Businessmirror august 02, 2016

“He is a black soul. And this is totally unfit for the leadership of this beautiful country.”—Khizr Khan, father of Humayun Khan, a decorated US Army captain who was killed in Iraq in 2004, to CNN about Donald Trump. The Republican presidential nominee criticized Khan’s parents after remarks Khizr Khan made at the Democratic National Convention last week. AP

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“I was kind of dreading the upcoming season, knowing I’d go deeper in the hole.”—Tim Richmeier, a single father in Phoenix, who found the cost overwhelming as his 15-year-old son tried out for a travel hockey team. A survey by TD Ameritrade of 1,000 parents, whose children are involved in such elite endeavors—and in some cases Olympic aspirations—finds most pay between $100 and $499 a month. AP

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‘Govt should avoid blanket policies on labor, mining’ ₧40B By David Cagahastian @davecaga, Cai U. Ordinario @c_pillas29 & Catherine N. Pillas

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he Duterte administration should allow businesses more flexibility when it comes to their manpower requirements, taking into account the nuances of certain industries, the Philippine Chamber of Commerce and Industry (PCCI) said on Monday.

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AMERICA

DonalD Trump, the presumptive republican presidential nominee, delivers an address at the Trump SoHo Hotel in new York, June 22, 2016. Damon Winter/the neW York times

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ROM “Morning in America” to “Yes, We Can,” presidential elections in the United States long have seemed like contests in optimism: The candidate with the most upbeat message usually wins. In 2016 that seems to have been turned on its head: America is shrouded in a most unAmerican pessimism. The gloom touches race relations, which—after the shooting of white police officers by a black sniper in Dallas, and after Black Lives Matter protests against police violence were followed by arrests in several cities—seem to get ever worse. It also hangs over the economy. Politicians of the left and right argue that American capitalism fails ordinary people because it has been rigged by a cabal of self-serving elitists. The mood is one of anger and frustration. America has problems, but this pic-

ture is a caricature of a country that, by most measures, is more prosperous, more peaceful and less racist than ever before. The real threat is from the man who has done the most to stoke national rage. Win or lose in November, the Republican Donald Trump has the power to reshape America so that it becomes more like the dysfunctional and declining place he claims it to be. The dissonance between gloomy rhetoric and recent performance is greatest on the economy. America’s re-

The PCCI made this pronouncement after President Duterte again warned that he will shut down businesses if they will continue to practice contractualization, or “endo.” PCCI President George T. Barcelon said they are willing to dialogue See “Blanket policies,” A2

Why railways are being railroaded worldwide

BusinessSense THEof DIVIDING

HillarY ClinTon speaks about the economy and Donald Trump during an event at the Fort Hayes metropolitan Education Center in Columbus, ohio, June 21, 2016. richarD PerrY/the neW York times covery is now the fourth-longest on record, the stock market is at an all-time high, unemployment is below 5 percent and real median wages at last are starting to rise. There are genuine problems, particularly high inequality and the plight of low-skilled workers left behind by globalization, but these have festered for years. They cannot explain the sudden fury in American politics. On race relations there has, in fact, been huge progress. As recently as 1995, only half of Americans told pollsters that they approved of mixed-race marriages. Now the figure is nearly 90 percent. More than one in 10 of all marriages are between people who belong to different ethnic groups. The movement of non-whites to the suburbs has thrown together white, black, Hispanic and Asian-Americans, and generally they’re getting along fine. Despite all this, however, many Americans are increasingly pessimistic about race. Since 2008, when Barack Obama was elected president, the share of Americans who say that relations between blacks and whites are good has fallen from

68 percent to 47 percent. The election of a black president, which seemed the ultimate proof of racial progress, was followed by a rising belief that race relations actually are getting worse. What explains the divergence between America’s healthy vital signs and the perception, put with characteristic pithiness by Trump, that the country is “going down fast?” Future historians will note that since about 2011 white and non-white babies have been born in roughly equal numbers, with the aging white population on course to become a minority around 2045. This was always going to be a jarring change for a country in which whites of European descent made up between 80 percent and 90 percent of the population for about 200 years, from the presidency of George Washington to that of Ronald Reagan. Demographic insecurity is reinforced by divisive partisan forces. The two parties have concluded that there is little overlap between the groups likely to vote for them, and therefore that success lies in making those on their own side as furious as possible, so that they

turn out in higher numbers than the opposition. Add a candidate, Trump, whose narcissistic bullying has prodded every sore point and amplified every angry sentiment, and you have a country that, despite its strengths, is at risk of a severe, self-inflicted wound. The damage would be greatest were he to win the presidency. His threats to tear up trade agreements and force American companies to bring jobs back home might prove empty. He might not be able to build his wall on the border with Mexico or deport the 11 million foreigners currently in the United States who have no legal right to be there. Even if he failed to keep these campaign promises, however, by making them he already has damaged America’s reputation in the world. Breaking them would make his supporters angrier still. The most worrying aspect of a Trump presidency, though, is that a person with his poor self-control and flawed temperament would have to make snap decisions on national security—with the world’s most powerful army, navy and air force at his command and nu-

clear-launch codes at his disposal. Betting markets put the chance of a Trump victory at around three in 10—similar to the odds they gave for Britain voting to leave the European Union. Less obvious, but more likely, is the damage Trump will do even if he loses. He already has broken the bounds of permissible political discourse with his remarks about Mexicans, Muslims, women, dictators and his political rivals. It may be impossible to put them back in place once he is gone. When contemplating a protest vote in favor of tearing up the system, which is what Trump’s candidacy has come to represent, some voters may ask themselves what they have to lose. That, after all, is the logic that drove many Britons to vote for Brexit on June 23. However, America in 2016 is peaceful, prosperous and, despite recent news, more racially harmonious than at any point in its history. So the answer is: an awful lot.

Right time for a second look at agriculture The Entrepreneur

WALKER WINS A MARATHON AT THE PGA CHAMPIONSHIP

A prototype Hybrid Road Train with coach and chassis locally fabricated runs on diesel and electricity—it uses one unit of 300-kVA generator set and 260 12V DC40aH lead acid batteries. Each coach can accommodate 60 passengers and is expected to be a traffic-solving transport innovation. NONIE REYES By Michael Makabenta Alunan Special to the BusinessMireror

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Second of three parts

LTHOUGH the futuristic modern magnetic levitation (Maglev) railway technology ushers in a promising future for long-distance and cross-country travel that will be faster than airplanes, railway

PESO exchange rates n US 47.0900

travel today is now being railroaded by roadtrack-based buses, which are now much cheaper and more efficient. In fact, over 136 cities worldwide have dumped their Metro Rail Transit (MRT) or Light Rail Transit (LRT) plans and have adopted instead an original Filipino innovation of Francis R. Yuseco Jr., which has been popularized glob-

ally as Bus Rapid Transit (BRT) that should have been phrased more grammatically as Rapid Bus Transit (RBT).

What’s the buzz?

IT’S a bus. Xiamen, China, for instance, even converted its elevated LRT infrastructure into an RBT facility. Continued on A2

Manny B. Villar

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he Philippines, like every developing country, strives to develop industries to increase government revenues and family incomes, with the ultimate goal of providing prosperity for all citizens.

Industries, however, comprise only one of three major sectors of the economy. Promoting industrialization cannot be at the expense of the two other major sectors, namely, services and agriculture. Continued on A10

Pacquiao can still settle tax case via ₧1-B deal

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© 2016 Economist Newspaper Ltd., London (July 16). All rights reserved. Reprinted with permission.

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The revenues earned by the government from mining firms every year

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“Seeing that level of human pathogenic virus is pretty much unheard of in surface waters in the US. You would never, ever see these levels because we treat our wastewater.”—Dr. Valerie Harwood, chairman of the Department of Integrative Biology at the University of South Florida, after an Associated Press study found the waterways of Rio de Janeiro are as filthy as ever, just days before the Summer Games. AP

he Bureau of Internal Revenue (BIR) has come up with a figure for Sen. Emmanuel D. Pacquiao to think about—P1 billion in settlement if he chooses to have a compromise deal for his P2.26-billion tax-deficiency collection case now pending with the Court of Tax Appeals (CTA). BIR Deputy Commissioner for Legal Affairs Clint Aranas told the BusinessMirror that the BIR’s current policy in pending tax-evasion and collection cases is to continue to prosecute the offenders and go after their tax liabilities. But Aranas said those that can still be settled through a compromise deal may be pursued in such manner, subject to the procedures in the Tax Code, since it is easier to collect the tax deficiencies through this process. “We will not relent on tax-evasion and collection cases which are pending,” Aranas said. “But for those cases which can be subject to a compromise, then we’re open to that. If they’re going to pay us P1 billion, then we’ll accept that. It will all be aboveboard, and the government will give them a receipt [for the payment],” he added, when asked whether the spouses Pacquiao have sought to settle their pending tax-deficiency case.

On Monday night Pacquiao, who is now a member of the ruling party PDP-Laban, was scheduled to meet President Duterte in Malacañang, although the agenda of the meeting was not disclosed. Aranas said a taxpayer facing a collection case filed by the BIR may file an application for a compromise on his alleged tax deficiency, subject to approval by the evaluation board composed of the commissioner of the BIR and the four deputy commissioners, if the basic tax deficiency involved exceeds P1 million. Aranas said Pacquiao’s tax-collection case still falls within the power of the BIR commissioner to compromise. Under Section 204 of the National Internal Revenue Code (NIRC), the BIR commissioner may compromise the payment of any internal revenue tax when: “a reasonable doubt as to the validity of the claim against the taxpayer exists; or the financial position of the taxpayer demonstrates a clear inability to pay the assessed tax.” Pacquiao would fall within the first category of cases which can be compromised, wherein the compromise payment will have to be at least 40 percent of the alleged basic tax deficiency of P2.26 billion.

n japan 0.4603 n UK 62.3613 n HK 6.0707 n CHINA 7.0918 n singapore 35.1418 n australia 35.7366 n EU 52.6325 n SAUDI arabia 12.5566

David Cagahastian Source: BSP (1 August 2016 )

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Why railways are being railroaded worldwide Continued from A1

The railways were replaced by cheaper road tracks, while the costly train coaches changed with longer regular buses. And depending on demand, additional buses or even double-decked buses or “articulated or elongated buses, can be added any time. There is also no need to build costly elevated LRT/MRT infrastructure as all an RBT system requires is an “exclusive or designated road track.” For slow-moving city driving, the RBT buses will have more standing room, and a few seats for the elderly, pregnant and the disabled, thus carry more passengers, say, 200, instead of the current 50 to 60 seated passengers, at five seats to a row. The main objective is to increase riding capacity and move more passengers as fast as possible, thus avoiding traffic buildup. Loading and unloading can be done in the middle of the road, like in Columbia, US, or along the usual right side of a road. Railways cost P264 million as against P26 million per kilometer for RBTs. Media reports declared National Economic

Blanket policies. . .

Development Authority Director General Ernesto M. Pernia announcing the “bidding out of the new PNR [Philippine National Railways] South Line, a publicprivate partnership [PPP] project costing P170.7 billion, consisting of an 80-kilometer per hour commuter railway between Tutuban, Manila, and Calamba, Laguna, and a long-haul railway between Tutuban and Legaspi, Albay, with extension plans to Matnog, Sorsogon.” This budget translates to over P264.24 million per kilometer based on the current driving distance of 646 kilometers from Manila to Matnog. The project can be completed in five years and even beyond President Duterte’s term, if implemented by next year, at the earliest. This cost estimate is understated as railways can take shorter straight lines, while our computations are based on winding driving distance. In contrast, Yuseco’s system costs only P26 per kilometer, which already includes a contingency of P4.8 million per kilometer, all of which can be constructed and finished in only six to eight months, or even one year allowing for delays. But this is still within Mr. Duterte’s first year.

Continued from A1

with the Department of Labor and Employment (DOLE), but the government should avoid blanket policies related to “endo.” “Remember that there is really cylical employment in some industries. [Ending contractualization] can’t apply to all sectors,” Barcelon said. “[My business before], for example, has to hire more employees toward the end of the year, as we have to deliver goods to North America by summer the following year. But business slows by the first or second quarter,” he added. While seasonal employment is different from “endo,” or the practice of giving a worker a five-month contract, Barcelon said the government’s policies on this should be “clear.” He warned that the growth of micro, small and medium enterprises, which usually resort to hiring workers on a short-term basis, could be hampered if the government would be “too stringent” on its labor policies. Barcelon said the government and the private sector should “work closely” to

ensure that the Duterte administration’s labor policies would not lead to the loss of jobs. “Contractualization is not just a practice in the private sector. That’s done by the government, as well, so we’d like to coordinate and have a dialogue with the Dole,” he said. Dr. Aniceto C. Orbeta Jr., research fellow of the Philippine Institute for Development Studies, said contractualization “is not that simple.” Orbeta said the government must carefully study the reasons why firms resort to contractualization. These reasons are varied, such as the nature of their business or the level of trust accorded to employees. He said some businesses, such as construction firms, would often veer away from hiring long-term employees because they are engaged in seasonal work, adding that buildings “do not take forever to construct.” “For some jobs, it requires firms to know the workers before they will commit to them. You don’t want to trust your whole

More bonuses in package

AND there are more bonuses packed into the Yuseco cost package of P26 per kilometer for a total of P70 billion. This budget even includes a road track all the way to La Union in the north, for a total of 1,079 kilometers. It also includes road-track construction of the same kilometer length for the Visayas and Mindanao; 300 articulated buses at 100 each for Luzon, the Visayas and Mindanao; 300 agri-refrigerated vans and 300 smart cargo trucks for all three islands; plus additional rolling stocks to be farmed out to other groups; depots; and a central command post. Effectively, Yuseco’s Intel-Track can be built at only 2 percent of railway costs, all built within one year, and completely subsidy-free. Moreover, the bodies of the articulated buses can all be built locally, thereby generating thousands of jobs and contributing to more inclusive growth, Yuseco said. In contrast, all the moving spare parts of a train system, numbering about 2,000 are all imported, thus causing a drain in foreignexchange reserves. household to someone who is not trustworthy. It requires as much trust or as much skill. We don’t presume to know [all the reasons],” Orbeta said. Since companies do not really declare their hiring strategies, Orbeta said the government may find it hard to pinpoint which businesses actually resort to contractualization. What is needed, he said, is to give firms and employees “flexibilities.” “If you ban contractualization, what happens to those jobs? How can you operate? Forcing companies to hire permanent employees right away may be too expensive for them,” Orbeta said.

‘Toothless’ memo

Last week, Labor Secretary Silvestre H. Bello III issued a memorandum reiterating the prohibition against labor-only contracting. However, Bello’s Labor Advisory 10 merely reiterated the current laws, which on paper prohibit labor-only contracting, but in practice still allows some employers to skirt the constitutional right of workers to security of tenure.

Follow the trend, don’t take the train?

THERE’S a widespread perception that because railways have the highest passenger load capacity and mass transit is the solution to congestion, then we must follow the trend and take the train. But with the influx of cars a century ago, which offered door-to-door convenience, power, speed and individual mobility at any moment, many railway programs were figuratively railroaded in favor of the Detroit model of development, and translated locally the past four decades to five decades as the Toyota model of development of building more roads to sell more cars. Right or wrong, this perception cannot be ignored. Unfortunately, as environmentalist lawyer Antonio A. Oposa Jr. would say, “in our desire to achieve individual mobility, we attained collective immobility,” which is the massive traffic gridlock. He also recommends mass transit so we can have more road-sharing space for pedestrians, bikers and green landscapes. However, with Yuseco’s idea, mass transit need not necessarily be limited to railway trains. In fact, Yuseco’s RBT is now the trend, This is because under the current laws against labor-only contracting, a contractor or subcontractor may still engage workers who will work for another corporation for as long as the contractor or subcontractor would have the minimum P3 million in substantial capital or investment in the form of tools, machineries, work premises and other assets. The workers may attain regular status with respect to the contractor or subcontractor only, but not with respect to the corporation where they are actually performing the work.

