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34 tech companies sign Cybersecurity Tech Accord

By Henry J. Schumacher

he new paper, signed by 34 tech companies, is akin to a “digital Geneva Convention” to govern the rules of engagement in technology.

Mast3r | DreaMstiMe.coM

Here are the big takeaways: • Signatories to the accord will not, among other things, “help governments launch cyberattacks against innocent citizens and enterprises.” • The accord comes amid a wave of new attempts by governments to compel tech companies to decrypt communications. One week ago, a group of 34 technology companies signed the “Cybersecurity Tech Accord,” a document that declares that the signatories will protect all of their customers from threats and will not “help governments launch cyberattacks against innocent citizens and enterprises from anywhere.” The signatories include Microsoft and Facebook, Dell, VMware,

»continued on A2

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Tuesday,April April24, 24,2018 2018Vol.Vol.1213No.No. Tuesday, 215192

The quick brown fox Task Force Boracay told: Reveal of lazy violators jumpsnames over the dog 30 J By Ma. Stella F. Arnaldo

UST two days before Boracay Island is to be closed for a six-month, state-led rehabilitation effort, the interagency Task Force Boracay has yet to reveal the names of the violators and government executives that will be charged for abetting violations on the popular resort destination.

LIM: “The government [has to] publish a complete list of violators. The public has to know what sanctions will be imposed on them.”

number the Formaximum mer Tour ism Secretar y of legal experts the the BusiNarzalina Z. Lim told nessMirror thatappoint “the government President can to a [has to] publish a complete list of constitutional commission violators. The public has to know that will help lawmakers Continued on A12 tackle the job of amending the charter

Firing execs bare resolute Duterte, The quick brown fox jumps over the lazy shallow bench Continued on A2

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Beating the catch-up game What elections mean manny villar

thE EntrEPrEnEUr Manny B. Villar THE ENTREPRENEUR

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AY said it all when he quit: President Duterte is one tough cookie. Dominador R. Say was supposed to be the next one off the Commander in Chief’s chopping block. Say dodged the bullet when he resigned just days before his dismissal was made public last week. Presidential Spokesman Harry L. Roque Jr. said the President has personal knowledge about his alleged corruption as the Department of Labor and Employment (DOLE) Undersecretary for Employment, Policy Support and Luzon-Visayas Regional Operations. However, Roque added he can’t say whether that accusation prompted the President to fire Say. Had he been booted out, Say would add to nearly a hundred government personnel sacked by Duterte, mostly because of corruption allegations, in just a span of about two years in office. Weeks before Say quit, the firebrand President announced he has accepted the resignation of Justice Secretary Vitaliano N. Aguirre II, amid speculations of another cabinet reshuffling. Aguirre, Duterte’s fraternity brother in San Beda’s Lex Taleonis Fraternity, was replaced by Senior Deputy Executive Secretary Menardo Guevarra. See “Firing execs,” A2

businessnEwS newsSOUrcE source bUSInESS ofthE theyEar year Of

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Special to the BusinessMirror

By Bernadette D. Nicolas

2016EjaP ejapjOUrnalISm journalismawarDS awards 2016

Workers in a microchip-manufacturing facility in Laguna prepare to go for a break after a full-morning job. According to the National Economic and Development Authority, the industry sector—manufacturing, in particular—is one of the major drivers of the economy. Still, Socioeconomic Planning Secretary Ernesto M. Pernia allays concerns the economy is overheating, saying other signs it is so are absent. NONIE REYES

lections are one of the most important features of democracy. Fair and free elections are the hallmarks of true democratic governments, which are able to operate in a politically stable environment. Based on these considerations, I would say that the fact that we are able to hold fairly peaceful, fair and free elections shows how democracy thrives and flourish in the Philippines, and that Filipinos are not chaotic or volatile as a people. Continued on A10

Manufacturing sector powered GDP growth in Q1–Neda Continued on A2

By Cai U. Ordinario

@cuo_bm

he manufacturing sector’s strong performance in the first three months of the year likely boosted the country’s GDP growth in the first quarter, according to the National Economic and Development

Authority (Neda). On Monday Socioeconomic Planning Secretary Ernesto M. Pernia told reporters that first-quarter GDP growth likely reached 7 percent. In order to reach the country’s full-year target of 7 percent to 8 percent, he said GDP growth must reach at least 7 percent per quarter. “We expect, at least hope, that

first-quarter GDP growth rate would at least touch 7 percent or hover around 7 percent,” Pernia said. Neda Undersecretary for Planning and Policy Rosemarie G. Edillon told the BusinessMirror that manufacturing growth, which grew above 20 percent in January and February, caused GDP to expand faster.

Data from the Philippine Statistics Authority (PSA) showed that the Volume of Production Index (VoPI) grew 24.8 percent in February and 21.9 percent in January. PSA data also showed that the Value of Production Index (VaPI) grew 23.6 percent in February and 20.4 percent in January.

thE qUIcK brOwn fOx jUmPS OvEr thE lazy See “Manufacturing,” A12

34 tech companies sign ‘Cybersecurity Tech Accord’

Mast3r | DreaMstiMe.coM

enerio: “it would be good to have this percentage grow exponentially in the next couple of years because they are a longstay market, and they spend more. They’re a highyield market.”

PESO ExchangE ratES n US 48.4730

n jaPan 0.4675

By Henry J. Schumacher

he new paper, signed by 34 tech companies, is akin to a “digital Geneva Convention” to govern the rules of nengagement in n UK 59.4231 n hK 6.2496 chIna 7.2073 n SIngaPOrE 12.9237 Source: BSP (14 October 2016 ) technology. C A2 ontinued on

PESO exchange rates n US 52.1370

Here are the big takeaways: Signatories to the accord will not, among other things, “ help governments launch cyberattacks against innocent citizens and enterprises.” The accord comes amid a wave of new attempts by governments to compel tech companies to decrypt communicattions. One week ago a group of 34 35.0999 n aUStralIa 36.6844 n technolog y companies signed the “Cybersecurity Tech Accord,” a document that declares that

the signatories will protect all of their customers from threats and will not “help governments launch cyberattacks against innocent citizens and enterprises from anywhere.” The signatories include Microsoft and Facebook, Dell, VMware, HP and HP Enterprise, Cisco, Avast, CloudFlare, F-Secure, Sy53.5966Trend n SaUDI mantec, Micro, arabIa BT, Juniper Networks and Telefonica, among Continued on A2 Continued on A12

n japan 0.4837 n UK 72.9918 n HK 6.6470 n CHINA 8.2789 n singapore 39.6238 n australia 39.9891 n EU 64.0034 n SAUDI arabia 13.9024

Source: BSP (23 April 2018 )

BMReports BusinessMirror

A2 Tuesday, April 24, 2018

www.businessmirror.com.ph

‘Reforms to ensure PHL economy won’t overheat’ Continued from A12

The Washington-based lender expects the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy after inflation averaged 3.3 percent for the year. Hansl noted that the World Bank’s report, titled, “Philippines Economic Update,” indicated that the capacity of the local manufacturing sector is peaking to 84.1 percent and this shows the economy’s ability to produce and grow more is reaching its limit. She also said the increase in real wages has been almost flat in the past 10 years. The report stated that while employment increased, mean wages remained stagnant between 2006 and 2015. “Increasing inflation together with high credit growth…the recent output rising to capacity level…labor market indicates really that the economy is operating at capacity and there is, perhaps, the risk of overheating in the economy,” Hansl said. Socioeconomic Planning Secretary Ernesto M. Pernia said, however, that concerns about imminent risks of overheating were simply “exaggerated.” He added the country’s solid macroeconomic conditions and ongoing reforms make the economy disposed for sustained and even higher growth. He also reiterated that concerns on overheating are being met head on with reforms that focus on addressing red tape, closing infrastructure gaps and investing in human capital, which has been lagging in the past few years.

Firing execs. . .

The National Economic and Development Authority (Neda) chief said the government is exerting efforts to enforce and monitor the Anti-Red Tape Act (ARTA), which is expected to reduce the unnecessary burden the government is imposing on the private sector. The impact of the massive infrastructure campaign of the Duterte administration, dubbed as “Build, Build, Build,” is expected to be felt this year. At least 34 flagship projects of the administration will be rolled out this year or early next year. The Neda is also pushing for the full implementation of the Republic Act 10687, also known as the Unified Financial Assistance System for Tertiary Education Act, which will expand access to higher education as the government continually invests in teacher training and other critical inputs to ensure the quality of education. “As we tread a high growth trajectory, risks are typically present on both domestic and external fronts. Nevertheless, we remain vigilant in monitoring these developments. And we already have the platform to effectively address these concerns,” Pernia said. “This is also the first time that we are seriously implementing measures to maximize our demographic dividend. At this point, we want families to attain their desired family size while the government pours sufficient investments into programs helping children reach their full potential,” he added.

Inflation and growth

Commodity prices are among the

Continued from A1

Albeit it was unclear if Duterte asked his fraternity brother to resign, the fact remains the President appears unyielding in his policy statement: “A whiff of corruption, you’re out.”

Alone at the top Jean S. Encinas-Franco of the Department of Political Science at University of the Philippines Diliman considers Duterte’s firing tack to come from the President’s aim to be perceived as tough and a no-nonsense leader. And Franco believes propping up that perception appears to work for people who believe him. “I think the people like what he is doing because Filipinos have long wanted that: a no-nonsense [leader], who can fire immediately officials [on a whiff of corruption],” she told the BusinessM irror. However, Franco said there’s also the reality that the Duterte administration has a shallow bench. The President is resorting to frequent change of officials because he has no pool of technocrats to rely

on, she added. Nonetheless, Duterte’s hiring and firing style is welcomed by Franco. She believes some officials would be very careful so that they will avoid doing something to earn the President’s ire The downside of this is political stasis. “If you’re careful, you might not do anything. You will not initiate bold reforms or you’ll just be super beholden to the President that you are to deliver.” Casiple agreed with Franco saying Cabinet members may be on their toes since they don’t want to make a false or bad impression in front of the President. That, according to him, may affect whole governance.

Apt pupil POLITICAL analyst Ramon C. Casiple said the Duterte administration is more likely to sack people compared to the past administration of Benigno S. Aquino III. Casiple, who is also the executive director at the Institute for Political and Electoral Reform, said booting

most important economic indicators that Filipino households are sensitive to. High prices are crucial in sending millions to poverty, while low prices mean more resources for various needs and wants. However, in the past five years, the Philippines has enjoyed low prices and high economic growth —a “rare” combination, according to economists. Between 2013 and 2017 fullyear inflation was at its highest in 2014 at 3.6 percent, using the new base year and methodology to compute the Consumer Price Index employed by the Philippine Statistics Authority (PSA). The lowest annual average inflation rate was at 0.7 percent in 2015. In terms of economic growth, which is expressed in constant 2000 prices or real terms, the Philippine economy grew an average of 6.6 percent between 2013 and 2017. The highest annual economic growth the country posted was in 2013 at 7.1 percent, while the lowest was in 2015 at 6.1 percent. At current prices or nominal terms, economic growth averaged 8.4 percent. Nominal GDP was highest in 2014 at 9.5 percent and was lowest in 2015 at 5.4 percent. “Real GDP growth and inflation have a negative relationship. When inflation is low, real GDP growth is relatively high. Nominal GDP growth, however, can have a positive relationship with inflation, since an increase in demand can raise prices,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror.

“At present, inflation lowers nominal GDP by less than 3 percentage points. This is low relative to some Asean countries,” Terosa added. Neda Undersecretary for Policy and Planning Rosemarie G. Edillon said inflation is not entirely bad for the economy as it is an indicator of demand. Edillon said between 2010 and 2017, nominal GDP increased by 76 percent, but real GDP grew by 52 percent on average. She added that nominal GDP grew by 8.4 percent, while commodity prices increased by 2.2 percent on average during the period. “It should also be understood that economic growth comes with some inflation. When inflation becomes too high, then it can negatively affect future growth,” Edillon said. This “high” level of inflation, especially if it is accompanied by a 20-percent peso depreciation, is “deadly” for the country’s GDP, according to Emilio S. Neri Jr., lead economist of the Bank of the Philippine Islands (BPI). Neri told the BusinessMirror that the current level of inflation, which averaged 3.8 percent in the first quarter of 2018, is not dangerous to the country’s economic growth. This is the case even if inflation averaged 4.3 percent in March alone. Neri said as long as inflation is lower than nominal GDP growth, the economy remains to have a “fighting chance.” He added that even if 2018 nominal GDP rises to 14 percent, from 10 percent in 2017 and even if inflation rises from 3.2

out people is good for the country since cabinet officials will always keep an eye on their performance as public servants. He said this administration is different because the President came in from the cold with a political platform but with no expectations of winning the elections. He also did not come from the national government, although he is a longtime Davao City mayor, Casiple said. “I would appreciate his entry as President because he is the only one with no strings attached to the elite,” he added. Casiple explained the elite have an advantage in running the government “because they already know what it requires to be a president.” “So usually they already have shortterm to long-term plans before they run and they are also prepared with their list of their Cabinet appointees,” he said.

corruption. They include former Interior Secretary Ismael Sueno, former National Irrigation Administration Head Peter Laviña and former Immigration Deputy Commissioners Al Argosino and Michael Robles. Sueno was Duterte’s party-mate at the Partido Demokratiko PilipinoLaban ng Bayan party, while Laviña served as the President’s campaign spokesman during the 2016 elections. Argosino and Robles were his fraternity brothers, too. Aside from them, the President also sacked as of March of last year over 92 government personnel, including officials from the Energy Regulatory Commission, the Land Transportation Franchising and Regulatory Board, Land Transportation Office and the Bureau of Immigration. They were shown the exit based on alleged irregularities in the performance of their duties. If not corruption allegations, these officials were also accused of taking too many trips abroad.

Dogged determination DUTERTE ran with the slogan “Change is coming.” Indeed, even those thought to be under his aegis were axed over hints of

Sodden impact FOR political analysts like Casiple, these frequent changes in the Cabinet have little impact on the gears running the engines of public service. Maria Fe Villamejor-Mendoza, dean of the UP National College of Public Administration and Governance, told the BusinessMirror the impact on government performance would just be in the “short term.” This is so “because this [Cabinet reshuffle] concerns the people at the top who may not have that much influence in the day-to-day operations at the bureaucracy,” Mendoza said. Franco also believes changes at the top would affect the present administration’s governance to some extent but not as much.

Economy. . . Continued from A12

“I think their compromise is there will be a more frequent rebasing of the rates. Anyway, beginning 2018, the domain will be provincially represented so rebasing the rates will be more straightforward,” Edillon said. And, despite the rebasing of the CPI to 2012 prices, the Neda believes this is still not enough to reflect the current situation of prices nationwide. The changes implemented in the CPI also do not mean the country can

percent in 2017 to 4.5 percent in 2018, the economy will be fine. The inflation rate of 4.3 percent in March is above the 2-percent to 4-percent inflation target of the BSP. The target is the same for the years 2017 to 2022. However, Neri said this target is very low and could even be bad for economic growth. He added the low inflation target may have also been the reason that kept the economy from maximizing its growth potential in the past few years. “It might be counterproductive if the inflation target is that low. We were just lucky in 2015 and 2016 when global oil prices fell below $25 per barrel. Now that it has normalized to $60 to $70 per barrel, raising interest rates to keep inflation below 4 percent might be bad for growth. We should widen the target to maybe 1 percent to 6 percent,” he said.

‘Goldilocks period’

Despite the threat of rising inflation, there is no stopping the engines of the Philippine economy from growing by 7 percent to 8 percent in the medium term, according to the Neda. In a presentation in Cebu last Thursday, Pernia said the economy is, indeed, in the golden age of growth, a “Goldilocks period” that will allow it to provide more jobs and lift millions out of poverty. This meant that the economy was “neither too hot nor too cold” and that growth is “just right.” The Asian Development Bank agreed with this pronouncement. ADB Philippine Country Office Director Kelly Bird said what the country is now experiencing is

simply a golden age of economic growth that has never been seen in at least 40 years. Bird said this kind of growth is based on solid macroeconomic fundamentals that can be sustained in the medium term. He also said the Philippines’s recent economic growth occurred at a time when there is also moderate inflation, low deficit, declining debt and investment grade rating. The ADB Philippine country official said the Philippines’s fiscal position remains strong with a deficit of only 2.2 percent of GDP and national debt standing at around 42 percent of GDP, the lowest in 20 years. This will be strengthened by the revenues to be collected from the Tax Reform for Acceleration and Inclusion program. Bird said the country is expected to collect P90 billion this year and P140 billion next year. Bird added the country’s fixedinvestment rate increased to 25 percent of GDP after years languishing at only 10 percent to 20 percent of GDP. He also pointed out the strong employment numbers, which, as of the January Labor Force Survey, showed an unemployment rate of 5.3 percent and employment rate of 94.3 percent. “I say this to my colleagues, the Philippines is in like a golden age for its economic growth, it’s been growing at this pace for several years and it is its strongest economic expansion in over 40, 50 years,” Bird said. “It’s quite a virtuous cycle, that’s why I call it a golden age for the Philippines because its growing in a very sound macroeconomic policy framework.”

