Issuu

“It was completely intimidating.”—Carolyn Palmer, the sculptor chosen to create a replacement statue in the late actress Lucille Ball’s hometown. The much-maligned statue of Ball will be replaced after it drew worldwide attention as “Scary Lucy”. AP

media partner of the year

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2015 environmental Media Award leadership award 2008

“I hope you’ve buckled your seat belts. It’s always challenging, and it’s always messy.”—Barack Obama’s message for youth from other countries watching America’s rollicking presidential election. Obama said the campaign is a good lesson in the fact that democracy is hard everywhere. AP

“Even though the US and its allies try to block our space development, our aerospace scientists will conquer space and definitely plant the flag of the DPRK on the moon.”—Hyon Kwang Il, director of the scientific research department of North Korea’s National Aerospace Development Administration. AP

BusinessMirror

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A broader look at today’s business n

Friday, August 5, 2016 Vol. 11 No. 300

Senators eye collusion of power industry players to jack up power prices

DOE moves to avert Luzon power shortage

INSIDE

@llectura & Butch Fernandez

@butchfBM

he Department of Energy (DOE) and the Energy Regulatory Commission (ERC) have begun assessing the country’s power-supply situation, after a series of yellow- and redalert status were raised in Luzon.

rides that matter

motoring

By Lenie Lectura

₧20/kWh

The price jump at the WESM as an offshoot of a series of yellow and red alerts by NGCP in the Luzon grid On Thursday, when the National Grid Corp. of the Philippines (NGCP) placed the Luzon grid on yellow-alert status anew, the DOE said it had started looking at all possible mechanisms that would ensure adequate and stable power supply Continued on A2

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Nipping the bud Teddy Locsin Jr.

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oseph Goldstein in the New York Times asks: Is a police shooting a crime? In American law and jurisprudence, it all depends on the officer’s point of view. A black teenager reached into his waistband, the officer shot him dead. He was reaching for a bag of marijuana, he dumped it in a toilet as the cop shot him. A grand jury indicted the officer, but the judge dismissed that jury. He empaneled another jury that absolved the cop. Continued on A11

Linemen check this power grid to maintain its condition and avoid power disruption. The National Grid Corp. of the Philippines placed the Luzon grid on yellow-alert status on Thursday due to insufficient operating reserve. NONIE REYES

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Suzuki posts 37% growth

M a z d a Skyactiv-D: Breaking

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ICC-Cabcom seeks Duterte’s W approval for 10 infra projects By Cai U. Ordinario

T E3

CHANGE IMMIGRATION LAWS, ADVOCATES SAY

@cuo_bm

he interagency Investment Coordination Committee (ICC)Cabinet Committee (Cabcom) on Thursday said it has endorsed for the approval of President Duterte 10 projects costing at least P136.44 billion. The 10 projects were endorsed by the ICC-Cabcom to the National Economic and Development Authority (Neda) Board—the highest policy-making body of the Neda chaired by the President. Under the Duterte administration, the

PESO exchange rates n US 47.0310

ICC-Cabcom said it has agreed to meet every fourth Monday of the month. “These recommended projects are a good start toward the government’s goal of improving government investments in infrastructure, especially in transportation and health, and agribusiness,” Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement. “We are optimistic that these projects will significantly contribute to the development and improvement of their target areas and communities,” Pernia added. Of those endorsed for approval, five

are new projects. These are the NorthSouth Railway Project-South Line; Maritime Safety Capability Improvement Project for the Philippine Coast Guard Phase II, worth P8.02 billion; Metro Manila Bus Rapid Transit-Edsa, P68.26 billion; Plaridel Bypass Toll Road Project,

ASHINGTON—Immigrants contribute millions of dollars in taxes and create hundreds of thousands of jobs in all 50 states every year, according to statistics compiled by a new group that’s advocating for change in immigration laws. Those statistics illustrate the sizable impact immigrants have in states such as Florida, California and Texas. For instance, in 2014 immigrants generated more than $20 billion in business income in California. But they also show that smaller states benefit from their immigrant populations. The study came as part of a larger announcement by the Partnership for a New American Economy, a bipartisan group started by former New York Mayor Michael Bloomberg that advocates for revamping US immigration laws. “It’s going to be a hard fight, and what we’re going to need, and historically what there hasn’t been enough of, are the right stories, the right data, the right facts,” said Jeremy Robbins, the executive director of the organization. That hard fight begins now, advocates said in a conference call on Wednesday, and will continue into 2017 regardless of whether Republican Donald Trump or Democrat Hillary Clinton wins the presidential election in November.