Repeal or amend

According to the acting dean of the University of the Philippines’s School of Labor and Industrial Relations, the current laws still allow for contractualization of workers by providing for a process by which contractors or subcontractors may provide workers to another entity without being held liable for labor-only contracting. Prof. Ma. Catalina M. Tolentino said unless Department Order 18-A is repealed or amended to disallow the arrangement

so there is no need to follow the train.

Dumping ground of old technology

AS the old train systems are being edged out in favor of RBTs, it is expected that railway manufacturers will not just give up without a fight. By hook or by crook, or through fat incentives, they will find ways to dump their old technologies in markets with political leaders who are more submissive and easily influenced. On a huge P170-billion project for the PNR South line alone, even the usual 5-percent broker’s commission is still a tempting whopping P8.5 billion. While China is now developing and shifting to Maglev trains for long distances and RBTs for urban centers, it is trying to export its old MRT trains. Singapore sent back the same to China for their many structural, mechanical and electrical defects. If we still have to go MRT, why import, if the Department of Science and Technology (DOST) has been able to develop its own version. But in the end, it still boils down to economics, thus making Yuseco’s Intel-Track offer, still the best alternative. wherein there is a middleman between the worker and a company, contractualization cannot be eradicated. In effect, allowing contractors and subcontractors to operate still defeats the rationale of the laws to provide for a right of security of tenure of workers with respect to the corporation where they are actually rendering the service, and not merely with respect to the contractors or subcontractors. Thus, only the blatant violations of the labor laws are actually punished by the government, such as the so-called “5-5-5” arrangements wherein the same workers are hired in cycles of five-month fixed-term employment periods which are particularly designed to prevent them from attaining regular status.

Workers elated

According to the Workers Assistance Center Inc. (WAC), a labor group supporting the establishment of a union in the Cavite-based C & F Manufacturing Philippines Corp., the threat from Mr. Duterte is a “welcome” development. “This is welcome news and a great relief especially for agency-supplied contractual workers who’ve been working in a company for years already without being considered as a regular worker of a company,” WAC International Relations Officer Cecilia V. Tuico said. “Thank God for our President who knows how to walk the talk. But more than closing down these companies and entities, we’re looking forward for the regularization of these affected workers in the companies where they are working for,” Tuico added. WAC had brought to the DOLE’s attention the allegations of union busting by C& F Manufacturing, which remains pending at the department. On Monday Mr. Duterte reiterated his policy against contractualization and warned corporations to follow the labor laws and not wait for any inspection which will only result in the closure of their factories. “Don’t wait for me to find out, because I will be unforgiving. You will not only lose your money, you will lose your pants. I will have no tolerance for you on this. Stop that; pay them the correct salaries. Stop contractualization. It will not do good to our country,” Mr. Duterte said. “If I find out, I will just simply close your plant and I can always find a thousand reasons to do it, believe me,” he added. Mr. Duterte also reiterated his policy against illegal mining and warned mining companies not to use publicity against Environment Secretary Regina Paz L. Lopez to undermine her efforts against illegal mining operations. He said the government could do away with the P40 billion in revenues, which they remit to the government. “I can do away with the P40 billion. You obey or we will survive as a nation without you. You try to castigate Gina Lopez for being strict and yet, you destroy the land, destroy the soil, then you’re going to get rich out of it,” Mr. Duterte said. “Those oligarchs who have foreign partners, you get rich at the expense of our native land. I will not allow it. I can forego the P40 billion I collect from you guys and the Filipinos will survive without you. Either you follow strictly government standards or you close up,” he added.

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Experts: Duterte’s popularity can improve tax compliance, but reforms more crucial

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By Cai U. Ordinario @cuo_bm

f the Duterte administration wants to improve tax collection, local economists said it would take more than just the President’s popularity to encourage Filipinos to pay their dues. Internal Revenue Commissioner Caesar R. Dulay earlier told the BusinessMirror that the President’s popularity can be used to encourage taxpayers to voluntarily file their taxes. However, economists, l i ke Ateneo de Manila Eagle Watch senior fellow Dr. Alvin Ang, believe this is not enough, since taxes are “emotional ” for Filipinos and the process involved is very complicated. “Tax is an emotional issue to people as it touches on income. It’s better to fix the agency’s processes and simplify them,” Ang said. “Not many want to pay their taxes, but if the BIR [Bureau of Internal Revenue] simplifies their processes, maybe more will be encouraged. Filipinos who need to pay taxes are forced to pay, but they encounter difficulties in paying, so they resort to illegal means,” he explained. Ang said the process of paying taxes should be simple enough that even sari-sari store owners (micro retailers) who want to pay taxes can do so without encountering difficulties. Simplifying processes can also help improve tax effort, which, Ang said, is currently pegged at around 15 percent. He also estimates that less than 40 percent of those working and earning incomes are paying taxes. He added that improving the

tax effort should, in fact, be the focus of the administration, especially since the Duterte administration wants to cut tax rates. University of Asia and the Pacific School of Economics Dean Cid Terosa added that tax-collection efficiency and tax-monitoring efficiency should be given focus. Currently, Ang said the BIR does not even have sufficient data, such as those needed to determine how much tax is bei ng generated f rom work i ng Filipinos per capita. This is part of tax-monitoring efforts that need to be improved. “I believe President Duterte’s popularity can provide momentum or inertia, but the task of raising tax revenues will require more than that. I believe that raising taxcollection efficiency and taxmonitoring effectivity should be pursued vigorously,” he added. Terosa also said it would also do well to focus on improving the tax collection among high- and middle-income Filipinos. “I think the focus should be on the high- and middle-income c l a s s e s. O u r m id d le - i ncome class isn’t big enough to shoulder the burden of financing government,” he added. In April the World Bank said the next administration needs to overhaul the tax system to plug the country’s inclusive growth investment deficit of P900 billion.

Internal Revenue Commissioner Caesar R. Dulay (left) joins Senate President Aquilino Pimentel Jr. (center) and Finance Secretary Carlos G. Dominguez III during the 112th Bureau of Internal Revenue Anniversary celebration held on Monday at the BIR Compound in Diliman, Quezon City. NONOY LACZA

In a report, the World Bank said the Philippines needs to increase its investment in the infrastructure and social services sectors to 6.8 percent of GDP. The government, the World Bank said, must also index tax rates and valuations to inflation, particularly the petroleum excise taxes and property valuations. In a recent forum, experts from the Philippine Institute of the Development Studies (PIDS), the Department of Finance and

Ta x Management Association of the Philippines agree that the country’s tax system needs to change. T he cou nt r y ’s persona l-income t a x (PI T ), spec if ic a l ly, h a s not been upd ated si nce t he 1997. T h is has resu lted in what is ca l led “ brac ket creep,” where low-i ncome t a x payers “ hu r t more” t ha n t heir h ighincome cou nter pa r ts. Bracket creep, PIDS senior research fellow Rosario G. Manasan

DOT moves to professionalize surfing industry

explained, has occurred because of the “non-indexation” to inflation of PIT brackets. This means that

I believe President Duterte’s popularity can provide momentum or inertia, but the task of raising tax revenues will require more than that.”—Terosa

Saudi’s lower oil price to Asia most in 10 months in sign of glut

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surfing in Mati Photos by DOT By Ma. Stella F. Arnaldo Special to the BusinessMirror

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HE Ph i l ippi nes is fa st becoming a surfer’s paradise, with many areas now taking advantage of increased demand from local and foreign tourists who want to ride the country’s waves. As such, the Department of Tourism (DOT) is now intent on developing surfing as a major tourism product by accrediting resorts and surf camps that provide surfing lessons, and professionalizing surfing instruction in the country, DOT Director for Tourism Standards Maria Rica Bueno said. In a news statement, Bueno said resorts, surf camps or other facilities that provide surfing lessons to clients will only be accredited by the DOT if they “retain certified surfing instructors

Surfing Instructors Certification Course DOT

to teach or supervise the teaching of their students.” She added that these establishments will also be required to have “the essential teaching equipment and gear, such as soft training surfboards and rash guards; adequate spaces for class lessons, lockers, toilets and showers.” She, likewise, stressed the importance of designating emergency rescue and crisis-response teams in these establishments, with first-aid kits and communications equipment, so they can handle urgent situations. Bueno said the DOT has drawn up a “national criteria for the certification and classification of surf training facilities,” and will be refined and finalized after the ongoing public consultations have been completed. “Another vital component of this product-development program is the upgrading of local

coaches to bring them to the level of internationally certified professional surfing instructors and place them at par with the world’s best surfing coaches, and increasing the number to retain certified instructors to teach or supervise the teaching of their students,” she underscored. Thus, all instructors have to undergo an intensive Surfing Instructors Certification Course to be certified. For this project, the DOT has partnered with Australia’s Academy of Surfing Instructors (ASI) and its local chapter, the Academy of Surfing Instructors Philippines. ASI is the world’s leading professional education, certification and accreditation entity for the surfing industry. Asip’s role is to execute all ASI functions, such as conducting instructor certification courses in the Philippines under strict ASI supervision. The DOT director said some 50

surfing instructors in the country have already received their ASI Level 1 certification with 15 more from Mati, Davao Oriental, expected to join their ranks. At least two more accreditation and certification runs are scheduled for this year: one in Baler, Aurora, and another in Zambales, which are expected to produce 50 more ASI Level 1-certified instructors. “In professionalizing the local surf industry, the DOT hopes to provide more job opportunities to the coastal and surfing communities,” Bueno said. Aside from Mati, Baler and Zambales, other surf spots in the Philippines include La Union, Pagudpud in Ilocos Norte, Siargao and Samar. International surfing competitions, such as the Siargao Cloud 9 Surfing Cup, have also been held annually, attracting thousands of foreign and local surfers to join the contest.

the coverage of each tax bracket does not take into consideration the current value of the peso.

audi Aramco, the world’s largest oil exporter, lowered the pricing terms for Arab Light sold to Asia by the most in 10 months, as refineries grapple with falling margins and oversupply. State-owned Saudi Arabian Oil Co. said on Sunday it will sell cargoes of Arab Light in September at $1.10 a barrel below Asia’s regional benchmark. That is a pricing cut of $1.30 from August, the biggest drop since November, according to data compiled by Bloomberg. The company was expected to lower the pricing by $1 a barrel, according to the median estimate in a Bloomberg survey of eight refiners and traders. Aramco’s pricing cut is part of a “market share battle” for Asian customers, particularly with Organization of Petroleum Exporting Countries (Opec) rival Iran, which is ramping up crude exports after sanctions eased in January, John Kilduff, partner at Again Capital Llc. in New York, said by phone on Sunday. Refineries in China “bought a lot of extra crude earlier this year when prices were lower, so they’re going to have to work that off,” he said. Ref iner ies f rom Singapore to China and South Korea are cutting operating rates amid a slump in margins and rising supply from state-owned giants, such as China Petroleum and Chemical Corp. In China independent refiners are operating at less than half their capacity at a six-month low, according to data compiled from Oilchem.net.

Oil prices

Brent crude has climbed 14 percent since the start of the year on supply disruptions from Nigeria to Canada. Prices are still 20 percent lower in the past year. Saudi Arabia led the November 2014 decision by the Opec to maintain production levels to drive out higher-cost producers. All other official selling prices for Asian clients were reduced. The biggest cut was by $1.60 for Extra Light crude. Pricing for Light and Extra Light grades for US clients was cut by 20 cents and 40 cents, respectively, while the Medium and Heavy grades were unchanged. Aramco raised the pricing of all grades except Extra Light to northwest Europe and the Mediterranean. Money managers have never been more certain that oil prices will drop. They increased bets on falling crude by the most ever as stockpiles climbed to the highest seasonal levels in at least two decades, nudging prices toward a bear market. The excess supply hammered the second-quarter earnings of Exxon Mobil Corp. and Chevron Corp. Inventories are near the 97-year high reached in April as oil drillers boosted rigs for a fifth consecutive week. “The rise in supplies will add more downward pressure,” said Michael Corcelli, chief investment officer at Alexander Alternative Capital Llc., a Miami-based hedge fund. “It will be a long time before we can drain the excess.”

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Duterte asked: Review, not abolish, party-list system

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By Jovee Marie N. dela Cruz

@joveemarie

Fire Protection and Bureau of Jail Management and Penology.

ARTY-LIST lawmakers on Monday asked President Duterte to review the party-list system law, instead of calling for its abolition. Party-list Rep. Gary C. Alejano of Magdalo said the Durterte administration should initiate a review of the law to strengthen it. “It would be wise for the President to call for a review or an investigation on the Party-list System Law before having any pronouncement,” Alejano said. Alejano made a statement after Duterte’s pronouncement on Friday calling for the abolition of the Partylist System Act. Duterte has expressed his dissatisfaction with regard the implementation of Republic Act (RA) 7941, or The Party-List System Act. According to Duterte, he would support the abolition of the partylist system in the proposed Constitutional reforms. President Duterte stressed that the party-list system has been abused by the rich and the powerful. While admitting the RA 7941 is outdated, Alejano said he does not support the abolition of the partylist system, “I agree that the partylist law should be amended to weed wealthy opportunists out of the system.” Meanwhile, Alejano suggested studying, as part of the comprehensive review of RA 7941, the background of the different party-list groups that participated in the election, the personalities that represent these party-list organizations, as well as their performance in the previous congresses to ascertain that they have promoted the advocacies of their parties. For his part, Party-list Rep. Tom Villarin of Akbayan said “not all party-list groups are bad.” “The party-list system was instituted by framers of the 1987 Constitution to enhance proportional representation and uplift the plight of all Filipinos, including the underrepresented sectors,” the lawmaker said. Villarin said the government should instead address the systemic causes ingrained within traditional political culture that affect the legislature’s credibility in truly representing the people. “What the President should do is follow and implement the constitutional mandate of abolishing

Energy sector

political dynasties. Many of them are in fact now allied with him,” the lawmaker said.

