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n Friday, August 3, 2018 Vol. 13 No. 293
DA: ₧20B for farmers a must with rice tariffs T By Jasper Emmanuel Y. Arcalas
@jearcalas
HE national government must spend P20 billion to roll out interventions that will help rice farmers cope with the scrapping of the quantitative restriction (QR) on rice if it wants the price of the staple to drop by P7 per kilogram (kg).
Agriculture Secretary Emmanuel F. Piñol also said the decline in prices will not happen immediately after the QR on rice is replaced with tariffs. The Department of Finance projected in December that the price of the staple will go down by P7 per kg if the import quota is replaced with a 35-percent tariff.
“[The decline in prices] may happen in three to four years; maybe at the end of the term of the President,” Piñol told reporters at the sidelines of the Department of Agriculture’s (DA) budget hearing at the House of Representatives on Thursday. “[This will happen] provided that
all the tariffs collected from rice imports will go to the rice sector,” he added. Bills that would amend Republic Act (RA) 8178 and convert the country’s rice QR into tariffs prescribe the set up of a rice competitiveness enhancement fund. The RCEF will consist of all the tariffs collected
from rice imports and would be earmarked for the development of the rice sector. Based on their estimates, Piñol said the RCEF would amount to around P21.6 billion annually, based on an import volume of 2 million metric tons (MMT) at an average quotation of $500 per metric ton. “If that happens, then our farmers will be able to improve their productivity, increase their production and lower their cost of production. In the process, we will be able to compete with imported rice being brought into the country,” he said. “And in that process, we will realize the statement of the President that the price of rice in the market would go down by P7 [per kg]. What the President announced would only be felt when all the support to the rice industry has been delivered,” Piñol added. See “DA,” A12
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PLANNED PHL-CHINA JOINT EXPLORATION STIRS ‘CAUTION’ CALL By Butch Fernandez @butchfBM
& Bernadette D. Nicolas
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@BNicolasBM
IRST, it must comply with the provisions of the Constitution. Second, it must undergo congressional review. Third, it must not be pursued alongside Charter change, as such may infuse legal uncertainty into negotiations. These are the priority considerations emerging from a planned joint oil-exploration deal with China in the West Philippine Sea (WPS), even as a maritime law expert said on Thursday the country should not pursue Charter change in the middle of negotiations for such a bilateral arrangement, and before the Supreme Court rules on a similar arrangement
By Jovee Marie N. dela Cruz
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By Joel R. San Juan @jrsanjuan1573
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See “Ongpin,” A2
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with Vietnam in 2005. Sen. Joel Villanueva, invoking the Senate’s oversight powers, on Wednesday sought submission for congressional review of a separate joint oilexploration deal with China in the WPS. “I do not see any problem entering into a similar arrangement w ith China,” Villanueva said a day after Foreign Secretary Alan Peter Cayetano said the joint exploration deal was nearing completion, but quickly added a word of caution: “the devil is in the details.” Acting Chief Justice Antonio Carpio said the proposed deal between the Philippines and China on the joint exploration of natural resources in the WPS must comply with the provisions of the Constitution. See “Joint exploration,” A2
House panel okays tax reform bill ‘in principle’
Ongpin cleared of insider trading raps in Philex case HE Court of Appeals has affirmed its ruling clearing businessman Roberto Ongpin of 174 counts of insider trading involving Philex Mining Corp. shares back in 2009. In a five-page resolution penned by Associate Justice Ma. Luisa QuijanoPadilla, the CA’s Special Thirteenth Division denied the motion for reconsideration filed by the Enforcement and Investor Protection Department of the Securities and Exchange Commission (SEC) of its December 1, 2017, decision, which reversed and set aside the latter’s decision issued on July 8, 2016, finding Ongpin liable for insider trading.
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A consumer buys goods at a stall at Balintawak Market. The Bangko Sentral ng Pilipinas said inflation may have risen by as much as 5.8 percent for July, and lawmakers are rushing the shift to rice tariffs. The agriculture chief, however, said such may not immediately lead to lower rice prices. contributed photo by Beverly de la Cruz
PESO exchange rates n US 53.1150
@joveemarie
HE second package of the Duterte administration’s Comprehensive Tax Reform Package (CTRP) is now moving closer to getting passed, as the members of the House Committee on Ways and Means approved “in principle” the measure known as TRAIN 2. House Committee on Ways and Means Chairman Rep. Dakila Carlo Cua of Quirino, however, said his panel created a technical working group (TWG) to consolidate all related tax proposals filed in the chamber and create one version of Package 2, which aims to lower the corporate income tax (CIT) and modernize incentives. Currently, there are 12 bills
filed in the lower chamber seeking to reduce CIT and rationalize fiscal incentives. However, Cua’s version of the second tax reform will be used as the main bill. Cua said his panel is working double time to pass the package, as it was declared as a priority bill of both Speaker Gloria MacapagalArroyo and President Duterte. “We are trying to finish as early as possible without compromising the quality of the legislation. Speaker [Gloria Macapagal] Arroyo said [we should] give this 100-percent attention and top priority, so that’s why we are not wasting any time on this,” Cua said. “[However], we have to understand that this is not something we want to do in one day, as we endeavor to pass this legislation.
n japan 0.4755 n UK 69.7294 n HK 6.7678 n CHINA 7.7938 n singapore 39.0121 n australia 39.3210 n EU 61.9427 n SAUDI arabia 14.1632
See “House,” A2
Source: BSP (2 August 2018 )
News
BusinessMirror
A2 Friday, August 3, 2018
Sotto files bill reforming CIT and perks, allays inflation fears
S
ENATE President Vicente C. Sotto III on Thursday filed a bill “reforming the corporate income tax and incentives” by amending at least 31 sections of the 1997 National Internal Revenue Code, but stopped short of tagging his measure as “TRAIN 2.”
The bill’s filing comes after some quarters expressed concern the taxreform program might stall owing to the absence of a clear sponsor in the Senate for the next-round measures, topped by the reduction in corporate income tax and the modernization of fiscal perks. In his explanatory note to Senate Bill 1096, Sotto stressed that existing investment tax incentives will not be removed “but it will be rationalized.” He noted that for the past three
decades, there were 654 firms enjoying incentives from government. “Thus, it is high time to have a tax incentives system that is performance-based, targeted, transparent and time-bound in order to ensure that the Filipino people will gain from every peso that the government gives to the firms registered in the investment promotion agencies (IPAs). The Senate leader gave assurances the measure being proposed will “simplify the tax system to avoid
Joint exploration. . .
“As long as the joint development complies with the Philippine Constitution and there is no waiver of our sovereign rights under the arbitral ruling, I have no objection,” Carpio said in a text message sent to reporters on Thursday. The senior magistrate earlier welcomed President Duterte’s pronouncement in his third State of the Nation Address (Sona) that Manila will not waver in defending the country’s interests in the WPS despite strengthened ties with Beijing. “Well, that’s the correct position. We should never give up our rights there. That can be reconciled. We can continue to trade with China while we continue to defend our sovereign rights,” Carpio said in chance interview after the President’s Sona. “There’s no incompatibility there because we have other relations with China. We have trade. We have cultural and all other matters. But we should not do anything that will waive our rights to the West Philippine Sea,”he added. Cayetano made assurances that the Philippine government would ink a joint exploration deal with China that is “equal or better” than its contract in Malampaya. The $4.5-billion Malampaya gas-to-power project is a joint undertaking of the Philippine government and the private sector. Cayetano also defended the government’s move to pursue talks on the matter with China. “My question really is if we are to get a partner, whether it’s from Indonesia, Saudi Arabia, or the Dutch, we will eventually get a partner to explore. So what do we lose if we do it with our neighbors?” he asked. China earlier expressed its willingness for a 60-40 possible joint exploration in the WPS, where the 60 percent would go to the Philippines while China gets the balance of 40 percent. Cayetano has yet to give a specific
House. . .
Continued from A1
There has to be proper transition, proper transitory provisions,” he added. According to the lawmaker, the country’s fiscal incentives must be modernized to ensure that these are more “responsive, targeted and transparent.” “Our objective here is to attract more investments, which, in turn, would generate more jobs,” Cua said. Aambis-OWA Rep. Sharon Garin, a senior member of the ways and means committee and an author of one of the bills, said approving the bill in principle means the panel has already finished all the discussions on different versions. Approving the measure in principle also means that the measure would be tackled as a package, rather than per individual tax proposal. “We will consolidate all the bills and opinions, then approval of the substitute bill and committee report at the mother committee,” Garin said. One of the authors of the bill, Al-
Continued from A1
timeline on a possible Philippines-China joint exploration, but added that Duterte and President Xi Jinping had basically given a “go signal” for the drafting of a framework.
Charter-change timing
Maritime law expert Jay Batongbacal warned against pushing Charter change or federalism in the middle of the proposed 60-40 joint exploration of natural resources deal with China, as it will complicate things. In an interview with B usiness M irror, Batongbacal also urged the Supreme Court to issue the ruling first on Bayan Muna’s challenge to the constitutionality of the Joint Marine Seismic Undertaking (JMSU) entered into in 2005 by the administration of thenPresident Gloria Macapagal-Arroyo with China and Vietnam. “I am not in favor of Charter change in the middle of all of this because that’s an additional cause for uncertainty,”he said. “Second, I would want for the Supreme Court to already make the decision on the JMSU case so that the stand on the [interpretation of the] 1987 Constitution is already clear.” Only after that, Batongbacal said, can a decision on the modality of the supposed joint exploration and development deal with China be reached.
Tell Congress
Meanwhile, Sen. Villanueva voiced hopes the Department of Energy will “be vigilant in its job” even as he asked the DOE to submit copies of the proposed joint oil exploration contracts with China “for notification of Congress and to inform our citizens of these deals.” At the outset, the Senator clarified he was pressing for a Senate review to make sure any agreement entered into with China is“purely for a beneficial bilateral business transaction and bay Rep. Joey Salceda, meanwhile, said the bill seeks to lower the corporate tax rate, as well as widen the corporate tax base and plug its tax leakages, by rationalizing the administration of tax incentives. “The passage of [TRAIN 1] made our personal income taxation simple, fair, and efficient. To complete the administration’s fiscal reform package, the corporate income tax and incentives must likewise be made fair and efficient,” Salceda said. He said the country’s income tax system is characterized by a narrow base and a high rate of 30 percent, the highest in the Asean region. He said the country’s investment tax incentive system is characterized by “complexities and [an] overly liberal mind-set” with little regard to cost efficiency and effectiveness. “While the importance of tax incentives is not denied—as it attracts investments, addresses market failures, and pivots the state toward reaching its full potential—it needs to be rationalized and disciplined to ensure that foregone revenues arising from its grant do not cost the government more than the
tax evasion,” and impose higher penalties on offenders. “Considering this is a revenueneutral tax measure, it will not have any inflationary effects but it may one way or another provide support to some 90,000 plus SMEs to be covered by this Act,” he added. Sotto recalled that on January 1, 2018, the Duterte government implemented/the Ta x Reform for Acceleration and Inclusion (TRAIN) which, after six months of enforcement, allowed the government to have a decent budget to finance, among others, social mitigation programs for the poor, the free education program and the initial phase of the administration’s “Build, Build, Build” infrastructure program. “While the effectiveness of TRAIN 1 is creditable, rising prices of basic commodities, power and food, utilized by the majority of the population belonging to lower
strata of society have been wrongly blamed to the effect of TRAIN 1,” he said. The Senate President lamented that “it is quite unfortunate” the targeted 3.7% inflation rate set by the Department of Finance ballooned to 5.2%, but pointed out that the impact on inflation was not a result of TRAIN 1 alone, “other external factors not related to it, including , among others, the increase in world oil prices that jumped to $53.7 per barrel in the start of this year to a high of $75.16 per barrel in June 2018.” Such global oil price spikes—which the finance department conceded it had underestimated—compounded the effect of the higher excise tax on fuel as levied by TRAIN. Sotto added the increase in US interest rates also led to the peso depreciation against the US dollar from 49.74 in January to 53.05 in June 2018. Butch Fernandez
will not be used to compromise our economic and political sovereignty.” This, even as Villanueva also acknowledged the proposed 60:40 sharing arrangement between the Philippines and China is consistent with existing law governing oil and gas exploration and utilization in the country. He recalled that the Philippine government earlier entered into partnership with multinational companies under this arrangement, citing the Royal Dutch Shell Company which has been extracting natural gas from Malampaya for decades.