See “ICC-Cabcom,” A2

See “Immigration laws,” A2

The number of new projects endorsed by the ICC-Cabcom to the Neda Board

n japan 0.4646 n UK 62.6923 n HK 6.0618 n CHINA 7.0867 n singapore 35.0742 n australia 35.6871 n EU 52.4443 n SAUDI arabia 12.5413

Source: BSP (4 August 2016 )

BMReports BusinessMirror

A2 Friday, August 5, 2016

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DOE moves to avert Luzon power shortage Continued from A1

necessary to sustain the country’s economic growth. In particular, the DOE is assessing the practices of power-generation firms during incidents of sudden plant shutdown. “The recent spate of yellow alert-status declaration by the NGCP prompted the DOE to assess whether there are enough measures or standards for power-generation companies to ensure their power plants are always in good condition and are able to meet their obligations to their respective customers,” the DOE said. Mechanisms that are being studied by the agency include looking into the provision of replacement power for contracted capacities and the creation of technical-audit teams to assess the operations and contracts of generation companies (gencos) and distribution utilities (DUs), as well as strengthening the promotion of energy investments to augment the supply of electricity in the country. “We are keen on improving the power-supply situation in the country. We will strengthen the policies and programs and we will work with the ERC to ensure that all standards are enforced to ascertain reliable, stable and reasonably priced electricity, because we cannot let the people suffer from power interruptions,” Energy Secretary Alfonso G. Cusi said.

‘Price rigging’

The Senate Committee on Energy is poised to conduct a full-blown inquiry into alleged “price rigging” by power industry players following last weekend’s simultaneous shutdowns of six power plants in the Luzon grid, triggering massive spikes in electricity rates charged to millions of consumers. Sen. Sherwin T. Gatchalian, committee chairman, said on Thursday

ICC-Cabcom. . . P9.33 billion; and Metro Manila Flood Management Project Phase 1, P23.5 billion. The Neda said no cost estimate has been made available for the North-South Railway Project– South Line as of press time.

the panel’s probe was instigated by Senate Minority Leader Ralph G. Recto’s resolution, citing “possible collusion among industry insiders after the six plants, which provide more than 13 percent of the Luzon grid’s installed capacity, went offline for unscheduled maintenance at the same time.” “What we want is to determine what really happened and come out with legislation to prevent this type of collusion [from] happening,” Gatchalian said. He lamented that as a result, electricity prices in the Wholesale Electricity Spot Market (WESM) jumped to five times the normal rate, from an average of P4 per kilowatt-hour (kWh) over the last month to a whopping P20 per kWh on July 29 and 30. Gatchalian added that senators also want to find out at the upcoming inquiry “if we have mechanisms to prevent collusion and to punish collusion, and that’s where the legislature will come in,” Gatchalian said. At the same time, the senator affirmed his commitment to work with the Duterte administration in crafting a “forward-looking plan in pursuit of building a stable and efficient energy supply for the entire country.” He explained that forecasting and planning are very important in the energy sector,” noting that “this is a long-term industry, and to build a plant takes years and years.” “So, we really need to plan. We really need to develop strong planning and forecasting mechanisms and, at the same time, work together with the legislature to come up with policies which will support these plans,” Gatchalian added.