46 party-list groups

AT least 46 old and new party-list groups have represented the marginalized or underrepresented sectors or organizations in the country in the 17th Congress. Under RA 7941, or the Party-list System Act, the party-list representatives shall constitute 20 percent of the total number of members of the House of Representatives. Representing prolife advocates in the 17th Congress are the Buhay, with two seats, and MATA or Ang Mata’y Alagaan, with one seat. In the last Congress the Buhay filed 37 bills focusing on senior citizens and an act repealing RA 10354, or the Responsible Parenthood, and Reproductive Health Act of 2012, while MATA has filed 12 bills. For teachers, there are ACT Teachers (two seats), Kalinga (one seat) and A Teacher (one seat) in the 17th Congress. During the 16th Congress, ACT Teachers filed a total of 38 principally authored bills, Kalinga field seven bills, while A Teacher filed 48 bills. Among these bills were An Act Increasing the Minimum Monthly Salaries for Public-school Teachers to P25,000 and Nonteaching Personnel to P15,000; An Act Increasing the Personnel Economic Relief Allowance Granted to Government Employees to P4,000; and An Act Providing for a Teaching-supplies Allowance for Public-school Teachers. At least seven groups would represent the farmers and agriculture sector in the next Congress, namely, Agri Party-list (two seats), Abono Party-list (two seats), Agap or Agricultural Sector Alliance of the Philippines (one seat), AAMBISOWA (one seat), Butil Party-list (one seat), Anakpawis (one seat) and Agbiag (one seat). In the 16th Congress, these partylist groups has filed a total of 209 bills concerning the farmers and agricultural sector. Among these measures were An Act Strengthening the National Food Authority; An Act to Institutionalize Micro-Credit Financing

for the Agricultural Sector; An Act to Create an Agriculture Scholarship Fund; An Act Creating an Agri-Pinoy Trading Center in Every Province; An Act Promoting Agri-Tourism by Identifying Areas that are Viable for Development; An Act Promoting the Scientific Propagation, Processing, Utilization and Development of Philippine Native Animals and Creating the Philippine Native Animal Development Center; and An Act Instituting Genuine Agrarian Reform in the Country. They were also included to the authors of the recently signed laws—the Customs Modernization and Tariff Act and the act extending the utilization period of the agricultural competitiveness enhancement fund.

Progressive groups

THERE are also groups and individuals belonging to different left and progressive traditions in the 17th Congress. Representing Filipino women is the Gabriela Women’s Party, which is set to occupy two seats in the next Congress. In the previous 16th Congress, Gabriela has filed a total of 63 bills, which most focused on divorce in the Philippines, legal separation, decriminalizing premature marriages and removing classification among legitimate, illegitimate and legitimated children. The Akbayan (one seat), which filed 70 bills, vowed to strengthen the right of citizens to information held

Prank, dropped calls swamp 911 By Rene Acosta @reneacostaBM

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RANKSTERS had a field day on Monday, hours after the emergency hotline 911 was activated. The Philippine National Police (PNP) received as of Monday morning more than 2,400 calls, many coming from pranksters. The hotline number, launched at 12:01 a.m., received more than 300 prank calls, prompting the PNP chief Director General Ronald de la Rosa to warn that the pranksters would be identified and arrested. “We are warning the prank callers and the would-be callers to refrain from making prank calls, the 911 system is currently tracking the prank callers and we will make sure that you will be unmasked and arrested,” de la Rosa said. As of 7 a.m., the Emergency Hotline 911 has already recorded a total of 2,475 calls with 75 legitimate handled calls, 1,119 dropped calls and 304 pranks calls. “I am also appealing to our people to refrain from making prank calls or

The 911 system is currently tracking the prank callers and we will make sure that you will be unmasked and arrested.”—de la Rosa

test calls to our 911 hotline because this will clog up the lines and prevent the people with real emergencies to reach us,” de la Rosa said. Among the calls that were responded to by joint PNP, Bureau of Fire Protection and Department of Health personnel were ambulance assistance, vehicular accidents, neighborhood trouble, drag racing, drinking in public places, harassments, drug pushing and rumbles. The police’s 18 regional offices, 85 provincial offices, 20 city offices, 117 city stations, 1,494 town stations and the five districts of Metro Manila were alerted to respond with their available resources. “Again, I am calling all chiefs of police all over the country to be alert and respond to the calls routed to you

by our 911 call center and to immediately provide police assistance to our people when needed,” de la Rosa said. He added the response time should be within five up to 10 minutes. “As much as possible, if the area where response is needed is just near a police station, it should only be three minutes,” de la Rosa said. In Metro Manila, he cited the examples of Marikina and Taguig, which have ready infrastructure for 911. “Hopefully, all cities and towns all over the Philippines will follow so that before the Duterte administration ends we will have a smooth and efficient 911,” de la Rosa added. Emergency Hotline 911, which adopted Davao’s Central 911, provides the citizens’ link to emergency resources on a 24-hour basis anywhere in the country.

I agree that the party-list law should be amended to weed wealthy opportunists out of the system.”—Alejano by the government and strengthen the commission on human rights, as well as the Party-list System Act. The Bayan Muna (one seat), meanwhile, vowed to push the bill prohibiting the establishment of political dynasties, bill lowering individual income-tax rates and measure increasing the pension under the Social Security System. In the recently concluded Congress, the group filed 170 bills. Also, the Kabataan Party-list (one seat) said it will refile the bill establishing magna carta for students. The youth group filed a total of 119 bill in the past three years. Groups fighting corruption and poverty are CIBAC or Citizens’ Battle Against Corruption (one seat), YACAP or Youth against Corruption and Poverty (one seat), Abang Lingkod (one seat) and Sagip Party-list (one seat). Among the bills filed by the said groups were An Act Regulating the Donation and Transplantation of Human Organs and Tissues from Living Donors; An Act Providing Penalties to Parents Acting Irresponsibly and for Other Purposes, and An Act Providing for a Magna

Carta of the Poor. Pushing for private and public employees’ rights are DIWA or Dignidad sa Bawat Manggagawa (one seat), Trade Union Congress of the Philippines (one seat). The two party-list groups vowed to refile the bills mandating the creation of a typhoon code of practice in every office and establishment where employees are required to report to a place of work, an act providing for benefits to families of employees who are missing and in danger of death, an act rationalizing government interventions in labor disputes, an act to enhance the regulation on employment of foreign national and transfer of technology and an act strengthening the workers’ right to strike, amending the Labor Code of the Philippines. The Magdalo Party-list (one seat), which represents public officials particularly, from military services, vowed to push the bill expanding and maximizing the scholarship grants extended to the family members of personnel of the Philippine National Police, Armed Forces of the Philippines, Bureau of

REPRESENTING the energy sector are Liquefied Petroleum Gas Marketers’ Association (LP-GMA) and 1-CARE or Consumer Alliance for Rural Energy. In the 16th Congress, the two groups filed a total of 32 principally authored bills, which include the bill establishing the regulatory framework for the safe operations of the LPG industry and an act creating the Mindanao Power Corp. Representing Bicolanos, the Ako Bicol party-list group obtained three seats in the present Congress. During the recently concluded 16th Congress, Ako Bicol has filed 22 principally authored bills, including an act providing grants to part time and independent students, an act granting public elementary and high-school teachers nonwage benefits in the form of free tertiary education in any state college or university for one dependent child and an act establishing the Filipino identification system. Occupying two seats for Mindanaoan is Anak Mindanao. In the past Congress the group has filed a total of 12 bills. Among these bills are an act prohibiting discrimination against persons on account of ethnic origin and or religious belief, an act declaring a national policy on peace zones and an act providing for the mandatory study of moro and indigenous peoples history, culture and identify in the curricula of all levels of schools in the country. Representing Visayan and indigenous people are the reelected An Waray party-list with one seat and ANAC-IP with one seat. For cooperatives, maritime and professional there are COOP-NATCCO (two seats), Angkla (one seat) and ABS or Arts Business and Science Professional (one seat), respectively.

New party-list groups

NEW groups joined the 17th Congress to represent their respective sector are athlete’s groups 1-Pacman (two seats) and PBA (two seats), Senior Citizens (two seats), Kabalikat ng Mamayan or Kabayan (two seats), Alliance of Organizations, Networks and Associations or Alona Party-list (one seat), ACTS-OFW (one seat) and Ang Kabuhayan (one seat). Also joining the present Congress are Bagong Henerasyon (one seat), AASENSO (one seat), Serbisyo ng Bayan Party-list (one seat) 1-Ang Edukasyon (one seat), Manila Teachers (one seat), Kusug Tausug (1 seat) and Aangat Tayo (one seat).

Duterte has no veto power over Con-ass on Charter changes By Butch Fernandez @butchfBM

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resident Duterte cannot wield his veto power over the Senate and the House of Representatives once it convenes as a constituent assembly (Con-ass) to approve Charter changes, including a shift to federalism, which will be submitted directly to the people for ratification in a national plebiscite, senators said on Monday. This, even as Senate President Pro Tempore Franklin M. Drilon also asserted only Congress has the “sole authority” to decide how existing provisions of the 1987 Constitution would be amended or revised. “The mode of amending the Constitution, whether by Con-ass or constitutional convention [Con-con], is the sole prerogative of Congress,” said Drilon, who chairs the Senate Committee on Constitutional Amendments and Revision of Codes and Laws. In a statement, the senator noted that unlike ordinary bills, a resolution calling for a review of the Constitution is not subject to the approval of the President. “A resolution calling for a Con-con or Con-ass does not need the approval of, and cannot be vetoed by, the President,” he added. The senator explained it will be the Filipino people who will ultimately decide whether they will ratify the amendments to

the Constitution. “The amendments to the Constitution are not approved and cannot be vetoed by the President, but is submitted directly to the people for approval or rejection in a plebiscite.” Drilon expects members of the Senate and the House to deliberate and decide the best mode to amend the Constitution, taking into consideration the views of all stakeholders, “including the President, and constitutional and legal experts.” Sen. Richard J. Gordon, in a separate interview, said Charter-change proponents must first determine if the exercise will involve amendment or revision of the existing Constitution crafted and adopted under the Corazon C. Aquino administration, following the 1986 People Power Revolt that toppled the Ferdinand Marcos dictatorship. Gordon also asserted the need to resolve whether the Senate and the House would be voting separately to adopt proposed amendments, as the law only required three-fourths vote, but did not specify how the 24 senators and 300 congressmen would vote on Charter changes. Senate Majority Leader Vicente C. Sotto III sees the issue as a deal breaker, but added: “Kung [two chambers] voting separately, that stands a chance.” Sen. Panfilo M. Lacson Sr., likewise, voiced “misgivings” over the move favoring Conass over a Con-con, whose delegates will be

chosen in a special election, which Palace officials thumbed down as “expensive,” citing estimates it would cost P5 billion to maintain a Con-con. “[I have] misgivings on Con-ass, simply because I don’t trust ass,” Lacson said. “Mas maganda ang Con-con, maski mas magastos nang kaunti,” he said, voicing concerns among some senators over “many intangibles in the Con-ass mode...baka in the long run mas magastos pa.” For instance, Lacson added: “baka mamaya may concessions na hihingin aside from the reality na alam naman natin baka pumasok ang selfish political interest ng ating mga mambabatas, naloko na ang ating constitutional amendment.” “Remember, we’re not only talking of amendment here. Kasama ang revision,” the senator pointed out. “When we say revision, ito ang pwede mo i-delete ang isang buong provision, palitan ng ibang provision. Kung amendment, pwedeng dagdagan dahil baka may kakulangan ang provision. Pero pwede i-revise din. So medyo delikado.” Drilon, however, assured that, as the sitting chairman of the Committee on Constitutional Amendments, he will “give the resolution to amend the Constitution the highest the priority.” The committee will take it up as soon as the organization of the Senate is finalized and completed, he added.

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Grass greener on other side of Mekong for top Thai fund manager

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aced with what he sees as a prolonged slowdown at home, Thai Fund Manager Atikrai Chatikavanij is embracing his favorite investment analogy, as he looks across the Mekong river to greener, but riskier, pastures. Atikrai is increasingly targeting Thailand’s poorer, but fast-growing, neighbors: Vietnam, Cambodia and Lao PDR. By doing so, he says he’s taking a page from renowned investor Ralph Wanger’s A Zebra in Lion Country. The lesson in that book, published in 1999, is that the animals travel in big herds and the grass in the middle of the pack is trampled down—so to find fresher feed they must move to the edge where they might also get eaten by a big cat. “In order to make exceptional gains, you must be prepared to stick your neck out and look for unusual opportunities,” Atikrai, whose younger brother Korn is a former Thai finance minister, said in an interview in his Bangkok office. “We love finding stocks that are underowned by institutions and underresearched. These businesses are also usually pioneers in their industries.” Set up with $3 million in 2005, Atikrai’s Ton Poh fund has swelled to $200 million, beating 99 percent of its peers over the last five years and doing seven times better than the SET Index. While his geographical focus is expanding, the 54-yearold won’t be changing his strategy of looking for listed firms with market values under $1 billion, where the founder still owns a big chunk. Thailand’s economy, which grew as fast as 7.8 percent as recently as 2010, is set to expand around 3 percent a year for the foreseeable future, said Atikrai. That compares with forecasts of 6.7-percent growth in Vietnam this year, 6.8 percent in Lao PDR, 7 percent in Cambodia and 8.4 percent in Myanmar, according to Asian Development Bank estimates. Known as Jeep by friends and colleagues after the vehicle his father Kraisri drove his pregnant mother to the hospital in when he had to rush back from the golf course, Atikrai’s family is part of the Bangkok elite. Kraisri was director general of the customs department and a founding board member of the Thai stock exchange, while his grandfather was police commissioner and a member of the royal privy council. After starting his career as a zinc trader, Atikrai worked with Korn, who was finance minister from 2008 to 2011 in Abhisit Vejjajiva’s administration, at JF Thanakom Securities Co., a joint venture with Jardine Fleming, running sales and trading. When JPMorgan Chase & Co. came along and bought the brothers’ stake, Korn used the money as a springboard into politics, while Atikrai set up the Ton Poh fund.

First investment

LPN Development Pcl. was his first investment. It pioneered low-cost condominiums right after the Asian financial crisis, Atikrai said. He said he bought the stock for around 2 baht a share in 2005 and sold a decade later for 10 times the price. PTG Energy Pcl. is a more recent purchase.

Chatikavanij

$200M

The fund being managed by Atikrai’s Ton Poh from only $3 million in 2005

The gas-station operator, which Ton Poh bought into early last year, had been overlooked by other investors as it wasn’t exciting enough, he said. “When we first met management, we were struck by how they could back up every single claims with numbers,” he said. “The glasssurface meeting table was strewn with numbers and projections. They had a very clear vision of where the business was going.” Atikrai made his first foray beyond Thailand last year, buying a 5-percent stake in Vietnam’s Cotec Construction Joint-Stock Co. He followed that up by taking a similar position in Superdong Fast Ferry Kien Giang Joint Stock Co. The companies’ share prices are up 45 percent and 50 percent, respectively, so far this year. Ton Poh exited a third Vietnamese company—Hoang Huy Investment Services SVC JSC—after just seven months last year due to a “serious disagreement” with management. Vietnam is one of the most exciting stories out there and it will do very well over the next 10 to 15 years, but it’s tougher picking winners than in Thailand, he said.

‘Most attractive’

Vietnam’s VN Index is up 12 percent in 2016, trailing a 19-percent surge in the SET Index that’s the best performance in Asia. It’s risen 65 percent over the last four years, compared with 26 percent for the Thai gauge. Vietnamese authorities are opening up to more foreign investment as they seek inclusion in emerging-market indexes. “The Vietnamese stock market is one of the most attractive on the globe right now,” said Thomas Hugger, CEO of Asia Frontier Capital Ltd. in Hong Kong. Opportunities are more limited in Lao PDR and Cambodia, with less than 10 listed companies to choose from, and Myanmar, where foreigners aren’t currently allowed to invest in shares, he said. To access growth in those markets, Ton Poh will buy into Thai companies that are active there, like it did with Group Lease Pcl., said Atikrai. “They transformed a run-of-themill motorcycle leasing company in Thailand into a digital financing company in Cambodia and Lao PDR,” he said. “And they also just got a license to operate in Indonesia. They took a risk and found fresh grass in new markets.” Atikrai stresses that Ton Poh isn’t abandoning Thailand but wants to use the country and its companies as a platform to access the Mekong nations. “Our neighbors are opening up and are trying to catch up with us,” he said. “It’s just a matter of time before the Thai experience is repeated elsewhere in the region.” Bloomberg News

Editor: Max V. de Leon • Tuesday, August 2, 2016 A5

Amnesty Intl warns Malaysian law gives govt ‘abusive powers’

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Malaysian security law that gives embattled Prime Minister Najib Razak sweeping emergency powers came into force on Monday, with Amnesty International warning it could be used to trample on human rights.