On Con-com’s proposed provision to give Congress the power to liberalize the country’s restriction on joint exploration of natural resources, Batongbacal considers this as a loophole, as such loosening equity restrictions are in fact ways of opening it up to foreign acquisition. “That [provision] will open the resources of the country to potentially 100-percent foreign control through private corporations. It doesn’t necessarily say about foreign states but of course, you can expect that what applies to private corporations will also apply to [a] foreign power, which will really open it up.” Batongbacal also stressed that the issue on the proposed 60-40 joint exploration deal on natural resources with China is really about the matter of where it applies to. “The 60-40 split per se is not the problem since the [present] Constitution provides for 60-40 splitting between the state and a contractor for natural resources. Just because it’s 60-40 doesn’t mean anything. The issue there is what 60-40 applies to—whether it applies to ownership or sovereignty over the resources,” he said. He said Cayetano’s statement is not yet clear and final, since the whole idea of joint exploration with China is still subject of the outcome of the ruling on the JMSU case pending in the Supreme Court. “There is no assurance that the whole idea of joint exploration will be deemed legal by the Supreme Court since the [case] is pending,” he said. Cayetano earlier said China has expressed its willingness to conduct a 60-40 joint exploration on natural resources in the West Philippine Sea—with 60 percent for the Philippines and 40 percent for China. He said authorities are still crafting the framework agreement for the possible joint exploration, and that officials from the Department of Energy and Department of Foreign Affairs, Chinese officials and international experts will meet to discuss the issue. With a report from PNA
‘No legal certainty’
Despite Villanueva’s confidence in the viability of pursuing the Malampaya template, Batongbacal frets over the legal uncertainty that could cloud talks on joint exploration if the Philippines were to pursue Charter change on a parallel track. “Doing all of this at the same time, dealing with China and going for charter change at the same time is complicated so even for China it would not be advisable because there is no legal certainty,” the professor said. “There are no legal guarantees to whatever deal it enters into right now, so if I’m on the Chinese side, I would advise to hold everything off until the Philippines sorts out its legal issues.” These legal issues also include the Duterte administration’s bid to shift the form of government from unitary to federal apart from the pending court case. Batongbacal said that unlike China, the Philippines might have problems if it holds off the talks on the proposed joint exploration deal, especially that there’s a looming energy crisis in the middle of 2020 when Malampaya runs out. Batongbacal also earlier expressed his disappointment over the proposed federal charter as he said some provisions, especially on National Territory, do not strengthen the Philippines’s claim to the disputed waters. benefits these investments bring,” Salceda said. “With the tax incentives rationalized and the tax base expanded, the corporate income tax rate will now be reduced in order to alleviate the burden of majority of the business community—notably the micro-small, and medium-size enterprises, who pay the regular 30percent income tax rate,” he added.
Hostage
The former chairman of the House Ways and Means Committee on Thursday said the proposal to lower corporate income tax rates has been held hostage by the second package of the Comprehensive Tax Reform Package (CTRP). Marikina Rep. Romero Quimbo said corporate income tax reduction cannot be conditioned on the overhaul of or removal of most tax incentives, as it amounts to a “hostage” situation. “We cannot make the reduction of corporate income taxes contingent on removal of fiscal incentives. The DOF’s ‘revenue-neutral’ strategy, as shown by the effects of TRAIN [Tax Reform For Accel-
eration and Inclusion] 1, has not produced the desired effects,” said Quimbo at the sidelines of the continuation of the Ways and Means hearing on the second package of the tax reform. The second package of the CTRP, which was designed to be revenueneutral, proposed to gradually lower the CIT rate from 30 to 25 percent, while rationalizing fiscal incentives for companies to make these performance-based, targeted, time bound and transparent. According to Quimbo, corporate income tax reduction is an urgent concern that affects the country’s competitiveness. “We currently have the highest corporate income tax in the Asean. An investor will not be convinced to come to our country if for every peso profit they make, 30 centavos will go to the government while in other neighboring countries, they only lose between 5 to 15 centavos. In some cases, they even get tax holidays,” he said. He added that foreign direct investment is important to drive the most laggard sector in our economy—the manufacturing sector.
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Pagcor to solons: We’ll follow Palace policy on Bora casinos
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HE Philippine Amusement and Gaming Corp. (Pagcor) has assured lawmakers that it will follow the Palace’s directive to deny licenses for casinos on Boracay Island even after the six-month rehabilitation of the world-acclaimed tourist haven. At a hearing on the 2019 national budget, Pagcor Chairman Andrea Domingo denied that her agency was cooperating in the continued creation of a Chinese-owned casino on Boracay. The Chinese gaming firm’s Philippine partner Leisure and Resorts World Corp. (LRWC) had earlier denied the scrapping of the project, a statement that was viewed in some quarters as going up despite President Duterte’s disapproval of casinos. But the LRWC official, Atty. Katrina Nepomuceno, has since clarified what she meant: that the land development and hotel plans are on target, subject to the Department of Environment and Natural Resources and other regulatory approvals. She made no mention of the casino part of the development. Macau-based Galaxy Entertainment Group partnered with Leisure Corp. and invested $500 million to develop a 23-hectare land in Barangay Manoc-Manoc, Boracay Island. “[A]ng Pagcor, under sa office of the president, susundin po namin ang directive ng pangulo, so kung sinabi po niya na hindi pwede, hindi ho pwede [Pagcor, under the Office of the President, will follow the directive of the president, so if the
Ongpin. . .
Continued from A1
The appellate court did not give credence to SEC’s insistence that there was substantial evidence to support its findings that Ongpin committed insider trading. Being a quasi-judicial body, the SEC pointed out that its findings should be conclusive and binding upon the court. The SEC further claimed that all the elements of insider trading were established during its investigation; thus, Ongpin was properly meted out the penalty of a P174-million fine for 174 counts of insider trading. However, the CA agreed with Ongpin’s contention that only “findings of fact”of quasi-judicial agencies are binding upon the court as stated in Section 10, Rule 43 of the Rules of Court. “This Court is therefore not bound by the legal conclusions of the former owing to the inherent duty of courts of law to determine legal issues and settle actual controversies,”the CA explained. The CA noted that the other arguments raised by SEC in its MR “are mere rehash”of those that have already been discussed and resolved in its December 1, 2017, decision. “This Court is therefore not con-
“This is the sector that brings in the highest personal income growth as manufacturing sector creates jobs,” said Quimbo.
Separate discussion
Meanwhile, he said it is better for Congress to discuss the proposal reducing the corporate income tax and the proposal rationalizing the fiscal incentives. “I think we need to discuss them separately. However, certainly nothing prevents us from putting them both in one law,” he said. The Department of Finance (DOF) is also pushing for the passage of the measure as the country needs to harmonize the 315 incentive laws into one incentives law. It said some 315 existing special laws grant other forms of incentives beyond what the investment promotion agencies (IPAs) give. Currently, the Philippines has 14 IPAs authorized to grant incentives to a select group of businesses. With the incentives laws, the DOF said the government lost P178.56 billion in potential revenues in 2016 as a result of tax
President said it is not allowed, then it is not allowed],” she said, referring to the casino ban that Duterte had imposed. He reiterated the policy on Friday (July 27), according to Tourism Secretary Bernadette Fatima Romulo Puyat. Domingo told congressmen that Pagcor saw no rules being broken when they gave the provisional license in March 2018, and stated that once there had been a change of directives and policy, they followed. “Ayan naman po ang gaming eh, ‘yan ay hindi right, kundi privilege [That’s what gaming is about. It is not a right, but a privilege],” Domingo said. Although Pagcor assured the lawmakers they will follow the President’s policy, Domingo said they have yet to terminate the license. Boracay was shut dow n in April 2018 for a rehabilitation project with the aim of cleaning the island. Earlier, Environment Secretary Roy A. Cimatu said the Boracay Island would be reopened to the public on October 26. Meanwhile, in the same hearing, Pagcor Assistant Vice President Sharon Quintanilla said Pagcor’s total income increased to P67.60 billion in the first semester of 2018, higher than its total income of P59.85 billion in 2017. It aimed to generate an income of 68.93 billion for 2019. “The highlights show that we are earning more while spending less,” Quintanilla said. Joahna Lei Casilao vinced that a modification of our ruling is warranted.” In its July 2016 decision, the SEC barred Ongpin, a former trade minister under the late dictator Ferdinand Marcos, from becoming part of the board of any Philippine Stock Exchange-listed firm. The commission also ordered him to pay a fine of P174 million, or P1 million each for 174 counts of insider trading. The SEC found Ongpin liable for insider trading when he accumulated, then sold, a big block of Philex shares to Manuel Pangilinan-led First Pacific, with the prior knowledge of an agreedupon price at which to sell the shares. Ongpin acquired his first block of Philex Mining shares from Banco de Oro in 2007. He then acquired additional shares held by John Gokongwei and Manuel Zamora. In the morning of December 2, 2009, Ongpin, through Golden Media Corp., bought another block of almost 50 million shares at P19.25 each, from the open market. That evening, Ongpin sold his 550 million shares for P21 apiece to Two Rivers Pacific Holdings Corp., a subsidiary of First Pacific. As a result, First Pacific assumed control over Philex.
perks to only 3,102 firms registered with various IPAs. In the same hearing, Jenina Joy Chavez from the Industrial Policy team noted the importance of incentives and their effect on fiscal space. “[W]e believe that incentives are come-ons designed to encourage investments where they would not normally go or where the expected social benefits are high,” Chavez said, adding that with freed fiscal space, “new priorities may be identified in the future.” She added that some incentives may be flexible and last for five years but not more than 10, to “help an activity or an enterprise to get past the stage of infancy or precarity, to develop efficiencies and to stand on their own. “The reforms in fiscal incentive will have broader benefits for more industry players so it can balance out,” Chavez said. Finance Undersecretary Karl Kendrick Chua reiterated that Package 2 is revenue-neutral because as “we lower the corporate income tax gradually, we are going to phase out the unneccessary incentives.” With Joahna Lei Casilao
The Nation BusinessMirror
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Editor: Vittorio V. Vitug • Friday, August 3, 2018 A3
Con-com: Charter-change bid far from over
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By Bernadette D. Nicolas
@BNicolasBM
ollowing Sen. Panfilo M. Lacson Sr.’s statement that the proposed Charter change on federalism is just “waiting to be cremated” in the Senate, the President’s Consultative Committee (Con-com) declared that the fight to push for Charter change is far from over.
On Thursday Lacson expressed doubts that the push for Charter change would get the numbers in the Senate. “It’s not going to get enough numbers because, last Wednesday, right after we witnessed the change in leadership in the House…in the majority caucus and later on all senators’ caucus, the first question of Senate President [Vicente C. Sotto III] was: Who among you will support Charter change as of now? And no one raised their hand,” Lacson said, even mentioning that he even did not notice former Senate President Aquilino L. Pimentel III raising his hand, probably because he was “shy” or “intimidated.” Lacson’s statement came following the pronouncement of newly installed House Speaker and former President now Pampanga Second District Rep. Gloria Macapagal-Arroyo that she is in favor of the House and the Senate voting separately to push for Charter change. Arroyo cited that it was because she also ended her presidency with the “same stalemate” on whether Senate and House of Representatives should vote jointly or separately. But Lacson downplayed Arroyo’s statement, saying that, despite the pronouncement, she is just one vote in the Congress. “Although she said, I’m okay for voting separately, she is just one vote in the House. What if the majority of members in the lower house are thinking differently?” the senator said. Reacting to Lacson’s statement that Charter change is just awaiting cremation, Con-com member and former Senate President Aquilino
Subic firm FCL denies ‘human-smuggling’ rap
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By Henry Empeño | Correspondent
UBIC BAY FREEPORT—A company based in this Freeport has denied involvement in human smuggling, saying the Department of Justice (DOJ) has dismissed the case of illegal recruitment that was filed against it early last month. In a news statement sent to the media, Fahrenheit Co. Ltd. (FCL) strongly denied that it was involved in any form of human trafficking, human smuggling or illegal recruitment. “How could we be involved in illegal recruitment when we are not even actively recruiting people for work abroad? There is not a single time when we, or the company, have even asked for any form of payment or fees in exchange for overseas employment,” FCL President Isagani Cabrera said. “So the unfortunate events which happened were a big surprise to us since for the past two decades, we have been operating our business smoothly and efficiently,” he added. The company issued the denial after several news reports indicated that authorities “rescued” 139 undocumented persons who might have been victims of illegal activities from the company’s ship MV Forever Lucky in Orion, Bataan, on July 3. However, Cabrera said that Fahrenheit, which is in the business of port operations and other related businesses for the past 20 years, has been “operating as a law-abiding and responsible business entity.” “We would not sacrifice our untarnished reputation just to be involved in illegal activities especially in something as grave as human smuggling,” Cabrera said. “MV Forever Lucky was not even scheduled to depart anywhere since at that night of July 3, there were some repairs being done in the ship,” he added. According to the company, the case filed against Cabrera and four other Fahrenheit workers has been downgraded to illegal recruitment, as there was no compelling reason or evidence to charge them for human smuggling or human trafficking. “In fact, the case filed against them was for alleged violations of RA 8042, otherwise known as the ‘Migrant Workers and Overseas Filipinos Act of 1995’ as amended by RA 10022. The DOJ, in a decision handed last July 9, already dismissed the case for lack of probable cause,” it added. The statement also pointed out that out of the 139 supposed victims, the National Bureau of Investigation (NBI) got only nine complainants, who were not workers directly involved with Fahrenheit, but students fulfilling their internship training. Two days after the raid by the NBI and the Philippine Coast Guard, the nine complainants submitted their affidavits of desistance, the statement further said. This reportedly compelled the DOJ to find “not only a misapprehension of the facts which transpired previously but also [a] manifest lack of intention on their [complainants] part to pursue the case.” With this, the DOJ reportedly found no probable cause to indict the respondents, as there was now “a dearth of evidence with regard to the alleged acts of the respondents pertaining to the alleged illegal recruitment.“ “Evidently, there is no intent from Fahrenheit to mislead the OJT trainees. In fact, it should be their OJT recruiter who should answer what promises were made to them,” added FCL’s lawyer John Aquino. Meanwhile, investigators handling the Fahrenheit case here found no information to implicate in the illegal-recruitment case MacroAsia Pharma Inc., a Subic-registered company that some witnesses had tagged as another venue for recruitment.