“The bureaucracy is manned by people who are on a permanent basis and they are on security of tenure and they have been there a long time ago. They already know their jobs. They are used to having secretaries come and go,” Franco said. “They can definitely adjust. That’s the beauty of permanent staff in a department because they really continue the process despite the changes.” Casiple also said the level of disruption of services would not be that serious since the bureaucracy is intact. “The direction is set by the President actually,” Casiple said. “That is why it doesn’t really matter [if a high official leaves].”

So what I’m scared of is how valid the information he is getting from the people,” she said. “Of course, if he really trusts in people that are with him, I hope they give the President the totality [of the information].” But Casiple said he already expected that Duterte would use the trialand-error method in his appointees. He also expects the President would continue to do this until the end of his term. “I think so. It’s his management style,” he said. “But I would rather say that there would come a time that he would be more confident with his appointees.”

Trial, error

MENDOZA said there should be a more permanent and systematic process in place to help the presidents who have a hard time picking people for his Cabinet, noting that most of the Presidential appointees come from a President’s comfort zone. “It would be better if we have a system so that you will have a process of vetting who should be on the bureaucracy to help the President,” she told the BusinessMirror. According to Mendoza, this is important today as the country is not used to Duterte’s leadership style. Such style, she said, is different from the past administrations wherein decisions were made in a subtle and more professional manner, especially in firing people. “[A]lthough he has the authority, there should still be at least a due process,” she added. “They are not dots [on the wall] that you can just remove,” she said. Franco added it should also be better if the government would be transparent in letting the public know the reason for the firing or replacement of an official.

THE only downside to the firing tack of Duterte is the appearance, the President may be undertaking a trial-anderror method when it comes to political appointments, according to Mendoza. Maybe “he is slowly learning the ropes,” which may explain the time the President appointed good people. “If you look at the first wave of his appointees, most of them were either from Davao or Mindanao, from San Beda. The patronage politics that we have in the past that should not happen in good governance,” Mendoza said. “As he grows to address the job, he sees his mistakes. That is why with his appointment of PNP [chief Director General Oscar D.] Albayalde, among other new appointees, were hailed as good decisions.” However, Franco doesn’t want to call the President’s demeanor as “trial and error.” But she said the President needs to think thoroughly before firing people. “What he does is he has people he really trusts and he gets information on this people he really trusts.

already migrate to a chained value measure in computing GDP growth. Edillon said while the rebased CPI can be used to compute the expenditure side of the GDP, which looks at the country’s economy through consumption, computing GDP from the production side is a different matter. She added computing the output of the economy through the agriculture-fisheryforestry, industry and services sectors, requires the computation using the producer price index, which currently still uses the year 2000 as its base year. Edillon said that, with the country’s GDP

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also still using the base year 2000, it has not been able to reflect certain economic developments, such as the growth of the business-process outsourcing (BPO) industry and technological developments such as today’s mobile phones. “Actually at the very least, a rebasing of our GDP series [is needed] because right now its still 2000 [based]. It’s a different structure of the economy,” Edillon said. “When before the contribution of BPO may be small or negligible, this is not the case today; it’s a very, very different layout of the economy.” Cai U. Ordinario

The Nation BusinessMirror

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P512 wage in NCR not enough to support family of six–Ibon By Nelson S. Badilla Correspondent

N independent research group on Monday revealed that the P512 daily rate of workers in Metro Manila is not enough to buy the daily needs of a family with six members. The P512 daily rate, which is the minimum wage per day in the National Capital Region (NCR), is the highest in the country. The lowest is less than P300 per day, which is the prevailingrate at the Autonomous Region in Muslim Mindanao (ARMM), where laborers are considered one of the poorest in the country. But that does not necessarily mean that Metro Manila workers are the richest laborers since their daily income is not enough to buy the basic needs of a family with six members, research group, Ibon Foundation, said. Of course, the less than P300 daily wage of ARMM workers is definitely not enough, taking into account that the cost of living in the region is not high as in Metro Manila’s 16 cities and one municipality. Ibon argued that as of March this year, the worker with six members in a family should have a daily rate of about P1,168, while P973 is needed for a family of five. Ibon added that “[t]he onslaught of price hikes since early this year has made the mandated minimum wage in the National Capital Region even more inadequate for millions of Filipino workers to decently support their families.” Based on its computation, Ibon said “the NCR nominal minimum wage still falls considerably short of the rising family living wage [FLW]. As of March 2018 worsening inflation has increased the FLW needed

from the same period last year by P57.00 for a family of six and by P48.00 for a family of five [a 5.2percent increase for both].” Ibon blamed the Tax Reform for Acceleration and Inclusion law as the main culprit in the worsening inflation, adding that that inflation will continue to rise in the next few months. The minimum wage, however, has not kept up with the rising cost of living, the independent research added. Lawyer Jose Sonny G. Matula, president of the Federation of Free Workers, agreed with the Ibon Foundation’s findings. Matula told the BusinessMirror that the “[purchasing power of the] mininum wage [has been] reduced by [the] inflation rate.” “[The] present minimum wage [is] not enough to support a family,” he said. Matula, citing data released by the Philippine Statistics Authority said that the price of well-milled rice and other commodities had gone up compared to last year. Ibon, likewise, said that the P512 minimum rate is just 43.8 percent of the needed P1,168 FLW as of March. “This translates into a significant wage gap of P656 or 56.2 percent,” Ibon stated. For a family of five, the gap was nearly half [47.4 percent] of the FLW, it added. These wage gaps grew despite the regional wage board's approval of a P21 minimum wage increase from P491 to P512 in October 2017, thus making the wage discrepancy just as wide as the same period last year, Ibon said. The research group recalled that in March 2017, the nominal minimum wage in the NCR of P491 was 44.2 percent of the P1,111 FLW for a family of six.

Labor group’s last-ditch appeal to end ‘endo’ ahead of Labor Day By Jasper Emmanuel Y. Arcalas

@rectomercene

he passenger plane carrying the last batch of some 200 overseas Filipino workers (OFWs) touched down at the Ninoy Aquino International Airport (Naia) at 6:30 a.m. on Monday from Kuwait, bringing the grand total to 5,066 that were repatriated from the Gulf country, including 517 infants. President Duterte told OFWs to stop working in Kuwait in February following the discovery of a Filipino maid’s corpse stuffed inside the freezer of her employers. Joanna Demafelis, 29, who worked for a married couple in Kuwait in 2014 was found stuffed into a freezer in an abandoned rental property and police believe she was tortured or strangled to death. As murder charges were filed

against the suspects, Duterte has issued a ban on workers being sent to the Arab nation and has offered to fly thousands of them home for free. The Demafelis family declined the offer of “blood money” from the suspects, saying they will fight until the end to bring justice for her death. Joanna’s brother, Joejet Demafelis, said they will reject any offer of blood money or financial compensation for the brutal death of his sister in Kuwait. Foreign Secretary Alan Peter S. Cayetano and Party-list Rep. Aniceto D. Bertiz III of ACTS OFW welcome the group at the Naia Terminal 1. Cayetano told the OFWs that their labors have supported the country’s economy and said President Duterte gave him specific instruction to assist all OFWs anywhere in the world “no matter what.” He also said the President or-

@jearcalas

labor group on Monday urged President Duterte to reconsider his decision not to issue an executive order (EO) prohibiting contractualization, which, it said, could serve as a “policy direction” for lawmakers in crafting a security of tenure law. Daniel L. Edralin, first vice chair-

Power climb

A team of linemen tinkers with a high-voltage power transformer atop a concrete post to ensure reliable supply of electricity to residents of Quezon City. The government and power-generation companies have assured sufficient power supply across the country for the rest of the dry months. ROY DOMINGO

Total count of repatriated OFWs from Kuwait climbs to 5,066 By Recto Mercene

Editor: Vittorio V. Vitug • Tuesday, April 24, 2018 A3

dered all government agencies not to spare any amount helping any OFW in distress. “We are also quietly working on Filipino nationals with pending cases around the world and we don’t want any publicity because it sometimes causes ‘diplomatic hiccups,’ making it appear that the Philippines is complaining against those countries,” Cayetano added. Special Assistant to the President Bong Go quietly assisted recently Filipino fishermen who were jailed in Indonesia, Cayetano said. Duterte also gave P600 million more to the OFW fund, raising the seed money to P1 billion from previous P400 million. “The DFA [Department of Foreign Affairs] will shoulder the expenses of Filipino noncontract workers, while the Department of Labor and Employment will shoulder OFWs

expenses,” Cayetano said. “The President is trying his best to improve the economy so that Filipinos would no longer leave behind their families to work in other countries,” the foreign secretary told the OFWs. The Philippine Embassy in Kuwait assisted the repatriation of the OFWs boarding them on Philippine Airlines planes, while others were taken aboard Qatar Airways flights. The repatriated Filipinos have availed themselves of the extended amnesty program of the Kuwaiti government including undocumented nationals. The Philippine government started the repatriation program in Kuwait on February 11, assisted by a team from the DFA led by Undersecretary for Migrant Workers Affairs Sarah Lou Y. Arriola, who went there to supervise the repatriation.

man of Sentro ng mga Nagkakaisa at Progresibong Manggagawa and coconvener of Nagkaisa, said the flaws and loopholes in the security of tenure bills filed in both houses of Congress could be remedied by the provisions stated under the draft EO on endo or end of contract. “The EO would give an indication of what security of tenure law [should be passed]. It would be closer to what the [labor groups] and Secretary [Silvestre H.] Bello III agreed on,” Edralin told reporters at a news briefing on Monday in Quezon, City. “So, even the lawmakers, who are members of the PDP-Laban, would have an idea or indication immediately on what kind of security of tenure law President Duterte wants,” Edralin added. Last week Malacañang said Duterte will no longer issue an EO on endo, also known as labor-only contracting, and would instead leave the matter to Congress. Duterte said he would certifiy as urgent the bill that would put an end on endo, according to Bello. “It is true that the EO is just temporary until the law is amended, which may take so long. We have been saying that sign the EO now, so that, at least we would neutralize the detrimental effects of Department Order 174,” Edralin said. Edralin added they are still hopeful that Duterte would change his mind

groups have agreed that it is time to end contractualization,” he added. Edralin said that the signing of the EO “is the only way President Duterte can prove his sincerity to end contractualization.” “If he can’t even sign that, then why should he expect his minions in the Senate to support labor’s proposed security of tenure legislation?” The chairman of the House Committee on Labor and Employment said Congress is eyeing to submit to Duterte for his signature a proposed law addressing the problems of endo in the country by July. Rep. Randolph S. Ting of the Third District of Cagayan, the labor committee chairman, said the lower chamber is now waiting for the Senate version of the endo bill as it already approved on third and final reading its House Bill (HB) 6908 in January. HB 6908 seeks to strengthen the security of tenure of employees in the private sector. “We already approved our own version of the endo bill, and now we are waiting for the Senate, which committed to finish its version by first quarter of this third regular session of 17th Congress or by July. On the part of the House, we are ready to immediately conduct a bicameral conference committee meeting to reconcile the differences of our version and for us to submit our final version to the President for his signature,” Ting said.

We’re hoping that maybe, during the Labor Day, we could still convince the President to give in to the clamor [of the workers]. It is the first time in so many years that all labor groups have agreed that it is time to end contractualization.”—Edralin and would push through with the signing of an EO on endo. “We’re hoping that maybe, during the Labor Day, we could still convince the President to give in to the clamor [of the workers],” he said. “It is the first time in so many years that all labor

“The Senate may also decide to conduct its hearing and finish its version when session resumes on May 15,” he added. Ting said the National Economic and Development Authority has already expressed support for the passage HB 6908.

Lawmaker: Albay to reap more gains CA junks GSIS’s plea on sale of ₧10-M sale of NPC mural from free-college scheme it pioneered By Joel R. San Juan

ARAGA, Albay—Albay, which pioneered the free college tuition program, stands to gain further from the same scheme, now Republic Act (RA) 10931, or the Universal Access to Quality Tertiary Education Act (UAQTEA) of 2017, which, President Duterte signed last year. The government will start to implement the law this school year. Rep. Joey S. Salceda of the Second District of Albay, who pioneered the free college education in his province and who principally authored RA 10931, said Albay will have an initial batch of 30,000 enrollees under the program this year, about 17,000 of whom will enrol in state universities and colleges (SUCs) and 12,000 in local universities and colleges (LUCs). In his social-media account, Salceda recently shared a message from the DaragaCommunity College (DComC) here, the first so far to publicly announce a notice on the registration for UAQTEA: Free College at DComC. Registration, April 21 (GPA 85

percent); examinations, April 23 to 28. Where, before, only Albay had enjoyed the free-college scheme, state colleges and universities around the country will now start admitting enrollees this June for free. There are 112 SUCs and 78 LUCs presently accredited by the Commission on Higher Education and about 122 technical-vocational institutions accredited by the Technical Educational and Skills Development Authority in the country. The program will finally ease up the once perennial burden in the country’s education system: high cost or unaffordable tuition fees. Salceda first introduced the free college tuition concept under his Universal Access to College Education program in Albay where he was the provincial governor for nine years until 2016. The program helped 88,888 students complete their studies and served as the “inclusive tool and key to Albay’s poverty reduction from 41 percent in 2007 to 17.1 percent in 2015.”

@jrsanjuan1573

HE Court of Appeals (CA) has denied the plea of the Government Service Insurance System (GSIS) for the reversal of its earlier decision dismissing the estafa complaint it filed against former board officers and members of the National Press Club (NPC) in connection with the 2007 sale of a Vicente Manansala mural to a private gallery for P10 million. In a three-page resolution penned by Associate Justice Carmelita Salandanan Manahan, the CA’s Former Fourth Division held that the GSIS failed to raise new arguments that would warrant the reversal of its October 30, 2017, decision. The CA, in its October 30 ruling, said that the Regional Trial Court (RTC) in Manila did not err in granting the prosecution’s motion to withdraw the information for estafa filed against the former NPC board members in its order issued on March 17, 2014. The CA did not give merit to GSIS’s claim that the order of then-acting Justice Secretary Alberto C. Agra was for the withdrawal of the

case for qualified theft, and not for estafa. The appellate court agreed with the trial court that there is no probable cause to push for the trial of the estafa complaint against the former NPC board of directors. “This court finds that all matters and issues raised in the motion have already been passed upon and resolved by this court. In view thereof, there appears no cogent reason for the reconsideration of the decision,” the resolution stated. Concurring with the resolution were Associate Justices Fernanda Lampas-Peralta and Elihu Ybanez. The CA earlier explained that the based on the records of the case, the GSIS failed to provide evidence showing that the mural was received by the NPC in trust or on commission, or for administration, or under the obligation to return the same to GSIS. The CA gave weight to the NPC’s claim that although the real property is registered in the name of GSIS, NPC is still considered the owner of the mural. It noted that the trial court’s decision declaring NPC as the owner of the mural was

affirmed by the CA’s Seventh Division in a ruling in 2011. The decision, according to the CA, put to rest the issue of ownership over the subject mural. In its ruling in 2011, the CA upheld the NPC’s right over the contested mural, although it did not resolve the issue on the ownership of the NPC building from where it was taken. “Being the owner of the mural, NPC has all the rights to dispose of the same in whatever manner it desires. NPC cannot be made liable, in any way, in exercising what is merely a propriety act,” the CA ruled. The GSIS had claimed ownership of the mural, saying it is an immovable part of the NPC building, which it owns by virtue of Transfer Certificate of Title 265236. The NPC, on the other hand, insisted on its right over the property through Letter of Instructions 500 issued by the late strongman Ferdinand Marcos in 1977 directing GSIS to donate to NPC the subject property. The NPC, then under Roy Mabasa as president, sold the mural to Heritage Galleries for P10 million.

Economy

A4 Tuesday, April 24, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

DENR chief reminds miners: Comply with PH-EITI rules

By Jonathan L. Mayuga

@jonlmayuga

mall-scale miners will soon be compelled to take part in the Philippine Extractive Industries Transparency Initiative (PH-EITI) by consistently submitting reports of their financial performance.