Under the National Security Council Act, a council led by Najib, who faces pressure to resign over a financial scandal, can declare a state of emergency in areas deemed to be under a security threat. Security forces can impose curfews and have wide powers of arrest, search and seizure without a warrant. The law is aimed at countering terrorism threats, but critics fear Najib will use it as a tool to hold on to power. Amnesty said the law “empowers the Malaysian authorities to trample over human rights and act with impunity.” “With this new law, the government now has spurned checks and assumed potentially abusive powers,” Josef Benedict, Amnesty’s deputy director for South East Asia and the Pacific, said in a statement. The human-rights group said Najib and his government were increasingly resorting to repressive laws in the name of protecting national security, “but in practice, imperil human rights.” The UN human-rights regional office last week also said it was “gravely concerned” that the law may encourage human-rights violations and lead to “unjust restrictions” on free speech and assembly. Najib has been dog ged for months by embezzlement investigations involving state investment fund 1Malaysia Development Bhd. (1MDB), which he founded in 2009. It is being investigated in several countries including the United States, Switzerland and Singapore. Last month the US Justice

With this new law, the government now has spurned checks and assumed potentially abusive powers.” —Amnesty International Department initiated action to seize $1.3 billion of assets that it said were part of a massive heist from 1MDB by people close to Najib. The fund was created to promote economic development projects. Instead, US prosecutors said fund officials diverted more than $3.5 billion through a web of shell companies and bank accounts abroad. The Justice Department complaint said more than $700 million of 1MDB money was transferred into the bank account of Najib, who is referred to as Malaysian Official 1 in the document, contradicting his claim the money was a donation from the Saudi royal family. The money taken from 1MDB was used to pay for luxury properties in New York and California, a $35-million jet, art by Vincent Van Gogh and Claude Monet and helped finance the Hollywood film, The Wolf of Wall Street, made by Red Granite Pictures headed by Najib’s stepson, according

Malaysian Prime Minister Najib Razak speaks at an Eid Al-Fitr open-house event in Kuala Lumpur, Malaysia. AP

to the DOJ complaint. The US forfeiture demand, the largest single action it’s taken, are by far the biggest threat to Najib’s credibility that could reinvigorate the opposition and ruling party members who are secretly opposed to him. He has pledged to cooperate in the investigations and denied any wrongdoing. He remains firmly in political control of the country, after replacing his critics in the ruling party and the government with men loyal to him. Najib has defended the new security law. He accused critics of

fear-mongering and said last week the terrorism threat was real and growing. Malaysian police have said a grenade blast at a bar last month that injured eight people was the first attack in the country by the Islamic State militant group. More than 160 people have been detained for suspected links to Islamic State over the past three years. “My government will never apologize for placing the safety and security of the Malaysian people first. These laws were necessary, and other countries have since followed our lead,” Najib said. AP

Plunging oil cost creates pain for Singapore banks

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he plunge in oil prices is catching up with Singapore’s three largest banks. Last week Swiber Holdings Ltd., a small Singapore company that provides construction services for international oil-and-gas projects, filed a petition to liquidate its operations, after facing payment demands from creditors at a time when its business was under pressure. DBS Group Holdings Ltd., one of Swiber’s largest lenders, said it only expects to recover about half of the S$700 million ($522 million) it loaned to the firm and its units. Swiber subsequently said it’s dropping the liquidation in favor of a restructure plan. DBS and Singapore’s two other large banks, Oversea-Chinese Banking Corp. (OCBC) and United Overseas Bank (UOB) Ltd., are exposed to the downturn in the energy sector as a result of their lending to local companies, which provide construction, shipping and maintenance services to the oil-and-gas industry. Many of those companies are suffering, as the plunge in crude prices since 2014 curtailed exploration and other activity by oil-and-gas producers. The financial health of the energy-services companies is the “key concern” for UOB over the next one or two years, CEO Wee Ee Cheong said at a media briefing on Thursday on the bank’s second-quarter results. The bank’s exposure to Swiber is “manageable,” Wee said, though he noted that the wider difficulties in the oil-and-gas services industry were a factor behind the 17-percent climb in UOB’s nonperforming assets for the second quarter.

Debt restructuring

Swiber said it will drop its liquidation application in a statement on Friday. Instead, the company plans to operate under a judicial management, which would allow it to continue operating under court supervision while it attempts to turn its business around. Some of its lenders had sought judicial management to recover more of their loans, according to people familiar with the talks who asked not to be identified because the discussions were private. “I presume it helps them buy time, but it’s uncertain how viable these oil-services companies are if oil prices remain low for an extended period of time,” said Alan Richardson, a Hong Kong-based fund manager at Samsung Asset Management, which owns DBS shares. “The indirect victims of these bankruptcies are the banks who are lending money to them.” Shares of DBS were little changed at S$15.40 as of 11:02 a.m. local time on Monday, paring this year’s loss to 7.7 percent. OCBC gained 0.8 percent and UOB rose 0.6 percent. Oil has slipped about 19 percent from its recent peak in early June, ending a recovery that saw prices almost double from a 12-year low in February. Prices are falling again as US producers increased drilling amid a glut of crude and fuel supplies that are at the highest seasonal level in at least two decades.

Moody’s downgrade

The recent recovery in oil prices from their lows has provided only modest

relief, OCBC CEO Samuel Tsien indicated on Thursday in a media briefing on the bank’s second-quarter results, which included a 61-percent jump in nonperforming assets. “We cannot say it’s going to be the bottom yet. We may have two more quarters to go,” Tsien said in response to a question on the rise in delinquent energy-sector loans. Oil-and gas-related loans made up 5.3 percent of gross lending by Singapore banks as of December, a higher proportion than at banks in Korea, Thailand and the European Union, according to Moody’s Investors Service. The deteriorating quality of the Singapore banks’ loans to energy firms, as well as weaker regional economies, prompted Moody’s to downgrade its outlook for the three largest lenders on June 30. UOB and OCBC’s exposures to offshore marine services companies amounted to 13 percent to 18 percent of their common equity Tier 1 capital and loan-loss reserves at the end of June, Moody’s said in a statement on Monday. DBS is due to report its secondquarter results on August 8. In a sign of how fast the bad-loan problems are worsening, OCBC said new nonperforming assets jumped 91 percent to S$924 million in the second quarter, mainly because of companies linked to the oil-and-gas support services sector. Newly soured assets at UOB more than doubled to S$802 million, from S$372 million a year ago. “New nonperforming-loan generation was the highest seen in this

NPL cycle so far,” Aakash Rawat, a bank analyst at UBS Group AG in Singapore, said in a report last week. “While this was cushioned somewhat by recoveries and upgrades this quarter, it is debatable whether this will continue to be the case in future.” The SGX Oil & Gas Index, which tracks 25 locally listed firms, fell to a record low last week after news of Swiber’s problems surfaced on Thursday. Among the biggest decliners on the index was Ezra Holdings Ltd., which provides engineering and construction services to the offshore oiland-gas sector. Ezra shares plunged 17 percent last week. Another indicator of the woes among Singapore oil-and-gas service firms comes from the bond markets. A total of 10 Singapore-listed firms in the sector, including Swiber, have asked bondholders to loosen their covenants so far this year, versus eight in all of 2015, according to data compiled by Bloomberg. That includes efforts to extend the maturity of debt and loosen covenants requiring companies to maintain certain leverage levels. Oil-related firms have S$1.4 billion of Singapore-dollar securities maturing through 2018, with S$325 million due by the end of this year, according to Bloombergcompiled data on July 18. Among the three large Singapore banks, only DBS has disclosed its exposure to Swiber. OCBC isn’t listed among the oil-and-gas services firm’s main bankers in its 2015 annual report. UOB’s Wee didn’t quantify the bank’s lending to Swiber at the Thursday media briefing. Bloomberg News

The W

Business Pro, antigovernment ralliers gather in Brazil’s two cities

A6 Tuesday, August 2, 2016 • Editor: Lyn Resurreccion

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Former Defense Minister Yuriko Koike (left) and her supporters celebrate her gubernatorial election victory at her election office in Tokyo on Sunday. Koike is the first female governor to lead Tokyo. AP/Shizuo Kambayashi

Tokyo elects 1st female gov

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OKYO—Tokyo on Sunday elected its first female governor to lead the city as it prepares to host the 2020 Olympics, as voters turned to a leader promising clean politics after two predecessors resigned over money scandals.

Yuriko Koike was announced the winner by Japanese media as soon as voting ended, based on her definitive lead in exit polls. She will take charge of a sprawling capital with a population of more than 13 million and an annual budget big ger than Sweden’s. “I am pushing for a Tokyo where people’s lives will be better, and everyone can shine—men and women, children and adults, the elderly and the disabled,” Koike said, appearing at her campaign office, bowing deeply and waving to cheering supporters. Koike, 64, had previously served as defense minister, Japan’s first woman in that post. But she ran in

13M The population of Tokyo

the Tokyo election without the official backing of the ruling pro-US, pro-business Liberal Democratic Party. During her campaign, she wore green to symbolize her freshness, and asked her supporters to also wear the color and wave green fans and banners. One of Koike’s first jobs will be going to the Rio de Janeiro

Olympics as the representative of the city that’s hosting the next games. Yoichi Masuzoe, the former governor, resigned in June after acknowledging exorbitant, though not illegal, spending of taxpayers’ money, including for hotel suites and expensive artwork. The governor before him also resigned in disgrace. Planning for the 2020 Tokyo games has run into problems, including ballooning costs, the scrapping of the initial main stadium design and delays in construction. The Tokyo Olympics logo had to be redesigned after the initial choice was reportedly plagiarized. T he games are a center piece for Japan’s rev ival hopes as the world ’s third-largest economy str ives to keep grow th going, largely based on monetar y policies after more than a decade of stag nation. Tokyo makes up a fifth of Japan’s gross domestic product, and is home to about half of the nation’s major companies. The city is hoping to showcase Japan’s prized technology, including self-driving vehicles, during the games. The other major candidates

for gover nor were jour na list Shuntaro Torigoe, the opposition candidate, and former rural governor Hiroya Masuda. Masuda, a former ministr y bureaucrat, was chosen the official ruling party candidate. Tor igoe, a cancer sur v ivor who is married, was embroiled in a sex scandal, reported in a popular tabloid magazine during the campaign period. He denies the allegations. Public broadcaster NHK reported that Koike had won over both independents and ruling party supporters. Official results are expected by Monday. After her win was announced, Koike promised that she would investigate what had happened regarding Masuzoe’s exorbitant spending, and that she would decide what needs to be done to prevent a recurrence. She also said she would work to fix the longtime problem over the lack of child-care facilities to help women pursue equal employment opportunities. She acknowledged that her being a woman was one way voters were looking for change. “I promise a city hall that has never been seen before,” Koike said. AP

IO DE JA NEIRO — Ju st days before the start of the 2016 Olympic Games, Brazilians in the country’s two largest cities protested by the thousands on Sunday during Brazil’s deepest political crisis in decades. Demonstrators in Rio de Janeiro, the Olympic host city, gathered along Copacabana beach to demand the conviction of President Dilma Rousseff and prosecution of her predecessor, Luiz Inacio Lula da Silva, one of Brazil’s most powerful figures. Meanwhile, in São Paulo, the business capital of Latin America’s largest and most populous nation, protesters rallied in support of Rousseff, Lula and their left-leaning Workers Party. The antigovernment crowd in Rio stretched nearly as far as the eye could see along the beach. They chanted, sang and wore the nation’s colors of yellow and green. Aware of the large presence of international media, some of the protest was conducted in English. “We welcome all of you and wish you a nice stay in our country,” Case Carvalho, a politician in the state of Rio de Janeiro, said through a microphone atop a parade car like those used during Carnival. “Enjoy the Olympic Games, because we are paying a high price for it!” Many of the protesters supported conservative pro-business parties. While they

said they hoped for a successful Olympic Games, they blamed the Workers Party, now embroiled in multiple corruption investigations, for putting Brazil in an untenable position. “It’s a lot of spending for uncompleted works that will serve for nothing after the Games,” said William Dalvo, waving banners with his wife, Roseangela. “What people want is security, education, health care. That’s what’s important.… We usually just want Carnival and soccer, but for the first time people are waking up!” Much of the anger was reserved for Rousseff, the successor to the populist Lula—who still leads national polls for 2018 elections but on Friday was ordered to stand trial on obstruction-of-justice charges. T he case against him was brought by crusading judge Sergio Moro, whose name was chanted repeatedly by the throngs. A former trade union leader who helped end Brazil’s military dictatorship 30 years ago, Lula was the face of modern left-wing politics in Latin America for the first decade of the 21st century. He embraced open trade and was friendly to business, but focused government resources on the poor. Today, Brazil is mired in a twoyear recession, and Lula’s image has taken a beating, as has that of the Workers Party. TNS

Taiwan prexy apologizes to aboriginals for suffering

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AIPEI, Taiwan—Taiwan’s p r e s i d e nt o n M o n d a y apologized on behalf of the government to the island’s aboriginal peoples for 400 years of conquest and colonization, saying the facing of difficult historical facts was necessary for society to move forward. Tsai Ing-wen said her government wished to “take a further step” and offer its “fullest apology.” “If we wish to declare ourselves as a country of one people, we need to face these historical facts. We have to face the truth. Most important, the government must truly reflect on itself and that is why I’m standing here today,” Tsai said at a ceremony at the presidential office building in the capital, Taipei. A “ justice and historical justice

commission” would be established to deal with the problems of the past, Tsai said. She was speaking on Taiwan’s official aboriginal people’s day before representatives of the island’s 16 officially recognized native tribes. Taiwan was inhabited by a variety of tribes for thousands of years before Dutch colonizers began importing Chinese laborers in large numbers during the mid-17th century. The Dutch were expelled from the island by Chinese privateer Koxinga, whose successors were then defeated by the Manchu Qing dynasty as part of their conquest of most of China. It was loosely administered from the mainland until becoming a province in 1885 under foreign pressure and was made a colony by Japan in 1895. AP

2 dead in historic Maryland town ravaged by floodwaters W A SH I NGT ON — H i s toric, low-lying Ellicott City, Maryland, w a s r av a ged b y f loodw aters on Saturday night, killing two people and causing devastating damage to homes and businesses, officials said. A Pennsylvania woman visiting the town with her family was one of those killed after their car was caught in the raging floodwaters and carried toward the Patapsco River, police said. Howard County Executive Allan Kittleman told The Associated Press (AP) by telephone that the devastation was the worst he’d seen in 50 years living in the county, including Hurricane Agnes in 1972, which caused the river to overflow its banks. Virtually every home or business along Main Street sustained at least some damage, and the cost of repairs could reach the hundreds of millions of dollars, he said. “It looks like the set of a disaster movie,” said Kittleman, a Republican. “Cars everywhere, cars on top of cars, parts of the road are gone, many parts of the sidewalk are gone, storefronts are completely gone.”