“Nene” Q. Pimentel Jr. told the BusinessMirror that what Lacson said could be “true as for now,” since it takes time to convince people to support advocacies that is “new” to them. “He is entitled to his own opinion,” the elder Pimentel said in a text message. “Even the Local Government Code took years to enact. Democratic change is evolutionary. Not revolutionary,” he said. The lone female Con-com member lawyer Susan
Ubalde-Ordinario echoed Pimentel’s statement, but noted that “public clamor is going to be the challenge they [Charter-change advocates] will have to meet, especially since elections are coming up.” Another Con-com member Arthur N. Aguilar said that, while federalism will “take a backseat” for now in favor of the national budget deliberations, the second tax-reform package and the heavy legislative agenda, it is still “premature to predict its death.”
“The public is now well aware how lives could be improved in the distant regions, and how Metro Manila could be decongested. Visayas and Mindanao will continue to agitate for it,” he told the BusinessMirror. “As long as President Duterte is in power, the genie is out of the bottle and hard to put back.” He also noted that the new Senate composition after the 2019 mid-term elections can also be a game-changer.
Economy BusinessMirror
A4 Friday, August 3, 2018 • Editor: Vittorio V. Vitug
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Groups seek JCPC probe into PSALM’s spending
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By Lenie Lectura
@llectura
wo electric cooperative (EC) groups are urging lawmakers to probe the Power Sector Assets and Liabilities Management Corp. (PSALM) on how it utilizes proceeds from the sale of state-owned power assets. Presley de Jesus, president of the Philippine Rural Electric Cooperatives Association (PhilReca), said the Joint Congressional Power Committee (JCPC) must take a “closer look into the books” of PSALM to determine how the body utilizes its funding. “We demand a no-nonsense examination of PSALM’s fund utilization in light of its statements before
the Senate. In particular, how does PSALM manage funds from the sale of power-sector assets? Were their expenditures in accordance with the Electric Power Industry Reform Act? Did the proceeds from the sale of these assets really used, as prescribed by Epira [Electric Power Industry Reform Act]?” de Jesus commented. PSALM is the agency tasked to manage the privatization of existing
assets of the National Power Corp. with the objective of liquidating all of NPC’s financial obligations. De Jesus said PSALM must be compelled to explain how NPC debts ballooned to P450 billion, with P34 billion more in interest. Consumers are the ones that shoulder these debts via the collection of universal charge reflected in electricity bills. Sergio Dagooc, president of the National Association of General Managers of Electric Cooperatives (Nagmec), commented that the bulk of PSALM funds should come from proceeds of the sale and privatization of NPC assets, “and not only from stranded costs [SCs] collected from electricity consumers.” “There must be an accounting of these funds. What were the terms of reference? What was the manner of sale? Let us remember that PSALM’s obligations incur interests, by the day, including exchange-rate
fluctuations. These are very important questions that need urgent answers,” Dagooc said. The Nagmec chief also pointed out that, while they only serve as mere collectors of these SCs, they bear the brunt of the consumers’ rage against increased electricity costs. “[The] PSALM should go around the country and explain to our consumers,” Dagooc said. “The bottomline here is another round of suffering for the Filipino electricity consumer because of the inevitable increase in power rates, while government agencies are engaged in a blame game,” he added. During a recent Senate hearing, PSALM officials passed the blame to the Energy Regulatory Commission (ERC) because of the regulatory agency’s “slow pace” in approving petitions for rate increases, currently pegged at 86 centavos per kilowatt-hour, and another 20 centavo “cost of delay
staggered recovery” attributable to ERC’s supposed inaction. “PSALM says the reason their debts and payables have increased exponentially is because of the ERC. PSALM could be resorting to pointing fingers to hide itself from
depends on the payment of consumers to pay its loans and debts. That should not be the case,” he said. The groups said there is an urgent need for “a thorough and immediate investigation by the
We demand a no-nonsense examination of PSALM’s fund utilization in light of its statements before the Senate. In particular, how does PSALM manage funds from the sale of power-sector assets?”—de Jesus complicity. Although the ERC may be partly remiss, that’s only one of the reasons. It’s not purely the ERC’s fault,” de Jesus added. “Pointing fingers at the ERC is a virtual admission that PSALM
energy committees of the House of Representatives and the Senate to determine where the revenue earned and proceeds from the sale of plants and from the privatization of NPC assets went.”
NEA secures P1.163-billion electrification budget for ’19
Task force opens Boracay one-stop shop for biz permit application
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By Jonathan L. Mayuga
he National Electrification Administration (NEA) has reaffirmed its mandate to fulfill its mandate of providing total electrification in the far-flung corners of the country despite limited budget. The NEA, according to Administrator Edgardo Masongsong, would be receiving P1.163 billion from the national government to finance electrification projects for 2019. The amount is lower than the P1.817-billion budget allotted this year to energize 1,817 sitios (rural enclave that form part of a village). Masongsong said the NEA will be asking for an increase in funds in the years ahead, citing the 19,740 sitios or 2.4 million households across the country that are yet to be reached by electricity service. Meantime, the NEA chief said the agency will continue to deliver in meeting its household electrification target. To date, the NEA, through its partnership with 121 electric cooperatives (ECs), has successfully energized 12.447 million consumers nationwide. “Our partnership with the 121 ECs is getting stronger every year, and with them by our side, we are making a steady progress toward meeting our target of new rural households having access to electricity for 2018,” Masongsong said. Latest data from the NEA Information Technology and Communication Services Department showed that 260,224 new consumer connections were registered in the first six months, or 56 percent of the 460,000 corporate target for the year. Lenie Lectura
@jonlmayuga
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O ensure ease of doing business, the Boracay Inter-Agency Task Force (BIATF) will set up a one-stop shop (OSS) in Boracay for speedy processing of permits in preparation for the island paradise’s reopening to tourists in October. Situated in the town of Malay, Aklan province, Boracay is the country’s top tourist destination. It has been closed to tourism activities since April 26, and it is currently in the final phase of a massive rehabilitation program to address various environmental problems. In a news statement issued on Thursday, Environment Secretary Roy A. Cimatu, who also leads the BIATF, said through the OSS, they intend to streamline the process of securing permits for commercial establishments in Boracay. The OSS is manned by personnel from various agencies comprising the BIATF, namely, the Departments of Environment, (DENR), Tourism, (DOT) and Local Government (DILG). The OSS will assist business owners in complying with the needed requirements that will enable them to operate when Boracay reopens on October 26. Cimatu said the DENR had already set up its own OSS in its base operations at Station 3 of Boracay’s White Beach. The agency provides services such as verification of the status or classification of the land occupied by an establishment and its compliance with easement rules. The DENR’s Environmental Management Bureau (EMB) has also assigned its personnel to help evaluate compliance with environmental laws, particularly on clean water, clean air, solid-waste management, and toxic substances and hazardous waste control. The EMB is currently conducting on-site visits to all business establishments on the island to check on their compliance with various regulations issued by the DENR, including the setting up of seweragetreatment plants (STPs) for hotels and resorts with more than five rooms. The DENR’s OSS also al-
Men of steel
Laborers hold tight to a steel pillar as they work at a construction site in Pasay City. According to reports, the rapid economic expansion in the country, and the Duterte administration’s massive infra buildup “Build, Build, Build” program could generate employment at a rate that the job market may not be able to cope up with. ALYSA SALEN
lows business owners to verify whether their establishments require an environmental compliance certificate, or ECC, or simply a certificate of noncoverage for establishments with five rooms and below. Aside from the DENR, establishments also need clearance from the DILG, or the local government unit, regarding their business and sanitation permits. Once clearances are obtained from both the DENR and DILG, business owners could then seek accreditation from the DOT, subject to the agency’s own requirements or conditions. Cimatu reminded business owners to secure the necessary permits, licenses, and certification to be allowed to reopen their
business establishments at the end of the six-month rehabilitation period. “The reopening of Boracay does not mean that all establishments will also reopen. They will have to first secure the necessary permits and comply with existing conditions or requirements,” Cimatu said during the third meeting of the BIATF last week. Earlier, Cimatu issued an order directing all business establishments on the beach fronts, with the exception of establishments with five rooms and below, to put up their own STPs. Likewise, all business establishments that are not yet connected to Boracay Island Water Co. are required to connect, or put up their own STPs.
Establishments with 50 rooms and above must have their own STPs, while those with 49 rooms and below can pool together resources to put up STPs with appropriate water-treatment capacity. The BIATF was created to carry out rehabilitation works in Boracay, which, President Duterte earlier described as a “cesspool” due to environmental problems plaguing the island known worldwide for its white-sand beaches. Last month, or two months into the rehabilitation of Boracay, Cimatu said Boracay can no longer be called a cesspool because of the improved water quality as a result of the effort of the BIATF and the cooperation of various stakeholders on the island.
ESS acquisition may soon have to go through CSP, DOE says
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HE Department of Energy (DOE) is eyeing to require distribution utilities (DUs) interested to procure Energy Storage System (ESS), or source supply from power generation firms offering an ESS, to go through the process of Competitive Selection Process (CSP). ESS is a facility designed to receive electrical energy, to store energy and convert such energy to electricity and deliver such electricity for energy demand and requirements. Energy stored in ESS could also provide improved reliability to the power industry. “Pursuant to the policy of state to
ensure the quality, reliability, security and affordability of the supply of electric power, this ESS policy is hereby adopted to encourage the use of ESS for the operational improvement of electric power industry,” the draft circular on Adoption of ESS in the electric power industry stated. The 10-megawatt (MW) Masinloc Battery Energy Storage (BES), which intends to provide ancillary service, is one example of existing ESS in the country. Also, the Kalayaan Pumped Storage power plant is considered an ESS as it uses electric energy to store energy at night and then pumps water from Laguna Lake to Caliraya reser-
voir, generating electricity during daytime peak period. Under the draft circular, existing and prospective DUs and power generating companies (gencos) that want to introduce ESS must sign up for accreditation that will be handled by the system operator. “DUs’ ownership of an ESS shall conform to the cross ownership provision in the Epira [Electric Power Industry Reform Act] and its rules. DUs planning to own and operate an ESS shall indicate such plans in the Distribution Development Plan. DUs intending to procure an ESS or source supply from generation companies
who offer electricity supply from an ESS shall go through the process of CSP,” the draft circular added. CSP is a policy which requires DUs to hold competitive bidding for their supply requirements as against securing power deals via bilateral contracts. For existing and prospective gencos that may want to introduce ESS as a means of provision of ancillary service are subject to the accreditation process and testing standard and procedure of the system operator. Gencos may introduce ESS as a means of provision of electricity power supply. They may also integrate ESS in their generating facilities. Lenie Lectura
Agriculture/Commodities BusinessMirror
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Irrigating all PHL farms would take 40 years–NIA
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By Jasper Emmanuel Y. Arcalas @jearcalas
t would take the government four decades to supply water to all irrigable lands in the Philippines, according to the chief of the National Irrigation Administration (NIA).
NIA Administrator Ricardo R. Visaya issued this statement after Surigao del Sur First District Rep. Prospero Pichay Jr. inquired about the NIA’s projected timeline to irrigate all 3.128 million hectares of irrigable lands in the country. “At this rate we are going at about 40,000 hectares per year, [it would take us] more than 30 years to 40 years,” Visaya told lawmakers during the agency’s budget hearing on August 2. Visaya disclosed that the NIA is
crafting an irrigation master plan that seeks to cover 85 percent of the total irrigable areas, or about 2.66 million hectares. The attached agency of the Office of the President was able to irrigate a total of 1.887 million hectares as of last year, or 60.35 percent of the 3.128 million hectares of irrigable lands in the Philippines. For this year, the NIA’s target is to irrigate 33,247 hectares of new areas and restore irrigation in 14,460 hectares.