In a news statement issued on Monday, Secretary Roy A. Cimatu of the Department of Environment and Natural Resources (DENR) said that to improve transparency and accountability in the mining sector, all mining companies, whether those engaging in large-scale or small-scale mining, must take part in the PH-EITI. Cimatu first made the assur-

ance that all mining companies will comply through DENR Undersecretary for Mining Analiza R. Teh during the PH-EITI National Conference held at the Philippine International Convention Center in Pasay City last Wednesday. Teh represented the DENR chief in addressing the various stakeholders that took part in the event. Cimatu reminded that un-

der DENR Administrative Order 2017-07, mining companies are required to submit their report to the PH-EITI. PH-EITI is a multi-stakeholder group that pushes for the local implementation of EITI, a global standard of transparency for improving governance of natural resources, including their prudent use and the management of natural wealth for the benefit of all citizens. It also serves as a platform to systematically report, review and assess the revenues received by the government from extractive industries through a system of bilateral disclosure. The PH-EITI is launching its Fourth Country Report, an enhanced version of the previous reports with the inclusion of large-scale nonmetallic mining projects. T he latest report presents updates on developments that affect the mining, oil and gas,

and coal industries in the country, and provides a broad picture of the legal framework and governance mechanisms for extractive industries. Mining companies must comply with the disclosure requirements of PH-EIT I under t he pain pain of nonissuance of Ore Transport and/or Mineral Export Permit, or worse—suspension of the a mining company’s Environmental Compliance Certificate or ECC, Cimatu warned. The DENR chief underscored the need for future PH-EITI reports to be fully comprehensive by including the small-scale mining sector, which, although small in scale, comprise thousands of workers and their families. “Ultimately, they also contribute a sizeable share to the economy, especially in the local front,” he said. “Let us work toward the inclusion of the small-scale mining sector in this initiative.”

NTC revokes registration of VAS provider in ‘missing load’ complaint

he National Telecommunications Commission (NTC) has revoked the certificate of registration of Got Deals Mobile Inc., a mobile content provider for Globe Telecom, following an investigation in con-

nection with a complaint lodged by a netizen on alleged theft of prepaid load. A recent NTC decision also m a nd ated Globe Te lecom to implement a strict opt-in system in order to protect their

consumers from unauthorized load deduction. In a news statement released over the weekend, the NTC said the decision should serve as a warning to all value-added service (VAS) providers to faithfully comply

with the provisions of the commission’s rules and regulations in the conduct of their business, as their business is imbued with public interest, which the state has the duty to protect. Other public telecommunication entities are also enjoined to strictly implement a stringent opt-in and verification system so that unauthorized load deductions will be averted, the NTC said. VAS providers offer services outside the standard calls and SMS, such as ringtones, wallpaper and infotext, among others. The NTC’s revocation order was triggered by a complaint filed by Feanne HontinverosMauricio, whose social-media post on “load theft” has caught the attention of netizens who have similarly experienced unauthorized deduction from their prepaid load credit. Prepaid subscribers complain that their load credits disappear due to their supposed “subscription” to certain services of the VAS provider even without their knowledge or authorization. It has since been investigated by the commission to pinpoint the source and cause of disappearing cellphone loads. Both Got Deals Mobile and Globe Telecom were summoned last month by the NTC to an investigation.

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DOTr, DPWH render brief update on airport, rail, road projects By Ashley Manabat Correspondent

LARK FREEPORT—A status report on “big-ticket projects” on airport and rail undertakings being implemented by the government was made by the Department of Transportation (DOTr) during the recent Philippine Economic Briefing here. Transportation Secretary Arthur P. Tugade updated Central Luzon sta keholders, singling out the new passenger terminal building of the Clark International Airport (CIA) that broke ground on December 20, 2017, will be completed as scheduled by 2022. “Once completed, it will accommodate an additional 8 million passengers annually,” he declared. T he Depar tment of Public Works and Highways (DPWH), for its part, has bared massive road projects that will complement the transportation projects of the government. Public Works Secretary Mark A. Villar said the P14.94-billion Phase 1 of the Central Luzon Link Expressway (CLLEx) is a 30-kilometer road stretch from Tarlac City to Cabanatuan City. He added during the Philippine Economic Briefing forum here that CLLEx was started in 2016 and will be completed by 2020. It will reduce travel time between Tarlac City and Cabanatuan City from 70 minutes to 20 minutes. “Upon completion, we will begin construction of Phase 2, which is 35.70 kilometers, spanning Cabanatuan City to San Jose City. Its indicative cost is P9.46 billion,” Villar said. Tugade also said the preconstruction activities for the Phase 1 of Philippine National Railway Clark (PNR Clark) started in January with actual construction targeted by November this year. “Phase 1 is a 38-kilometer segment spanning Tutuban to Malolos City in Bulacan. With this line, commuters from Tutuban will reach Malolos in as little as 35 minutes,” Tugade said. Phase 2, on the other hand, is a 69-kilometer stretch from Malolos City to Clark. PNR Clark will have a total of 17 stations—Tutuban, Solis, Valenzuela, Caloocan, Meycauayan, Marilao, Bocaue, Balagtas, Guiguinto, Malolos, Calumpit, Apalit, San Fernando, Angeles, Clark, CIA and New Clark City. Meanwhile, Tugade said Metro Rail Transit Line 7 is 22.96-percent complete as of February and will meet its target date in 2020. This is a 22-kilometer rail line that will connect Quezon City to San Jose

del Monte City in Bulacan. The manufacturing of the 108 rolling stocks is in progress. At present, there are five train sets completed, equivalent to 15 cars, he reported. “Through the trust and confidence of the people, and with the leadership of President Duterte, the DOTr, DPWH and Bases Conversion and Development Authority will work hand in hand toward the implementation and realization of the golden age of infrastructure,” Tugade said. “There is no doubt and it is a given hypothesis that if you want to develop and grow, there’s got to be infrastructure. Infrastructure must be developed in order for any economy to have its best to really grow,” he added. Other projects include the Plaridel Bypass Phase 2, which is a 24.61-kilometer, two-lane road that is seen to reduce travel time between Balagtas and San Rafael in Bulacan from 69 minutes to 24 minutes. “Plaridel Bypass Phase 2 entails the widening of the 24.61-kilometer road from two lanes to four lanes, including 12 bridges, drainage facilities and slope stabilization works. It is estimated to cost P5.26 billion,” Villar said. The public works secretary added that the Bagac-Mariveles Road, on the other hand, involves improvement/concreting of 20.61-kilometer road sections that will connect the Bataan Export Zone and Subic Bay Freeport Zone. Upon completion, travel time between Mariveles, Bataan, and Subic, Zambales, will be reduced from 120 minutes to 90 minutes, he said. This P716.290-million project is 94.50-percent complete and will meet the target date in 2022, he stressed. Another much-awaited project is the Capas-Botolan Road—a 81.63-kilometer east-west road connecting Capas, Tarlac, and Botolan, Zambales. Upon completion of this P5.91billion project, travel time will be reduced from three hours to one hour and 20 minutes, Villar said. “The new Clark-Bamban-Capas Access Road is a P980-million, 16-kilometer road that will reduce travel time between this free port and Capas, Tarlac, from 120 minutes to 90 minutes. It is 47.53-percent complete with target completion date in 2021,” the public works secretary announced. And finally, the P450-million, 6.98-kilometer New Clark CityMcArthur Access Road will reduce travel time between Manila North Road and New Clark City from 90 minutes to 30 minutes, he said.

TRAIN law ‘casualties’ listed under 4Ps get additional cash By Nelson S. Badilla

Correspondent

he Duterte administration has started to disburse some P10.56 billion for some 4.4 million households registered under the Pantawid Pamilyang Pilipino Program (4Ps) in a bid to extend help for them to survive the “adverse economic impact” of the Tax Reform for Acceleration and Inclusion (TRAIN) law, according to the Department of Social Welfare and Development (DSWD). In a news statement, the DSWD disclosed that it has already released in March the P4.32 billion for the 1.8 million beneficiaries of the unconditional-cash transfer (UCT) for the 4Ps beneficiaries who have cash cards issued by the Land Bank of the Philippines (LandBank). Each family of the 1.8 million household-beneficiaries, the DSWD said, has received P2,400 cash assistance for this year. The remaining 2.6 million poor families, who are part of the 4.4 million 4Ps beneficiaries, will receive

their respective P2,400 UCT assistance for this year starting today (Tuesday) through over-the-counter payment scheme since they have no LandBank cash cards, the DSWD said. The DSWD launched the over-thecounter mode of payment last week in Binondo, Manila, in cooperation with the LandBank and the SmartNatco, LandBank’s local conduit. Thus, starting today (Tuesday), the DSWD will release P6.24 billion to complete the P10.56- billion allotted budget for the UCT grants of the 4.4 million 4Ps beneficiaries. In the same news release, the department said that “the UCT is the tax subsidy [being] provided [by the Duterte administration as] the [implementation of the] TRAIN law [has started in January so that the national government, through the DSWD, could] help the poor [Filipinos] cushion the adverse economic impact of the [TRAIN] law.” The DSWD will do its save-thepoor-from-the-TRAIN law project for three years. Specifically, the UCT financial

assistance amounts to P2,400 for each family for the entire year, or equivalent to P200 per month, the DSWD said. In justifying the additional P2,400 dole out to the poorest of the poor Filipinos, DSWD Officer In Charge Emmanuel A. Leyco said that “[t]he UCT cash grant is a topup benefit for Pantawid beneficiaries who are also receiving their regular cash grant and P600 rice subsidy from the DSWD.” “[T]he beneficiaries will receive their UCT grants together with their regular cash grants and rice subsidy for the month of January,” he said. “We know how important this grant is to poor families. This is why we are working hard to hasten the process of determining the remaining beneficiaries so that they can receive their UCT cash grants. Rest assured that the DSWD is doing its best and is exploring various measures to ensure that all target households and individuals will be able to receive their UCT grants within the year,” Leyco assured.

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Banking&Finance BusinessMirror

Editor: Jun B. Vallecera • Tuesday, April 24, 2018 A5

Second TRAIN package seen lowering corporate-income tax, giving fiscal perks By Rea Cu

@ReaCuBM

he second package of the Duterte administration’s Tax Reform for Acceleration and Inclusion (TRAIN) seeks to lower corporate-income taxes paid by 95 percent of businesses while providing new fiscal incentives for deserving recipients, the Department of Finance (DOF) said. DOF Assistant Secretary Paola A. Alvarez said the TRAIN’s Package 2 will provide new or retain fiscal incentives, in response to reports claiming that all fiscal incentives will be canceled. Under Republic Act 10708, or the Tax Incentives Management and Transparency Act (Timta), the DOF estimates incentives given to registered enterprises in Philippine Economic Zone Authority areas reached P235.3 billion in 2015 alone. T hese perks are broken down as follows: income-tax holiday, P25.9 billion; the 5-percent tax on Gross Income Earned (GIE), P25.8 billion; Customs duties, P14.9 billion; import value-added tax, P147.8 billion; and local VAT, P20.9 billion. The perks under the 5-percent GIE is computed as the difference between what the companies paid and what they would have paid under the regular 30-percent net income tax. A lvarez said these hefty incentives were granted to registered firms that accounted for less than 1 percent of the businesses registered with the Bureau

of Internal Revenue (BIR) in 2015, and for only 6 percent of total employment in the country for the same year. “The DOF did not come out with its estimates on a whim. Our data came from the submissions of the IPAs [investment priority areas] and validated with data from the BIR’s income-tax information and the import entries from the Bureau of Customs’s [BOC] database and were based on what were required under the Timta and its implementing rules and regulations. In fact, apart from the DOF, the IPAs should be able to compute the cost of fiscal incentives as the data came from them. Our method is very transparent, and we are open to sharing it with interested parties,” Alvarez said. Under the Timta, the IPAs are required to submit data on fiscal incentives to the BIR, while the BIR and BOC are required to submit to the DOF the actual tax and duty incentives as evaluated and determined by these revenue agencies to ensure the accuracy of the claimed incentives declared by the registered enterprises.

Bangko Sentral launches InstaPay By Bianca Cuaresma @BcuaresmaBM

he Bangko Sentral ng Pilipinas (BSP) on Monday launched its latest automated clearing house that allows real-time electronic payments of up to P50,000 per day. Led by BSP Governor Nestor A. Espenilla Jr., the country’s central monetary authority launched InstaPay, the second automated clearing house under the BSP’s initiative to boost electronic payments in the country. The BSP said private individuals, businesses and government institutions will be able to send and receive funds or make payments of up to P50,000 per transaction in real time via the newly launched InstaPay. The transferred funds are instantly received in full, as no fee is charged to the receiving party. However, charges may apply to sending parties. Recipients may also be charged for cash withdrawals. The BSP said InstaPay will be accessible 24/7 through mobile apps and

Internet banking facilities provided by participating banks and e-money issuers, with other e-channels following soon. “This eliminates the need to go through the trouble of physically traveling and transacting at bank branches or payments counters,” the BSP said. Currently, there are 20 InstaPay participating institutions. The BSP is e x pect ing t his number to “ increase quickly” in the coming months a s more i n st it ut ion s res pond to customer demand. InstaPay’s launch came following the establishment of the first Automated Clearing House, PESONet, which was launched in November last year. Both initiatives are under the National Retail Payments System (NRPS) Framework. T he N R PS i s a B SP-le d pro gram that aims to establish a safe, efficient, affordable and reliable electronic retail-payments system in the country, with an estimated increase in the share of electronic payments to at least 20 percent by 2020.

Case clippings

By Justice S J Ranada Jr. DANGEROUS DRUGS–Instigation and entrapment There is instigation when “the accused is lured into the commission of the offense charged in order to prosecute him.” On the other hand, “[t]here is entrapment when the law officers employ ruses and schemes to ensure the apprehension of the criminal while in the actual commission of the crime.” A buy-bust operation is a form of entrapment used to apprehend drug peddlers. People v. Dumagay 07 Feb. 2018

GR 216753 Del Castillo, J

“Those who create good jobs, bring development to poorer areas of the country, and invest in research and development have nothing to fear. However, the spread of misinformation and false claims have led to confusion. These good corporate citizens certainly deserve performance-based and targeted incentives, as a reward for taking risks that others don’t for the good of the country,” she added. Package 2 also seeks to lower corporateincome tax for more than 95 percent of businesses in the country, mostly small and medium enterprises. “ The government will give support

to pro-poor and sometimes riskier investments for a reasonable amount of time, after which support can be directed to new players or those who wish to expand their contributions to job generation, innovation, and countr yside development,” she said. At 30 percent, the Philippines has the highest corporate-tax rate among its Association of Southeast Asian Nations neighbors, which boast a much lower tax rate of around 20 percent to 25 percent. The Train’s Package 2 includes provisions for a reasonable sunset period and new incentives for current players that expand their businesses or adopt new technology,

according to Alvarez. “At present, there are more than 100 special laws that result in an overly complex corporate-tax system, impose a large administrative burden for the government and taxpayers, and give special treatment to a small minority of corporations that pay 6 percent to 13 percent, in contrast with the 30-percent tax rate the vast majority has to cover,” Alvarez said. In Package 2, the DOF proposes to correct this inequity in the corporate-tax system by expanding what the Aquino administration started with the Timta, which now provides mechanisms for transparency allowing for targeting of incentives to deserving businesses.

A4 Tuesday, April 24, 2018 • Editor: Lyn Resurreccion A6

The World BusinessMirror

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S. Korea turns off loudspeakers along border with N. Korea

EOUL, South Korea—South Korea turned off loudspeakers blaring bouncy music and other propaganda into North Korea on Monday, silencing weapons of psychological warfare so annoying to the North that its military once fired shots across the border.