T he tow n, about 14 mi les west of Baltimore, received 6.5 inches of rain, according to the National Weather Service, and most of it fell on Saturday evening between 7 and 9 p.m. Videos posted on social media showed floodwaters rushing down the town’s Main Street, which slopes toward the river, and sweeping away cars. Some vehicles came to rest on top of each other. In one video posted to the Facebook page of a Main Street art gallery, several people can be seen forming a human chain to rescue a woman from a car that was being swept down the street. Baltimore County police, who recovered the victims’ bodies on the opposite side of the Patapsco, identified the victims as Jessica Watsula, 35, of Lebanon, Pennsylvania, and Joseph Blevins, 38, of Windsor Mill, Maryland. Both were inside vehicles that were overcome by floodwaters. Watsula’s relatives were able to escape, and Blevins’ girlfriend was rescued, police said. Cou nt y of f ic i a ls sa id at a news conference that up to five buildings had been completely

destroyed and up to 30 more had significant damage. More than 170 inoperable vehicles were stranded in the Main Street area and along the river. Gov. Larry Hogan toured the damaged area on Sunday along with Kittleman and Rep. Elijah Cummings, Democrat-Maryland, who has an office in the town. Hogan declared a state of emergency, which will allow greater aid coordination and assistance. “No one has ever seen devastation like this in Ellicott City or anywhere in Howard County,” Kittleman said. “There are a lot of businesses that are going to be hurting for a long time. There are a lot of people that lost their apartments and their homes.” Johnny Breidenbach, the owner and chef of Johnny’s Bistro on Main, said he closed his restaurant around 7:30 Saturday night, before the worst of the flooding, and he hadn’t been able to get back there to assess the damage. “They told me that the door was totally ripped away from the hinges, and I don’t know how much water I have inside,” Breidenbach told The AP by phone. AP

Cars are piled on top of each other in the Meadow Mill parking lot along the Jones Falls in Baltimore on Sunday, following Saturday night’s storms. Jerry Jackson/The Baltimore Sun via AP

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China factory gauges splintered for July

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hina economy watchers were left scratching their heads on Monday on the state of the nation’s manufacturing in July. An official factory gauge and a private manufacturing measure headed in different directions, with the government’s reading slipping and Caixin Media and Markit Economics’s figure released 45 minutes later jumping to the highest since February last year. At least some investors focused on the stronger of the two, with the Hang Seng China Enterprises Index rallying. The Shanghai Composite slid amid continuing concern over potential curbs on wealth management projects.

Key points

The official manufacturing purchasing managers index (PMI) was 49.9 last month, compared with June’s reading of 50, which was also the median estimate in a Bloomberg survey of economists. Nonmanufacturing PMI was at 53.9 compared with 53.7 in June. As in June, drag on official manufacturing index comes from small and medium enterprises. Numbers below 50 indicate conditions are deteriorating. By contrast, manufacturing PMI from Caixin Media and Markit Economics jumped to 50.6 in July, from 48.6 in June.

Big picture

Both gauges at least suggest little significant deterioration in China’s important manufacturing sector in July. Meantime, the trend of outperforming services remains clear. On the official gauge, a drop in a reading of new export orders, combined with a slump in South Korea’s exports last month, suggest global demand remains tepid.

Economist takeaways

“One way of cutting through the confusion is to avoid obsessing about small movements in the indexes,” Bloomberg Intelligence Economist Tom Orlik said. “Stepping back from the detail, the data show China’s economy remains in a holding posit ion, w it h st imu lus pre venting a further deterioration, but not driving a rebound.” “The market is generally more inclined to take on the Caixin PMI reading,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “We need to get in the middle of the two to get the whole picture. The emerging economies are generally on the rally, maybe we should believe that there is improvement and follow the money.”

The details

Measures of output, new orders and new export orders were among components of official factor y gauge t hat dec l ined. Large enterprises reported improving conditions, with manufacturing PMI for them rising to 51.2, while medium enterprises slipped to 48.9 and small to 46.9. On the services measure, new orders and selling prices slipped, while business activity expectations climbed. In Caixin PMI report, output rose to 52.1, highest reading since July 2014. Hang Seng China Enterprises Index rose 2 percent at 10:23 a.m. in Hong Kong, while the Shanghai Composite Index was 1.1 percent lower. Aussie dollar, seen as a proxy for bets on China’s economy because of Australia’s reliance on shipments of raw materials, climbed after Caixin PMI. Bloomberg News

Aging work force puts strain on skilled factory workers

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ONCOR D, New Hamp shire—In a small town just south of New Hampshire’s capital, General Electric (GE) runs two plants filled with workers building jet engines for the world’s leading airlines. With 800 workers, GE Aviation is the largest employer in town. But in the next five to 10 years, about a third of those workers are expected to retire. The company is scrambling to not only fill those jobs, but to find workers with the needed skills to take on jobs that are becoming ever more technologically advanced. It’s a problem expected to play out across the region and the country over the next decade, driven in part by the growth of the economy and a rash of retirements among baby boomers. “What we have found out is that as we raise the bar, we’re finding it a little bit difficult to get a pretty good population or a subset of folks that we can pick from to fill those needs,” said Peter Haley, a business operations leader at GE Aviation’s Hooksett facility. Nearly 60 percent of New H a mp s h i re ’s m a nu f a c t u r i n g workers are over the age of 45, compared to 49 percent nationally, state and federal data show. And from 2004 to 2014, the number of manufacturing workers in the state between the age of 35 and 44 dropped by nearly half. State projections show about 80 percent of open production jobs in the next decade will be to replace outgoing workers. On top of that, New Hampshire’s 2.8-percent unemployment rate, one of the lowest in the nation, means the labor pool is already shallow. “We’re having to rebuild the entire pipeline of workers,” said Katrina Evans, assistant director

of the state’s Economic and Labor Market Information Bureau. “It’s not even so much a skills mismatch as it is a warm body mismatch.” Nationally, a 2015 report from The Manufacturing Institute and Deloitte found that the skills gap “is real, and it is substantial,” noting that over the next decade, 3.5 million manufacturing jobs will have to be filled and that the skills gap means that 2 million of those jobs will go unfilled. Of the CEOs surveyed for the report, 82 percent said that the skills gap would impact their abilities to meet customer demands and 78 percent said it would impact their abilities to implement new technologies and increase productivity. “The basic consensus at this point is that the shortage of skilled labor is so severe that it’s actually affecting the ability of companies to grow,” said Val Zanchuk, a manufacturing executive and chairman of a new statewide effort to bridge the skills gap. “This is nationwide, and it’s certainly reflected in New Hampshire, as well.” But some experts think the nationwide skills gap is overblown. Elise Gould, senior economist at the liberal-leaning Economic Policy Institute, said federal jobs data shows there are two unemployed manufacturing workers for every available job. She said employers looking for workers could be doing more to train available workers or attract more talent by offering higher wages. “Actually, there’s a lot of unemployed workers in that field that you’re trying to hire in,” she said, noting that she did not have specific data on New Hampshire’s manufacturing sector. New Hampshire and several other states in the region aren’t waiting for the debate to play itself out. AP

Commuters are set for Tokyo’s last train home. Bloomberg News

Global earnings tumble as firms dig deeper for cost savings

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orporate earnings are heading for a fifth straight quarter of declines, dragged down mostly by energy companies’ struggles with low oil prices and a tepid global economy that threatens to throttle sales growth in many industries. United States companies as varied as hamburger chain McDonald’s Corp. and Honeywell International Inc., a maker of gas-processing equipment and cockpit controls, have slashed costs and bought back shares to help earnings. Amid a worldwide sales slog, European pay-TV operator Sky Plc. and South Korea’s Hyundai Heavy Industries Co. are crimping expenses to boost profit. John Carey, a Boston-based fund manager at Pioneer Investment Management Inc., calls it earnings engineering, and he’s seen it before. Companies have grappled with a lackluster economy for several years as the US manufacturing recovery sputtered, the world economy slowed and oil prices fell to $50 a barrel from more than $100 in 2014. “There hasn’t been a lot of what you might call real, honest earnings growth through sales and business improvement and expansion of operations,” said Carey, whose firm oversees about $240 billion of equities and fixed income worldwide. “They just keep digging deeper into the hat and finding hidden rabbits and new ways to generate earnings.” The global economy is forecast to expand 2.9 percent this year, according to the average estimates of economists surveyed by Bloomberg. That’s the lowest rate since 2009, with the US, European Union, China and Mexico all expected to post slower growth this year from 2015. W it h about t wo -t h i rd s of Standard and Poor’s (S&P) 500 Index members having reported, earnings have declined 3.3 percent from a year earlier and sales have slumped 0.5 percent. Excluding results from energ y companies, earnings have risen 1.1 percent and sales have gained 3 percent. Asia and Europe have fared worse. With 294 companies on the

2.9% The forecast in percentage of expansion of the global economy this year; the lowest rate since 2009

MSCI AC Asia Pacific Index having announced results, earnings have plummeted 19 percent. In Europe profits have dropped 14 percent, with results in from almost twothirds of companies on the Stoxx Europe 600 Index. With the third quarter in full swing, there are reasons to remain cautious, said Mark Luschini, chief investment strategist at Janney Montgomery Scott Llc., which manages $54 billion. Operating profit margins for the S&P 500 fell below 12 percent for the first time since 2010 and may deteriorate further as wage pressure begins to kick in.

‘Margin decay’

“There’s been margin decay over the last couple of years, and I expect we’re going to continue to see that more if we see hiring and wage gains occur,” Luschini said. “That will only put further pressure on margins in the absence of top-line revenue growth.” In the second quarter, oil producer ConocoPhillips posted a loss of $1.1 billion, its fifth straight. Caterpillar Inc., the large maker of earth-moving equipment, lowered its forecast for 2016 sales and earnings for a second time after posting a 16-percent decline in second-quarter revenue. Sony Cor p. ea r n i ngs per share dropped 76 percent in the three months ended June on an 11-percent decline in sales. Profit at Mitsui OSK Lines Ltd.,

Japa n’s second-l a rgest sh ip ping company by market value, slumped 89 percent. The earnings decline for S&P 500 companies probably hit bottom with the first quarter’s 6.7-percent drop. Profits are expected to resume growth this quarter, although a big reason is that companies will lap profit weakness that began a year earlier, said Jill Carey Hall, a US equity strategist with Bank of America Corp. “We definitely need to see a pickup in sales growth to make us be a bit more positive on the trajectory for the market,” Hall said. “We have been stuck in this slow, sluggish sales-growth environment, and you’re finally seeing some very early signs of a pickup.”

Brexit looms

Any fragile recovery of earnings could be hurt by Britain’s decision to leave the European Union, the so-called Brexit, which has made companies more cautious as they sort out the effects, Hall said. There are also concerns related to the US presidential election and an increase in terrorist attacks across the globe. For General Motors Co., Brexit “has put a strain” on the UK auto market. Coupled with the weaker pound, that could hurt revenue by $400 million in the second half of this year, CFOCharles Stevens said. At Ford Motor Co., CFO Bob Shanks said Brexit will cost his company about $200 million this year, rising to $400 million to $500 million in 2017. U K bro a d c a s t e r I T V Pl c ., k now n for t he d ra m a ser ies “Downton Abbey,” is aiming for cost savings of €25 million ($33 million) in 2017, including job cuts, as it prepares for what it described as uncertainties in the economic outlook following the country’s vote to leave the EU. Stocks haven’t been fazed by political events or even terrorist acts. The S&P 500 closed at a record high on July 22, and the FTSE 100 rose to its highest level this year July 27. The S&P 500’s ratio of price to earnings has topped 20 times for the first time since 2009.

Rebound seen

Jim Paulsen, chief investment strategist at Wells Capital Management, isn’t alarmed by valuation after the S&P 500 gained 19 percent from its low this year on February

11. The market is forecasting an economic rebound that will spur earnings, he said. Paulsen, whose firm manages about $340 billion in assets, said a Citigroup index measuring data surprises relative to market expectations has turned positive in July for the first time since the beginning of 2015. Consumer confidence, new home sales, retail sales and industrial production have all outperformed estimates. A turn in commodity prices should buoy emerging-market growth and stimulus may help Europe turn the corner, Paulsen said. With an uptick in the global economy and energy profit no longer dragging as last year’s weakness is lapped, companies may begin to post solid earnings growth, he said. “Expectations always go too far,” Paulsen said. “They get too optimistic on earnings when reality has already turned down, and then they get too pessimistic on earnings when the rally already turned up.”

Tech shines

One bright spot has been technol o g y, w he re re s u lt s f ro m Google parent Alphabet Inc. and Apple Inc. are helping to boost the sector by the most in eight years. The group’s 5-percent gain since earnings season began is the best among 10 S&P 500 industries, and its lead over the broader index during that period is the biggest since 2008. Facebook Inc.’s earnings almost doubled to 97 cents a share in the second quarter as sales of video and Instagram advertising climbed 59 percent. Alphabet posted sales and earnings that beat analysts’ estimates on more ad sales to mobile users and better cost controls. Uniqlo Co., the Japanese maker of casual apparel, beat analyst estimates for third-quarter profit on better-than-expected online sales within Japan. Operating income rose 19 percent from a year ago, fueled by a 41-percent surge in e-commerce sales. With higher valuations, the strategy of using buybacks, acquisitions and spinoffs to boost earnings is losing its effect, said Hall, the Bank of America strategist. And companies can cut costs only so much, she said. They may be running out of ways to squeeze profits. Bloomberg News

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The World BusinessMirror

Tuesday, August 2, 2016

www.businessmirror.com.ph

as Germany mourns shooting victims

Muslims go to Catholic Mass in France, Italy for solidarity

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Turkish demonstrators protest in Cologne, Germany, on Sunday. Supporters of Turkish President Recep Tayyip Erdogan demonstrate in Cologne amid heavy police presence. AP/Martin Meissner

Erdogan’s decree brings Turkey’s military under strict govt control

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STANBUL—Turkish President Recep Tayyip Erdogan issued a new presidential decree on Sunday that introduced sweeping changes to Turkey’s military in the wake of a July 15 failed coup, bringing the armed forces further under civilian authority. The decree—the third issued under a three-month state of emergency declared after the attempted coup—gives the president and prime minister the authority to issue direct orders to the commanders of the army, air force and navy. It also announces the discharge of 1,389 military personnel, including Erdogan’s chief military adviser, who had been arrested days after the attempted coup, the chief of general staff ’s charge d’affaires and the defense minister’s chief secretary. The changes are part of a broad crackdown in the aftermath of the abortive putsch, which Erdogan blames on of United Statesbased cleric Fethullah Gulen, who he says was behind the coup. Gulen, who lives in self-imposed exile in Pennsylvania, denies any knowledge of the attempt to overthrow the government. Authorities have continued to search for army personnel suspected of participation in the failed coup. A nighttime operation outside the Aegean resort town of Marmaris in the early hours of Monday captured nine people suspected of being part of a group that raided a hotel, at which Erdogan had been staying during the coup. A government official, speaking on condition of anonymity in line with regulations, said gunfire was exchanged during the operation and that three suspects were still on the run. Television footage showed armed forces running through forest roads,

1,389 The number of military personnel who were discharged

while a helicopter hovered overhead. Erdogan had been on vacation in Marmaris when the coup occurred. A group of soldiers who raided his hotel in an attempt to capture or kill him is believed to have missed the president by an hour or less. The nighttime operation used drones and helicopters to pinpoint the location of the men, the official said, adding that authorities had been notified by a group of local villagers who had been hunting boars. A pa r t f rom ap pre he nd i ng those who directly participated in the putsch, the government has sought to crack down on those suspected of being members of Gulen’s movement and has been bringing the military under increasing civilian control. Sunday’s presidential decree puts the mi litar y commands direct ly under the defense ministr y, puts all militar y hospitals under the authority of the health ministr y, and also expands the Supreme Militar y Council—the body that makes decisions on militar y affairs and appointments—to include

