases of local palay, especially during the palagad (main harvest) in the fourth quarter. The inability of the NFA to replenish its stockpile from imports and from domestic procurement last year has eventually resulted in the depletion of its stockpile. As of this writing, the NFA’s buffer stock is nearly wiped out and the President’s order to import 250,000 metric tons is a tad too late. The volume will arrive sometime next month, so low-income consumers would have to wait until then before they could buy cheap government rice. For now, they would have to make do with rice sold at P38 to P39 per kg by the DA and other retailers who have pledged to sell more rice to stabilize retail prices. It is no secret that the Duterte administration wants the NFA to get out of rice trade and to just allow the private sector to import and sell the staple. But before this could happen, the government must craft a plan that would make the transition easier and prevent squabbles between and among agencies concerned with the rice supply situation. That the problem hounding the food agency was again seen this year reflects the lack of foresight among bureaucrats to prevent it from recurring. Also, discussions must now center on how to ensure that cheap rice would reach consumers after the quantitative restriction (QR) on rice is lifted. Lawmakers are now rushing the passage of the rice tariff bill as the Philippines has committed that the QR would be converted into tariffs by June. The country’s economic managers are pinning their hopes on the passage of this measure to cut rice prices. Part of the bill includes a provision calling for the “reengineering” of the NFA, which sold cheap rice for many years. The NFA has a system in place that allows cheaper rice to reach even far-flung areas in the country. The government must now find ways to ensure that this can still be done if the NFA would be taken out of the domestic rice market. Since 2005

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Free fire Continued from A1

‘T

he global community must agree on concrete recommendations on the two items in our agenda—nuclear disarmament and outer space. On the NPT, these recommendations should contribute to the success of the 2020 Review Conference. A successful RevCon should strengthen the nonproliferation architecture. The agreements will help avert miscalculations in tense situations as in the case of the Korean Peninsula or when weapons of mass destruction get in the hands of terrorists and it is near impossible to determine whether they or a nuclear weapon state had used them. Collective response must keep pace with the speed of nuclear weapons developments. “The Philippines remains strongly committed to maintaining international and regional peace and stability though never at the expense of freedom and sovereignty; promoting a nuclear weapon-free world and the safety of Filipinos abroad from the use of weapons of mass destruction. “We remain hopeful of preserving the gains of the 2010 NPT Review Conference, which was chaired by the Philippines, by pursuing the goals of the 2010 outcome document and the 64-Point Action Plan as the international community prepares for the 2020 RevCon. “To achieve the objectives of the NPT, we should work hard for the entry into force of the Comprehensive Nuclear-Test-Ban Treaty [CTBT].

“The Philippines adheres to and continues to advocate for principles of irreversibility, verifiability and transparency in implementing the NPT. Without transparency and verifiability it is impossible to foster the trust that alone ensures the attainment of NPT goals. “The Philippines has taken action in line with international commitments on nonproliferation and peaceful uses of nuclear energy. The Philippine Congress passed the Strategic Trade Management Act [STMA] to prevent the proliferation of weapons of mass destruction by closely managing the trade in strategic goods. “Universalization is key in complying with the treaties and agreements on nonproliferation and disarmament of

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FACT IS MIGHT!

F we don’t patronize Lotto, Keno, Sweepstakes, Digit Games and Small Town Lottery (STL), can we still avail ourselves of financial assistance from the Philippine Charity Sweepstakes Office (PCSO) for medicine and hospitalization?

This is just one of the many questions I read everyday from the inbox and messenger of Mandirigma Kawanggawa (FB Page) and Mandirigma sa Kawanggawa (FB Community Page: http://facebook.com/mandirigma83), the two official social-media pages of PCSO’s Office of the General Manager, retired Marine Maj. Gen. Alexander “Mandirigma” Balutan. Whether you patronize PCSO’s products or not, you will be given assistance regardless of your social status if you seek help from the agency.