The South’s Defense Ministry said it switched off all batteries of the propaganda loudspeakers along the inter-Korean border, known as the Demilitarized Zone (DMZ), days before its president, Moon Jae-in, is to join the North’s leader, Kim Jong Un, there on Friday for a summit meeting. It said the decision was made to help “ease military tensions and create a peaceful mood for the meeting.” The venue—Panmunjom, a “truce village” inside the DMZ—is within the earshot of propaganda broadcasts from both sides. “We hope that our move today

will result in South and North Korea ending mutual slandering and propaganda against each other and creating a peaceful new beginning,” the ministry said in a statement. The silencing of the propaganda loudspeakers was another sign of easing tensions on the divided Korean Peninsula, as Kim prepared for his meeting with Moon and for a separate one later with President Donald J. Trump, which would be the first-ever summit meeting between North Korea and the United States. Over the weekend, Kim announced an end to all nuclear and long-range missile tests and the

We hope that our move today will result in South and North Korea ending mutual slandering and propaganda against each other and creating a peaceful new beginning.”— South Korea Defense Ministry

Protests force Nicaragua leader to reverse on cutbacks

ANAGUA, Nicaragua— President Daniel Ortega of Nicaragua announced last Sunday that he was reversing a social-security overhaul that had prompted days of protests in which up to two dozen people died. “We have to reestablish order,” Ortega said in televised remarks. “We cannot allow groups to impose chaos, crime and looting.” His announcement seemed to acknowledge that the protests, which started last Wednesday as a picket by college students against the social-security overhaul, had become a serious challenge to his authority. But it is unlikely to sway protesters who still have other grievances against his government—including Ortega’s interference with the national assembly, the law and the Constitution, like eliminating term limits. He is also widely criticized for having manipulated the Supreme Court, the elections council and mayoral races. The Nicaraguan leader has faced protests before, but at no point since his 2007 reelection have so many sectors united against him in what has become the greatest test of his presidency. Experts say it is the largest popular uprising here since the end of the nation’s civil war nearly 30 years ago. If anything, students at Polytechnic University in Managua, who had been protesting for days, seemed galvanized by Ortega’s Sunday announcement. “We’re not going to move,” said Golden Rivas, 36, a nursing major who had been at the Polytechnic University throughout the sit-in. Dara Nicole Díaz, 18, a graphicdesign major, whipped out her cellphone to read a long list of the students’ demands, which included the release of protesters detained in the past week and the resignation of the police chief. “This isn’t a struggle just from now,” she said. “This has been a dictatorship for almost 12 years. The people can’t take it anymore.” Ortega’s announcement capped

a weekend of intensifying pressure. The rallies had spread to cities around the nation and claimed up to twodozen lives, according to Cenidh, a leading human-rights organization. By the end of last Saturday, a reporter for an official government channel had been killed while filming a Facebook Live video about the protests. A police officer in Managua, the capital, shot in the head, was fighting for her life as other families arranged to bury their dead. The government posted images of city blocks burning, government buildings in shambles and widespread ransacking of supermarkets with no police officers in sight—looting that some accused the government of staging in order to justify a crackdown. At lunchtime last Sunday, before Ortega’s announcement, the streets of central Managua were largely deserted, with businesses looted or shuttered, as tension lingered. Ortega and Vice President Rosario Murillo, his wife, had said the previous day that they were willing to consider changes to the socialsecurity overhaul, but the privatesector lobby Cosep responded that it would not enter into talks until the government ended police repression, released detained protesters and allowed freedom of speech. One news station has been taken off the air. The business group also said other sectors would have to join the talks. “We want to sit at a real table, not a false one,” Fidel Narváez, 29, a lawyer organizing some of the protests in the capital, said before Ortega’s announcement. “We want a national recall referendum.” The social-security overhaul would have forced contributors to pay more into social security and retirees to receive 5 percent less. Now in his third consecutive term as president, Ortega has a strong grip on power, including every branch of government and the military. Many poor people who receive housing and other government benefits support him. New York Times News Service

South Korean army soldiers adjust equipment used for propaganda broadcasts near the border area between South Korea and North Korea in Yeoncheon, South Korea, in this January 8, 2016, photo. South Korea says it has halted anti-Pyongyang propaganda broadcasts on the border ahead of the April 27, 2018, inter-Korean talks. Lim Tae-hoon/Newsis via AP

shutting down of his country’s only known nuclear test site. South Korean officials said the North was expected to reciprocate the South’s initiative by turning off its own propaganda loudspeakers. Because of electricity shortages in the North, its loudspeakers have

not been as powerful as the South’s, South Korean military officials said. For decades, loudspeakers have been a Cold War fixture along the border, beckoning soldiers to defect to the other side. Last November a North Korean soldier defected to the South in Panmunjom, fleeing

through a hail of gunfire by fellow North Korean soldiers. Day and night, songs eulogizing the North’s “fatherly” leader and communist propaganda lamenting “depraved capitalist” lifestyles have drifted across the border to the South.

For their part, South Korean loudspeakers denounced hunger and human-rights violations in the North, highlighting the number of cars and other signs of affluence in the South. Lately, it added K-pop music to the mix. South Korea hoped that its propaganda barrage would undermine the personality cult surrounding the ruling Kim family in the North. In 2015 Kim ordered his frontline military units to go on a “semiwar state” after the two Koreas exchanged rocket and artillery fire. He ordered his frontline units to prepare to attack South Korean loudspeakers along the border unless they stopped blaring propaganda. The two Koreas decommissioned their loudspeakers after their ties improved following their first-ever summit meeting in 2000. But they switched them on again as their relations soured. The propaganda war across their heavily armed border escalated after the North conducted its fourth nuclear test in early-2016. But anti-North Korean activists in the South vowed to continue to send propaganda balloons, which carry dollar bills, transistor radios, CDs containing Western movies and leaflets that call Kim a pig. Some of the activists complained that the police tried to stop their balloon campaign as South Korea cultivated its rapprochement with the North. In the past, the South Korean authorities have tried to discourage the balloon campaign when relations with Pyongyang have improved or the North has threatened to fire across the border to shoot down the balloons. New York Times News Service

2 Korean Air heiresses lose jobs for ‘immature behavior’

EOUL, South Korea—Two sisters accused of abusing Korean Air employees will be removed from management positions in their family-run corporate empire, the company announced last Sunday, four years after one of them became notorious for an episode known as “nut rage.” The executives, Cho Hyun-ah, 43, and Cho Hyun-min, 35, have become lightning rods for South Koreans who say that leaders of the family-run conglomerates known as chaebol, which dominate the country’s economy, often act as if they are above the law. Cho Hyun-ah became infamous in 2014 when, as a Korean Air vice president, she flew into a rage after she was served macadamia nuts in an unopened package, rather than on a plate, in first class. Officials said she threw documents and insults at members of

the flight crew, and she ordered flight attendants to kneel and beg for forgiveness. Cho Hyun-ah then ordered the Korean Air plane back to its gate at Kennedy International Airport in New York so that she could have the chief flight attendant removed. She was later accused of violating airline-safety laws and spent several months in prison, though she recently made a quiet return to the Hanjin conglomerate for which her father, Cho Yang-ho, is chairman, managing a hotel business that he controls. This month, police began investigating accusations of physical abuse against her younger sister, Cho Hyun-min, a Korean Air marketing executive. She was accused of insulting an advertising executive and hurling water in his face during a business meeting. Cho Hyun-min said she had thrown the water on the floor, not

US sanctioning Russian oligarchs spurs cash exodus from Latvia

nited States sanctions targeting Russian billionaires have sparked a further exodus of cash from Latvia, a Baltic nation whose banking system has already been shaken by a string of money-laundering scandals. The measures against businessmen, companies and senior officials were taken days after President Donald J. Trump expelled 60 Russian diplomats for the nerve-agent attack on a former Russian spy in the United Kingdom. The penalties prompted lenders in Latvia to end relationships with the sanctioned people and entities, according to the head of the local regulator. “There were a number of subjects from those mentioned on the list,” Peters Putnins, director of the Financial and Capital Market Commission, said in an interview in Riga last Friday. He declined to provide names. The US sanctions have pounded the business interests of billionaires, including aluminum magnate Oleg Deripaska, whose United Co. Rusal has lost about 60 percent of its value since the announcement. Foreign money was already fleeing Latvia after the country’s No. 3

lender was closed amid US accusations it routinely handled illicit cash. Compounding matters, the central bank is battling bribery allegations that saw him briefly detained. Latvia, a European Union and euroarea member, has traditionally served as a payments center for clients from the former Soviet Union. In a bid to shake off claims that it holds wealth of questionable origin, the government is tightening oversight of the financial system. Deposits have plunged by about €2.5 billion ($3.1 billion) since mid-February. Parliament may adopt measures this month banning shell companies from Latvian banks, accelerating the fall in foreign deposits. Regulators started tightening oversight as long ago as 2016, raising capital standards and forcing lenders to undergo audits of anti-money laundering systems at their own expense. The changing backdrop is forcing lenders with foreign clients to examine new business lines and models. Some may decide to relocate from Latvia, according to Putnins. They may choose to “emigrate away,” he said, without naming specific banks. Bloomberg News

at the official’s face, but nevertheless apologized for what she called foolish and reckless behavior. But the family’s trouble did not end there. The local news web site Ohmy News released what it described as an audio recording of her screaming at Korean Air officials. Korean Air whistle-blowers have also accused the Cho family of illegally bringing in luxury items from abroad, disguising them as company goods to avoid tariffs and to save transport expenses. Police and customs investigators raided the offices and homes of the Cho family this month to collect evidence. The family has become so vilified among South Koreans that people have petitioned to the office of President Moon Jae-in to ban Korean Air from using “Korean” in its name. Cho Yung-ho, the company chair-

man, apologized in a statement last Sunday: “I am deeply sorry that problems connected to my family have worried the people and employees of Korean Air,” he said. “As chairman of Korean Air and as the head of my family, I feel crushed by the immature behavior of my daughters.” He added they would be immediately removed from management. Cho also said he would introduce professional managers to top company posts. His son, Cho Won-tae, remained as president of Korean Air. South Korea’s wealthy families have developed reputations over the years for running their corporate empires like fiefs. The families have also become entangled in several corruption scandals and feuds. But the chaebol continue to endure, critics say, because they are crucial to the country’s economy. New York Times News Service

4 dead in Waffle House shooting in Tennessee; suspect sought

ASHVILLE, Tennessee—A nearly naked gunman wearing only a green jacket and brandishing an assault rifle stormed a Waffle House restaurant in Nashville early last Sunday, shooting four people to death before a customer rushed him and wrestled the weapon away. Authorities were searching for the 29-year-old suspect, Travis Reinking, who they said drove to the busy restaurant and killed two people in the parking lot before entering and continuing to fire. When his AR-15 rifle either jammed or the clip was empty, the customer disarmed him in a scuffle. Four people were also wounded before the gunman fled, throwing off his jacket. Nashville Police Chief Steve Anderson said there was no clear motive, though Reinking may have “mental issues.” He may still be armed, Anderson told a mid-afternoon news conference, because he was known to have owned a handgun that authorities have not recovered. US Secret Service agents arrested Reinking last July for being in a re-

stricted area near the White House, officials said. Special Agent Todd Hudson said Reinking was detained after refusing to leave the restricted area, saying he wanted to meet President Donald J. Trump. State police in Illinois, where Reinking lived until last fall, subsequently revoked his state firearms card at the request of the FBI, and four guns were then taken from him, including the AR-15 used in last Sunday’s shooting, as well as a handgun, authorities said. Sheriff Robert Huston in Tazewell County, Illinois, said deputies allowed Reinking’s father to take possession of the guns on the promise that he would “keep the weapons secure and out of the possession of Travis.” Huston added that, based on past deputies’ encounters with Reinking, “there’s certainly evidence that there’s some sort of mentalhealth issues involved.” While Huston said it was unclear how Reinking reclaimed the guns, Nashville Police spokesman Don Aaron said that his father “has now acknowledged giving them back to his son.” AP

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The World BusinessMirror

Tuesday, April 24, 2018 A7

China cyberspies mined Japan firms for N. Korea secrets

hinese hackers have targeted Japanese defense companies, possibly to get information on Tokyo’s policy toward resolving the North Korean nuclear impasse, according to cybersecurity firm FireEye Inc. The attacks are suspected to come from a group known as APT10, a China-based espionage group that FireEye has been tracking since 2009. One of the lures used in a “spearphishing” e-mail attack was a defense lecture given by former head of United Nations Educational, Scientific and Cultural Organization, Koichiro Matsuura. Two attacks took place between September and October 2017. “Lure content related to the defense industry suggests that a possible motive behind the intrusion attempt is gaining insider information on policy prescription to resolve the North Korean nuclear issue,” said Bryce Boland, chief technology officer for the

Asia-Pacific region at FireEye. China’s Ministry of Foreign Affairs didn’t respond to a faxed request for comment last Friday. After a similar FireEye report involving United States targets last month, ministry Spokesman Lu Kang said that China opposed all kinds of cyber attacks. The suspected attacks coincided with a dramatic escalation in tensions over North Korea’s nuclear weapons program as Kim Jong Un tested a hydrogen bomb and US President Donald J. Trump threatened to “totally destroy” the country. The United States and Japan have been coordinating their diplomatic and military pressure campaigns against the country, and

neighboring China is anxious to avoid a clash on its border. Tensions have eased since the two Koreas started talking ahead of the Winter Olympics and Winter Olympics and Trump granted an unprecedented meeting with the North Korean leader. Earlier this month, the foreign ministers of China and Japan agreed to work closely to push the regime to surrender its nuclear weapons program, although Japanese officials continue to express skepticism about Kim’s willingness to make a deal. The latest cyber attacks mirror other recent hacks with geopolitical overtones investigated by FireEye. Among the most recent, a wave of incursions on mainly US engineering and defense companies linked to the South China Sea, where China’s claims for more than 80 percent of the water clash with five other nations. In 2016 the web site of Taiwan’s Democratic Progressive Party was attacked months after the party won elections, securing its leader Tsai Ing-wen the presidency. “We believe APT10 is primarily tasked with collecting critical information in response to shifts in regional geopolitics and frequently

A display of computer coding sits on a glass panel in the Airbus SE Defence and Space CyberSecurity pavilion at the CeBIT 2017 tech fair in Hannover, Germany. Krisztian Bocsi/Bloomberg

Lure content related to the defense industry suggests that a possible motive behind the intrusion attempt is gaining insider information on policy prescription to resolve the North Korean nuclear issue.”—Boland

Beijing’s war on pollution fuels state takeover of heavy industry P

resident Xi Jinping’s big push to curb pollution and excess capacity in steel and other industries is also consolidating his government’s control over them. Just last year, the state’s share of steel capacity increased to 67 percent from 60 percent, while aluminum smelting saw about an equal increase, J Capital Research Ltd. estimates. In coal, which began consolidating years earlier, the government now controls 80 percent of capacity compared with about 45 percent in 2010, according to the Hong Kongbased firm. Xi’s campaign has boosted corporate profits, ended years of deflation and stabilized debt growth to help underpin the first full-year economic acceleration last year since 2010. But his aim for a “bigger, better and stronger” state role also means those bloated companies risk stifling private ones, as the Communist Party strengthens its grip on the economy. Call it “de facto nationalization,” says Jude Blanchette, China practice lead at Crumpton Group in Arlington, Virginia, and a former Conference Board researcher in Beijing. “We’re clearly seeing the restrengthening of state-owned enterprises [SOE], oftentimes at the zero-sum expense of private players. Private folks are exiting the market either because they’re pushed out or they can’t survive.” State gains in heavy industry follow a broad SOE comeback since Xi took power in 2013. Their share of fixed-asset investment stopped falling in 2014 and rebounded over the next three years, says Andrew Batson, head of research at Gavekal Dragonomics. The state is also extending control over the private sector away from heavy industry as it cracks down on debt. Once-acquisitive insurer Anbang Insurance Group Co. was seized by the government, and regulators have curtailed the activities of conglomerates, including Dalian Wanda Group Co. and HNA Group Co. Such consolidation may spur blowback from the United States and other countries. President Donald J. Trump

Discarded car doors sit in an alleyway as smoke billows from the chimneys of a factory nearby in Dalian, China, on January 17, 2017. Contrasting fortunes in Dalian illustrate China’s transition toward consumption and services to cut reliance on debt-fueled infrastructure spending and smokestack industries. Qilai Shen/Bloomberg

already brands China a strategic rival, slapping tariffs on its goods and criticizing industrial policy for subsidizing state enterprises in a push to dominate tech sectors. “The idea, promoted during the Zhu Rongji era, that state enterprises should be independent, profit-seeking companies that just happen to be owned by the state has essentially been abandoned,” said Batson, referring to the former premier. “The government thinks that SOEs are there to serve its overall strategic goals.” W hile antipollution sweeps closed some private enterprises, state firms get a gentler touch. Jinan Steel, a unit of Shandong Iron and Steel Co. with about 20,000 employees, was shut in July. But many workers were moved to another unit. Premier Li Keqiang then visited to say that while closures hurt, the nation would work to ensure employees get new jobs. Total assets of central enterprises under the State-owned Assets Supervision and Administration Commission surged to 55 trillion yuan ($8.7 trillion) last year from 10 trillion yuan in 2005 as return on assets fell to 2.6 percent from as much as 7 percent, says Nicholas Lardy, a senior fellow at the Peterson

Institute for International Economics in Washington. “There’s a massive decline in the efficiency of these companies,” said Lardy, whose 2014 book Markets over Mao: The Rise of Private Business in China highlights private-sector contributions to growth. “They’re a huge drag on economic growth. The entire universe of state industrial companies is earning about 3 percent. The returns are still pathetic.” China often says it can’t be judged by the same standards as advanced economies. Huang Huiqun, a researcher at the Chinese Academy of Social Sciences, a government think tank in Beijing, says a dominant state sector is hard to avoid in the developing economy, which requires large-scale infrastructure projects. “State enterprises are better positioned to use and control resources,” Huang says. On the upside, air pollution improved in many cities last year as small companies fouling the skies were shuttered. State companies often survived because, unlike private companies, they had the money to meet environmental regulations. The economic impact of a bloated state sector also may be contained if services and consumption continue to boost output.