Turkey’s deputy prime ministers and its justice, foreign and interior ministers. It also shuts down all military schools, academies and noncommissioned officer training institutes and establishes a new national defense university to train officers. More than 10,000 people have been arrested in the crackdown, most of whom are military personnel. Thousands more have been detained and nearly 70,000 people have been suspended or dismissed from their jobs in the education, media, health care, military and judicial sectors. On Sunday Turkey’s soccer federation said every member of its committees had tendered their resignations “for the well-being of the ongoing security investigation.” In an interview on Saturday with private A Haber television, Erdogan said he also wanted to put the country’s MIT intelligence agency and the chief of genera l st a f f ’s headqu a r ters under the presidency. “If we can pass this small constitution package...then the chief of general staff and MIT will be tied to the president,” Erdogan said. The package would need to be brought to parliament for a vote. The government’s crackdown has caused concern among the country’s Western allies, who have urged restraint. Turkey has demanded the speedy extradition of Gulen from the United States, but Washington has asked for evidence he was involved in the attempted coup and says the US extradition process must be allowed to take its course. Erdogan has also strongly criticized US military officials for comments he said implied that the detention of Turkish military officers as part of the coup investigation could affect the country’s fight against theIslamic State group. The US Chairman of the Joint Chiefs of Staff Joe Dunford was to visit Turkey and was scheduled to meet Prime Minister Binali

Yildirim on Monday, the prime minister’s office said. Turkey’s relations with Germany are also coming under strain, with Ankara demanding its crackdown on the Gulen movement extend to Gulenaffiliated schools in Germany, and seeking the extradition of members of the judiciary believed to have ties to the movement who are in Germany. Erdogan Spokesman Ibrahim Kalin criticized a decision by German authorities not to permit messages from politicians in Turkey to be shown on a video screen on Sunday at an anticoup rally in the German city of Cologne that drew about 20,000 people. Germany’s highest court rejected a bid Saturday night to reverse local judges’ ruling that a screen at the event couldn’t be used to show addresses from outside speakers—a decision that Turkey says prevented an address by Erdogan. Ger m a n Foreig n M i n i ster Frank-Walter Steinmeier has said there’s “no place in Germany” for any side to “bring domestic political tensions from Turkey to us in Germany and intimidate people with other political convictions.” Germany has a sizeable population of people with Turkish roots. In a series of tweets, Turkey’s EU affairs minister Omer Celik criticized the German court decision as going “against freedom of speech and right to assembly” and said it was “such a shame to see that EU fails in upholding democracy and showing solidarity with a candidate country in the face of a coup threat.” Turkey has been seeking to join the EU for decades, although its efforts have been near moribund for years. Also on Sunday, Turkish Foreign Minister Mevlut Cavusoglu demanded the 28-nation EU say exactly when Turkish citizens will be granted visa-free entry and added that, if the rules aren’t loosened, Ankara will back off a deal to stem the flow of migrants into Europe. AP

Retaking IS-held Mosul tricky, costly for Iraq

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AGHDAD—It promises to be the biggest and, perhaps, last major battle against the Islamic State (IS) group in Iraq. Iraq’s government is setting its sights on Mosul, Iraq’s second-largest city that has been under IS control since June 2014, as its next major target. The assault is probably months away, but fierce fighting already has been raging as Iraqi forces try to clear the militants from villages and towns south of the city. The goal is to protect the Qayara air base, which was recaptured from the militants on July 9 and is to be a main hub for the final

move on Mosul. Some 560 US military personnel, mainly engineers and logistics, security and communications experts, are due to be deployed at the base to upgrade its facilities, in preparation for the Mosul attacks, according to US Defense Secretary Ash Carter. But that can’t happen yet, because Qayara base has come under frequent rocket fire. About two-thirds of the surrounding towns and villages are controlled by IS fighters. Iraqi forces need to clear a 20-kilometer radius around the base and to retake the key nearby towns of Qayara

and Shirqat, several Iraqi military officials told The Associated Press. Iraqi forces already have driven the IS out of the cities of Ramadi, Fallujah, Tikrit and Beiji west and north of the Iraqi capital, rolling back the jihadis’ dramatic blitz in summer 2014 that captured nearly a third of the country and linked up with their territory in neighboring Syria. Retaking Mosul would be far more significant, robbing the IS of the jewel of its self-declared caliphate. While the Syrian city of Raqqa is considered the caliphate’s de-facto capital, Mosul is the largest

city under its control, with an estimated population of between 500,000 and 1 million. IS fighters in Mosul, meanwhile, vary from a few thousand to “not more than 10,000,” according to the coalition. But the presence of hundreds of thousands of civilians in Mosul raises the prospect of a flood of people joining tens of thousands still displaced by previous fighting. The Geneva-based International Committee of the Red Cross said on Friday that up to 1 million Iraqis could be forced to flee their homes in the coming weeks amid worsening fighting. AP

OUEN, France—Muslims in France and Italy flocked to Mass on Sunday, a gesture of interfaith solidarity following a drumbeat of jihadi attacks that threatens to deepen religious divisions across Europe. From the tower ing Gothic cathedral in Rouen, only a few miles from where 85-year-old Rev. Jacques Hamel was killed on Tuesday by two Muslim fanatics, to Paris’s iconic Notre Dame, where the rector of the Mosque of Paris invoked a papal benediction in Latin, many churchgoers were cheered by the Muslims in their midst. Interviewed outside the cathedral in Rouen, Jacqueline Prevot called it “a magnificent gesture.” “L ook at t h is whole Mu slim community that attended Mass,” she said. “I find this very heartwarming.” French television broadcast scenes of interfaith solidarity from all around France, with Muslim women in headscarves and Jewish men in kippot crowding the front rows of Catholic cathedrals in Lille, Calais, or the Basilica of Saint Denis, the traditional resting place of French royalty. There were similar scenes in Italy, where the head of Italy’s Union of Islamic communities— Izzedin Elzir—called on his colleagues to “take this historic moment to transform tragedy into a moment of dialogue.” The secretary general of the countr y’s Islamic Confederation, Abdullah Cozzolino spoke at the Treasure of Saint Gennaro chapel; three imams also attended Mass at the Saint Maria Church in Rome’s Trastevere neighborhood, donning their traditional dress as they entered the sanctuary and sat down in the front row. Ahmed El Balazi, the imam of the Vobarno mosque in Italy’s Lombard province of Brescia, said he did not fear repercussions for speaking out. “ These people are tainting our religion and it is terrible to know that many people consider all Muslim terrorists. That is not the case,” El Balazi said. “Religion is one thing. Another is the behavior of Muslims who don’t represent us.” Italian Foreign Minister Paolo Gentiloni thanked Italian Muslims for their participation, saying they “are showing their communities the way of courage against fundamentalism.” Among the parishioners in Rouen was a nun who survived Tuesday’s siege in nearby SaintEtienne-du-Rouvray, which began when two 19-year-old attackers stormed a stone church and killed Hamel as he celebrated morning Mass. She joined her fellow Catholics in turning to shake hands or embrace the Muslim churchgoers after the service. At Notre Dame cathedral in the French capital, Dalil Boubakeur, the rector of the Mosque of Paris, said repeatedly that Muslims want to live in peace. Boubakeur, in a fraternal nod to the Catholic Church, said he was addressing Urbi et Orbi—a Latin blessing long identified with the pope and meaning “to the city and the world.” France and Italy are both increasing their super v ision of mosques after the spate of jihadi attacks, including Tuesday’s attack in France and the July 14 atrocity in Nice in which a Muslim truck driver plowed through a crowd of revelers, killing 84 people. Both attacks were claimed by the Islamic State group. Italian Interior Minister Angelino Alfano told the Senate this week that authorities were scrutinizing mosque financing and working with the Islamic community to

ensure that imams study in Italy, preach in Italian and are aware of Italy’s legal structuring. The Paris prosecutor’s office, meanwhile, said a cousin of one of the t wo 19 -year-olds who killed the priest faces preliminary charges of participating in “a terrorist association with the aim of harming others.” The 30-year-old Frenchman, identified as Farid K., “knew very well, if not of the exact place or time, of his cousin’s impending plans for violence,” the office said in a statement. In a related development, the prosecutor’s office said a man identified as Jean-Philippe Steven J. faces preliminary charges connected to an attempt to reach Syria last month with one of the two French priest’s killers. In Munich people on Sunday mourned the victims of the shooting rampage in which nine people were killed, with Germany’s president vowing that the country won’t give in to fear after a string of violence that also included two attacks claimed by Islamic extremists. On July 22 an 18-year-old German-Iranian man killed nine people and wounded over 30 others at a McDonald’s restaurant and shopping mall in the city. He then killed himself. There was no suggestion that Islamic extremism played any part in the slayings. “We will probably never find out what really moved him and pushed him to his inhuman actions,” President Joachim Gauck said at a memorial event in Bavaria’s state parliament. The rampage in Munich was the deadliest of a string of attacks over a week that rattled Germany—a sequence that also included an ax attack and a bombing in Bavaria that were both claimed by theIslamic State group. Gauck acknowledged that “the events outstrip our ability to distinguish one act from another— we find it hard to distinguish between whether an act was committed in the name of a religion or an ideology, out of fanaticism, nationalism or racism.” “There is one thing we will not give all those who want to make our home a place of fear and horror, the assailants and gunmen and the terrorists: our submission,” he said. “They will not force us to hate like they hate. They will not keep us in the captivity of perpetual fear.” E a rl ier on Su nd ay, Gauc k joined Chancellor Angela Merkel and regional officials at a nondenominational service in the city’s Frauenkirche, or Church of Our Lady. That service included an address by a Muslim representative, ref lecting the fact that several of the Munich victims were Muslims. Ger man officia ls have said t he Mu nic h g u nma n was a w ithdraw n loner obsessed w it h p l a y i n g “ k i l l e r ” v i d e o games who had been treated for depression and psychiatr ic problems. Witnesses said the g unman shouted slurs against f o re i g ne r s , e v e n t ho u g h he himself was the Ger man-bor n son of Iranian asylum-seekers. The restaurant where most of the victims died was a hangout for youths of immigrant backgrounds, and the dead included victims with Hungarian, Turkish, Greek, and Kosovo Albanian backgrounds and a stateless person. Bavarian governor Horst Seehofer stressed the importance of fighting all forms of extremism and racism, as well as strengthening security forces. The rampage in Munich and the attacks elsewhere in Bavaria “have burned themselves into our hearts, and they have also changed the world for us,” he said. AP

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As Francis tells the youth on Poland trip to believe ‘in a new humanity’

Pope: Don’t label Islam ‘violent, terrorist’

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BOARD THE PAPAL PLANE—Pope Francis on Sunday said he won’t label Islam as “terrorist” because that would be unfair and not true. Reporters aboard the papal plane flying him home after a pilgrimage to Poland that began the day after extremists slit the throat of an elderly priest celebrating Mass in a French church, asked him why he never uses the world “Islam” to describe terrorism or other violence.

While in Poland, Francis made an unscheduled stop at a church in Krakow to implore God to protect people from the “devastating wave” of terrorism in many parts of the world. Francis replied: “It’s not right to identify Islam with violence. It’s not right and it’s not true.” He added: “I believe that in every religion there is always a little fundamentalist group.” “I don’t like to talk of Islamic violence because every day, when I go through the newspapers, I see violence, this man who [kills] his girlfriend, another who kills his mother-in-law,” Francis said, in apparent reference to crime news in the predominantly Catholic country of Italy. “And these are baptized Catholics. If I speak of Islamic violence, then I have to speak of Catholic violence.” Noting he has spoken with imams, he concluded: “I know how they think, they are looking for peace.” As for the Islamic State (IS) group, he said it “presents itself with a violent identity card, but that’s not Islam.” In Krakow, Pope Francis told young people who flocked by the hundreds of thousands to listen to his words on Sunday that they need to “believe in a new humanity” stronger than evil, and cautioned against concluding that

1.5M The estimated number of World Youth Day participants who attended Pope Francis’s Mass near Krakow on Sunday

one religion is more violent than others. Organizers of the Catholic jamboree, known as World Youth Day, estimated 1.5 million youths attended his Mass at a meadow near Krakow, many of them having camped out in sleeping bags from a vigil service of prayer, singing and dance performances the previous evening. The jamboree, meant to infuse young Catholics with fresh passion for their religion, was the main reason Francis came to Poland on a five-day trip, which also took him to the former Nazi Auschwitz death camp, where he prayed in silence and reflected on what he called “so much cruelty,” and to a church in Krakow, where he prayed that God protect the world from the “devastating wave” of terrorism. Extremist violence was on his mind when he set out last week, the day after extremists rushed

Pope Francis blesses a statue of the Virgin Mary and Jesus during his visit at a Caritas charity organization house in Krakow, Poland, on Sunday. During an earlier Mass the pontiff announced Panama will be the host city of the next World Youth Day. L’Osservatore Romano/Pool Photo via AP

into a church in the French countryside and murdered the elderly priest there, slitting his throat, as he was celebrating Mass. Security was very tight throughout the pope’s visit, but he encountered huge crowds day after day without incident and arrived back in Rome on Sunday evening. The pope used his several encounters with the young pilgrims— from mega-gatherings to a private lunch with only a dozen people from five continents—to encourage a new generation to work for peace, reconciliation and justice. God, said Francis in his final homily of the pilgrimage, “demands of us real courage, the courage to be more powerful than evil, by loving everyone, even our enemies.” “People may judge you to be dreamers, because you believe in a new humanity, one that rejects hatred between peoples, one that refuses to see borders as barriers and can cherish its own traditions without being self-centered or small-minded,” Francis told his flock. Earlier in his pilgrimage, Francis had expressed dismay that many people and places aren’t welcoming enough to refugees or those flee-

ing poverty in their homelands. After more than 1 million people arrived on Europe’s southern shores last year, some nations on the continent, notably in central and eastern Europe, hastily built fences to keep the refugees out. Poland has been among the EU countries that have refused to take in many Muslim refugees, saying it has already welcomed hundreds of thousands of Ukrainian immigrants. Attending Francis’s closing Mass on Sunday were some of Poland’s top leaders, including President Andrzej Duda and Jaroslaw Kaczynski, head of the conservative ruling Law and Justice party. Since the Paris extremist attacks in early 2015, concerns have heightened that the Vatican and the pope, in particular, could be targeted because of his role as the most influential Christian leader. When the pope travels, a corps of Vatican bodyguards travels with him, running alongside his popemobile or scrutinizing crowds along the route. At Sunday’s Mass, several Polish police vans followed the pope’s open-sided popemobile as he rode through the wide flat meadow in the middle of hundreds of thou-

sands of pilgrims. Motorcycle police rode close to metal barriers keeping the crowd away. This pilgrimage marked the first time the native Argentine pope sent foot in Eastern Europe. Flying back to Rome, he was a sked by re por ters wh at he thought about Poland and its welcome to him. Referring to the enormous crowds he drew day after day in a country where Saint Pope John Paul II was born, Francis joked that “Poland was invaded, this time by young people.” He apparently was referring to Germany’s 1939 invasion of Poland that triggered World War II. Francis sounded charmed by what he saw, including during his drive a couple hours to the airport in rain that came down in buckets. “This evening, with the rain coming down, along the street there were not only young people but also little old ladies,” the pope said, referring to the crowds cheering him as he rode by. Du r ing Mass, Fra nc is a nnounced the next World Youth Day would take place in Panama in 2019. Later, the 79-year-old pope told rally volunteers he did not know if he would be at that one. AP