PCSO’s charity is for all. Here is another question: Where did the P52.9 billion earnings of PCSO in 2017 go? Those who ask this question are obviously still in doubt that a part of the earnings could line the pockets of officials. The answer is that 55 percent of PCSO’s total earnings is allocated for the prize fund or the cash prizes for the winners of Lotto, Keno, Digit Games, Sweepstakes and STL; 15 percent goes to the PCSO operating fund; and 30 percent is allocated

conventional weapons of mass destruction or the nuclear threat will elude monitoring by being passed around the jurisdictions involved or complicit.

Ban treaty

“The Philippines welcomes the positive outcome of the First Preparatory Committee Meeting for the 2020 NPT Review Conference [RevCon]. The PrepCom carried some issues forward and revealed new opportunities for advancing the agenda throughout the new review cycle. “The Philippines emphasizes that the single major development between the first and second NPT Prepcoms for the 2020 RevCon is the negotiation of the treaty prohibiting nuclear weapons [ban treaty]. Being the first multilateral legally binding instrument for nuclear disarmament, we see the ban treaty as complementary to the NPT and essential to achieving its goal of a nuclear weapon-free world. The NPT continues to provide the foundation and the way forward to erecting the arch of a nuclear weapon-free world. But we view the nuclear ban treaty as the capstone and added inspiration to the NPT endeavor that will hold it firmly in place when progress is finally achieved. “Under the ban treaty, the Philippines has advocated the urgency of highlighting the catastrophic humanitarian consequences of the use of nuclear weapons. “The ban treaty cannot be ignored which was the initial reaction of nuclear weapon states to the United Nations vote adopting it. Rather than resisting the universal aspiration the ban treaty eloquently articulates of a nuclear weapon-free world, the NPT process should seek and find language that will give the ban treaty its appropriate place

for the charity fund. At times, questions like these can be frustrating because it’s apparent that who asked already know the answers, but they ask nonetheless for the sake of attacking PCSO. At the end of the day, however, if you’re in dire straits and you have no one else to run to, PCSO certainly would cross your mind as it can possibly offer you help. Worry not if you have said negative remarks about PCSO, or if you have criticized the agency for its slow processing of documents, or if the assistance given to you, your family, or friend wasn’t enough. It’s true that its income is the money of the people, particularly the gaming public’s, which fill up PCSO’s fund. However, the agency’s fund does not come from the General Appropriations Act of Congress. We must also remember that the fund given to the sick comes from PCSO’s lottery games. The greater the amount of money received from the gaming public, the larger is the fund provided to the charity fund.

in the outcome document of 2020.

Denuclearization in the Korean Peninsula

“The Philippines reiterates its support for the denuclearization of the Korean Peninsula in a peaceful manner and expresses its readiness to play a constructive role in contributing to peace and stability in the Korean Peninsula. The Philippines has been supportive of the creation of conditions that support and encourage the resumption of dialogue among the concerned parties and is encouraged by the readiness of the United States and North Korea to discuss terms of a peaceful resolution.

Outer space

“ON the issue of outer space, the Philippines aligns itself with the Asean statement. “Philippine policy is that taking the arms race into outer space undoes all efforts to stop their spread and the threat of their use on the ground. The Philippines voted in favor of resolutions on “Prevention of an arms race in outer space” and “No first placement of weapons in outer space” at the First Committee and at the General Assembly Plenary on December 4, 2017. “The task of threshing out the critical issues in the next three weeks of the UN Conference only appears Herculean. It is not. The difficulty will be easily overcome by the sincerity of the collective endeavor. It depends entirely on the participants. There are no external obstacles to success. “I thank you, Madam President.” 1The President of the 2018 UNDC is Her Excellency Gillian Bird, permanent representative of Australia to the United Nations.