“The state is definitely becoming dominant in old-line industries,” says Andrew Collier, an independent analyst in Hong Kong and former president of Bank of China International USA. “But over time, the success of private firms in more advanced manufacturing and new technologies will supersede the oldline state enterprises.” Consolidation continues. China’s cement association has said it will shutter 540 grinding companies this year and allocate 60 percent of capacity to top producers by 2020, in line with a State Council order. The risk is short-term gains mean longer-term pain. The producer inflation boost already is easing, suggesting profits driven up by pricing power amid capacity cuts may soon weaken. Eighty percent of steel capacity eliminated in 2016 and 2017 was at private steel mills, while 75 percent of additions were at state enterprises, says J Capital managing partner Tim Murray in Sydney. Eighty-eight percent of aluminum capacity eliminated last year was in private companies and 75 percent of additions in state enterprises, he says. “They’re squeezing out private players and pouring more money into state players,” he said. Bloomberg News

targets organizations with long research and development cycles,” Boland said, citing firms in construction and engineering, aerospace and military, telecommunications and high-tech industries. In an unusual development, the hackers inserted lines of text in the malware associated with the Japanese attacks, mocking the security researchers. Such gems included, “I’m here waiting for u,” “POWERED BY APT632185,NORTH KOREA” and “According to the analysis report, some Japanese analysts have always been portrayed as a bit of joke.” Also under attack since November 2017 have been Japanese health-care companies. “China’s new push on pharmaceutical innovation as a national priority, along with rising cancer rates, will likely drive future espionage operations against the health-care industry,” Boland said. Mandiant, a unit of FireEye, alleged in 2013 that China’s military might have been behind a group that had hacked at least 141 companies worldwide since 2006. The US issued indictments against five military officials who were purported to be members of that group. Bloomberg News

Moon’s goal to become S. Korea’s ‘jobs president’ increasingly in jeopardy

outh Korean President Moon Jae-in’s goal of becoming a “ jobs president” is looking increasingly like a stretch, as joblessness rises despite his government’s efforts. Une mp l o y m e nt i n M a rc h jumped to the highest level since 2010, and many are blaming Moon’s aggressive increase in the minimum wage, putting his economic agenda at risk less than a year after he took office. Moon became South Korea’s first liberal president in a decade by promising voters to pursue social justice and “income-led growth” at a time of rising anger over inequality and stagnant incomes. He pledged to create hundreds of thousands of public-sector jobs, to subsidize hiring at small businesses and to provide direct assistance to job seekers. Now the government is pushing for its second extra budget to create jobs, at a cost of 3.9 trillion won ($3.7 billion). But resistance is growing among conservative opposition parties in parliament, where Moon’s party lacks a majority. Conservatives say the new proposed spending package is a “populist” giveaway to voters ahead of nationwide regional elections in June. It doesn’t help Moon that many economists are blaming the 16-percent increase in the minimum wage, which took effect in January, for the rise in unemployment. “If the job situation remains weak, which I think it will, it will increase criticism over the effectiveness of Moon’s economic policies, especially the minimumwage increase,” said Yun Changhyun, a professor at the University of Seoul and a former head of the Korea Institute of Finance. Yun said the minimum wage hike was the main reason for recent weakness in jobs data, noting that the increase was a b out 10 t i me s t he a n nu a l inflation rate. Finance Minister Kim Dongyeon recently denied that the wage increase is responsible for

the growing joblessness, pointing to job cuts in the shipbuilding and auto sectors. In addition, the services sector is still sluggish as a result of China’s ban on package tours to South Korea. The Bank of Korea (BOK) recently lowered its projection for 2018 job growth to 260,000, which is almost 20 percent less than the increase seen in 2017. The government’s forecast remains at 320,000. Job growth could stay weak throughout the year, according to Lee Geun-tae, a research fellow at LG Economic Research Institute. “The property boom last year, which led to an increase in construction workers, has peaked out, and overall economic growth will be weaker this year due to issues, such as trade tension,” Lee said. LG forecasts the economy to grow 2.8 percent in 2018, versus 3.1 percent last year. BOK board members, who have set a 2-percent inflation target, have expressed concerns that a lack of improved hiring is delaying a recovery in private spending and any accompanying inflationary pressures. Governor Lee Ju-yeol told reporters this month that weak employment can in the long term have a negative impact on the nation’s potential growth rate. Moon’s approval rating remains relatively high at 70 percent, according to a Gallup survey released last Friday, but a poll in January found 39 percent of people said the minimum-wage hike would have a negative impact on the economy, while 38 percent said they expected it to be positive. For now, the supplementary budget proposal, submitted to parliament on April 6, is languishing. So far, no committee has reviewed the bill. “The extra budget would help temporarily but, fundamentally, there needs to be a way to activate industries so companies can increase hiring,” said Joo Won, a director at Hyundai Research Institute. Bloomberg News

The Regions

Tuesday, April 24, 2018 • Editor: Dennis D. Estopace

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Neda sees no conflict in three airport projects By Cai U. Ordinario

@cuo_bm

HE National Economic and Development Authority (Neda) doesn’t see any conflict in the construction and rehabilitation of three different airports. Socioeconomic Planning Secretary Ernesto M. Pernia told reporters on Monday this is so since the construction of an airport in Bulacan, the construction of the Clark airport and the rehabilitation of the Ninoy Aquino International A ir port (Naia) would be undertaken by three different entities. The Bulacan air port is being proposed by the San Miguel Corp., while the Naia rehabilitation will also be undertaken by a consortium composed by several companies. The Clark airport is being undertaken by the Bases Conversion and Development Authority (BCDA). “Well, these things can go concurrently. There’s no conflict in terms of the attention because

Bulacan will be handled by the private sector and Naia also by the private sector, [while] Clark is being handled by BCDA, so these are separate efforts,” Pernia explained. In terms of approval, Pernia said the Bulacan airport has already been endorsed by the interagency Investment Coordination Committee Cabinet Committee (ICC-Cabcom). The project will likely be included in the agenda of the upcoming Neda Board meeting on Wednesday, the first meeting for 2018. Earlier, the BusinessMirror reported that the New Manila International A ir port project involves the construction, operation and maintenance of the new international airport in the

company’s 2,500-hectare property in Bulakan, Bulacan. The location of the proposed airport is a first-class municipality that is 35 kilometers north of Metro Manila. As of 2015, the municipality has a current population of 76,565. Of the total land area, around 1,138 hectares will be allocated for the actual airport, with a 100-hectare government center area and 1,132 hectares for other developments. The airport will have two runways for domestic flights and two runways for international flights. The design allows for an expansion of another two runways. The parallel runways will allow 240 movements per hour, or 60 movements per hour per runway. Airport facilities will include air cargo, aircraft maintenance, catering/flight kitchen, ground support, airport management and maintenance, rescue and firefighting services, police, fuel storage, an air-traffic control complex and fixed-based operators. These facilities and project details come at a cost of P735.63 billion, using 2017 current prices. The bulk of the amount, or P641.53 billion, will be allocated as capital cost particularly

for land development, design, construction, contingency and insurance. The remaining P94.1 billion will be the financing cost for the project. The Duterte administration has approved a total of 40 projects since assuming office in June 2016, according to data from the Neda. In its latest update, the Neda said these projects amounted to as much as P1.23 tr illion and only two of these will be financed through public-private partnership (PPP) mode. The bulk of the projects, around 28, will be financed through official development assistance (ODA); seven to be financed by local financing; two each to be financed through PPP and a combination of ODA and local financing; and one to be financed by internally generated funds. Data showed 20 projects were approved in 2017 while 16 were approved in 2016. Only three projects have been approved this year, as of February and only one does not have a date of approval. The biggest projects approved by the current administration amounted to P866.41 billion, or over 70 percent of the total approved projects since June 2016.

NMIS allots P45M for meat shops in 10 poor provinces

HE National Meat Inspection Service (NMIS) is setting aside P45 million for the rehabilitation and construction of meat establishments across 10 poorest provinces in the country in a bid to improve food safety in these areas. In a statement, the NMIS, through its Small Scale Meat Establishment Project (SSMEP), said it will address the lack of slaughterhouses in 15 local government units (LGUs) in these provinces. “In an agreement recently signed between the NMIS and 15 LGUs, a seed fund of P3 million for each of the LGU will be allocated for the construction or rehabilitation of meat establishment within their localities provided they comply with the requirements set by the NMIS,” the NMIS said. In the statement released on Monday, the NMIS said the agreement also stipulates that the fund support will be used to enable establishments to conform to the standards and the requirements on meat safety and meat hygiene. Under the agreement, “the LGUs will provide the lot where the meat establishment will be erected,” according to the NMIS, an attached agency of the Department of Agriculture. “It is mandatory under the agreement that the LGUs will apply for the issuance of license to operate to ensure that all meat to be produced in the meat establishment are safe and wholesome,” it said. The NMIS added it has conducted

More Caraga farmers use DA credit window By Manuel T. Cayon @awimailbox Mindanao Bureau Chief

AVAO CITY—More farmers in the Caraga region were accessing the piloted loan facility of the Department of Agriculture (DA), attracted mainly by the far lower interest rate than those imposed by loan sharks, the regional DA office there said. The Caraga Information Office told the BusinessMirror a total of 591 farmers in the region already accessed the loan package since June last year, when the loan facility was launched in t he tow n of Ma l imono, Surigao del Norte. The region is composed of the two Agusan and two Surigao provinces, including the island province of Dinagat. The DA said farmers were “currently enjoying the very minimal interest rate.” In its story dispatch last Friday, the DA Caraga office asserted the agency’s Production Loan Easy Access (PLEA) program as a “liberating” facility for farmers from loan sharks. PLEA, a nationwide credit program, is currently implemented in selected municipalities across the nation through the Agricultural Credit Policy Council (ACPC). The PLEA offers marginal and small rural farmers and fishermen a loan amount of up to P50,000 without collateral. “Borrowers can pay the loaned amount from two to 10 years, depending on the commodity or activity.” “ Ty pical Filipino farmers need financing to sustain its farm operation. That is why some of them hooked to loan sharks who charge neck-level interest. But not anymore in a barangay in the town of Esperanza, Agusan del Sur,” the DA in Caraga said.

The office added that members of the Dakutan Farmers Mu lt ipur pose Cooperative, for instance, “are now enjoy i ng low i nterest - rate financing package.” One farmer named Brigida Naparan, 59, a resident of Purok 10 of Barangay Dakutan, said she accessed P22,000 for her one-half hectare of rice farm. “The loan I’ve got from PLEA was used for labor expenses during land preparation, planting, inputs and fertilizer,” she said. Before the PLEA facility, she used to borrow at 20 percent per cropping of rice, compared to PLEA’s interest rate of only 6 percent per annum, or 0.5 percent per month. The DA cited another farmer, Abdul Rakman Batingal, 37, who bor rowed P45,000 from PLEA and who disclosed that the whole amount went a long way to his farm. He used it to cover labor expenses for seedbed, land preparation for planting, and farm inputs and fertilizers. “Before, I used to lend money from loan sharks who collected 10 percent per month, or 30 percent per cropping, whereas in PLEA, the interest is only 6 percent per annum, so it is really a big advantage for us farmers,” he said. He added he was confident he would be able to pay his loan in the coming harvest. Jose Zaldy Manug, the municipal agriculturist of Esperanza, Agusan del Sur, said the town supported the PLEA program by extending technical support to farmers to ensure a good harvest. The DA-ACPC has identified five lending conduits in Caraga region with an approved credit fund allocation of P40 million. It said it would increase the number, “as more cooperatives are applying to be a lending partner.”

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an orientation to prepare the LGUrecipients “to become familiar on the mechanics and requirements in setting up a small-scale meat establishment.” The recipients were also provided with a standard slaughterhouse design with emphasis on structural, electrical, equipment components, as well as the scope of sanitary plumbing, according to the NMIS. “They were also taught with the basic requirements of good manufacturing practices and sanitation standard operating procedures,” it added. “Last, they were oriented on their roles and responsibilities in slaughterhouse management and operations.” During the orientation, NMIS Executive Director Ernesto S. Gonzales said the agency “will fulfill its responsibilities in ensuring meat safety at the national level, while the LGUs must do theirs at the local level.” The LGUs for the support program are: Casiguran, Sorsogon; Linamon, Lanao del Norte; Malasique, Pangasinan; Santa Fe, Nueva Vizcaya; Benito Soliven, Isabela; General Tinio, Nueva Ecija; Candelaria, Zambales; Rizal, Laguna; Dolores, Eastern Samar; Baras, Rizal; San Miguel, Catanduanes; Alfonso Lista, Ifugao; Sikatuna, Bohol; Dumalinao, Zamboanga del Sur; and General McArthur, Eastern Samar. Last year the NMIS allocated nearly P25 million for its SSMEP for nine identified LGUs in six provinces. Jasper Emmanuel Y. Arcalas

Product sales in Bacolod’s Panaad Festival up 29.7 percent

LONG CRUISE

This photo shows the Panay River Cruise, a 10-kilometer motorboat ride that has 18 stations. Each station offers different activities for tourists like demo farm for organic farming and an adventure park. The Panay River Basin encompasses almost entirely the province of Capiz, with only small portions lying within the provinces of Iloilo and Aklan. The Panay River Basin Integrated Development Project is one of many flagship projects of the Duterte administration. NONIE REYES

DAR gives CLOAs, farm machines to Rizal Arbos

HE Department of Agrarian Reform (DAR) said it recently awarded certificates of land ownership awards (CLOAs) and P9.7 million worth of farm machines to 10 different agrarian reform beneficiaries’ organizations (Arbos) in the province of Rizal. According to the DAR, 21 far mers received their individual CLOAs, while the Arbos were given the machines during a ceremony held in Tanay town on April 20. DA R Undersec ret a r y for Support Services Rosalina L. Bistoyong led the turnover of the farm machinery to various Arbos in the area, while Undersecretary Karlo S. Bello of Field Operations Office spearheaded the CLOA distribution. “With these machines, our agrarian-reform beneficiaries can now till their land faster and more efficiently,” Bistoyong was quoted in a statement as saying. “These [machines] will greatly help in decreasing losses in pro-

duction and increase their yield and income.” The farm machines consisting of heavy-duty farm tractors, rice reapers, shredders and power tiller cultivators were turned over to the Arbos, where more than a thousand are ARB members. DAR Mimaropa (Mindoro, Marinduque, Romblon and Palawan) Regional Director Luis Bueno explained that the machines were given as “equipment grant.” Bueno added the machines will be managed and operated by the farm organization as a business asset. Minimal user fees will be collected for its use for the maintenance of the farm equipment. The project is implemented under DAR’s Agrarian Reform Community Connectivity and Economic Suppor t Ser v ices, which aims to transform A R B s i nto v i able ent re pre neurs by providing them with support ser vices to increase their income and far ming capabilities. Jonathan L. Mayuga

RECIPIENT Arbos

he agrarian reform beneficiaries’ organizations (Arbos) given certificates of land ownership awards (CLOAs) and P9.7 million worth of farm machines are the following: • Palaypalay Maunlad Farmers Association Inc.; • Pagkalinawan Nagsaca Farmeras Association Inc. • Nagkaisang Magsasaka ng Punta Inc.; • Llano Farmers Multi-Purpose Cooperative Inc.; • Sipsipin Maunlad Farmers Association Inc.; • Niogan Agrarian Reform Beneficiaries Multi-Purpose Cooperative Inc. Madilaydilay Agrarian Reform Cooperative Inc.; • Sampaloc Agrarian Reform Beneficiaries Multi-Purpose Cooperative Inc. • Organization of ARB Farmers of Inalsan Inc.; and • Organic Farmers of Barangay Macabud Inc.