Tuesday, August 2, 2016

A9

briefs

Embassies call on Maldives prexy to return to democracy

COLOMBO, Sri Lanka—The US embassy and other foreign missions on Sunday urged the Maldives president to return to the path of democracy, saying they are concerned over what they call recent erosions of fundamental freedoms and institutions of democracy in the archipelago state. In a joint statement offices—including the United States, Norway, Germany, the Netherlands, the United Kingdom and the delegation of the European Union—said they support all Maldivians’ struggling to preserve democracy and human rights. The statement came ahead of a Parliament debate on Monday on a bill to criminalize defamation, which, if passed, the diplomatic offices say risks being a serious setback for freedom of speech. Critics say defamation may carry heavy fines and jail terms. Maldives became a multiparty democracy in 2008 after decades of autocratic rule. However, President Yameen Abdul Gayoom is accused of reversing the democratic gains by misusing courts, police and the bureaucracy to muzzle dissent. AP

Armenia: 20 gunmen surrender, police-station standoff over

YEREVAN, Armenia—All 20 gunmen inside a police compound in Armenia’s capital surrendered on Sunday, ending a two-week standoff that left two police officers dead and several wounded on both sides, the security service said. The standoff involving armed members of a radical opposition group also set off protests that led to unrest in the capital, Yerevan. The leader of the gunmen barricaded inside the police compound, Varuzhan Avetisyan, said in a telephone interview with local media that they decided to surrender after security forces used armored vehicles to enter the police compound. Another factor, he said, was that police had started to shoot gunmen who ventured outside. Most were hit in the leg, but a man shot on Sunday was hit in the chest, he said. AP

Clinton: Trump’s comments on Muslims ‘degrading’ A

SHLAND, Ohio—Hillary Clinton said on Sunday that Donald Trump repaid the “ultimate sacrifice” of a US Army captain killed in Iraq with insults and degrading comments about Muslims, as the soldier’s bereaved father pressured Republican Party leaders to distance themselves from the GOP presidential nominee. Clinton’s comments came after Trump refused to back down from his criticism of the Gold Star parents’ remarks. “Am I not allowed to respond?” Trump had tweeted. “Hillary voted for the Iraq war, not me!” It was the latest bitter rhetorical volley between the defiant Republican candidate, Clinton and the family of a fallen soldier since the two parties concluded their major conventions last week and the nation looked ahead to a close election this November. Trump’s stand has once again left Republican leaders facing demands to denounce their party nominee and overshadowed C l i nton’s c a mpa ig n mess a ge with controversy. “He is a black soul,” said Khizr Khan, whose son Humayun received a Bronze Star and a Purple Heart after he was killed in Iraq in 2004. “And this is totally unfit for the leadership of this beautiful country.”

Speaking on CNN’s State of the Union, he said, “It is majority leader’s and speaker’s moral, ethical obligation to not worry about the votes, but repudiate him, withdraw the support.” Likewise, Clinton told Republicans on Sunday: “This is a time to pick country over party.” In statements released on Sunday, Senate Majority Leader Mitch McConnell and House Speaker Paul Ryan condemned any criticism of Muslim Americans who serve their country and rejected the idea of a Muslim travel ban— an idea proposed by Trump earlier in the campaign. But neither statement mentioned Trump by name or repudiated him. McConnell praised Captain Khan as an “American hero,” while Ryan noted that many Muslim Americans have served “valiantly” in the US military. “Captain Khan was one such brave example. His sacrifice—and that of Khizr and Ghazala Khan— should always be honored. Period,” Ryan said. Sen. Harry Reid, the Democratic minority leader, issued a blistering statement of his own, saying anything short of revoking their endorsements of Trump was “cowardice” on the part of McConnell and Ryan. “This shouldn’t be hard,” Reid said. “Donald Trump is a sexist

In this July 28 photo, Khizr Khan, father of fallen US Army Capt. Humayun S. M. Khan, and his wife Ghazala speak during the final day of the Democratic National Convention in Philadelphia. Republican presidential nominee Donald Trump broke a major American political and societal taboo over the weekend when he engaged in an emotionally charged feud with Khizr and Ghazala Khan. AP/J. Scott Applewhite

and racist man who insults Gold Star parents, stokes fear of Muslims and sows hatred of Latinos. He should not be president and Republican leaders have a moral responsibility to say so.” On a post-convention bus tour through Ohio and Pennsylvania, Clinton said Trump has a “total misunderstanding” of American values and has inflamed divisions in American society. “I don’t know where the boundaries are. I don’t know where the bottom is,” she told reporters during a campaign stop at a cheese barn in Ohio. “I do tremble before those who would scapegoat other Americans,” she told parishioners in

a Cleveland church on Sunday morning. “That’s just not how I was raised.” At last week’s Democratic National Convention, Pakistan-born Khan told his son’s story and questioned whether Trump had ever read the Constitution and said “you have sacrificed nothing.” During the speech, Khan’s wife, Ghazala, stood quietly by his side. “If you look at his wife, she was standing there. She had nothing to say. She probably, maybe she wasn’t allowed to have anything to say,” Trump said, in an interview with ABC’s This Week. Ghazala Khan responded on Sunday in an opinion piece published in The Washington Post, say-

ing talking about her son’s death 12 years ago is still hard for her. When her husband asked if she wanted to speak at the convention, she said she could not. “When Donald Trump is talking about Islam, he is ignorant,” she wrote. At one point, Trump had disputed Khan’s criticism that the billionaire businessman has “sacrificed nothing and no one” for his country. “I’ve made a lot of sacrifices. I work very, very hard. I’ve created thousands and thousands of jobs, tens of thousands of jobs, built great structures,” Trump said. Trump, who had no campaign events scheduled this weekend, released a statement late Saturday night calling Humayun Khan “a hero” but disputing his father’s characterization. “While I feel deeply for the loss of his son, Mr. Khan who has never met me, has no right to stand in front of millions of people and claim I have never read the Constitution, [which is false] and say many other inaccurate things,” Trump said. Trump’s rebuke was unusual in the world of politics where officials only speak well of families whose loved ones die in service to their country. When Cindy Sheehan, who lost her son in Iraq, staged prolonged protests on the war, then-President George W. Bush

responded by saying that the nation grieves every death. When asked about the mother of a State Department official killed in Benghazi, Libya, who blamed Hillary Clinton for her son’s death, Clinton told Fox News Sunday that her “heart goes out” to the families and that she didn’t “hold any ill feeling for someone” who has lost a child and recalls events differently. Across the country, veterans and their families closely watched the political back-and-forth. “It was inappropriate on both sides,” said Mark Farner of Ocean Isle Beach, North Carolina, as he stood a few feet from the Vietnam Veterans Memorial in Washington. “For one to use it as it as the Democrats intended it to be used, and I don’t think Trump handled it the way he should have on his end.” Farner had just made a rubbing of the name of his cousin, Calvin Wilson, who was killed in action in February 1967. Romell Short of Washington, a US Marine Corps veteran who deployed to Iraq and Afghanistan, said he has no problem with veterans’ families being politically active and speaking about their experiences. “America should know the suffering and the cost of war and part of that is the sacrifice of American troops and the sacrifice of American families,” Short said. AP

A10 Tuesday, August 2, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

The CPP-NPA may have lost its war

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he leaders of the “Rebellious Left” embodied in the Communist Party of the Philippines-New People’s Army (CPPNPA) went from, at best, serious participants to, at worst, irrelevant. While the government has said the peace process and negotiations will continue, the CPP-NPA leadership is now rendered toothless by their own actions. Jose Maria Sison himself said in a television interview that he was not in a position to order the insurgents to declare a truce.

That is not to say their armed members are not a dangerous threat. Groups like this can always find innocent civilians to terrorize and kill. However, it will be difficult for government negotiators to trust the words of the other side. Further, the government said the leaders of the CPP-NPA had been furnished with the guidelines to the cease-fire prior to the deadly encounter. Was the CPP-NPA leadership unable to communicate with its fighters or were their orders ignored? The former seems unlikely from the statement issued by the CPP-NPA, when they said, “The AFP [Armed Forces of the Philippines] is leaving out the glaring truth that its troops were clearly on combat operation and not engaged in ‘civilian’ activities, in direct violation to GRP President Duterte’s cease-fire order.” The AFP contends that, in a statement from 1003rd Infantry Brigade commander Col. Ricardo Nepomuceno, AFP troops were pulling out from the operational area in compliance with the unilateral cease-fire. When asked by President Duterte for an explanation, Rigoberto Sanchez, spokesman of the NPA-Southern Mindanao Regional Operations Command, said there was no “conspicuous and veritable unilateral cease-fire” exercised by the AFP, PNP and paramilitary troops in the region. If that is true, why didn’t Sanchez offer any example of government forces attacking the NPA operatives or any evidence of the AFP being on “combat operations”? Sanchez clearly and unequivocally stated the NPA performed a preemptive strike on the Citizen Armed Force Geographical Unit forces. In other words, instead of withdrawing to see if there might be a combat operation against them, the NPA acted first. Perhaps, the best proof of a “conspicuous and veritable unilateral ceasefire” is that the side that declares the unilateral cease-fire does not fire first. Active and retired commanders of the AFP have said privately that, during the Aquino administration, efforts to bolster the AFP military capability were very successful with greater supplies, armaments and training made available. Further, these same officers have expressed—from cautious optimism to absolute confidence—that the NPA insurgents could be taken down. However, it will be a “bloodbath” with hundreds, if not more, combatants killed as well as thousands of people being displaced. President Duterte came under harsh criticism and was accused of coddling the communist insurgents by reaching out to their leadership. Unfortunately, by this incident, the CPP-NPA may have proven what many have said all along. Their members do not want peace; they only want victory. The CPP-NPA will not achieve either except maybe—as in the President’s words—the “peace of the dead.”

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Right time for a second look at agriculture Manny B. Villar

THE Entrepreneur Continued from A1

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want to focus on agriculture, which was the dominant means of livelihood of Filipinos before we started developing the services trade and building industries, following the model of developed countries.

The agricultural sector, however, is on a decline. According to Jose Ramon Albert, then-secretary-general of the National Statistical Coordination Board, the agricultural sector’s importance in terms of its share to the economy continuously dropped over the past decades. From 29.7 percent in 1946, Albert said the share of agriculture to the economy fell to 11.1 percent in 2012. During the first quarter of 2016, when the economy grew by 6.9 percent, agriculture’s contribution was negative 0.4 percent, compared to 2.9 percent from the industry sector and 4.4 percent from services. In terms of growth, agriculture also lags behind the two other major sectors of the economy. During the first quarter of this year, agriculture contracted by 4.4 percent, while industry grew by 8.7 percent

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demand for food and feeds. The decline in agriculture is a threat to the nation’s food security, which could not be covered by the industry or services sectors. What happens in agriculture also affects other segments of the economy, such as exports. According to an online report by FreshPlaza, inadequate raw-material supply, high cost of sugar and other material inputs are among the problems that impede the growth of the food manufacturing and exports sector. FreshPlaza cited industry leaders as saying these problems must be resolved immediately to “arrest the continued low performance and declining competitiveness of the country’s agro-food processing and food exports.” Agriculture, according to Albert, is crucial in reducing poverty and

The politicians versus the people

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and services by 7.9 percent. Agriculture has also declined in terms of employment. According to Albert, the average share of agriculture in employment was about 36.6 percent. In 2010 the share of agriculture declined to 31.2 percent of total employment. The latest Labor Force Survey showed that, as of April 2016, the share of agriculture in total employment further decreased to 25 percent, although still bigger compared to the 18.3-percent share of industry. The services sector accounted for the largest share at 56.7 percent. Despite its declining share in the economy, we cannot neglect agriculture. On the contrary, its declineshouldalarmusandpromptus into action. First of all, the agricultural sector is the key to food security, and must be able to cope with increasing

Despite its declining share in the economy, we cannot neglect agriculture. On the contrary, its decline should alarm us and prompt us into action. First of all, the agricultural sector is the key to food security, and must be able to cope with increasing demand for food and feeds. The decline in agriculture is a threat to the nation’s food security, which could not be covered by the industry or services sectors.

John Mangun

OUTSIDE THE BOX

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t is not about President Duterte as such. It is about the highest presidential trust ratings in history. It is about the Filipinos’ record-high optimism about expectations for a better quality of life and an improving economy. It may be about the peoples’ belief that the President of the Philippines will do what he says he will do, as evidenced in a survey showing 63 percent saying Mr. Duterte can fulfill most of his promises. But, most important, the current situation in the Philippines is that the President is offering what the people want. The top election issues for the people were crime, poverty, the rebellions, service breakdown and corruption. While these are recurring issues of the past decades, the people did not want the continuity of the same promises and the same frustrations when these issues are not addressed with the fervor and solutions that the people want.

The massive political unrest we are seeing around the globe is a negative reaction to politicians telling the people what is best for them and the people answering with a resounding “No.” Germany is caught in a crime wave due in part to a flood of immigrants. While you may argue that it is based on nationalism, racism, or any other “ism”, don’t the people of a sovereign nation have the right to determine their own course even if no one else approves? Isn’t self-determination a

The massive political unrest we are seeing around the globe is a negative reaction to politicians telling the people what is best for them and the people answering with a resounding “No.”

basic “human right”? A recent German poll showed 66 percent of the people do not agree with Chancellor Angela Merkel’s immigration policy for refugees. Only 27 percent agree with her. Yet, even in light of this poll and four terrorist attacks on European soil in seven days, Merkel refuses to change her immigration policy. She said, “Despite the great unease these events inspire, fear can’t be the guide for political decisions. It is our historic duty and this is a historic challenge in times of globalization.” Actually, fear does determine political decisions. That is why nations maintain standing armies and police forces. But, more important, how can a leader say she represents the people when the vast majority disagrees with her policies? How can anyone attempt to continue to lead

attaining the Millennium Development Goals (MDG), which includes halving the proportion of people in extreme poverty and hunger. He said that official poverty statistics dating as far back as 1985 “show that the concentration of the poor has been in the agricultural sector.” In fairness, past administrations had allotted substantial resources to modernize agriculture and implement reforms, but the country’s farmers and fishermen continued to lead impoverished lives. This is a challenge that the new administration must take up. With a new government in place, I believe it is the right time to review the performance of the agriculture sector and analyze what happened, for instance, in the past six years—why we did not accomplish as much as we could. The review should go beyond personalities, like which agriculture secretary did well and who performed poorly. Rather, it should look into the policies and programs adopted and implemented in the past, and in the process identify flaws, make corrections or adopt new initiatives. Let’s not forget that even the wealthiest countries have strong agriculture sectors. More important, let’s not forget the millions of families in the farms and fisheries sectors that still cry for help to move out of poverty. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

when the vast majority of the people do not trust the leader’s decisions? French President François Hollande holds a 17-percent approval rating as of July 22. Note also the trust rating for the US president is 36 percent and for Congress, it is only 6 percent. “Organized religion” scored higher than both. But how could any company function when 80 percent of the stakeholders disapprove of the leadership? What army could ever be successful if only 30 percent of the troops believe in the battle plans? As the trend continues, there will only be two kinds of political leadership. Nations like the Philippines and Indonesia (Joko Widodo’s approval rating is 67 percent), where leaders follow the wishes of the people, and countries where the leaders are fighting against the people. Actually there is a third alternative as found in Venezuela, North Korea and others, where the people’s wishes are simply ignored. 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.