People queue on a daily basis at PCSO to avail themselves of said financial assistance. Moreover, we must also understand that PCSO’s charity fund is finite. The fund depends on the earnings from its gaming products, which include Lotto, Keno, Digit Games, Sweepstakes and STL. Many assume that if one asks for assistance from PCSO, a hospitalization bill of P100,000 for example, the agency will shoulder the total expense. This is not the case because PCSO follows a system for assistance provision. I shall explain this in my next column. For those who patronize PCSO’s games, may you continue to give Lotto, Keno, Digit Games, Sweepstakes and STL your support. For each P20 that you bet, P6 automatically goes to the charity fund. If you’re in luck, you’ll even become a millionaire. Legal or illegal games? People must wisely choose where they place their bets. E-mail: fetad@yahoo.com.

Opinion BusinessMirror

www.businessmirror.com.ph

World faces choice between nuclear war vs new renaissance Michael Makabenta Alunan

on the contrary

he world is teetering dangerously on the verge of a possible escalation anew of clashes over the bombings in Syria and mounting tensions with Russia that could possibly lead to a global nuclear war, while on the other side of the globe, the potentials for a new renaissance led by China’s massive global infrastructure thrust called “Belt and Road” initiative (BRI) are attracting the interest of about 140 countries. In short, the world is faced with two choices—revive the Cold War with Russia and China by escalating the Syrian war and confrontation with Russia that could trigger a nuclear war annihilating human civilization in one to two hours, or join China’s win-win development agenda which Xi Jinping calls a “common destiny of humankind.” n Rushing the Russian bogey. If Syria and Russia were guilty of chemical bombings, the hasty missile attacks by Britain, the United States and France were premature as the Organization for the Prohibition of Chemical Warfare (OPCW) still had to investigate if chemical bombings happened and who were behind. Moreover, the attacks violated the UN Charter and had no Congress or Parliamentary approval. The British seems to fall into its trap of the proverbial “boy crying wolf” story as it blames Russia again, while half of Europe no longer believes its tale. Earlier, Prime Minister Theresa May blamed Russia for poisoning double agent Sergei Skrippal and daughter Yulia. Sergei was jailed in Russia and released on a spy exchange. May expelled 23 Russian diplomats, and got the US and 18 European Union members and others to kick out 144 Russians. May raised the Russian bogey for Russia to prove its innocence in a mockery of justice when the burden of proof supposedly shifts back to the accuser. We may not believe Russia’s selfserving defense, but neither could we believe Britain for not producing proofs and ignoring Russia’s 14 valid questions. Putin could not risk tarnishing his name weeks before his March 18 reelection. Syria is also winning the war so why risk a setback on these chemicals. n Some British are brutish in lies? In jurisprudence, the burden of proof is on the accuser, but why is the perceived accused made to prove his innocence. We are traditionally biased against Russia, but must take caution and political cushion now, owing to the countless political distortions done by the British in history. For one, Iraq war happened on the hoax peddled by Tony Blair that Saddam Hussein possessed “weapons of mass destruction,” but swallowed hook, line and sinker by President George W. Bush. Arguably, it was more believable and perceived justifiable owing to Saddam’s history of abuses, but May’s pronouncements and the attacks on Syria appear questionable with contrary reports about the British-created “White Helmets” rescue organization colluding allegedly with the jihadi “Jaish alIslam” in the chemical bombing. Rightly or wrongly, we need to sift and discern through the Goebellian propaganda surreptitiously peddled by media influenced by the Council on Foreign Relations, whose tentacles of control and alleged twisted reporting is what Trump complains about. n The Trump contradiction. Trump is a contradiction of sorts for his arrogance, impulsive decisions and racial, Islamophobic and misogynist remarks, while he goes for peace, irking neoconservative war-hawks representing the military-industrial complex. He wants to stop regime changes, cutdown defense, revive space spending instead, calls Cold