NFA office in Region 6 to get mechanical dryers from DA
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n support of the National Food Authority’s (NFA) palayprocurement program, the Department of Agriculture (DA) has turned over two mechanical dryers to be set up in NFA warehouses in Region 6. The NFA said in a statement that each mechanical dryer has 120 bags of capacity per batch, complete with prime mover, threephase generating set and all attachments. The mechanical dryers may be used for free by farmers provided they sell part of their palay produce to the NFA. The farmers will also receive additional drying incentives of P0.20 per kilogram. During the turnover of the agricultural machinery held at the DA Regional Office in Jaro, Iloilo, recently, Agriculture Secretary Emmanuel F. Piñol said farmer cooperatives and associations that sell at least 2,000 metric tons of palay to NFA will be granted farm machines and equipment as another incentive. Aside from this, the cooperatives or farmer associations who bring their palay produce to NFA will also be given priority to avail themselves of the low-interest bearing Production Loan Easy Access. This is a loan program being provided by the DA to qualified farmer cooperatives and farmer associations. The NFA assured continuous support to farmers by intensifying its local palay-procurement programs. Regional Director for Region 6 Angel Imperial Jr. said the NFA buys palay from farmers at P17 per kg with applicable incentives of up to P0.70 per kg.
The food agency buys palay from farmers to beef up its stockpile, part of which is sold to the public at a lower price. At present, the NFA is serving a total of 529,942 rice outlets across the country. These include 225,399 accredited outlets inside market; 54,971 accredited outlets outside market; 202,450 Institutionalized Bigasan sa Palengke; 26,810 Bigasang Bayan Outlets; 2,088 Barangay Bagsakan; 1,793 Bigasan sa Parokya Outlet; and 16,431 other outlets. These outlets are supplemented by rolling stores manned by NFA personnel and deployed to remote areas without accredited retailers, public market or NFA rice outlet. The NFA has a total of 13,636 accredited rice retailers selling NFA rice at P27 and P32 per kg in these outlets. Recently, the NFA also partnered with the DA for the sale of NFA rice in Barangay Food Terminals in some provinces across the country. From January to July 25 this year, the NFA has already distributed a total of 3,089,984 bags of rice through its various outlets across the country. For the month of July alone, total distribution has already reached 786,639 bags. “Even before the arrival of our imported rice in June, NFA personnel have been instructed to make the low-priced NFA rice immediately available to the markets. Our regular patrons have been waiting for it since March. At present, we have already established our presence in all corners of the country,” NFA administrator Jason Aquino said.
Ho we ve r, t he a ge nc y h a s only irrigated 2,193 hectares of new areas, or about 7 percent of its 2018 target, as of July 31. As for restored areas, it was only able to cover around 1,258 hectares, or 9 percent, of its full-year goal. For next year the NIA is eyeing to ir r igate an additiona l 36,700 hectares of land, which is smaller compared to its target area of 47,707 hectares for 2018. Of the total target next year, about 31,400 hectares are new areas, while 5,300 hectares are for restoration. The NIA’s Department of Budget and Management-approved budget for next year is P37.609 billion, 10.85 percent lower than the P41.669-billion allocation it obtained this year. Of its proposed funding for next year, the NIA is planning to spend P15.792 billion for its irrigation systems development program, which was 1 percent lower than its allocation of P15.997 billion this year. The agency is targeting to spend P2.326 billion for its ir-
r igat ion systems restorat ion program next year. The figure, however, is 25 percent lower than the P3.117 billion it is spending for the program this year. However, Agriculture Secretary Emmanuel F. Piñol said the NIA will not be able to cover all the 3.128 million hectares of irrigable land in the country. Piñol added that there are parts of the country that cannot be serviced by the facilities of the NIA. “We are an archipelagic country [and] we have rice farms located in isolated areas. We cannot task the NIA to irrigate all the areas,” he said. “Let’s go for unconventional irrigation systems, like solarpowered i r r igat ion s y stem s, which could cover secluded areas and even those downstream areas that the NIA cannot cover. The position of the DA is to work hand in hand with the NI A,” he added. The government is keen on expanding irrigated farmlands in the country to prop up the production of water-loving crops, such as rice.
Editor: Jennifer A. Ng • Friday, August 3, 2018
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Group questions Bfar’s P606.7-M budget for aquaculture in 2019 By Jonathan L. Mayuga @jonlmayuga
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he gover nment shou ld channel more resources to the capture fisheries subsector than the aquaculture program of the Bureau of Fisheries and Aquatic Resources (Bfar), the Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) said on Thursday. Of the proposed P3.757-trillion 2019 national budget, Pamalakaya noted that P5.7 billion will be allotted to the Bfar, lower than its P5.9-billion budget this year. Of the Bfar’s budget for 2019, P606.7 million will go to its aquaculture program. Pamalakaya said the appropriation for the aquaculture program is almost three times higher than the allocation for the development of the capture fisheries subsector. The group added that the capture fisheries subsector is “in dire need” of government support more than the aquaculture subsector. “Only giant fishing firms are capable of investing in aquacul-
ture, thus, they have capital and means to operate the industry. We demand an explanation from the Bfar why the allocation for aquaculture is thrice bigger than the budget for the development of capture fisheries, which is only P214.4 million,” Fernando Hicap, national coordinator of Pamalakaya, said in a statement. According to Hicap, municipal fishermen “urgently need” subsidy because of their “poor and backward production.” The budget for aquaculture, Hicap said, is “contradictory” to the directive of the President to dismantle illegal fish pens and fish cages in Laguna de Bay and in other areas. “The budget for aquaculture program reflects inconsistencies in the government’s anti-fish pen campaign. It clearly shows that the Duterte government is not sincere in clearing out private fish pens and aquafarms in our fishing waters. They will even subsidize giant fishing firms whose production is based on export,” he said.
Lopez to miners: Plant bamboo in areas for rehab By Elijah Felice E. Rosales @alyasjah
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he country’s trade chief wants mining firms to develop bamboo plantations within the area of their operations to rehabilitate affected lands and provide livelihood opportunities for nearby communities. In a text message to reporters on Thursday, Trade Secretary Ramon M. Lopez said he pitched to mining stakeholders his plan to introduce bamboo farming in mining areas. He argued this will not only rejuvenate the lands exhausted by operations, but will also provide local communities with a source of livelihood. “Mining companies have vast tracts of land that need rehabilitation, and they have the funds— mandated allocation from their operating expenses—for rehabilitation use. Bamboo grows fast, [with] strong carbon absorption, effective for anti-soil erosion and, more importantly, has the ability to make the mined areas restore its conditions for agricultural purposes,” Lopez said. Communities surrounding the mining operations could also benefit if firms decide to develop bamboo plantations, he added. Apart from this, Lopez said the country is in need of bamboo. “Moreover, from the bamboo industry cluster perspective, the rehabilitation program will solve the bamboo-supply problem needed in the growing demand for bamboo-based products, from poles to panels, fiberboards, lumber, handicrafts, food, beverage, modern furnitures, clothing, fabric, paper, flooring and many more,” he said.
Photo from Wikimedia Commons
“Also, as part of the bamboo development plan, we need to supply the classroom tables and chairs for [the] DepEd [Department of Education], which is currently underserved due to lack of bamboo material supply,” Lopez added. According to the trade chief, the demand for bamboo culms is at 20 million, but only 5 million is available. “It is said that there are not enough areas that are planted with bamboo. Currently, only
about 10,000 hectares are planted with bamboo, but there are about 300,000 hectares of mined areas that can be rehabilitated with bamboo,” Lopez added. Citing President Duterte’s call for responsible mining, Lopez said bamboo farming could be “the way forward” his principal is looking for. He claimed this will serve the interest of all sides: environment, local communities and miners. “[Environment] Secretary [Roy A.] Cimatu and I believe that presenting
this mining rehabilitation plan using bamboo can meet the requirement of the President to have a clear and sustainable mining development plan and rehabilitation plan, especially for open-pit mining activities. This is a great win-win program that addresses many issues,” Lopez said. The trade chief has recently pitched to mining stakeholders this proposal, and urged them to consider it for their rehabilitation plans. He said Cimatu is amenable to the measure.
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BusinessMirror
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Editor: Angel R. Calso
The World BusinessMirror
Friday, August 3, 2018
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Asean foreign ministers pose for a photo ahead of the 51st Asean Foreign Ministers Meeting in Singapore on Thursday. From left are Lao PDR Saleumxay Kommasith, Malaysia’s Saifuddin Abdullah, Myanmar’s U Kyaw Tin, Philippines’s Alan Peter S. Cayetano, Vietnam’s Pham Binh Minh, Singapore Prime Minister Lee Hsien Loong, Singapore’s Vivian Balakrishnan, Thailand’s Don Pramudwinai, Brunei Darussalam’s Erywan Yusof, Cambodia’s Perak Sokhonn, Indonesia’s Retno Marsudi and Asean Secretary-General Lim Jock Hoi. AP/Yong Teck Lim
Asean bloc asked to gear up for trade feuds, protectionism
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INGAPORE—Southeast Asia’s top diplomats opened an annual meeting on Thursday to tackle a slew of security concerns, including South China Sea territorial disputes, with host Singapore calling on the bloc to brace for external tumult such as rising protectionism.
North Korea’s rapprochement with South Korea and the United States is expected to be welcomed by the Association of Southeast Asian Nations ministers, who began four days of meetings in Singapore with a working dinner on Wednesday. Rising extremism and the plight of minority Rohingya Muslims in Myanmar’s Rakhine state are also under the spotlight. Founded in 1967 during the Cold War, the Asean steadily weathered storms to become a stable 10-nation bloc, which now draws Asian and world powers in annual gatherings and is forecast to become the fourth-largest economy in the world in three decades. New challenges, however, include escalating trade tensions between the United States and other global powerhouses like China and
the European Union, and require Asean to stay united “to remain relevant,” Singapore Prime Minister Lee Hsien Loong said at the start of the meetings. “We can all see the growing political uncertainties,” Lee said. “At the same time, each Asean memberstate is subject to different pulls and pressures from bigger powers.” Lee said it was important that the Asean continues to support the multilateral system with likeminded partners, citing the bloc’s efforts to conclude a wider freetrade pact with six Asia-Pacific nations by the end of the year. That new accord, called the Regional Comprehensive Economic Partnership, or RCEP, includes China but not the US, and is regarded by some as an alternative to the Trans-Pacific Partnership
free-trade pact, from which President Donald J. Trump formally withdrew last year. Currently led by Singapore, the Asean will host on Saturday Asia’s largest security forum, including the key players involved in the Korean Peninsula’s disarmament efforts, which will provide a chance for them to talk on the sidelines of the meeting. In the South China Sea disputes, which have pitted China, Taiwan and four Asean claimants—Brunei Darussalam, Malaysia, the Philippines and Vietnam—the group is expected to announce an agreement with Beijing on an initial negotiating draft of the so-called code of conduct, a proposed set of regional norms and rules aimed at preventing the long-seething disputes from degenerating into a shooting war. The ministers will welcome “the improving cooperation between the Asean and China and were encouraged by the progress of the substantive negotiations toward the early conclusion of an effective code of conduct in the South China Sea on a mutually agreed timeline,” according to a draft of a joint communique by the ministers, obtained by The Associated Press. Some of the ministers are expected to repeat their concerns over China’s transformation of seven disputed reefs into islands, including three with
runways, which now resemble small cities armed with weapons systems, including surface-to-air missiles. China has come under intense criticism for the militarization of the strategic waterway, but has said it has the right to build on its territory and defend them at all costs. The ministers “took note of the concerns expressed by some countries on the land reclamations in the area, which have eroded trust and confidence, increased tensions a nd may under mine peace, security and stability in the region,” the draft communique said, without naming China and reflecting the internal divisions over the touchy issue. Asean members Cambodia and Lao PDR , which are known China allies, have opposed the use of strong language against Beijing over the disputes. Vietnam and Indonesia have backed stronger rhetoric against China’s assertive actions. “There will be the inevitable differences, if not tensions, within Asean on what should be in the document. You have claimant and nonclaimant states. You have countries with very close ties with China and those more cautious of China,” said Eugene Tan, an associate professor of law at Singapore Management University. “A meeting of minds is essential to set the stage for the arduous road ahead,” Tan said. AP
More than 1,000 homes torched in massive California wildfires
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PPER LAKE, California—A massive wildfire in Northern California has torched more than 1,000 homes in and around the city of Redding, authorities said on Wednesday as some evacuees were allowed to return home and new blazes exploded in what has become an endless summer of flame in the Golden State. “Whatever resources are needed, we’re putting them there,” Gov. Jerry Brown said at a news conference. “We’re being surprised. Every year is teaching the fire authorities new lessons. We’re in uncharted territory.” Just a month into the budget year, the state has already spent more than one quarter of its annual fire budget, at least $125 million, California Department of Forestry and Fire Protection Spokesman Mike Mohler said. Cal Fire said another 488 buildings, including barns and warehouses, have also been destroyed by the fire, which is now the sixth most destructive in California histor y. The 121,000-acre Redding-area blaze, which star ted July 23, forced 38,000 people from their homes and killed six. It has scorched 189 square miles (490 square kilometers) and is 35 percent contained. At least three new fires erupted on Wednesday in the Sierra Nevada region, including a blaze in Placer County that had consumed 1 1/2 square miles (1,000 acres or 4 square kilometers) of land. N o r t h o f S a n F r a n c i s c o, a f i r e
An outbuilding burns on Dessie Drive as the River Fire tears through Lakeport, California, on Tuesday. AP/Noah Berger
threatened homes in an old ranching and farming area near Covelo. About 60 homes were ordered evacuated as the blaze erupted late Tuesday and winds whipped flames through brush, grass, oak, pine and fir near the Mendocino National Forest, officials said. To the east, another blaze on Tuesday night raged through grassy cattle lands near Yuba City, covering more than 1 1/2 square miles (4 square kilometers) in a few hours. The new fires erupted without warning and spread with shocking speed through forest and brush that have literally become tinder, said Scott McLean of Cal Fire. “It just goes on and on,” McLean said.