ACOLOD CIT Y—Product sales during the nine-day 25th Panaad sa Negros Festival held from April 14 to 22 increased by 29.7 percent to P23.908 million, from the previous year’s P18.434 million. Figures released by the provincial government last Sunday night showed the consolidated sales raked in by the local government units (LGUs), Eco-Garden Show, Organic Market, Livestock Dairy Fair, Food Park and concessionaires and kiosks. During the first day, on April 14, the sales totaled P2.188 million and went up the next day, April 15, to P2.254 million. Sales went down April 16 to P2.010 million, but picked up again on April 17 (P2.597 million) and on April 18 (P2.934 million) before decreasing to P2.710 million on April 19. Sales nearly doubled on April 20 to P4.305 million and went down on a Saturday, April 21, to P3.132 million. The last day (April 22) saw sales hitting P177.3 million. For the entire festival, the LGU sales amounted to P12.292 mil lion, sa les of the EcoGarden Show to P1.958 million, the Organic Market with P683,142, the Livestock/Dairy Fair at P2.915 million, the Food Park with P1.349 million and conce s s ion a i re s a nd k ios k s , P4.708 million. The festival is being held every April for the past 25 years at the Panaad Park and Stadium here in Barangay Mansilingan. The annual event was participated in by a l l 19 tow ns and 13 cities of Negros Occidenta l, inc lud ing its capita l, Bacolod City. Panaad sa Negros Festiva l showcases the distinctive Negrense skills, talents and creat iv it y in t he u n ique t heme pavilions of the participating LGUs. PNA

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Fraud scandals, bad debts at India banks threaten economic outlook By Anirban Nag Bloomberg

candals, bad debts, ATM cash shortages—India’s banking system has experienced them all in recent months and the bad run is starting to have repercussions for both the broader economy and Prime Minister Narendra Modi. India’s nearly $1.7 trillion formal banking sector is coping with $210 billion of soured or problem loans, and some regional banks have been ensnared in fraud scandals. With a national election slated for April or May, Goldman Sachs Group economists have trimmed their growth projections for the year ending March to 7.6 percent from 8 percent amid concerns that the banking system’s woes are more widespread than previously thought. On top of that, ATMs in some parts of the country have been reported to be running dry in recent days. There’s an unusually high demand for cash, according to the Finance Ministry. The rupee shortage is being blamed on everything from farm spending to looming elections and hoarding by some families. Yet, some roots of the issue may lie in Modi’s 2016 decision to take high-denominated cash out of circulation in a bid to curtail India’s vast and unreported black economy and crack down on illicit financial transactions. The move initially caused economic mayhem and the disruptive shocks to cash in circulation continue to linger. While government officials have said the banking system is healthy and that there’s adequate cash for the excess demand, the crunch has only further tarnished the public image of banks. “The problems in India’s banking system are self-inflicted mostly because of lack of due diligence,” said N.R. Bhanumurthy, a Delhi-based economist at the National Institute of Public Finance & Policy. “Of course this will affect growth.” The broad uncertainty hovering over the financial sector comes just as the economy was showing early signs of recovering from a disruptive tax system overhaul and the 2016 cash ban. Now there are growing worries that lending, and with it economic activity, will stall. Bhanumurthy for now forecasts GDP growth of 6.5 percent for the current fiscal year ending March 2019, although he fears the numbers could go even lower. His estimate is already below last year’s 6.6 percent and, as well as the most pessimistic forecast of 6.9 percent in a Bloomberg survey. Indian banks—the heart of its economy—have had their image tarnished by a string of scandals that have come to light over the past couple months as companies, saddled with excess capacity and subdued demand, struggle with the aftermath of a borrowing spree following the global financial crisis. Many companies have been unable to pay down their debt as the economy has slowed, especially in the power, steel and telecommunications sectors. At least some of these loans might have been given with insufficient scrutiny, exposing financial institutions to risk.

That coupled with tougher regulatory oversight by the central bank and federal investigators, has skeletons tumbling out of closets. Last week Kolkata-based UCO Bank was in the spotlight after India’s federal investigative agency registered a case against its former chairman for cheating the state-run lender. The bank had reported losses for nine straight quarters as it made provisions for soured debt. Calls to him went answered. Axis Bank CEO, Shikha Sharma, this month said she will quit earlier than expected from the mid-sized lender after failing to rein in about 250 billion rupees in gross nonperforming loans. In one of the most high-profile cases of fraud, a billionaire jeweler was accused of masterminding a $2-billion scam at Punjab National Bank, one of the country’s largest public sector banks by using fake guarantees. Punjab National Bank shares have lost almost 40 percent over the past year. Business sentiment has soured in the wake of the alleged banking frauds, said Abhishek Gupta, Bloomberg’s India economist, who cut growth forecasts this week. This is likely to have a negative impact on credit growth, with the banking system burdened by bad loans. Gupta has lowered his growth forecasts to 7.2 percent from 7.5 percent for the year ending March 2019. That took it below the Bloomberg consensus of 7.4 percent, a pace probably insufficient for Modi to create enough jobs in time for the elections.

Adequate cash

India’s banks are still reasonably well capitalized according to international Basel-III capital guidelines. A government capital infusion plan should take care of public sector banks, which have a 70-percent share of India’s banking system, said Srikanth Vadlamani, vice president for financial institutions group, Moody’s Investors Service. The government will make sure that adequate cash is available at ATMs and in banks so that all demand is met, Sanjeev Sanyal, a Modi advisor said earlier this month. “There is no crisis, the banks are in perfectly good shape, we have more than adequate cash and more will be printed if necessary. So there is absolutely no need for anybody to panic about this.” India announced a $33 billion recapitalization plan in October last year to tackle one of the highest stressed loan ratios in the world. But the latest scandals have raised concerns that most of the capital to be pumped in will go into providing for more losses toward soured loans, leaving very little for fresh lending. That bodes badly for the economy, which is already estimated to have slowed to a four-year low in 2018. “Corporate sentiment is already down,” said Madan Sabnavis, Mumbai based chief economist at Care Ratings Ltd. “Demand isn’t there and most sectors are facing excess capacities. So will the investment cycle revive? Unlikely, and these problems in the banking sector are coming at a time when they are already grappling with large nonperforming loans.”

A Punjab National Bank (PNB) branch in Mumbai. Dhiraj Singh/Bloomberg

Editor: Angel R. Calso • Tuesday, April 24, 2018 A9

Big four consulting firms show interest in initial coin offerings

Cryptocurrency mining rigs composed of Antminer S9 ASIC machines operate on racks. Akos Stiller/Bloomberg

By Julie Verhage & Lily Katz | Bloomberg

nitial coin offerings (ICOs) have raised billions of dollars for start-ups while attracting criminals and authorities around the globe. Now, the young market may get some help cleaning up from the Big Four consulting firms.

In recent months the largest accounting firms have started—albeit cautiously—offering services specializing in the risky market for ICOs. The fundraising mechanism, where a company creates a new digital currency and sells it to the public, has become too big for the Big Four to ignore. ICOs generated $5.6 billion last year, driven by speculative investments, according to a report from research firm TokenData and Fabric Ventures, a

blockchain investment fund. The surge has caught the attention of regulators. China and South Korea banned ICOs outright in September. The United States Securities and Exchange Commission (SEC) issued subpoenas this year as part of a crackdown. Last week the SEC said it halted an initial coin offering (ICO) and alleged the founders “masterminded a fraudulent ICO.” SEC Chairman Jay Clayton called out problems in the ICO market at

a conference on Tuesday as one of two issues he finds surprising and troubling. (The other was pennystock fraud.) Consulting firms may be able to help companies navigate a fraught market, or they could find themselves dragged into scandal. That’s why they’re moving hesitantly. “What we’ve been doing is advising some investors and some clients on what to do with an ICO—whether they should do one, whether they shouldn’t,” said Eric Piscini, blockchain leader for the financial services group at Deloitte Consulting. “Our stance is very—I don’t want to say risk averse, but it’s very wait-and-see for now on ICOs, because the regulatory environment is changing really fast.” The hesitation toward ICOs is in contrast to the way Deloitte, PricewaterhouseCoopers, EY and KPMG jumped on the blockchain bandwagon as early as 2012. They quickly scrawled research reports and devoted staff to blockchain technology, a sort of distributed spreadsheet meant to be faster and more secure than systems used by financial

services and other industries. The ICO market, an offshoot of the cryptocurrency craze, has been around for years. The concept first drew international attention in 2016, when the Dao raised more than $150 million in just a few days. The hype soon turned to suspicion as the SEC took interest, the first instance of the regulator determining that tokens were sold as securities. While no charges were filed, the case served as a warning to the industry. Since then, the ICO business has grown apace, raising more than $500 million in a single month last summer. Telegram Group Inc., a popular encrypted messaging app, has raised $1.7 billion so far in the world’s biggest ICO, according to a March regulatory filing. It has said it may pursue another offering. When Egor Gurjev decided to hold an ICO last year for his cloud-gaming start-up Playkey, he enlisted the help of Deloitte. The firm spent about six months offering legal advice before Playkey’s ICO, which raised $10.5 million in December, Gurjev said. At PwC, ICO work has been mainly limited to clients in Asia and Europe. PwC hasn’t taken any ICO business in the US, said Grainne McNamara, the blockchain leader for the firm’s financial-services arm. “We’ve been quite active in assessing the US ICO market to create comprehensive frameworks for our clients,” she said. KPMG started taking on ICO clients mid-last year after almost nonstop interest, said Eamonn Maguire, US blockchain lead at the firm. “Every day we’re getting outreach regarding ICOs,” he said. EY also said it has received daily inquiries for ICO consulting this year but declined to disclose the names of any clients. “We are selectively working around the firm to help companies do ICOs, both domestically and internationally,” said Jeffrey Grabow, the US venture capital lead at EY. In each offering, the firm is being particularly careful to communicate the various risks that are involved in the projects, he said. “We’ve been watching it evolve over time and are constantly figuring out what role we can and should play.”

Currency whales make their move as trade war heats up By Katherine Greifeld Bloomberg

or the first time in a decade, the world’s central banks are looking beyond the dollar to build their currency reserves. With United States protectionism on the rise, a number of Wall Street strategists say the case for the euro has rarely been better. Existential crises that hobbled the European experiment have receded. A resurgent economy has spurred talk the region’s central bank will curb policies that drove euro yields below zero. And as President Donald J. Trump threatens a trade war with China, the European Union (EU) is pursuing free-trade deals all across Asia and Latin America. Of course, the dollar commands the lion’s share of the world’s $11.3 trillion of international reserves and most expect it to remain that way. But even a small shift—whether as a hedge against Trump’s trade policies or in the name of diversification—could have big consequences. After shunning the common currency for years because of negative interest rates and the region’s persistent turmoil, reserve managers at some of the biggest central banks are now looking to add more euros, according to two heads of foreign-exchange strategy who’ve held regular discussions with them. “A lot of countries around the world are turning to Europe for increased partnership in trade,’’ said Jens Nordvig, who was Wall Street’s top-ranked currency strategist for five years running before setting up Exante Data a

little over two years ago. “It’s not crazy to think that’s also going to be happening in the area of capital markets and reserve allocations. The bottom line is, this trade stance the US has now is not helpful in terms of making the dollar attractive” for central banks that hold billions in reserves. Nordvig estimates a half-trillion dollars could flow into the euro in the next two years, equal to a 25-percent boost in the currency’s share of reserves. Developing countries and oil-exporting nations in the Middle East, which rely heavily on international trade, are the most likely to lift their euro allocations, he said. Six emerging economies—China, Saudi Arabia, Taiwan, India, South Korea and Brazil— hold almost half the world’s reserves, data compiled by Bloomberg show. China alone has amassed over $3 trillion in foreign exchange—primarily as a result of its cheap exports to the US. The ramifications of such a shift are significant. For over a half century, the dollar has been the reserve currency of choice for most of the world’s central banks because of its depth and stability in global markets. That status has given the United States some notable advantages. It has helped America keep a lid on funding costs, allowing it to run budget deficits, as trading partners park their dollars in US government bonds. The benefits also extend to American companies because the widespread use of dollars in global trade, such as for oil and commodities, often makes it cheaper for US multinationals to borrow vis-a-vis many of their

overseas competitors. Currently, about 64 percent of global reserves are denominated in dollars. The euro, the only other primary reserve currency, has remained a distant second, accounting for 20 percent of official allocated reserves, or $1.93 trillion. (The remainder comprises a mix of other national currencies like the British pound, Japanese yen and Canadian dollar.) There’s been plenty of talk over the years about the need to loosen the dollar’s hegemony over the global economy, and the euro’s introduction in 1999 preceded a decade-long decline in dollar reserves. But for much of the past decade, there was little reason to think the euro would be the answer. After the euro’s share peaked at almost 28 percent in 2009, a succession of humbling setbacks, from the European debt crisis, to Greece’s meltdown and the UK’s decision to leave the EU, has eroded confidence in the currency. Start-stop growth and repeated bouts of deflation didn’t help either. As the European Central Bank enacted emergency measures that drove euro-area sovereign bond yields below zero, reserve managers who typically seek steady income had little incentive to hold euros. From 2010 to 2016 the euro lost roughly 30 percent of its value against the dollar. Now, two big reasons suggest the euro is about to have its moment. The one, everyone wants to talk about is the economy and how it’s back from the brink. Last year the euro area expanded 2.3 percent and is poised to grow at an even faster clip in 2018.

While that might not sound like much, it’s the most in a decade and almost four times the average over that span, spurring speculation the ECB will pare back its stimulus. And politically, the union is more sound than it’s been in years, especially after the French election of Emmanuel Macron in May beat back a rising tide of anti-EU sentiment.

Trump factor

But just as important, perhaps, is the Trump factor. While Wall Street strategists were loath to point fingers at the Trump administration’s “America First” trade policies, there’s little doubt that over the long term, US protectionism could undermine the dollar’s global standing. In early-March Trump tweeted that “trade wars are good, and easy to win” and made good on his promise to hit back at China by enacting up to $60 billion of tariffs. The administration has also dropped more than a few hints it prefers a weaker dollar to help US manufacturers. China, which holds more US government debt than any other foreign creditor, responded with levies of its own and signaled that “all options,” including scaling back its purchases of Treasuries, were on the table. If the administration “not only abandoned the strong dollar policy but were intent on pushing the dollar down aggressively to secure trade advantages, that would diminish the currency’s luster as a reserve asset,’’ said Barry Eichengreen, an economics professor at the University of California at Berkeley and coauthor of How Global Currencies Work.

A10 Tuesday, April 24, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Safe and easy riding

Motorcycle riders have constantly been the top victims of road-crash injuries since 2010, according to data from the Department of Health, with 6 in 10 injured involving them. Studies showed that there are about an average of 16,208 motorcycle accidents recorded in the country every year. In its 2015 road-safety report, the World Health Organization (WHO) found that 1.25 million people have died globally due to road accidents, with motorcyclists comprising 23 percent of the figure. The WHO report also said that more than half—or 53 percent—of those who die in road accidents in the Philippines are motorcycle riders. With motorcycle sales going through the roof every year—the Motorcycle Development Program Participants Association projects annual sales to go over 2 million units by 2020—we urge the government to impose more safety measures to prevent accidents. There are about 4 million motorcycle users in the Philippines, and most of them are beginners or first-time users, but even those who’ve been driving around in motorcycles for quite some time are not exempted from boorish behavior on our roads. Despite the implementation of the helmet law in the country, motorcycles have the highest fatality accident rate in Metro Manila, according to statistics compiled by Metropolitan Manila Development Authority’s (MMDA) Metro Manila Accident Recording and Analysis System Database. Nine out of 10 motorcycle riders killed in accidents were not wearing helmets, a DOH study said. The common causes of motorcycle accidents were head-on collisions, lane splitting (motorcycle driving between two lanes of slow moving cars), driving under the influence, going straight through an intersection, and passing or trying to overtake a car. A lot of motorcyclists seem to believe they are exempted from traffic rules. Transportation and traffic officials should really crack the whip on reckless motorcyclists, as they should do for all kinds of drivers, since bad driving is the No. 1 cause of accidents for any kind of vehicle on our roads. Mr. Takeshi Yano of Yamaha Motor Philippines Inc. said most motorcycle drivers lack proper training. Recognizing the need to address the growing number of motorcycle accidents, his company has been conducting a safe riding campaign, which incorporates lectures and drills aimed at highlighting the importance of road safety and the relevance of wearing helmets and other protective gears. The issuance of driving licenses should also be closely monitored, especially the practical or actual driving tests. There should be more stringent tests for motorcycle drivers because motorcycle accidents are more likely to result in serious injury or death. A good number of motorcycle accidents have also involved women and children. Establishing motorcycle toll lanes or facilities that could ensure protection for riders by providing them safe ingress and egress to and from Metro Manila is also a measure worth considering. The MMDA is already implementing the “blue lane” policy for motorcycle riders traversing Edsa, which aims to lessen crashes on the country’s busiest road, where motorcyclists are involved in 55 road crashes a day. Traffic authorities could certainly expand the network of motorcycle lanes to other busy roads within our cities and even those going to and from the provinces. There are many responsible motorcycle drivers and motorcycle associations out there. We commend them for teaching their fellow riders about proper driving and safety-consciousness. We wish them well and we hope their tribe will increase. With their and the government’s help, we truly look forward to seeing less and less motorcycle accidents on our roads.