War Nato obsolete, and wants to make friends with China and Russia. He wants US troops out of the Middle East, claiming over $7 trillion have been wasted, which also shows the magnitude of the war business. He hit the “color revolutions” backed by George Soros (i.e., 2004 Orange revolution in Ukraine; 2003 Rose Revolution in Georgia; 2005 Tulip revolution in Kyrgyzstan, 2005 Cedar revolution in Lebanon, Yellow Umbrella Revolution in Hong Kong; Arab Spring in the Middle East, the failed White Revolution in Russia. It was for Trump’s anti-war position that the Russiagate campaign against him was launched, which is backlashing and revealing again the British hand through intelligence officer Christopher Steele. His impulsiveness made him expel Russian diplomats and joined the Syria bombing, but maybe he was forced due to mounting pressures at home. n “Art of Deal” and “Art of War.” Trump has no depth, hates books and prefers abbreviated impulsive Twitter messages, but because of his nature as expressed in his book Art of the Deal he wants to do business with Russia and China and do a Sun Tzu “Art of War” by talking peace and win for US without firing shots. With Xi Jinping and South Korea, Trump contributed in softening North Korea’s Kim Jong Un through the Pyongyang-to-Pyeongchang Winter Olympic diplomacy, dominated by images of Ivanka Trump and Kim’s sister. A meeting is being brokered by China this May. This may revive peace and the Korean “Iron Silk Road” achieved in 2002 to build railways from Busan, through North Korea, up to Rotterdam, and industries at Kaesong border, employing 50,000 North Koreans by 123 South Korean firms, but all stopped under Bush-Cheney. World peace with Belt and Road. While Trump doesn’t know poker diplomacy, his ”Trump card” style of reaching out to arch enemies may help “bring world peace,” a motto of the Miss Universe pageant he once owned. China’s BRI with Russia heavily involved, which is an improvement of the BRICS coalition, is a promising idea for a new renaissance and peaceful alternative to the “zero-sum dog-eat-dog game” of globalization, “geopolitics” of perpetual Cold War and revolutions, resulting in “winners and losers” and massive poverty, amid few pockets of wealth. BRI ignores British Empire Lord Palmerston’s concept of “permanent wars and permanent revolutions” and his saying, “There are no permanent friends and enemies, but permanent interests.” China plans six development corridors across Asia, Europe, Africa and Southeast Asia, including the 30-year delayed Kra Canal in Thailand, cutting travel by 1,200 kilometers to the Indian Ocean and bypassing Singapore, the $49-billion Nicaragua Canal about 3.5 times longer than Panama Canal. And if America is involved, link Russia’s Siberia and Alaska at the Bering Straits, and massive projects all the way to South America, among others. Threats are ominous, amid the potentials for a new renaissance, we just have to make the right choice as what we have long followed for what is right are deceivingly leading us to perdition or hell.

E-mail: mikealunan@yahoo.com.

Wednesday, April 18, 2018 A11

Data privacy and cyber security for insurance companies Dennis B. Funa

INSURANCE FORUM

he possible breach of data privacy and cyber security poses real risks for insurers and their policyholders. Looking out for data-privacy infringement and cyber attacks should both be part of a company’s risk management. The threats of privacy breach and cyber attacks are all too real. While data-privacy breaches need not be done through the Internet or through information-technology infrastructures, more often, data breaches are done electronically or through cyber attacks. Let us consider the latest figures. As of 2016 malware infections on smartphones grew nearly 400 percent. As of 2017 there were 500,000 unknown cyber threats per day. In 2016 3.7 million Hong Kong voters’ personal data were stolen. In the financial world, also in Asia, 3.2 million debit cards were compromised. The cost of these attacks is astounding. The cyber attack on a Bangladesh Bank resulted to the loss $81 million. For Leonie AG, it was €40 million. According to a PwC Health Research Institute analysis, the estimated cost of a major health-care breach is $200 per patient, while the cost to prevent

a breach is only $8 per patient. Because of this escalating trend worldwide, the Philippines adopted the Data Privacy Act of 2012 (Republic Act 10173), which became effective on November 3, 2012, and the Cyber Crime Prevention Act of 2012. The Data Privacy Act is administered by the National Privacy Commission (NPC). The commission’s concerns focuses on personal data collected within the agency and the data collected by insurance companies. The first concern was addressed by NPC Circular 16-01, re: Security of Personal Data in Government Agencies, and NPC Circular