“We had this rain at the beginning of the year and all that did was promote the growing of grass and brush,” McLean said. “It’s a Catch-22. It’s growing more product to catch on fire.” He said the state really never left its drought status and several years of significant rainfall are needed to bring the state back. McLean also had a warning for people visiting rural and wilderness areas. “Pay attention,” he said. “Don’t park the car on dry grass...no campfires, no flame. It doesn’t take anything to start a fire right now.” The new fire near Covelo was only about 40 miles (64 kilometers) north of where twin fires in Mendocino and Lake counties
have burned an area three times the size of San Francisco, destroyed 14 homes and threatened 12,000 more. The Lake County seat of Lakepor t remained under evacuation orders and was a virtual ghost town, although people were allowed back home in several smaller communities as firefighters shored up containment lines. Containment grew overnight to 24 percent. Jessyca Lytle fled a fast-moving wildfire in 2015 that spared her property but destroyed her mother’s memorabilia-filled Lake County home. Lytle found herself listening to scanner traffic on Tuesday and fire-proofing her mother’s new home as another wildfire advanced. “Honestly, what I’m thinking right now is I just want this to end,” Lytle said, adding that she was “exhausted in every way possible — physically, emotionally, all of that.” Paul Lew and his two boys, ages 13 and 16, evacuated on Saturday from their Lakeport home. “I told them to throw everything they care about in the back of the car,” said Lew, 45. “I grabbed computers, cell phones, papers. I just started bagging all my paperwork up, clothes, my guitars.” Lew, who is divorced from Lytle, is camped out at the house in the nearby community of Cobb that she fled in 2015. He is watching over her chickens, sheep and other animals. With a laugh, he said repeated fire alerts have made him an emergency preparation expert. AP
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Oil trades near $68 as inventory, F Opec outputs weigh on market
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Fed leaves key rate unchanged
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il traded near $68 a barrel after sliding for two consecutive sessions as rising US inventories and higher output from the Organization of Petroleum Exporting Countries (Opec) and Russia weighed on the market. Futures in New York were little changed, following a 3.5-percent slide in the past two sessions. US government data on Wednesday showed a surprise gain in nationwide stockpiles. Meanwhile, Opec’s July output climbed as Saudi Arabia pumped near-record volumes and Russia boosted production to levels not seen since it joined the cartel in a coordinated cut two years ago. Oil last month posted the worst loss in two years on concern a trade war between the United States and China could curb eco-
nomic growth and limit energy demand. Under constant pressure from US President Donald J. Trump to cool prices, Opec and its allies are fulfilling a pledge made in June to increase output to ease concerns over potential supply disruptions in countries such as Iran and Venezuela. “Oil has been rebounding every time prices fall to near $68 since mid-July,” Makiko Tsugata, a senior analyst at Mizuho Securities Co., said by phone. “We may be seeing a similar move now.” West Texas Intermediate (WTI)
crude for September delivery traded at $67.85 at 3:51 p.m. in Tokyo. The contract declined $2.47 in the previous two sessions. Total volume traded was about 30 percent below the 100-day average. Brent for October settlement rose 44 cents to $72.83 a barrel on the London-based ICE Futures Europe exchange. The contract dipped $1.82 on Wednesday. The global benchmark traded at a $6.11 premium to WTI for the same month after the spread widened to as much as $11.43 in June. Futures for September delivery were little changed at 502.9 yuan a barrel on the Shanghai International Energy Exchange. The contract lost 1.9 percent on Wednesday. US crude inventories rose 3.8 million barrels last week, according to data from the Energy Infor mat ion Ad ministrat ion. That’s compared with a forecast for a 3-million-barrel decline in a Bloomberg survey of analysts. Stockpiles at the Cushing storage hub in Oklahoma fell for an 11th
straight week. “A wide price spread between the US and global benchmarks a while ago made American crude relatively cheap and attracted buyers, helping decrease inventories,” Mizuho’s Tsugata said. “But with the current narrower spread, US crude has lost its appeal.” Traders also are weighing output from Opec and its allies following their accord to increase production in June. Saudi Arabia’s output rose by 230,000 barrels a day in July to 10.65 million barrels per day. Higher crude output from the Saudis, along with Nigeria and Iraq, pushed up total Opec production by 300,000 barrels a day last month. Meanwhile, Russia boosted its oil production in July to just below the post-Soviet record set in October 2016, Energy Minister Alexander Novak said. That’s equivalent to about 11.21 million barrels a day, a jump of 140,000 from a month earlier, according to Bloomberg calculations based on the ministry’s data. Bloomberg News
India’s central bank flags currency wars as it hikes rates
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ndia’s central bank governor raised the prospect of global currency wars as he led policy-makers in raising interest rates to the highest in two years to shore up the rupee and
tackle inflation pressures in the world’s fastestgrowing major economy. After delivering the first back-to-back rate increase since the monetary-policy committee
came into being in September 2016, Reserve Bank of India (RBI) Governor Urjit Patel said he’s seeking to maintain economic stability amid growing risks from global trade and
currency tensions. “We have had a few months of turbulence behind us,” Patel told reporters in Mumbai on Wednesday. “This is likely to continue and for how long, I don’t know. The trade skirmishes evolved into tariff wars and now we are possibly at the beginning of currency wars.” The RBI’s rate move follows emerging-market counterparts in Indonesia, the Philippines and elsewhere who are trying to counter currency routs and inflation risks triggered by a strong dollar and higher US rates. The Federal Reserve left borrowing costs unchanged on Wednesday but stuck with a plan to gradually tighten policy in coming months.
Currency woes
The rupee is Asia’s worst-performing major currency this year, down 6.6 percent against the dollar this year, and is vulnerable to a slump in the yuan amid China’s ongoing trade tensions with the US. The rupee gained 0.1 percent to a nearly two-week high of 68.3488 against the dollar on Thursday, a day after five of the six members of the rate-setting panel voted to raise the repurchase rate by 25 basis points to 6.5 percent. Currency and inflation woes aside, the economy is growing faster than any other major nation, strengthening Prime Minister Narendra Modi’s position as he prepares for elections next year. But risks to the outlook are formidable: as the world’s fastestgrowing oil consumer, higher crude prices will push up the current-account deficit, while global trade tensions threaten exports and investment. Inflation has been running well above the central bank’s medium-term target of 4 percent, with the outlook set to worsen because of oil prices and currency weakness. “Given this, we have to ensure we run a tight ship on the risks we control to maximize the chances of macroeconomic stability,” Patel said. “Every country is adjusting currency to navigate trade turbulence. India will also have to,” said Rupa Rege Nitsure, chief economist at L&T Finance Holdings Ltd. in Mumbai. “This raising of rates would help encourage capital flows and in that way protects from currency volatility. That’s what the RBI seems to have aimed at.” While acknowledging that geopolitical tensions and elevated oil prices continue to be sources of risk to global growth, the RBI was confident that the domestic economic recovery was well entrenched. Bloomberg News
ederal Reserve (the Fed) officials left US interest rates unchanged and stuck with a plan to gradually lift borrowing costs amid “strong” growth that backs bets for a hike in September. Economic activity has been “rising at a strong rate,” and unemployment “has stayed low,” the Federal Open Market Committee (FOMC) said on Wednesday in a statement released in Washington. “Household spending and business fixed investment have grown strongly.” While leaving rates on hold as expected, the committee repeated guidance for “further gradual increases” in its policy benchmark, lining up September’s FOMC meeting for the third hike of the year. President Donald J. Trump lashed out at the Fed last month, saying he wasn’t “thrilled” it was raising rates. The comments threw a political cloud over the central bank’s decisions, though economists and investors had widely anticipated Wednesday’s decision. Policy-makers “are not really affected or paying close attention to the political commentary,” said Laura Rosner, senior economist at Macropolicy Perspectives. Stocks and bonds shrugged off the Fed announcement, with the Standard & Poor’s 500 Index closing down 0.1 percent and the 10year Treasury yield at 3 percent at 4 p.m. New York time. Odds for a rate hike at the central bank’s September 25 and 26 meeting held around 80 percent. “The FOMC did nothing to the statement that would suggest a lower likelihood of a September hike,” said former Fed Governor Laurence Meyer, who runs a policy research firm in Washington. “The market has now priced a September rate hike as a nearcertainty, and we agree with that assessment.” Fed Chairman Jerome Powell is tr ying to nurture the secondlongest US expansion on record by slowly reducing the amount of suppor t that monetar y polic y prov ides to g row t h. T he economy is r iding a tailw ind from ta x cuts and higher federa l spending, though a trade war threatens to dent grow th.
The committee described risks to the outlook as “roughly balanced,” and restated that “monetary policy remains accommodative” while leaving the target range for its benchmark policy rate at 1.75 percent to 2 percent. Most Fed officials in June projected three or four rate hikes for 2018, implying one or two more moves this year. “There’s a lot of concern that the trade negotiations and the heightened rhetoric surrounding trade negotiations might lead to slower economic activity later in the year,” said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “While it certainly looks like it’s all systems are go for another rate hike in September, and another one in December, the text hasn’t been written just yet on that.” Pricing in federal funds futures markets imply odds slightly above 60 percent for a fourth rate hike in December. Policy-makers weighed their action against a generally positive backdrop. The US economy grew at a 4.1-percent pace in the second quarter, its fastest pace since 2014. Inflation is close to the Fed’s 2-percent goal, rising at 2.2 percent for the year ending June, while the core rate that excludes food and energy was up 1.9 percent. The committee noted in the statement that both headline and core inflation “remain near 2 percent.” Unemployment was 4 percent in June, below the Fed’s 4.5 percent estimate of the level that reflects full employment. The gradual pace of rate increases shows that officials want to see if tight labor markets can continue to draw more people into the work force and produce higher wages, without sparking unwanted inflation. Wed nesd ay ’s dec ision wa s unanimous 8-0. Voting members shifted chairs at this meeting, with John Williams voting for the first time as New York Fed president and FOMC vice chairman, with Kansas City Fed chief Esther George taking his place as an alternate for San Francisco while it seeks a new president. Bloomberg News
Germany blocks China deal
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hancellor Angela Merkel’s government for the first time vetoed a possible Chinese takeover of a German company, signaling a toughening stance toward investments from the country. Merkel’s Cabinet on Wednesday voted to block the potential purchase of German machine tool manufacturer Leifeld Metal Spinning AG by a Chinese investor. The government took the precautionary measure even though Yantai Taihai Group indicated at the last minute that it will withdraw its offer. The decision follows a government review examining possible negative impacts of the sale that concluded a purchase would raise national security concerns. Leifeld— based in the city of Ahlen in the state of North Rhine-Westphalia—is one of the leading producers of high-strength metals for the car, space and nuclear industries. “Leifeld produces some really top-notch machinery,” said Mikko Huotari, deputy director at the Mercator Institute for China Studies in Berlin. “Germany is well aware of the threat” posed by the Asian country’s goal of becoming the leader in advanced manufacturing under the so-called Made in China 2025 program.
Tighter measures
Germany is joining the US and Canada in taking a tougher line on China. Merkel’s government has been at the forefront of moves to bring in European Union-wide screening of outside investments after being the target of Chinese acquisitions in recent years. Policymakers are acting out of concern that China is seeking access to sensitive technology or wants to boost its global influence by acquiring key infrastructure including ports and electricity networks. Since Germany tightened its measures blocking unwanted takeovers in July 2017, more than 80 deals have been probed, with
more than a third of those involving Chinese investors directly or indirectly, an Economy Ministry spokeswoman said. The government hadn’t used the law to block an investment since it was established in 2004. As part of the tougher approach, Merkel’s government swooped in last week to nab a stake in one of the country’s largest powergrid operators, thwarting an attempt by a Chinese firm to buy the holding. The Economy Ministry is also looking at further tightening rules on foreign investments in the country from outside the EU.