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The caring, hardworking man who built his own empire Cecilio T. Arillo

database

“Start by doing what is necessary; then do what is possible; and suddenly you are doing the impossible.”—St. Francis of Assisi

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HIS Friday (August 5) marks the 29th philanthropic rite of the Wong Chu King Foundation Inc. (WCKF), named after the humble and visionary immigrant from Amoy, China, who built his own caring family and empire in the Philippines through hard work, fierce determination and great sacrifice. His traits were evident during the war, when he started a small cigarette business. With the help of four assistants, King peddled his produce in the narrow and crowded streets of Binondo and Divisoria, survived the war and learned valuable lessons that served him well over the years. One such lesson that stood out is love of God, and as a sign of gratitude for sparing his life and family during the war, he refurbished damaged churches and improved the lives of hungry and destitute war survivors. Generosity and compassion became his tenets in living a life dedicated to providing opportunities for others. After the war, he established La Campana Fabrica de Tabacos. And the rest, as they say, is history. King nurtured his small business into a thriving empire and became one of the country’s large taxpayers with the help of his wife Nelia and his equally hardworking children. Focused on growing his business, King continued to live by the lessons in the turbulent times when survival was uncertain. His commitment to business leadership and success was also his way of fulfilling his pledge of helping as many people as possible by providing them employment and opportunities for personal growth. Today the WCKF lives up to his legacy of humility, charity and love of God and country. King’s unwavering and enduring faith in God translated into a solid commitment to charity and compassion. The foundation espouses transformation through charity because this is how Wong Chu King envisioned his legacy to be handed down. The foundation believes in taking small but necessary steps to help the needy and provide opportunities to the deserving but less fortunate, thereby changing the world—and doing the impossible—one small step at a time with the help of around 5,000 volunteers of the foundation. Transformation through charity is the tenet that drives the WCKF. Founded on March 30, 1990, by the heirs, WCKF is involved in educational and apostolic charities, primarily in areas in the Philippines where tobacco farming is prevalent. The foundation provides scholarships to deserving young men and women, especially to dependents and beneficiaries of Filipino tobacco farmers. The foundation seeks to encourage and promote education and scientific research through its scholarship pro-

grams, focusing on high school, and college and university scholarships. As devout Catholics, the Wong Chu King family has spearheaded assistance programs to parishes and dioceses in a number of provinces in the country through WCKF for restoration and rehabilitation work for churches, especially those with great historical and cultural value to communities. Through the years WCKF has undertaken projects that reflect the generosity and charity of Mr. Wong Chu King. These can be seen in the foundation’s outreach programs for institutions, like the Home for the Elderly (formerly Golden Acres) and the White Cross Orphanage. The foundation also addresses concerns in health and nutrition, youth and family welfare, and disaster relief. While its scholarship programs are managed directly by the foundation, other types of assistance are rendered through other non-governmental organizations. Its main sources of income come from donations and contributions of members of the Wongchuking family and from supporters. WCKF aims to expand its charitable work in the coming years as it continues to perpetuate the memory of the family patriarch.

Vision, mission and core values

Vision. For the greater glory of the Almighty, the Wong Chu King Foundation Inc. will be a world-class institution providing effective, continuing and inspiring opportunities toward the enhancement of the welfare and well-being of deserving beneficiaries by 2020. Mission. The Wong Chu King Foundation Inc. will address the needs of its stakeholders in the areas of culture, spirituality, education, environment and youth development. Core values: Malasakit, genuine care and concern, pagmamahal sa kapwa, selflessness, unconditional service; integrity, honesty, reliability, credibility, trustworthiness; goal-oriented, resultdriven, management by objective, sense of urgency, excellence; highly-committed, dedication, hardworking, perseverance, conviction; teamwork, pagkakaisa, cohesiveness, coordination, WinWin; and Yahweh/God-loving, faith, makatao, family solidarity and compassion.

To reach the writer, e-mail cecilio.arillo@ gmail.com.

A new agriculture revolution Edgardo J. Angara

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he Agtech Investing Report 2015 found that, across the globe, up to 526 deals were clinched last year involving new agricultural technologies, amounting to $4.6 billion in investments—nearly double the $2.36 billion invested in 2014.

Spread across 672 unique investors, the lion’s share of these deals— up to 58 percent of the total number, amounting to around $2.4 billion— was cornered by companies based in the United States, followed by those in Israel ($550 million), India ($506 million) and China ($480 million). Such investment surge—in companies that manufacture environmentally safe biopesticides, provide crop-mapping services through drones or satellite technology, retrofit farm equipment with cutting edge sensors, or develop cloud-based

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hinese automakers are selling more cars than ever before. But Chinese drivers aren’t especially enjoying the experience. According to a new study from market research firm J.D. Power, Chinese satisfaction with the whole process of buying a new car—everything from the showroom to the salesperson—declined in the last 12 months. And those who bought local cars had the worst experiences: Only five Chinese brands made it into in the top 25 for overall sales satisfaction—in China. That’s probably not the sort of statistic that keeps Chinese leaders awake at night. But it should, given that China’s manufacturing-based economy is rapidly transitioning into one largely based on services. As Chinese consumers become richer and more sophisticated, their

expectations for quality of service are rising, as well. Meeting those demands is going to require a fundamental shift of mind-set across a whole range of industries, from cars to clothes. For most of China’s commercial history, consumers have fully expected service—whether in a hotel or an auto dealership—to be terrible. Anything decent was a pleasant surprise, usually enjoyed only at the high end of the market. The issue wasn’t only cultural: China’s state-dominated economy provided few incentives for businesses to cater to the needs of their customers. In a country where service is often equated with servility, that often resulted in customer-staff encounters that ranged between hostile and indifferent. Sales clerks could be famously haughty, while banks and hospitals—places where long lines are still legendary—became opportunities to put pesky consumers

information systems that help farmers monitor soil moisture and nutrients—points to a burgeoning agritech revolution, some have called Agriculture 3.0. A 2012 CropLife article explained that where Agriculture 1.0 referred to the “fairly labor intensive, low productivity affair” that involved millions of small farms, and Agriculture 2.0 to the advances of the American Green Revolution that peaked in the 1960s, Agriculture 3.0 points to an era where farms are increasingly robotized, utilizing digital and “big

data” technologies for better management and profitability. In the Philippines a more fundamental agricultural revolution is needed. Despite the country’s breakneck economic growth, the sector barely grew in the last decade. In 2014, up to 31 percent of the country’s work force are farmers or fishermen, but they are among the least productive, accounting for only 10 percent of GDP. This explains why, according to the Food and Agriculture Organization (FAO), between 2010 and 2012, the Philippines rated the fifth-highest food inadequacy in Asean at 28.3 percent, compared to 15.8 percent in Indonesia, 15.5 percent in Thailand and 6.9 percent in Malaysia. Agriculture has also become a less attractive career path, leading to a farmer population whose average age was 57 years old in 2013. Fewer of their sons and daughters are enticed to continue their trade, choosing to pursue opportunities in the cities—if not abroad. This is understandable, especially when a farmer’s average monthly income is only P2,000 (or roughly $50).

It’s not back to the trenches, after all

E-mail: angara.ed@gmail.com.

consultants,” and that government troops be immediately withdrawn from areas where the NPA operates and sent back to the barracks. On July 27 the NPA attacked a detachment of the Civilian Armed Force Geographical Unit (Cafgu) in Davao del Norte that led to the killing of a militiaman and the wounding of four others. The incident prompted President Duterte to ask the NDF to explain the incident, setting a deadline of 5 p.m. on Friday, July 29. When that deadline passed without any response from the NDF, Mr. Duterte extended the deadline to Saturday, July 30 at 5 p.m. When that extended deadline passed still without any response, President Duterte scuttled the unilateral cease-fire. Sison called Mr. Duterte’s decision “hasty” as he claimed they were ready to agree to a cease-fire by 8 p.m. that same day. “Volatility, lack of prudence in something as sensitive and delicate as peace negotiations between two armed fighting sides—it’s hard to agree with people who are quick to judgment,” the exiled communist leader said. He added the CPP-NPA-NDF cannot be dictated upon by President Duterte and that “the revolutionary movement is treated as if it’s a servant

Chinese and foreign-made cars will vanish “over the next two to three years.” The key is whether Chinese car companies can create an equally good customer experience, too: “Closing that gap is important to the domestic brands if they want brand loyalty and future car purchases,” Broderick says. Right now, “loyalty is dropping,” and so are profits. In 2015, 75 percent of China’s auto dealerships were unprofitable or just breaking even. Those that survive will have to focus on more than the quality of the cars they sell, which is increasingly uniform. Compared to figuring out how to better machine an engine block, the steps required to improve service seem oddly prosaic. But they add up. Among the 23 metrics that J.D. Power used in its newest China Customer Service Index study were whether a car was returned to a customer cleaner than

when it was dropped off for service (international brands did it 80 percent of the time compared to 60 percent for domestic ones) and—in a very Chinese twist—whether a massage device was available at the dealership (40 percent of the time for international dealers, 20 percent for locals). It’s not just the critical automotive industry that needs to work on improving service. In 2015 Forrester Research surveyed 9,000 Chinese consumers on 60 well-known brands. Of these, 80 percent were ranked as delivering “mediocre” customer experiences, with retail and e-commerce scraping along the very bottom of the rankings. That’s a problem, but also a long-term opportunity for brands and businesses to begin differentiating themselves in a crowded market. For example, Air China, China’s national flag carrier, has long set it-

self apart from a slew of anonymous airlines with a focus on high-quality service, especially in its business cabin, which it’s marketed quite successfully. Replicating Air China’s success won’t be cheap or quick. Expensive training programs, much like those pioneered by foreign hotel and fast-food brands, will need to become a part of more industry cultures. Meanwhile, employers are going to have to work harder—and pay more—to retain the employees they’ve spent the resources to train. Finally, compensation and incentive programs will have to change. Currently, many Chinese employers remain focused on selling volume, often without regard to the client. More will need to start evaluating—and rewarding—employees on how well they treat customers, not just on how many units they sell. That is, if they want those customers to come back.

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or a while there, we thought that, with President Duterte revoking his declaration of a unilateral cease-fire, it would be back to the trenches for government forces and Maoist rebels, and the countryside would again reverberate with the beating of the drums of war.

in their place. China’s economic liberalization opened the door to changes. Fivestar hotels and foreign fast-food restaurants brought customer-centric experiences to China’s biggest cities. For most Chinese consumers, though, price remained the biggest consideration when buying a product. That preference aligned with China’s lowcost manufacturing model: So long as Chinese brands competed as commodities, brand loyalty and expectations of service remained low. Over the last half-decade, the model has begun to shift dramatically. Many Chinese manufacturers now make products that meet the high standards for quality that China’s increasingly worldly customers demand. Geoff Broderick, vice president and general manager for Asia-Pacific at J.D. Power, says he expects that the quality gap between

willingness to go back to the negotiating table. They have not. Neither have they said anything about stopping “revolutionary taxation” in areas where they operate as another proof of their sincerity in going to the negotiating table. All they are saying is that, if the government agreed to social, economic and political reforms, then and only then can discussion on ending their armed rebellion be started. And their attack on the militia detachment on July 27 is unfortunate, as it appears they have no control over their forces on the ground. In short, the NDF has accepted every concession given by the government, yet, it has given nothing in return to show good faith and sincerity. In his inaugural speech, Mr. Duterte vowed to work for a “permanent and lasting peace” before he ends his term in 2022. “That is my goal, that is my dream,” he said in his Sona. “All of us want peace, not the peace of the dead, but the peace of the living. We express our willingness and readiness to go to the negotiating table, and yet, we load our guns, fix our sights, pull the trigger. It is both ironic and tragic, and it is endless,” the President said. “To the CPP-NPA-NDF, let us end these decades of ambuscades and skirmishes. We are going nowhere and it is getting bloodier by the day,” he added. We fully agree with him on this, and hope that the communist rebellion that has led to the deaths of an estimated 30,000 people since the late 1960s would grind to a halt. The way out of this quagmire is for both sides to go back to the negotiating table without any preconditions or demands, nor political oneupmanship.

ABOUT TOWN

Now, with the communist-led National Democratic Front saying they are willing to declare a simultaneous cease-fire on August 20 to coincide with the start of peace talks with the government, at least we know that all-out war is not in the horizon. It’s been a roller-coaster ride in the past week as far as the peace process is concerned. Even as President Duterte had made a surprising announcement in his State of the Nation Address (Sona) on July 25 that he was declaring a unilateral cease-fire with the communist movement, the National Democratic Front (NDF) did not reciprocate the confidencebuilding move. Soon after Mr. Duterte announced the unilateral cease-fire, Jose Ma. Sison, the founding chairman of the Communist Party of the Philippines (CPP), said in media interviews the CPP-New People’s Army (NPA)-NDF would respond to the offer of an olive branch “within the hour.” There was no response within the hour. Instead, their response came a couple of days later, not to reciprocate the truce, but to raise the demand that the government should first release political prisoners, particularly those they claimed to be “peace

The Duterte administration rightly refocuses the national development agenda on agriculture. The overarching goal should be food security, not necessarily food selfsufficiency—particularly in staples, like rice and basic items, like fish, fruits and vegetables, to ensure the population’s easy access to nutritious foods. The concurrent aim should be to raise the incomes of our farmers and fishermen. We expect that, under the leadership of Agriculture Secretary Emmanuel F. Piñol, the government will move more decisively toward boosting productivity and strengthening core infrastructure—access roads, harvest facilities, and other related transport and logistical requirements. Eventually, the administration’s pivot to agriculture should include a long-term effort to deploy new agricultural technologies, mechanize and modernize our farming practices—to fast-track the Agriculture 3.0 revolution throughout the country.

of the new boss. That cannot be.” Sison said, however, that despite this development, formal peace talks will resume as scheduled in Oslo, Norway, on August 20. From where I sit, the Duterte administration appears to have already bent over backward to pave the way to restart the negotiations and put an end to nearly 50 years of fighting. First, Mr. Duterte gave at least four nominees of the NDF positions in his Cabinet, two as secretaries of the departments of Social Welfare and Development, and of Agrarian Reform, another Leftist as chairman of the National Anti-Poverty Commission, and still another as undersecretary in the Department of Labor. Considering that the mainstream Left has never gone past beyond the stage of “strategic defensive” both in terms of political influence or military strength in the past 50 years, President Duterte’s offer of positions in his government to some of their leaders is already a big concession to them. Second, Mr. Duterte appears willing to release the 500 or so political prisoners now in various jails as another confidence-building measure. And third, the unilateral ceasefire would have provided an excellent opportunity for both sides to talk peace without bullets whizzing by in both directions, had it been reciprocated by the NDF earlier. If we consider peace talks as a continuing process of give and take, it’s been one-sided all the way. For what has the NDF done to show sincerity and good faith, and promote a pleasant atmosphere for the political negotiations? Just before President Duterte announced the unilateral cease-fire on July 25, the NPA held captive four off-duty policemen in Mindanao. The NPA could have immediately released the four cops to show their

Ernesto M. Hilario

Putting the customer first in China By Adam Minter | Bloomberg View

Tuesday, August 2, 2016 A11

E-mail: ernhil@yahoo.com.

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