16-02, re: Data Sharing Agreements Involving Government Agencies. Under the Data Privacy Act, personal-data controllers and processors have the obligation to protect the personal information collected. They have the duty to secure and protect such information “against any accidental or unlawful destruction, alteration and disclosure, as well as against any other unlawful processing” (Section 20). Only personal data are covered by the Data Privacy Act. They are to be guided by the principles of transparency, legitimate purpose and proportionality (as opposed to being excessive). Sanctions are imposed for failure to observe the obligations. Personal information has been defined in the law as “any information whether recorded in a material form or not, from which the identity of an individual is apparent or can be reasonably and directly ascertained by the entity holding the information, or when put together with other information would directly and certainly identify an individual” (Section 3, g). Examples of personal information would include: names, employee number, address, ID photo and e-mail address. Sensitive personal information (Section 3, l) would include the civil status, social security number, a person’s health condition and birth date.

Personal information may only be processed under specific guidelines, such as only for “specified and legitimate purposes,” they must be “processes fairly and lawfully,” they must be “accurate, relevant and, where necessary for purposes for which it is to be used in the processing of personal information, kept up to date,” they must be “adequate and not excessive in relation to the purposes for which they are collected and processed,” they must be “retained only for as long as necessary for the fulfillment of the purposes for which the data was obtained,” and they must be “kept in a form which permits identification of data subjects for no longer than is necessary.” Moreover, processing must be done only with a lawful basis, such as where the data subject has given consent, where the processing is necessary for compliance with a legal or contractual obligation, where the processing is necessary for the protection of the data subject or another person, where the processing is necessary for public purposes and where the processing is necessary to pursue legitimate interests.

Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

PCC merger review as tool for competitive markets, consumer welfare Atty. Johannes Benjamin R. Bernabe

Competition Matters Continued from A1

he Philippine Competition Act (PCA) provides for compulsory review of M&As. Transacting parties whose transaction is valued above the PCC’s threshold must be notified before consummation of their deal. Some countries, notably Singapore and Australia, do not require compulsory notification before consummation and choose to review transactions on an “as needed” basis. Many other economies, such as the United States, Japan, South Africa and Brazil, follow a compulsory system like ours. These countries, such as the Philippines, put a premium on legal predictability and certainty as indispensable elements to doing business, and are averse to the risk of subjecting a transaction to review and possible prohibition and unwinding months or even years after they have been consummated. The PCA initially set the threshold for compulsory notification at a “transaction value” of P1 billion. So it can hone in on transactions more likely to pose harm on the market, the PCC subsequently adopted a twofold test: “size of party,” which pertains to the total revenues or asset size of one of the transacting parties, is now pegged at P5 billion; and the “size of transaction,” representing the assets or revenues of the acquired entity, has been fixed at P2 billion. These rules, however, only tell us whether a transaction should be

notified. They don’t begin to tell us whether the transaction is likely to substantially lessen competition. Even if the thresholds for notification are not met or an otherwise notifiable transaction is not submitted for review, the commission can still exercise its power to review M&As on a motu proprio (on its own initiative) basis. On at least two occasions, the commission has had to undertake such a review where the transactions are likely to result in a substantial lessening of competition. In June 2016 the PCC sought to review PLDT and Globe Telecom’s acquisition of San Miguel Corp.’s telecom assets because of the parties’ insufficient notification. More recently, PCC has initiated a review of Grab’s acquisition of Uber’s Southeast Asian business. In its review, the commission determines whether a transaction