Blocked purchases
In May Canada blocked a proposed takeover of construction firm Aecon Group Inc. by a unit of China Communications Construction Co., while the US House of Representatives in July voted to expand reviews of foreign investment in sensitive industries. Chinese investment in US technology companies probably would become more difficult and time-consuming under the legislation, with an increased risk of being blocked by a US government panel that examines national security risks. The German Economy Ministry is looking at lowering the threshold for examining a foreign takeover to purchases of stakes of less than 25 percent. The country’s domestic intelligence service said in July that Chinese acquisitions of high-tech companies in Germany represent a potential nationalsecurity threat. The German government already last year tightened rules for foreign investors after a public backlash over high-profile acquisitions by Chinese corporations—such as the Midea Group Co. purchase of robot maker Kuka AG in 2016. A Chinese takeover of semiconductor-equipment maker Aixtron SE failed due to US opposition. Bloomberg News
The Regions BusinessMirror
A9
Editor: Dennis D. Estopace • Friday, August 3, 2018
Davao region raises minimum daily wage
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AVAO City—Workers in the Davao region will be receiving an addition of P56 to their daily wage after the Regional Tripartite Wages and Productivity Board (RTWPB) implements two tranches of a wage hike this month.
The first tranche of P30 is expected reflected in the workers’ August 16 payroll. This should mean an increase in daily wage to P370 for workers in the industrial, commercial and retail services sectors, the companies of which employ more than 10 workers. Agriculture workers should be receiving a daily wage of P365. Employees in businesses in the retail services, which are employing fewer than 10, should be paid P355 each after the wage increase. The next tranche of P26 will be applied to the payroll of the workers by February next year. The new Wage Order RB XI-20 was issued on June 26, or about 20 days after the regional wage board conducted public hearings and consultations in Davao City, Digos City, Mati City, Panabo City, Island Garden City of Samal, Tagum City, Compostela Valley, Davao del Norte, Davao Occidental, Davao Oriental and Davao del Sur. The wage board said its public hearings and consultations corroborated the study it conducted on the wage profile of workers in the region, which necessitated a new round of wage increase “to restore lost purchasing power of minimum-wage earners in Davao region for them to cope with the rising cost of living.” It said the implementation of the two-tiered wage increase system was based on the poverty threshold “as the floor wage and productivitybased scheme for the second tier as necessary to raise the lowest statutory wage rate in the region to a level above the poverty threshold.” The RTWPB said, however, that its prescribed wage hike would not impair the productivity and viability of business and industries in the region. “Consistent with the government’s policy of achieving a higher level of productivity
to preserve and generate jobs, and to augment the income of workers, there is a need to build the capacity of business enterprises to be competitive through productivity improvement and gainsharing programs.” The board is encouraging businesses “to adopt productivity improvement schemes such as time and motion studies, good housekeeping, quality circles, labor-management cooperation as well as implement gainsharing programs.” The new wage rates would not cover domestic helpers, or kasambahay, whose minimumwage requirement has been set by the Batas Kasambahay (Republic Act 10361). Workers of establishments registered under the Barangay Micro Business Enterprises (BMBE) law and the Go Negosyo Act of 2013 are also not covered by the wage hikes. However, the Davao City Chamber of Commerce and Industry (DCCI) has warned on the impact of the wage increase on the micro-, small- and medium-scale enterprises (MSMEs) as the city government is also implementing new rates in real estate and business taxes. “I don’t k now how t he [MSMEs], which comprise about 99 percent of all registered businesses in Davao, can cope with these increases,” DCCCI President Arturo Milan said. Milan said he hopes the increase, which is about 16 percent of the previous wage level, “even in tranches, would not result to business closure of micro and small businesses, or retrenchment of their employees.” “I personally feel this is just too high, not to mention the local business taxes just increased by 10 percent, plus the impact of the [first package of the new tax law] to their businesses,” he added. Manuel T. Cayon
DPWH applies modern road, drainage approach in Boracay
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OR AC AY I SL A N D — T he De pa r t ment of P u b l i c Wo r k s a n d Highways (DPWH) is using state-of-the-art technology to ensure quality of roads and rain water pipes in this resort island. Public Works Secretar y Mark A. Villar said during his visit here on Wednesday the agency is applying a German technology that uses highdensity polyethylene pipes (HDPPs) in road concreting. “This is one of a kind. It is considered to last for a 100 years. It’s also enough to ca-
ter to future developments of Boracay,” Villar said. Villar also announced it would temporarily close the Boracay main road for a month beginning August 2 to give way to the road rehabilitation of this resort island. The first 4 kilometers of road to be rehabilitated is expected to cost P450 million. According to Villar, this initial allocation includes not only the concreting of roads but also the application of the HDPP technology. The road closures would affect those going to school. Jun N. Aguirre
A10 Friday, August 3, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Deadly demographics
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he battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate.” That was the opening statement in the early editions of The Population Bomb written by Paul R. Ehrlich in 1968. While virtually all of the doomsday scenarios offered by Ehrlich have been proven wrong, he still justified his fear mongering. In 2009 he wrote: “In honesty, the scenarios were way off, especially in their timing [we underestimated the resilience of the world system]. But they did deal with future issues that people in 1968 should have been thinking about.” Worrying about the future, and that actions today have consequences later, is important. However, the social engineering through government policy and regulation of the birth rate in China has proven disastrous. The modified “one-child” policy has created another policy for China: “We must get rich before we get old.” It has not been successful. In 10 years, more than 20 percent of the Chinese population will be over 60 and the rate of that growth in the elderly population will increase with time. The elderly now make up 27 percent of Japan’s population. In the US, the rate is only 15 percent. Japan, though, is entering a worst-case scenario of population and age demographics. If the current birth rate trend continues—and there is no light at the end of the tunnel—Japan’s population will fall by 30 percent in the next three decades. One demography expert, Kanako Amano at the NLI Research Institute in Tokyo, described it this way: “Now you see three, then you will see two” as you walk down the streets of Japan. She goes on to say, “The Japanese are at a crossroads, facing the threat of extinction. We’re an endangered species.” Much of the decline in population growth is attributed to the fanatical work ethic beginning in the 1960s as Japan built its economy that the job came before anything else. The birth rate even back then had fallen just above the population replacement rate of 2.08. Currently the birth rate is 1.41, the population is falling, and brutally long work hours remain the normal way of life. However, there is a social condition that is killing Japan’s future. A 2016 study found that nearly 70 percent of unmarried Japanese men and 60 percent of unmarried Japanese women were not in relationships. Nearly a third of Japanese people are entering their 30s without any sexual experience. A nationwide survey earlier this year revealed that nearly a quarter of Japanese men at the age of 50 have yet to marry. Part of the problem, according to Japanese columnist Maki Fukasawa, is the soshoku danshi, which translates as “grass-eating men” or “herbivore men.” Fukasawa describes this as a monk-like approach to life and relationships. In other words, no sex. He says these men would rather invest themselves in online gaming and other solo activities than seek female company in their free time. Studies in Japan estimate that this class of men, normally in their 20s and 30s, account for around 60 percent to 70 percent of the male population. That is one problem we do not have in the Philippines. Since 2005
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I saw the sign James Jimenez
spox
O
ne of the major thrusts of the Commission on Elections is the promotion of inclusivity in elections. This commitment seeks to ensure that our electoral exercises and procedures are more readily accessible to sectors of society who, while not being completely shut out of electoral processes, are nevertheless faced with challenges that make it more difficult for them, than it is for others, to participate in elections. There are several of these sectors, which are deemed vulnerable—senior citizens, for instance, for whom the rigors of election day can sometimes be insurmountably daunting; or indigenous persons, who are perennially ill-used by local power structures who view them as mere warm bodies in their political struggles. Women and the youth are likewise considered vulnerable sectors, as they face challenges unique to their place in the old-boys-club environment of Philippine politics. But by far the most vulnerable sector is that of the persons with disabilities (PWDs). The disadvantages—the barriers to access—faced
by PWDs are so numerous that they almost seem baked into the system; so integral into how things are done that many PWDs have simply given up trying to fight them. Whenever PWDs are mentioned in the context of elections, people normally default to thinking of wheelchair-bound people unable to negotiate steps, or of visually impaired individuals unable to read the lists of candidates. These are all problems, certainly; problems which the Commission on Elections seeks to address with special procedures like Accessible Polling Places and a system of assistors, and so on. What many people fail to realize is that
election day access isn’t the only place or time these barriers exist. And this is especially true for PWDs with invisible disabilities, like deafness. Even before election day, hearingimpaired individuals are essentially denied the ability to meaningfully participate in the democratic process because they can’t hear what candidates are saying on television or radio—both in interviews and political advertisements. This inability is not commented on a lot, even among people who campaign for greater PWD accessibility, so you can only imagine how little is being done to address the problem. Look at Republic Act 10905—also known as the Closed Caption Law. It was passed by Congress in 2015, but it wasn’t even signed by the President, which led to it lapsing into law almost a full year later. As if that weren’t dismal enough, the law itself provides for significant exemptions from the requirement to provide closed captioning for all television programs: Public-service announcements that are less than 10 minutes long; content that airs between 1 and 6 a.m.; programs that are primarily textual; and cases where compliance would be economically burdensome, with “economically burdensome” being broadly—and almost tautologically—defined as (closed captioning)
resulting in “significant difficulty or expense,” mostly to the program producer. Without going too deeply into the wisdom of that massive back door, you have to ask how long an average political advertisement is, and therefore how completely illusory that reality renders the benefits of this law, particularly in the context of elections? As for that “significant difficulty or expense” clause, an infographic released by a senator explicitly describes the exemption as referring to those instances when closed captioning would be “economically burdensome to TV operators.” Which leaves the hearing impaired out in the cold, doesn’t it? Thankfully, earlier this week, the Senate Committee on Suffrage agreed to consider new legislation that would require political advertisements to feature sign language interpreters. The details will have to be worked out in a technical working group, of course, and it goes without saying that the specifics of the requirement will have to be well-defined so as not to be too difficult to comply with, but the mere fact that this measure is up for discussion at all is definitely a step in the right direction, moving toward even greater inclusivity in elections.
End-of-days metals rout overstates trade risks
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By David Fickling | Bloomberg Opinion
ommodity investors are acting like it’s the last days of Rome. News that the Trump administration was planning to increase the tariff rate on $200 billion of Chinese imports to 25 percent from 10 percent sent markets into a tailspin on Wednesday, with a Bloomberg Intelligence index of mining companies falling 1.7 percent and every major industrial metal slumping in synchrony.
Rio Tinto Group investors were so alarmed at the backdrop that even the company’s promise in first-half results on Wednesday to hand $7.2 billion back to shareholders in dividends and buybacks couldn’t stop the stock sliding as much as 4.8 percent. It’s time to settle down. While trade wars could, indeed, deal a blow to global economic growth and the materials demand that’s bound up with it, the effect on individual commodities is likely to be anything but uniform. Indeed, for the likes of Rio Tinto it could be outright bullish. To understand why, consider Beijing’s efforts to boost credit. The People’s Bank of China has been encouraging banks to lend more by taking a softer stance on loan quotas so as to offset the effects of a cooling economy, people familiar with the matter told Bloomberg News on Wednesday, adding to the
ongoing retreat from a deleveraging program that’s caused the country’s economy to slow this year. That shouldn’t be all that surprising. As we argued last year and earlier this year, opening up the spigots of industrial stimulus is the Chinese leadership’s go-to way of bailing the economy out of a soft patch. Right now, President Xi Jinping stands before a yawning gulf of slowing growth from economic rebalancing, buffeted by threats of trade war and speculation that his unprecedented control over the Chinese state is weakening. Faced with that, who could resist the easy attractions of a fresh bump of state-directed credit stimulus? To date, most official statistics have suggested that rebalancing is under way. Production of cement —one reliable proxy for the construction growth that swallows up most stimulus dollars—has been running
at its lowest rates in years: Steel rebar has been displaying the same pattern: In theory, China’s credit loosening needn’t dramatically alter that picture. If the measures go to prop up cash-strapped small and medium enterprises, they could support less materials-intensive service sectors and keep the rebalancing show on the road. But just as water flows downhill, credit in China tends to drift not toward the little guy, but to precisely the connected state-owned firms that the deleveraging campaign is meant to starve of capital. There’s already evidence that higher up the supply chain, industrial production is picking up. Output of crude steel and pig iron jumped to record levels in May and hardly edged back in June, according to data from Antaike, a consultancy—largely what you’d expect from a sector enjoying profits of around 1,000 yuan ($147) a metric ton. Steelmakers are so keen to boost output that they’re using scrap and high-iron ores to push their plants beyond conventional capacity limits, helping compensate for the closure of less-efficient factories in recent years, according to Goldman Sachs Group Inc. analyst Trina Chen. The best way to consider what will happen to commodities over the
remainder of 2018 will be to think about end-used sectors. Smaller-volume base metals like zinc and nickel may indeed be facing tough times, as rising tariffs reduce demand for the manufactured goods in which they’re used. Materials like aluminum and copper may suffer less, since their use in consumer goods is balanced by a decent slice of demand from construction and engineering. Those like iron ore and steel which depend principally on heavy industry could be looking at bullish conditions, as Beijing increases spending to offset political and economic headwinds. That’s bad news on a host of fronts. The global economy and climate badly need China to retreat from the materials-intensive path it’s pursued in recent decades. China’s current trajectory, paved with debt and increasingly unproductive industrial investments, inexorably reduces the odds that it can grow past the middle-income trap, and raises the risk of a financial crisis somewhere down the line. The one group of people who shouldn’t be fretting, though, are producers of bulk commodities like Rio Tinto. China’s industrial addiction may be a problem for the world—but if you’re selling the stuff its economy is hooked on, you’re in the money.