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04242018

otorcycles are a cheap and convenient way to get around our traffic-jammed roads, but more safety measures should be implemented to address the increasing number of deadly accidents involving them.

What elections mean Manny B. Villar

THE Entrepreneur Continued from A1

fter the 2017 national elections, we will hold the barangay and Sangguniang Kabataan elections in 42,028 villages throughout the country.

The last barangay elections were held in October 2013, while the last SK elections were held in October 2010. According to the Commission on Elections some 55 million voters are registered to vote in the May polls. Officials to be elected on May 14 are a barangay chairman and seven members of the Sangguniang Barangay (kagawad), as well as a Sangguniang Kabataan chairman, and seven members of the council. In May 2019 the country will hold midterm elections, during which 12 senators and more than 200 members of the House of Representatives would be elected. The newly elected senators will serve for six years, while the new members of the Lower House will

serve for three years. The winners in the 2019 elections will join the winners of the 2016 election to form the 18th Congress of the Philippines. The barangay elections signal the beginning of election fever in the Philippines, although political groups become more active only during elections for district and national positions. This early, the major political parties have begun preparing their respective slates for the Senate, while survey firms start gauging the potential public choices. A survey conducted by Pulse Asia from March 23 to 28 shows that if the midterm elections were held during that period, Sen. Grace Poe would top the “Magic 12” senatorial candidates.

‘OMG.... Look at the PSE!’ John Mangun

OUTSIDE THE BOX

ack in the day, there were three main daily newspaper sections. The first included world and national news. The second was devoted to opinion and local news. The third led with sports followed by business news consisting primarily of stock market prices. The way the newspaper was constructed was based on what people wanted to read. Everyone wanted to know what was going on in the world. Fewer readers were interested in local society events and the opening of the new grocery store. Sports and stock market results attracted even fewer readers. However, everyone who might read about sports was expert having a strongly held opinion on which team was going to be the champions. Stock market enthusiasts were even a smaller group and no one really talked about it except in conversations between those who invested.

These days—thanks to the Internet—almost everyone has an opinion on almost everything and to qualify as an “expert” means you have posted your opinion at least three times on social media. During the 1997 Asian Financial Crisis, the most common thought and comment was, “What the hell is going on?!” Since the beginning of the global financial crisis in 2007, the most common comment is, “I know exactly what is going on and why.” The number of economic and stock market experts has increased 10,000 fold. There was another reason that sports and stocks were in the same

Over 70 percent of 1,200 respondents said they would vote for Poe, who ran for president in May 2016. Sen. Cynthia A. Villar followed, with 55.6 percent of the respondents saying they would vote for her if elections were held today. Most of the probable winners are either incumbent or former members of the Senate. Below are the people who topped the survey list: 2-3. Taguig Rep. Pia S. Cayetano (53.8 percent). 4-6. Sen. Nancy S. Binay (45.8 percent). 4-7. Sen. Sonny M. Angara (44.9 percent). 4-7. Davao City Mayor Sara Duterte-Carpio (43.8 percent). 5-9. Senate President Aquilino L. Pimentel III (39.8 percent). 7-12. Former Sen. Sergio R. Osmeña (38.0 percent). 7-13. TV host Erwin Tulfo (36.7 percent). 8-15. Former Sen. Lito M. Lapid (33.8 percent). 8-15. Former PNP Chief Ronald M. dela Rosa (33.1 percent). 8-15. Former Sen. Jinggoy Estrada (32.8 percent). 9-15. Ilocos Norte Rep. Imee R. Marcos (32.2 percent). 10-19. Sen. Paolo Benigno A. Aquino IV (30.5 percent). 10-19. Sen. Joseph Victor G. Ejercito (29.0 percent).

Pulse Asia said only 15 of the 58 probable senatorial bets included in the survey’s senatorial poll would have a “statistical chance of winning” come in May 2019. It’s still a long way before the final list of candidates for the 12 seats in the Senate, as well as for the Lower House, will be completed. What is important is that the Philippines continues to pursue peaceful, fair and free elections. Controversies cannot all be avoided during elections, as even the United States, recognized as the leading democratic country in the world, has yet to find closure to the alleged irregularities that happened during the Hillary Clinton-Donald J. Trump presidential contest. Keeping elections peaceful, fair and free does not only allow people to make independent choices, but also show our political maturity as a people. Barangay and midterm elections are not expected to be a significant contributor to economic growth as presidential elections, but they help firm up the country’s image as a politically stable place where investors can put up industries and operate businesses. That is something we need to continue driving our economy forward.

We are told the stock market reflects the economy. Except dozens of studies over 30 years in 20 different and diverse countries prove that to be false. There is a “sweet spot” of economic growth that does affect the markets. Too much economic growth limits stock prices, as you can make more money with a business. Too little growth reduces investing funds.

had anything to do with the other. Both sports and the stock market is a game played by a limited number of professional and amateurs. We are told the stock market reflects the economy. Except dozens of studies over 30 years in 20 different and diverse countries prove that to be false. There is a “sweet spot” of economic growth that does affect the markets. Too much economic growth limits stock prices, as you can make more money with a business. Too little growth reduces investing funds. But, otherwise, there is little if any correlation between a booming economy and a booming stock market. The Philippine stock market is an indication of investor confidence according to the “experts.” Except, for 2013, the local stock market was flat and Foreign Direct Investment (FDI) increased by 50 percent. In 2015 the market lost 3.75 percent and FDI was up by 30 percent. But doesn’t the stock market also reflect the actions of the President of the Republic? If that is the case, then certain quarters would be disappointed to learn that local stock prices were down 16 percent from the 2015 high to the 2015 low and See “Mangun,” A11

section. Both are low on the list of what is important. The only time news from either made the front page was a momentous event like a baseball World Series. Or, in the case of the stock market, a crash in prices. Success in the world of sports is partly measured by trophies on display. In the stock market, it is the increase in wealth of the players. But neither has lasting impact for most people. In the Philippines the two intersected back in the 1990s when then-listed company Alaska Milk saw its basketball team win the championship. For the next few days, the stock price increased as if one

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When the janitor didn’t show up, this official did the unthinkable Ernesto M. Hilario

ABOUT TOWN

n Ilocos Norte politico wanted to give the incumbent governor a shaming in what he considers as his turf, the House of Representatives. He even went to the extent of incarcerating six Ilocos Norte government workers in a futile try at crucifying Gov. Imee R. Marcos for using the so-called tobacco funds for procurement of needed equipment and vehicles for tobacco producers. That odd episode saw Imee fighting tooth and nail in a legal skirmish for the so-called Ilocos Six, which showed mettle in waging war for the people she cares about. Her efforts at a legal resolution of the impasse paid off. The Ilocos Six were freed. But her adversary, touted as a senatorial bet for the 2019 midterm elections, lost so much pogi points—and credibility—in that pathetic, capricious attempt to bring Imee Marcos to heel. But the lady is not for burning. That uncalled-for tussle unwittingly highlighted the good job that she has been doing in Ilocos Norte— including the so-called Solid North— to touch off long-term development and combat poverty. “Walang himala [There’s no miracle]!” was the clarion call of the film classic Himala that Imee had given the go-ahead for its production under the auspices of the Experimental Cinema of the Philippines, which she led. The ECP turned up what film historians would likely recognize as an era that saw the greatest numbers of Filipino film classics hitting the movie screens, among them, The Boatman, Oro, Plata, Mata, Scorpio Nights, Misteryo sa Tuwa and Soltero. But there must have been a miracle of sorts when she hauled down the Ilocos Norte double-digit poverty index to 1 percent plus a few measly percentage points, or when her brainchild “Paoay Kumakaway” (Paoay Beckons) pushed up the tourist influx from 230,000 to about 2 million in as short as two years. Who could argue with success? She was also the guiding hand in the 1980s children’s TV series, Kaluskos Musmos and Kulit Bulilit, which left her critics and detractors perplexed why she had one hand in the production of films for mature

Mangun. . .

continued from A10

up from the 2016 low to the 2018 high by 28 percent. For the past two months, I have been telling my subscribers to stay far away from buying stocks unless they were active traders. And that had nothing to do with economics,

viewers while the other was seeing to the production of kiddie viewing fare. Not too many people would remember that, in 2010, the first task on her first day as newly elected Ilocos Norte governor was to clean the toilets at the Provincial Capitol. Janitorial services and dull, menial jobs aren’t exactly included in the list of duties that the chief executive of a province does. What does that tell you? She’s not the sort of person who would bellyache and gripe and groan over a trifle that can be tackled and solved pronto. When she’s in charge, and there’s nobody around to do what’s needed, count on her to do it herself. No red tape, no calling for others to do it—and it turned out there was only one janitor (who could attest to the incident) assigned to do toilets. So she just applied herself to the task at hand—walang kiyeme, walang kuskos-balungos, trabaho lang. What more does that tell you? She doesn’t give a hoot about the trappings of power; she’ll plunge right in to get things done. And yes, you must have heard the low whispers how she gave one of her kidneys to her ailing father. What does that tell you about her character? A lot. But suffice it to say that she can give so much of herself, never mind what people would say. You don’t expect that of someone so down-to-earth toting a PhD and a clutch of degrees from the Ivy League universities in the United States—but you’d expect that from a close barkada of the 1960s to 1970s icon Severino “Nonoy” Marcelo of Tisoy and Ikabod Bubwit fame. ’Yung pangmasa talaga, ’yung talagang may magagawa at ginawa na.

E-mail: ernhil@yahoo.com

politics or global events. It was because—just like in poker—the cards sometimes run sour, and you need to stand up from the table and walk away until the cycle changes. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Protectionism Cecilio T. Arillo

database

NITED States President Donald J. Trump’s protectionist economic policy is not actually new. It’s another name for mercantilism, the economic model that made the US the world’s unrivaled powerhouse beginning in the pre- and postWorld War periods. Protectionism is the antithesis of free enterprise, where products, prices and services are determined by the market and not by the government. It’s also the economic policy that most of Trump’s predecessors had pursued, resulting in unmitigated recessions and other economicpolicy failures. In the Philippines, protectionism was the late Salvador Araneta’s lifelong crusade. As secretary of economic coordination of former President Elpidio R. Quirino’s administration, he sponsored the importcontrol policy and the total ban of imported elementary textbooks and supplementary readers. Protectionism contributed significantly not only to the development, growth and economic advancement of the country but also to the modernization of the educational publishing in the Philippines. Araneta also forced oil companies to refine crude oil, instead of just importing gasoline. If they did not, he declared that the government would put up the refineries. Caltex was the first company to comply. “He seemed to have an uncanny sense of foreboding. The abuse that he had so feared came to pass 36 years later,” said Athle Wijangco Estacio in his

MAIL

WE write to commend our provincial governor who championed “Quezon’s First 1,000 Days” or Q1K program. His constituents are proud that he was named the Outstanding Governor–Hall of Fame Award for social services and development from the country’s largest group of social workers. Quezon Gov. David C. Suarez,

He saw the need for greater participation of private individuals in nation-building. Today, we have the participation of non-governmental organizations, the formation of grassroots leadership, as well as local autonomy. Araneta favored a federal form of government, with a well-balanced collective leadership, pointing out, as well, the need to limit the powers of those in authority. He saw the necessity of opening up public offices to citizens. We owe our knowledge of the controversial Dodds Report to Araneta, who, during his self-exile in Canada in the martial-law years, uncovered the existence of the document and denounced it in his book America’s Double-Cross of the Philippines. These were Araneta’s denunciatory words, as he explained the failure of the nation to industrialize: “The indifferent economic development of the country...was due to America’s policy toward Japan and the Philippines. This policy was the result of the Dodds Report that Truman accepted and which had as its objective to make Japan the industrial workshop of Asia and the Philippines a mere supplier of raw materials.” As Araneta bitterly continued: “We do not argue against the wisdom of providing Japan with the means to rehabilitate herself and allowed to become an industrial country once again, although this was contrary to the prior recommendation of a postwar planning committee headed by Secretary Henry Morgenthau Jr., a recommendation that was in line with the prevailing sentiment at the end of the war. “But certainly we can argue against a policy that would make Japan the exclusive industrialized country in the Far East, for such a policy was most detrimental to the Philippines. Indeed, the United States could not

America abhors impeachment By Charles M. Blow New York Times News Service

olks, have a seat and get some tea. I have something to tell you that you may not want to hear: Everyone still hoping for Donald J. Trump’s removal from office is hoping against the odds. Yes, Trump is wholly unqualified, lacking in morality and character, a consummate liar and surrounded by corruption. Yes, every day that he occupies the presidency he is a threat to this country, its ideas, conventions and comity, but also arguably to the safety and security of the world itself. But, although a perspicuous case can be made for his removal, that is an uphill battle because enough of the public and the political class abhor impeachment and find removal to be extreme and indecorous, even for a compromised president. It is possible that Trump could be impeached if the Democrats take the House of Representatives (odds are that they will) but a conviction in the Senate (where odds are the Republicans will retain a majority, however slim) is all but impossible. A note of historical relevance:

The true force behind Quezon’s success the youngest son of Rep. Danilo E. Suarez and former Rep. Aleta C. Suarez of the Third District of Quezon, received the award for outstanding comprehensive social services, exemplary provincial governance and leadership from the Association of Local Social Welfare and Development Officers of the Philippines Inc. (ALSWDOPI) at Crown Legacy Hotel in Baguio City on April 18. Our governor, who is married to Party-list Rep. Anna VillarazaSuarez of Alona, was recognized for implementing comprehensive social services in the province, particularly the Q1K program which promotes the welfare of pregnant women and their children. Suarez described the formative years or the first 1,000 days of a child’s life as the “golden window of opportunity” to address health and

article published by The Sunday Times Magazine on July 6, 1986. Araneta was just as consistent when he became a delegate to the Constitutional Convention of 1971 to 1972. He was the only delegate who showed up equipped with his own draft of a constitution, naming it the Bayanikasan Constitution based on studies made by the Philippine Constitution Association (Philconsa). Araneta was one of Philconsa’s founders in 1961 and was elected its first president. The Bayanikasan Constitution was a constitution for the future. Araneta was looking at a time frame of 10 to 20 years for its implementation. It was a constitution that stressed the democratization of wealth with savings and democratization of power. “It stressed the importance of property ownership and capitalism for all, since Pope Pius XII himself had declared that a just social order could not exist without giving every individual the means to own property,” Araneta said, adding that “the need for a bold housing program could serve as a main pillar for our prosperity,” explaining that “a family owning a home is a great stabilizing factor. It provides the family a sense of security and respect.”

Tuesday, April 24, 2018 A11

nutrition and the general welfare of young constituents. Under Quezon’s Q1K program, pregnant women are provided free prenatal checkups, lab tests, ultrasound services and health supplements to make sure that the mothers and their children are healthy. The United Nations Children’s Fund identified the first 1,000 days of a child’s life—from the womb through the child’s second birthday—as a critical period of development that will affect a person’s intellectual development and lifelong health. Suarez became the first local champion of the First 1,000 Days program and implemented it across Quezon province by providing pregnant women with adequate information and health interventions, so that their children will become healthy

justify a policy that provided all kinds of stumbling blocks to the industrialization of her ally [the Philippines]. As a result of this policy, industrialization in the Philippines suffered severe setbacks…” It was a division of labor, or of functions, which the Dodds Report crafted for America’s allies in the Far East. The Dodds Report explains the continuing obsession to this day of US foreign policy to keep the Philippines a free and open market for imports because a liberal import policy—another name for free trade —ensures that this country will never be able to industrialize and take the same protectionist, nationalistic developmental strategy that enabled once-poorer neighbors like Taiwan, Malaysia and Thailand, to transform into the newly industrialized countries that they are today. The geopolitical plan embodied in the Dodds Report explains what the late Claro M. Recto described as “America’s anti-industrialization policy for the Philippines.” Although Recto had no knowledge of the existence of the Dodds Report at the time—its existence would surface only in the early-1970s after Araneta exposed it—his enormous analytical power enabled him to deduce from policy statements of US officials that behind US policy in this country was a malevolent design to see to it that we never industrialize. Conclusive proof of what Recto described as America’s “anti-industrialization policy for the Philippines” came when former President Ferdinand E. Marcos formally launched an industrialization program in the late-1970s based on 11 heavy industries led by the steel, petrochemical and engineering industries. To reach the writer, e-mail cecilio.arillo@ gmail.com.