The PCC employs various economic analytical tools to establish the likelihood that post-transaction, there will be increased ability and incentive for the transacting parties to exercise market power—unilaterally or in coordination with other firms—to the detriment of competition and consumers. is likely to result in a substantial lessening of competition. In the case of an M&A between firms that compete against each other, such as Uber and Grab, we ask, among others: will their transaction likely give rise to a situation where the absence of competitive pressure leads to increased prices, deterioration in quality or lower incentive to innovate? Is the merger likely to adversely affect consumers? In transactions between noncompetitors, such as in the SM Group’s proposed acquisition of Goldilocks last year, the Commission examined, among others, whether the merger would deprive competitors access to prime mall space under reasonable terms—an input these competitors need to compete with Goldilocks. In competition jargon, whether input foreclosure resulting in a substantial lessening of competition would occur. The PCC employs various economic analytical tools to establish the likelihood that post-transaction, there will be increased ability and incentive for the transacting parties to exercise market power—unilaterally or in coordination with other firms—to the detriment of competition and consumers. At the same

time, sound analysis also allows for clearing transactions that enable the merged firm to reduce costs and become more efficient, leading to lower prices, higher quality, higher quantity and diversity of products, or increased investment in innovation. When performing merger analysis, the commission predicts a merger’s competitive impact to prevent problems before these materialize. Herein lies the challenge for business and legal practitioners who face the commission during merger review—at its core, competition law is economic analysis within a legal framework. The legal standard of “substantial lessening of competition” is not a concept framed with precision that lawyers can hang their arguments on. Rather, it varies from transaction to transaction, depending on the product or service, as well as geographic area involved, even the timing of the deal. Legal precedent has less of a place in competition law than in other fields of law. If Filipinos are to pursue the constitutional goal of attaining a more equitable distribution of opportunities, income and wealth, as well as an expanding productivity to raise the quality of life for all, it is imperative that we begin to appreciate the language and benefits of competition law. Commissioner Bernabe served as adviser to the Senate and the House of Representatives in the drafting of, and deliberations on the Philippine Competition Act. A lawyer by profession, he was a senior fellow at the Geneva-based International Centre for Trade and Sustainable Development and served as the Philippines’ lead trade negotiator on select issues at the World Trade Organization, also in Geneva, Switzerland.

Bank capital rules need more than fine-tuning

aving spent nearly a decade crafting new capital requirements to bolster the resilience of the country’s largest banks, the US Federal Reserve (the Fed) is getting ready to do some fine-tuning. The rules can certainly be improved —but what’s needed is more than tinkering around the edges. The Fed has two main tools to ensure banks have enough equity capital, the bedrock financing that lets them absorb losses and continue lending in difficult times. It sets minimum levels, and it conducts annual stress tests to see whether the thresholds would be breached in a crisis. Its new idea is to link the two together—using the tests to help adjust the levels. Currently, if a bank flunks a stress

test, the Fed restricts how much equity can be given back to shareholders—in the form of dividends and share buybacks—until the bank is better capitalized. Under the Fed’s new proposal, banks that suffered bigger losses in the tests would automatically face higher capital requirements, hence stricter limits on their payouts. This is a good idea as far as it goes. Banks that take on more risk need more capital to absorb the potential losses. Together with other tweaks to the stress tests, the proposal might boost some of the largest banks’ capital requirements by some tenths of a percentage point, while reducing requirements for smaller banks that don’t have global trading operations. Such fine-tuning, however, fails

to get to grips with the bigger problem. Taken together, existing capital requirements and stress tests still aren’t enough to prepare banks for a real crisis. As soon as people start to think a bank is going bust, it’s doomed. So it needs enough equity to absorb severe losses and continue operating. The largest institutions currently have as little as $6 in equity for each $100 in assets. Research by the Minneapolis Fed suggests that they would need more than twice that amount to make disaster acceptably unlikely. The Fed’s plan to link capital and stress tests does little to address that—and another new proposal moves in the opposite direction. Regulators want to weaken the socalled supplementary leverage ratio,

a backstop designed to make sure banks have a minimum amount of equity no matter how safe they believe their assets to be. The aim is to tailor this requirement to banks’ systemic importance—again, a good idea in itself—but the effect will be to reduce required capital at some of the country’s largest depository institutions by an estimated $121 billion. Regulation should be smart and no more burdensome than necessary. The Fed is right to seek improvements in an unduly complex system. But these plans miss the most important point: The goal should be to ensure that when the next crisis comes, the financial system will be a source of strength, not fragility. Bloomberg View