Opinion BusinessMirror
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Church is a hospital of sinners and an ally of the government Rev. Fr. Antonio Cecilio T. Pascual
SERVANT LEADER
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or God’s word is the foundation of the Church, and the Church lives within us through the Holy Spirit. The Church is a place where sinners are being healed through conversion and holiness. It is a home for everyone who wants to be united with our Lord Jesus Christ. The Lord Jesus Christ created the Church to save us from our sins and to be with the Almighty Father, not to become a great political leader. He doesn’t want to rule or conquer the world, but rather He wants us to free ourselves from misery. “We are not political leaders, and certainly not political opponents of government. The Church has, throughout history, coexisted with countless forms of government.” The Church respects the political authority, especially of democratically elected government officials, as long as they do not contradict the basic spiritual and moral principles we hold dear, such as respect for the sacredness of life, the integrity of creation, and the inherent dignity of the human person. Through the word, compassion, and mercy of God, the Church “has always been and will always be a partner of the government [especially in the local government units and barangays] in countless endeavors for the common good, especially in addressing the needs of the most disadvantaged sectors of society.” It is true that we have many weaknesses and shortcomings, but
“we have no reason to justify our weaknesses on the basis of our participation in the human condition, because we profess faith in the God who embraced the human condition, precisely to set a new template of humanity in His son Jesus Christ.” The Church always speaks from the “perspective of faith and morals, especially the principles of social justice, never with any political or ideological agenda in mind.” My dear people of God, let us draw a lot of strength from Saint Paul, who desperately begged the Lord to remove his weakness but only got these words as assurance, “My grace is enough for you; for in weakness power reaches perfection. It is when I am weak that I am strong” (2 Corinthians 12:9). To know more about Caritas Manila, visit or follow us on Facebook: CaritasManilaInc. For your donations, please call our DonorCare lines 5639311, 564-0205, 0999-7943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph and follow its Twitter and Instragram accounts @veritasph and YouTube at veritas846.ph. For comments, e-mail veritas846pr@gmail.com.
The First Amendment protects plans for 3-D guns By Noah Feldman Bloomberg Opinion
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he prospect of ordinary people making guns at home on their 3-D printers seems scary. Even President Donald J. Trump, a strong Second Amendment supporter, has tweeted that it “doesn’t seem to make much sense.” Attorneys general in eight states and the District of Columbia agreed, and sued to stop the web site of Defense Distributed from publishing instructions for printing out plastic firearms. A federal judge recognized the harm on Tuesday night and issued a temporary restraining order. But the attack on freedom of speech is also scary here. Even as he acted to block the gun plans, US District Judge Robert S. Lasnik recognized there are “serious First Amendment issues” at play. Under current interpretations of the Second Amendment, the government could almost certainly prohibit unregulated home manufacture of guns. The First Amendment, however, might well protect the distribution of the computer code that functions as the recipe for the 3-D printers. The threshold question is whether computer code is a form of speech at all. This question raises philosophical questions about whether computer code written in a programming language is effectively an object—not ordinarily regulated by the First Amendment—or is more like a set of written instructions from one person to another, which would typically be considered a form of speech. The US Supreme Court has never definitively answered this tricky question. But the lower courts have mostly held that code counts as speech. In an influential 2001 decision to that effect, the US Court of Appeals for the 2nd Circuit said that “a recipe is no less ‘speech’ because it calls for the use of an oven, and a musical score is no less ‘speech’ because it specifies performance on an electric guitar.” That brings us to the second legal problem: whether speech that instructs the public how to commit a crime is subject to free-speech protection. Here, too,
the Supreme Court has not given a definitive answer—and the legal landscape in the lower courts is not that clear. In an important 2005 article, First Amendment scholar Eugene Volokh pointed out that some courts have held that free-speech law does not extend to cover “speech that knowingly facilitates bomb-making, book-making, or illegal circumvention of copyright protection.” Yet Volokh, who tends to prefer very strong free-speech protections, cast serious doubt on most of the rationales that could be used to prohibit speech that tells people how to commit crimes. In particular, he pointed out that such information often has other, noncriminal uses. And he strongly emphasized that the Internet changes the landscape for such regulation, because sources outside the reach of US law could almost always post the same information, which would then be available to American users notwithstanding any ban. The best way to think about the question is to ask whether the government should be able to ban “The Anarchist Cookbook” or other works that describe how to make Molotov cocktails or simple bombs. Logically, the answer is almost certainly not. How-to guides for criminal activity aren’t like classified information, such as how to build an atomic bomb or make a biological weapon. The information is widely available and may have legitimate uses. The value of free speech outweighs whatever benefits may come from making it a bit harder for people to figure out how to make illegal weapons. Today, First Amendment law is substantially more speech protective than it was in 2005, when Volokh was writing. The Supreme Court now would almost certainly find that a ban on the distribution of 3-D printer code to be “content-based.” As a consequence, the court would say that a ban on distributing 3-D gun code could only be upheld if the government could show that it had a compelling state interest in the ban and that the ban was narrowly tailored, using the least restrictive means to achieve it.
Friday, August 3, 2018 A11
Farewell, Alice; farewell dear critic Tito Genova Valiente
annotations
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he last time I saw Alice Guillermo was during the last time I attended a Christmas Party of the BusinessMirror. As I am not much of a party person and do not mix well with others, I stayed close to Alice. We belonged both to the Lifestyle Section: she with her art criticism and I with my film and media reviews. I was in awe of her, this motherly woman who, that night, seemed to shield behind a regular appearance a mind that would have outshone the most boisterous presence in that happy party. She appeared to be enjoying the gathering, as she squinted her eyes and took all the movements and gestures around her. My memory fails me now as I recall if I ever wrote art criticism when Alice Guillermo was still around. If my memory does fail me, my good sense does not: I would not have attempted to do any art review when she was still around. Alice Guillermo was there in the early ’70s. When martial rule allowed all kinds of art because the Lady in the Palace was into the True, the Good and the Beautiful, she found the space to take note of artists who also saw that public space, that tiny slit of a free horizon into which one could watch a future, any future. To the artists who were able to portray the social conditions of the period, Alice Guillermo appended the label “social realism.” In his paper, “Social Realism: The Turns of a Term in the Philippines,” Patrick Flores states the argument of Alice Guillermo, that social realism in the Philippines “stresses the choice of contemporary subject matter drawn from the conditions and events of one’s time,” and “is essentially based on a keen awareness of conflict.” Alice Guillermo was always sure of herself. In her giant of a small book, From Image to Meaning: Essays on Philippine Art, she demonstrates this certainty when she defines the critic: “The mature viewer or critic is one who must have, after long expression and experience, arrived at the formulation of his or her own value system, his or her view of the world and humanity which he or she has come to feel deeply and strongly about. As the artist enjoys artistic independence, the critic/ viewer also enjoys a measure of autonomy. For, to be sure, the critic is
No one can be like Alice Guillermo. No one can be like her, unapologetic when she states: “Indeed, the responsible viewer/ critic must draw from a rich fund of knowledge and humanism.” Go, Alice, go and whisper to the Angels and the Holy Spirit. Tell them there is so much bad taste in this world. They will believe you, Alice, you with the blownaway hair, and that kind look. not an appendage of the artist or a promoter or publicist, but one who vitally contributes to the dynamic dialogue, interaction, and debate in the field of art and culture as these intersect with other human concerns, among them the political, social, and economic.” For Alice Guillermo, “The viewer/ critic, as also the artist should, places a value on the capacity of art to influence and transform society.” From the same collection of essays on Philippine art, Alice Guillermo demonstrates that she is a teaching critic. For her, the critic and the artist are two elements in the art process. On this, she reminds us about an “underlying premise then is that the viewer of art, in particular the art critic, needs to have thought out fully his own values or the guiding principles by which he or she lives as a total human person. The artist likewise creates his or her art not as a fragmented human being or purely technical specialist, but as a total thinking and feeling individual.” If that bravery of ideas does not win readers, one should experience Alice Guillermo’s prose, which is poetry. In her reviews for this newspaper, she seems to abandon all control as she is carried into the painting, living within the frame,
discovering whatever wellspring is there necessary for the viewer to understand and for the artist to revisit, refuse or interrogate. Everything is possible after an Alice Guillermo’s review because she opens a door, whether by theory or by sharing an experience. In her reading of Lina Ciani’s paintings, Alice Guillermo writes how the “delicate paintings of Lina Llaguno Ciani are like experiences on the brink of a high cliff, where one single misstep can send you plunging into an endless abyss of endless clouds and space into a surrealist realm of no gravity.” She sums up the artist’s works by impressing on us how Ciani “works on contrasts and contradictions: gravity and nogravity, two-dimensional versus three-dimensional, small and gigantic, fragility and strength.” On Federico Aguilar-Alcuaz, Alice Guillermo is daring and sweet: “What is probably the secret of Alcuaz’s art is that he was a true hedonist in his approach to life, nature and the world at large.” On the nudes we are observers and voyeurs, allowed and disallowed by a phrasing that teases the legal, the ethical and the moral. Alice Guillermo’s words save us from damnation as she talks of “the suppleness and ease of the nudes—they are fully at home in their boudoir—that create their harmonious poise, whether lightly crossing their legs or resting their hands on their lap, a sweet and tender vitality coursing through the body to the fingertips. The nude is usually seated beside a curtained window from which light softly blurs the contours of the sofa and backlights her figure lending a glowing tone to her skin. The elegance of the image also stems from its sparing
use of color limited to light ochre for skin tones, browns, supple velvety grays and sparkling whites for brilliant highlights. Sometimes the artist plays with white…. To this the artist may add a burst of color, a vibrant crimson for a spray of flowers. Another nude may take a diagonal pose in a somewhat darkened room with suggestions of vegetation in the window but with only a colorful weave accessory to her long, flowing limbs.” As we get lost in the near-prurience of the moment, she shakes us a bit with this line: “These subdued uncluttered images nevertheless convey a dignity as well as a sumptuousness that never cloys or tires the eye.” When she left the BusinessMirror, I was one of those who took her place. On the tenth time I submitted my art review, I recalled that on the space where her criticisms appeared, there was an old photo of Alice, her hair blown away, the face nonchalant but not aloof. “So, do I also get a photo beside my reviews?” I half-seriously, half-mockingly asked my editor. To which he responded: “Why, are you Alice Guillermo?” Of course, no one can be like Alice Guillermo. No one can be like her, unapologetic when she states: “Indeed, the responsible viewer/critic must draw from a rich fund of knowledge and humanism.” Go, Alice, go and whisper to the Angels and the Holy Spirit. Tell them there is so much bad taste in this world. They will believe you, Alice, you with the blown-away hair, and that kind look. They will believe you because you are always true to your words and the arts those words define for all humanity.
E-mail: titovaliente@yahoo.com.