America has only ever impeached two presidents (Andrew Johnson in 1868 and Bill Clinton in 1998 to 1999), but in both cases the Senate refused conviction, meaning both men remained in office. Richard Nixon, whose name and legacy is often invoked relative to Trump, resigned before the House even voted on his articles of impeachment. In each of these cases, it’s important to examine how politicians and the public responded to the possibility of removal. Johnson was a Democratic president when Democrats were the racist conservatives and Republicans were the abolitionist liberals. He became president because he was vice president when Lincoln was assassinated. (Yes, Lincoln had chosen a vice president from the opposing party and from a Southern state for strategic reasons.) The Civil War had just concluded and Reconstruction had begun. But Johnson, the racist that he was, opposed many aspects of Reconstruction. As the Senate web site points out: “Johnson vetoed legislation that Congress passed to protect the rights of those who had been freed from slavery. This clash culminated in the House of Representatives voting, on February 24,

1868, to impeach the president.” Both the House and Senate were controlled by Republicans. But here is the hurdle that the founders built into the process to make it nearly impossible to remove a president: While it only takes a majority of the House to impeach a president, two-thirds of the Senate must vote to convict in order to remove the president. In the Senate, the three articles of impeachment that were voted on all fell short by one vote, and that is because seven Republicans switched sides and voted with the Democrats for acquittal. One of those Republicans, Sen. James Grimes of Iowa, explained his actions this way: “I cannot agree to destroy the harmonious working of the Constitution for the sake of getting rid of an unacceptable president.” Even a Supreme Court associate justice, David Davis, a Republican who had served as Lincoln’s campaign manager, reportedly opposed Johnson’s impeachment, even though he believed him to have “qualities totally unfitting him to be the ruler of a people in the fix we are in” and calling him “obstinate, self-willed, combative, slow to act” and in possession of “no executive ability.” Johnson was impeached before the

advent of modern polling, but that polling did exist when Nixon resigned and Clinton was impeached. It is important to note in Nixon’s case that the televised Senate Watergate hearings had started, and the Saturday Night Massacre occurred in 1973, and yet the percentage of people saying he should be removed from office never rose above the 30s that year, according to Gallup. It wasn’t until after the House Judiciary Committee recommended impeachment that a majority of Americans thought he should be removed. In the case of Clinton, who was also acquitted, Gallup reported: “Bill Clinton received the highest job-approval ratings of his administration during the Lewinsky/impeachment controversy. As the Lewinsky situation unfolded, Clinton’s job approval went up, not down, and his ratings remained high for the duration of the impeachment proceedings.” It is quite possible that trying to impeach and remove Trump could have the opposite effect than the one desired: It could boost rather than diminish his popularity, and an acquittal by the Senate would leave an even more popular president in office.

individuals contributing to national development. The Department of Health and the National Nutrition Council also recognized the provincial government of Quezon for leading the implementation of the program in the country. Suarez was elevated to the ALSWDOPI Hall of Fame after being awarded the outstanding social protection development service awards for three years. “This award [Gawad Parangal] is one of the most important awards that we received, because it was given by the people who know and understand what service really means,” Suarez said. Our Governor is also proud that the social workers in Quezon province helped make the Q1K program successful, which earned for the province its first award in 2014.

Quezon province was also awarded in 2017 for the full implementation of Magna Carta for Social Workers and hazard pay for nonsocial workers, a health-coupon program called “Lingap Kalusugan Para sa Barangay,” a wider scholarship program and financial subsidy for senior citizens, day-care workers and nongovernmental organizations. The province was also recognized for its 2 in 1 environment program, which involved the planting of 2 million mangrove seedlings. Quezon province was again recognized this year for the sustainable implementation of these projects, as well as new award-winning programs in agriculture, nutrition, health care and nutrition. Among the new projects include the establishment of the first science high school in the province and the expansion of scholarship

programs for college and master’s degree students. Our governor complemented these programs with peace and order initiatives undertaken with the help of the Philippine National Police and the Armed Forces of the Philippines, as well as “Yakap Bayan,” a community-based rehabilitation program for drug dependents who have surrendered to authorities. Suarez, however, explained that the awards and recognition given to the province would not be possible without the gallant efforts of local social workers who are the true force behind the successful implementation of programs that are designed to help those who are in need. Maryrose Rosales Barangay Bukal, Pagbilao, Quezon

2nd Front Page BusinessMirror

A12 Tuesday, April 24, 2018

‘Reforms to ensure PHL economy won’t overheat’ 6.6 percent O By Cai U. Ordinario

@cuo_bm

nly air-conditioners and other cooling devices are overheating in the Philippines, where the onset of the summer season is causing tempers to flare. As far as government officials and experts are concerned, “overheating” is not a term that would best describe the current state of Philippine economy.

The average GDP growth recorded by the Philippines from 2013 to 2017

While the Philippine economy is growing at a faster pace—the highest in three, or even four decades— growing concerns related to its sustainability have recently surfaced. Last week the World Bank said the Philippines may already be showing signs of economic overheating

on account of the country’s average capacity-utilization rate rising to a two-decade high. A n “overheated ” economy, simply defined, is an economy that is growing an unsustainable pace. One of the first signs of this is high inflation. Birgit Hansl, World Bank lead economist and program leader for Equitable Growth, Finance and Institutions for Brunei Darussalam, Malaysia, Philippines and Thailand, said rising inf lation and high credit growth have already been observed in the Philippines. Continued on A2

Task Force Boracay told: Reveal names of violators Continued from A1

what sanctions will be imposed on them, especially the DENR [Department of Environment and Natural Resources] and LGU [local government unit] officials who allowed developments on wetlands and forest areas.” She said there were LGU and DENR officials “who gave permits to build and sell forest land” and, thus, should be held accountable. This call for transparency was echoed by Jose Clemente III, president of the Tourism Congress of the Philippines. “As early as the announcement of the possible closure of Boracay, we [tourism stakeholders] were already asking for the list of violators. It was even requested by the senators during the Senate hearing in Boracay on March 2, but, for some reason, they were not given the list.” He not e d , “ W he t he r t he interagency task force was still validating the list or not, it was certain that they must have already known of properties that were in violation. Otherwise, these properties would not have started self-repairs and self-demolitions.” Interior Assistant Secretary for Plans and Programs Epimaco V. Densing III said his agency should be filing the administrative cases soon. “Our legal team was told to consolidate the administrative cases,” he said in a text message. He added the list of DENR officials that were found liable for abetting violations of establishments on Boracay “has been turned over to the DENR.” The latter is expected to make its own investigation into these errant officials and file cases against them. As this developed, members of Task Force Boracay stressed that President Duterte will soon be declaring a state of calamity in

Boracay, and issuing an executive order that would formalize the island’s closure. “There’s already a draft [of the state of calamity declaration],” Densing said. The National Disaster Risk Reduction and Management Council, a unit under the Department of National Defense, was expected to convene in a meeting on Monday afternoon to finalize the declaration, which will then be sent to Duterte. “The President will definitely have to issue the declaration before Thursday, April 26,” the closure date of Boracay, according to Tourism Assistant Secretary for Public Affairs Frederick M. Alegre. The state of calamity declaration will pave the way for some P2 billion in calamity funds to be released from government coffers, which are meant to alleviate the loss of incomes of the island’s workers who are certified residents of the island. The state of calamity declaration also allows the Task Force to push its rehabilitation of Boracay, unimpeded by the normally tedious government bidding procedures, its members averred. So far, Task Force Boracay, composed of the DENR, Department of the Interior and Local Government (DILG), and Department of Tourism, has spoken only in generalities of the number of establishments that have violated easement and environment laws. In previous news conferences, the Task Force announced that 11 unnamed establishments were found to have illegally connected to the rainwater drainage pipe of the Tourism Infrastructure and Enterprise Zone Authority. These establishments were found using said pipe to carry their untreated waste and refuse out to Bulabog Beach, raising the coliform bacteria levels beyond normal acceptable standards. The DENR, on February 14, had

www.businessmirror.com.ph

BY TWEAKING BASE YEAR, govt MAY SOON SEE HOW MUCH ECONOMY GROWS

OW much is the economy really growing? How less have Filipinos consumed alcohol and tobacco products? These are the questions government economists want to know as the National Economic and Development Authority (Neda) moved to review consumption patterns. In an interview on Monday, Neda Undersecretary Rosemarie G. Edillon told the BusinessM irror that the government’s socioeconomic planning agency initially wanted the rebasing, particularly the computation of the weights of the commodities, to reflect Filipinos consumption behavior in 2015 instead of 2012. Using the 2015 data—which will be culled from the Family Income and Expenditure Survey (FIES) that year—will reflect key reforms, including the imposition of “sin” taxes on alcoholic beverages and tobacco. “We introduced the “sin” tax in 2013, [and] prices increased; so you would expect some substitution to have happened. This may have led to a decline in the consumption of alcohol [and tobacco],” Edillon said. “In which case, that would also reflect the way you compute for the CPI [consumer price index], which should now have lower weights, particularly for alcoholic beverages and tobacco. But now [that] it’s still

at 2012-base year, it still reflects the consumption pattern before, when they didn’t have this different profile of prices,” she added. However, Edillon said the rebasing, particularly the change in the methodology of computing the CPI to chained value measures (CVM), means more frequent rebasing of the data. The CVM is a means to compute economic growth using chained prices. This is not dependent on an assigned base year, which is now being used to compute GDP in constant prices. When using chained prices, the base year cancels out in the formula, and only the constant and current prices will be able to affect the outcome. The next revision of the CPI will be next year, when the 2018 FIES will be released. The FIES will be conducted this year, and the results may be available next year. After 2021 Edillon said the FIES will be released every two years, and this means the CPI will also be rebased every two years. The FIES is used in the rebasing of the CPI, particularly in the computation of the weights per commodity. The weights reflect the consumption of various commodities like food, alcoholic beverages and even tobacco by households. See “Economy,” A2

Manufacturing. . .

At the height of summer, a sudden downpour last Friday rendered the alley going to D’Talipapa almost impassable due to floodwaters. Boracay Island will be closed for six months starting on April 26 for a state-led rehabilitation effort. Among the goals is to clear up the drainage system of the island and prevent the flooding in many areas. CONTRIBUTED PHOTO

also ordered the closure of 51 establishments for various violations of the solid-waste management law and land-use regulations, but failed to name them. In other news briefings, the Task Force mentioned anywhere from 600 to 900 establishments that had supposedly violated the same laws on Boracay. Densing has said inspection

teams composed of representatives from the DILG, DENR, Bureau of Fire Protection and LGUs have been formed to check on all establishments on the island to see if they have relevant documents and permits to operate. (See, “Only 6 of 110 Boracay establishments have fire-safety permits, DILG says,” in the BusinessMirror, April 23, 2018.)

“Of the numbers in the first quarter, what is promising is the growth of manufacturing. In the first two months, it posted very high growth,” Edillon said. “It’s really in anticipation of infrastructure buildup and, of course, higher demand for export products.” However, Edillon said slower exports growth could have dampened the country’s economic performance in the first quarter. PSA data showed that the country’s export earnings grew by 3.5 percent in January and contracted by 1.8 percent in February. Edillon noted this was the first time the Philippines recorded a contraction in export earnings in two years. While it is too early to say if this will be a trend moving forward, Edillon said the decline in export earnings in February was due to the decline in coconut oil, pineapple and garment exports. PSA data showed that, in February, coconutoil exports declined 56.5 percent; canned pineapple, 35.6 percent; pineapple juice, 100 percent; pineapple concentrates, 43.1 percent; and garments, 32.8 percent. Edillon said the decline in coconut-oil exports may have been because of the “resurgence” of palm oil in the market. It also does not help that the price of coconut oil is double that of palm oil. Based on the World Bank’s Commodities Price Data, coconut-oil prices averaged $1,258 per metric ton, while palm oil averaged $674 per MT. In terms of the export of pineapples,

Continued from A1

Edillon said the decline may be supply-related, since most of the country’s pineapples come from Mindanao. For garments, Edillon said the country may have temporarily suffered from the expiration of the Generalized System of Preferences of the United States last year. The US Consolidated Appropriations Act, which extended the GSP of the Philippines, was signed only last month. Edillon said that, through the US GSP, the country exports baby and children’s clothes to establishments like K-Mart and Target. She said many of these factories are based in Taytay, Rizal. “Factories stopped production because they thought the US GSP would end in December of last year,” she said. Contrary to what some experts said, Pernia said inflation will not have a huge impact on GDP, even with the Tax Reform for Acceleration and Inclusion law in place. He said the finance department estimated that the TRAIN law will only have an impact of 0.4 percent, which is “negligible.” Pernia stressed that should there be increases in inflation, this will be caused mainly by higher oil prices; seasonal factors, especially when it comes to food items; and speculative factors. “Other speculative factors would be merchants who are just raising prices because they’re able to point to the TRAIN and oil prices and the depreciation as the cause. So I think (the law’s impact) has been exaggerated,” Pernia said.

34 tech companies sign ‘Cybersecurity Tech Accord’ Continued from A1

others. Notably missing from the list of signatories is Google, which is currently facing an internal revolt over their collaboration with the US Department of Defense on the use of AI to analyze drone footage. Likewise, Apple and Amazon are also conspicuously missing from the list. T he a c c ord , av a i l a bl e at www.cybertechaccord.org/accord/, has four key components: ■ We will protect all of our users and customers everywhere. ■ We will oppose cyber attacks on innocent citizens and enterprises from anywhere. ■ We will help empower users, customers and developers to strengthen

cybersecurity protection ■ We will partner with each other and with like-minded groups to enhance cybersecurity. According to a report in The New York Times, the accord was spearheaded by Microsoft President and Chief Legal Officer Brad Smith. For years, Smith has been calling for a “digital Geneva Convention” to mirror the rules of engagement in technology, in the same way that the Geneva Convention sets standards for conduct in war. In a blog post about the accord, Smith stated that “the success of this alliance is not just about signing a pledge, it’s about execution. That’s why today is just an initial step, and tomorrow

we start the important work of growing our alliance and taking effective action together.” Facebook’s involvement in the accord rings hollow. The socialmedia giant is presently embroiled in a scandal involving Cambridge Analytica and related organizations harvesting user data en masse and using it for psychologically tailored political advertising. To that end, a former employee indicated in a testimony to a UK Parliamentary committee that the data collection “far exceeds the previously stated figure of 87 million users.” Facebook’s view of civic responsibility appears nearsighted, as the company has been found to have a “two-tiered” pri-

vacy system that favors Facebook executives, leading ZDNet’s Zack Whittaker to declare, “On Facebook, Zuckerberg gets privacy and you get nothing.” The timing of the accord is important, as it comes just as new life has been breathed into the odyssey of government agencies around the world demanding backdoors into encryption. We also have to bear in mind that the implementation of the Philippine Data Privacy Act is in full swing, and that on May 25, the European Union’s General Data Protection Regulation will take effect, ushering in the most consequential changes to European Union data-protection law in

more than two decades, replacing the EU Data Protection Directive 95/46/EC. The GDPR applies to any company with operations in the European Union but can also apply to non-EU companies that offer goods or services to European Union residents or monitor the behavior of EU residents, such as their online activities. These protected European Union residents are called “Data Subjects” in the GDPR. The GDPR applies not only to companies collecting the personal data of EU residents (“Data Controllers”) but also any company processing that data (“Data Processors”). Let me conclude by saying that, in recent years, cybersecurity has

risen ever higher up the corporate agenda for the very good reason that incidents and breaches result in significant costs—money or intellectual property stolen, valuable data compromised, business disruption, impaired brand reputation, reduced revenue and/or lowered share price. More important, the need for cyber-risk assessment and coherent cybersecurity policies in companies is obvious. Companies may want to look at gap analysis, vulnerability tests or penetrations tests—to effectively reduce their cybersecurity exposure. For comments or assistance, contact me at Schumacher@eitsc.com.