India’s banking crisis is really a power crisis By Mihir Sharma Bloomberg Opinion
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ndia’s government seems intent on abandoning good ideas for dealing with the country’s banking crisis and encouraging bad ones. Perhaps that shouldn’t be surprising, given that the bureaucrats don’t yet seem to have grappled with the real nature of the problem. The latest terrible proposal for dealing with the bad loans weighing down India’s state-owned banks, which control more than two-thirds of deposits, is to create a “bad bank” —an asset-management company that would take stressed assets off their balance sheets. Naturally, the scheme emerged from a committee made up of the heads of India’s nationalized banks. Ownership of the new company would be shared between banks and private investors. It would have to raise at least 1 trillion rupees (about $14.5 billion) for an alternative investment fund from various pools of capital in the private sector. Why so much? Because the company will have to act as a market maker for stressed assets that nobody wants, picking up 15 percent of an agreedupon floor price. This is the real issue. There are already quite a few private-sector asset-management companies lurking around now that India has finally instituted a real insolvency code. The
problem isn’t that they don’t have enough money, it’s that not enough of the stressed assets being put on sale look good enough to buy. The most intractable bad loans, the ones the bad bank is meant to deal with, are concentrated in one sector: power. In particular, Indian thermal plants are struggling. A parliamentary subcommittee estimated earlier this year that 34,000 megawatts worth of capacity is in trouble. Either nobody has signed up to buy power from these plants, rendering them unprofitable, or they don’t have access to subsidized coal. An industry association thinks that the real number is closer to 50,000 MW, in the same ballpark as all the capacity added in the past five years of feverish plant-building. Others have provided even higher estimates. This is a significant proportion of India’s total power-generation capacity—and, at perhaps 4 trillion rupees, a sizable fraction of the banks’ balance sheets. India isn’t alone. In several countries, analysts are beginning to wonder if “stranded assets”—in particular, thermal capacity left behind in the shift to renewables or to more efficient generation—threaten to create systemic stress for the financial system. One estimate suggests that European financial institutions alone, including pension funds, have more than €1 trillion of exposure to fossil-fuel companies and projects, and even a
The most intractable bad loans, the ones the bad bank is meant to deal with, are concentrated in one sector: power. In particular, Indian thermal plants are struggling. A parliamentary subcommittee estimated earlier this year that 34,000 megawatts-worth of capacity is in trouble. Either nobody has signed up to buy power from these plants, rendering them unprofitable, or they don’t have access to subsidized coal.
smooth transition to a low-carbon economy might involve losses of €400 billion. Worse, it isn’t always certain who’s exposed to what degree—the exact circumstances in which sudden crises can take hold. In the US, meanwhile, coal companies are returning to the leveraged-loan market with a vengeance; fossil-fuel assets already made up a third of that market in 2015. In India renewable energy now looks competitive with “zombie” thermal power plants in terms of cost, while new plants require government subsidies and favorable administrative decisions that bureaucrats are reluctant to provide. In addition, provincial power utilities are chronically in the red because of their inability to force end-users of electricity to pay up. Even if they recover, and more and more Indians
get access to electricity, a decent proportion of the investment in the sector is going to go into renewables or clean coal. Those stressed assets that have been—or are likely to be—rehabilitated seem to be in sectors like steel, where recovering domestic demand in India (and some handy antidumping tariffs targeted at China) have convinced some investors to take a punt on a plant or two. By contrast, there are no takers for plants, like one $38 billion white elephant in Jharkhand, that were only profitable if the government subsidized their coal. Private Indian power plants are in any case operating at only 55 percent of capacity; who would want to risk setting up another one? The transition to a lower-carbon economy is a reality, even for countries like India where coal will still be the bedrock of power generation for decades to come and even if renewable energy is still unreliable for base-load power. Given that this transition is real and happening, policy-makers around the world must understand that carbon-based assets are a financial time bomb. In India they look like they might torpedo the banking sector; elsewhere, they will pose other major threats to financial stability. It’s time for regulators to get serious about the knock-on effects of the world’s fight against climate change.
2nd Front Page BusinessMirror
A12 Friday, August 3, 2018
www.businessmirror.com.ph
Most Manila Bay LGUs fail fisheries law audit
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By Jonathan L. Mayuga
@jonlmayuga
OST local government units in the Manila Bay region are not compliant with Republic Act 10654, or the Amended Fisheries Code, initial results of the Fisheries Law Compliance Audit conducted by the Department of the Interior and Local Government (DILG) reveal.
In a statement reacting to the result of the fisheries compliance audit, Oceana Philippines, an ocean-conservation advocacy group, said the audit findings will be useful in determining fisheriesmanagement measures in the Manila Bay region and the municipal waters nationwide.
“We commend the DILG for providing this tool to measure the state of compliance by the coastal local government units of their responsibility in protecting their municipal waters. By ensuring its sustainable management, they are also protecting the livelihood of millions who depend on
our ocean for sustenance,“ lawyer Gloria Estenzo Ramos, vice president of Oceana Philippines, said. The audit, which was initially tested in 19 of the 35 coastal LGUs in Manila Bay, aims to monitor the compliance of LGUs with the amended Fisheries Code, and the DILG Memorandum Circular 2018-59, which provides the guidelines and regulations for fishery activities within municipal waters nationwide. It also seeks to remind LGUs to exercise their mandate in managing municipal waters, especially in fishery law enforcement, fisherfolk registration and implementing management measures, such as closed season. Starting this month, the DILG will roll out the fisheries law audit nationwide. It was first tested in Manila Bay, which includes cities with major fishing grounds, such as Navotas,
Parañaque and Las Piñas in Metro Manila, and LGUs from Bataan, Batangas and Pampanga. Initial results of the audit revealed that all tested LGUs have an updated list of registered fishing boats and 52 percent of the tested LGUs monitor their fish catch.
Ban on ring net
Meanwhile, 21 percent of the tested LGUs do not have a local ordinance regulating the use of active fishing gears such as bottom trawling, ring net or Danish Seine or hulbot-hulbot, the mere possession of which was recently banned by the Department of Agriculture’s Bureau of Fisheries and Aquatic Resources recently. Meanwhile, around 47 percent of LGUs have an ordinance related to law enforcement, while 53 percent have no ordinance on the delineation of municipal waters The amended Fisheries Code
Asean links to China seen firmer, but PHL faces risk By Bianca Cuaresma @BcuaresmaBM
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HINA’S economic linkages with economies in the South East Asian region are likely to increase further despite the economic powerhouse’s structural adjustment, the Asean+3 Macroeconomic Research Organization (Amro) said. In a recent working paper on China’s economic linkages with the Asean, Amro said China’s structural adjustment will eventually benefit economies in the Asean region. However, it flagged risks for countries—including the Philippines —that rely on China’s market for their electronics exports. “Along with rising incomes and an expanding middle class in China, there has been increasing demand for consumer goods in both quantity and quality.
Although improvement in technology and manufacturing capacity in China will help meet demand for some higher-end products, there will always be a gap between domestic demand and supply for many products,” the Amro report read. “The gap will provide opportunities for Asean countries to export more to China, including tropical fresh fruits and vegetables, high-quality food products and specialty products from the region,” it added. China is one of the biggest country destinations of Philippine exports as of May. The US is still the largest country export market of the Philippines during the month. “In addition, there is still substantial room to attract more tourists due to China’s rapidly expanding middle class. All these indicate strong growing demand from China, with Asean firms
who can meet the evolving change in China’s consumer goods benefiting the most,” Amro said. In 2016 Chinese tourists accounted for 11 percent of the total arrivals in the Philippines.
But risks arise for the Philippines Risks, however, arise for certain countries, particularly for those dependent on China for their electronics export market. “In 2015 China announced an ambitious plan to upgrade its manufacturing—called Made in China 2025, with the aim to transform China from a manufacturing giant into an advanced manufacturing power by pursuing breakthroughs in developing new information technology such as high-end electronic parts and machinery,” Amro said. “If China succeeds in implementing
this plan, it will reduce its reliance on high-end electronic parts and machinery from Japan, [South] Korea and the Asean region,” it added. The Philippines is the third-largest exporter of electronic and industrial parts to China in 2016, next to Vietnam and Malaysia. In 2008 the Philippines was the largest exporter of electronic and industrial parts to China, data from Amro showed. On the other hand, Amro said China may increasingly rely on imports of lower-end manufacturing products, such as garments and footwear, as some firms have gradually moved from China to some developing Asean countries due to higher labor costs and stricter environmentalprotection standards in China. Amro’s recommendation is that policy adjustments should be considered to take advantage of the opportunities, as well as cope with challenges stemming from China’s increasing linkages and spillover effects. “…weaker demand by China for electronic components and commodities will weigh on these sectors in Asean. Adjusting these industries should be a policy priority,” AMRO said. “Nonetheless, overall trade and investment between China and Asean will increase further, and joint measures to facilitate local currencies for trade and settlement could be helpful,” it added.
DA. . .
Continued from A1
Amending RA 8178
The agriculture chief also said he supports the amendment proposed by Albay First Representative Edcel Lagman to House Bill (HB) 7735, or the Revised Agricultural Tariffication Act. The bill seeks to amend RA 8178 to remove the QR on rice and replace it with tariffs. “It puts an unequivocal and clear statement in the law that the tariffs collected from rice imports would automatically go to the RCEF. It will assure that the rice industry could stand up an inundation of imported rice,” Piñol said. “It will give an assurance to both members of Congress who are pessimistic about the effectiveness of tariffication and of course, industry stakeholders, [who will make] a little sacrifice, which is to allow imported rice to compete with them. They will be protected by the government, that’s what Congressman Lagman wants,” he added. During the DA’s budget hearing, Lagman said he seeks to put a “clearer” language in one of the provisions of the tarrification law that would exempt the collected rice import tariffs would be automatically approriated to the RCEF. “Proceeds from the fund should not be subject to [General Appropriations Act]. It should be released automatically by the [Department of Budget and Management] on a periodic basis,” he said. “So that we are not going to debate anymore how the fund will be appropriated. This will also assure the amount will be released to RCEF automatically. So that we will be able to help the DA and the country,” he added.
lapsed into law on February 27, 2015. It seeks to “prevent, deter and eliminate illegal, unreported and unregulated” or IUU fishing in the country. One of the most significant features is the installation of a Monitoring, Control and Surveillance system in “all Philippineflagged fishing vessels regardless of fishing area and destination of catch,” which would make it easier to ensure compliance with fisheries regulations. Meanwhile, DILG Officer in Charge Eduardo M. Año empha-
sized the crucial role of LGUs in implementing the law to manage and protect municipal waters, where commercial fishing and destructive gear, such as bottom trawling and Danish Seine or hulbot-hulbot, are prohibited. “Millions of lives depend on water and its natural resources. It is imperative, therefore, for LGUs to be on top of ensuring that their marine and water resources are nurtured and protected because these assets are vital to national development,” Año said in a statement.
Millions of lives depend on water and its natural resources. It is imperative, therefore, for LGUs to be on top of ensuring that their marine and water resources are nurtured and protected because these assets are vital to national development.”—Año
DELAY IN R.C.E.P. JUST PART OF BID TO FORGE BEST DEAL–N.Z. ENVOY By Elijah Felice E. Rosales @alyasjah
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oncluding the Regional Comprehensive Economic Partnership (RCEP) might be taking longer as planned, but negotiators are biding their time in making sure all provisions satisfy the interests of participating countries, according to a top envoy. In a recent BusinessMirror Coffee Club forum, New Zealand Ambassador to the Philippines David Strachan said his country is working hard toward the conclusion of RCEP negotiations. However, he admitted there really will be obstacles in finalizing the trade deal, given its far-reaching coverage. “We want to see a comprehensive outcome, and we believe that has been up to make sure that this agreement is caught to the extent that everyone is going to be satisfied with the outcome. If it means it takes a little bit longer, then so be it,” Strachan said. RCEP negotiators are determined to give the proposed agreement a go by the end of the year. However, reported disputes between the large economies involved in the talks have made it difficult for the trade deal to progress. Strachan said New Zealand, as one of the RCEP negotiating countries, is willing to own up to being a party in the delay in the talks. However, he argued the delay is reasonable, as negotiators are looking at possibly one of the most ambitious, if not the most ambitious, trade agreement in history. “We don’t believe in concluding an agreement for the sake of it,” Strachan said. “This has the potential to be one of the largest free trade agreement the world has even seen. It has enormous potential for all the citizens,” the diplomat added. In spite of the impediment in negotiations, Strachan reported that negotiators made significant headway in several provisions of the RCEP. “It is true what you say that there have been some delays, but, on the positive side, we are encouraged that, in the last round, they concluded chapters on customs procedures and trade facilitation, as well as government procurement,” he revealed. The chapter on customs procedures and trade facilitation will streamline trade activities be-
Strachan tween RCEP economies, Strachan explained. On the other hand, the chapter on government-procurement targets to make transparent rules and regulations on purchasing processes of RCEP governments. “The chapter on government procurement aims to promote transparency of laws, regulations and procedures, as well as cooperation among the parties regarding government-procurement. New Zealand, as well as some other countries in the negotiations, are showing substantial flexibility and have moved a long way in recent months to show that the real contribution we are making will get a substantial outcome on [the] RCEP later this year,” Strachan said. The diplomat, however, argued RCEP economies have to be liberal with restrictions on foreign investment, as this will assist the ease of doing business in their countries and will produce “commercially meaningful market access” for parties involved. According to Strachan, the RCEP will further improve bilateral trade between the Philippines and New Zealand. Total trade between the two countries was valued at $544.72 million last year, with Manila accumulating a trade deficit of $433.29 million. “We see the RCEP as an important piece of architecture that has potential to deepen economic integration in the region. We consider [the] RCEP to be a substantial opportunity to build on existing trade relationships, and believe it will further develop New Zealand and the Philippines’s positive relationship,” Strachan said. The RCEP is a multilateral trade agreement involving the 10 member-states of the Association of Southeast Nations and its trading partners Australia, China, India, Japan, New Zealand and South Korea. In 2016 RCEP negotiating countries accounted for almost half of world population, about 30 percent of global GDP and over 25 percent of world exports.