Judicious power consumption

The DOE also reiterated its call to the public to judiciously manage energy consumption. The NGCP placed the grid on yel-

Continued from A1

Meanwhile, the Neda said the ICC-Cabcom also endorsed the expansion of the bed capacity of the Eastern Visayas Regional Medical Center Modernization Project, which costs P2.4 billion. The project seeks to increase the

low alert from 9:01 a.m. to 4 p.m. on Thursday due to “insufficient operating reserve.” Later that day, the yellow-alert status was extended until 8 p.m. after the San Gabriel plant of First Gen tripped at 2 p.m. Based on the 6 a.m. advisory of NGCP, Luzon system capacity stood at 9,805 megawatts (MW), while the system peak demand is projected to reach 9,128 MW at 11 a.m., leaving reserve capacity at 364 MW. The Visayas and Mindanao grids are operating on normal condition. A yellow alert is issued by NGCP when contingency reserve is less than the capacity of the largest synchronized unit of the grid. In Luzon this is equivalent to 647 MW, or one unit of the Sual power plant. A red alert, meanwhile, means that there is severe power deficiency. From July 25 to August 4, there had been seven yellow alerts and two red alerts raised in Luzon grid.

ments, will be asked to operate their own generator sets if the grid operator projects a need to augment generation capacity in the Luzon grid. Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply during the season. Whenever yellow alert is issued, Meralco advises its ILP participants to be ready to use their own generator sets should the need arise.

Forced outage

Prior to Thursday’s yellow-alert status, the NGCP placed the Luzon grid in similar alert status late last month. According to the Manila Electric Co. (Meralco), the issuance of yellow and red alerts is the longest streak (seven days, or from July 26 to August 1) since April 2004, when the utility firm first adopted the Interruptible Load Program (ILP), according to Meralco Utility Economics Head Lawrence Fernandez. “In accordance with protocols, upon issuance of the yellow-alert notice, Meralco began advising participants to the ILP to prepare for possible activation, in case the state of the grid deteriorates to a red alert like it did last Friday and Saturday,” Fernandez said in an interview. Under ILP, customers with large loads, like commercial establish-

It has been observed that the lack of power supply or thinning power reserves for the past days have been due to the forced outages of various generating plants in Luzon. On T hursday nearly 1,300 MW was shaved off Luzon grid, following the unplanned outage of various plants. These are the the 50-MW Angat Hydroelectric Power Plant Unit 4, the 180-MW Kalayaan Hydroelectric Power Plant U1, the Makban Geothermal Power Plant U1 and U10 with a combined capacity of 83 MW, the 60-MW Limay Cogeneration Plant Block 5, the 382-MW Pagbilao Coal-Fired Power Plant U2, the 122-MW South Luzon Thermal Energy Corp. Coal-Fired Power Plant U1, the 280-MW Malaya Thermal Power Plant U1 and the 140-MW Southwest Luzon Power Generation Corp. Coal-Fired Power Plant U2. Meanwhile, the power plants on planned maintenance shutdown are the 180-MW Kalayaan U2, the 265-MW Santa Rita U2, the 55-MW Bacman Geothermal Power Plant and the 600-MW Ilijan Natural Gas Power Plant Block B. Meralco, for its part, said the immediate cause of the reduced reserve levels is the outage of Ilijan Block B (600 MW) at 12:44 a.m. earlier, to go on scheduled maintenance. The unit is expected to

hospital’s bed capacity to 500 from 325, transfer the hospital to a new site in Tacloban City, and establish a new information-technology (IT) system and medical equipment. The other hospital project is the modernization of the Gov. Celestrino Gallares Memorial Hospital. It will expand the hospital’s 225-bed capacity to 500 and transfer to a

new site in Cortez, Bohol. It will also include site development, warehouse building, medical equipment and IT systems. The government will spend P2.2 billion for project implementation, including design, procurement works and construction, in two years. A not her projec t endorsed by the ICC-Cabcom is the P10.15-

‘Longest streak’

be unavailable until August 28.

Ongoing review

The ERC, for its part, said on Thursday that it is currently evaluating the reports submitted by the power firms, whose generating facilities were among those that recently went offline. “Power plant outage reports are coming in. These are already being evaluated by the ERC,” said ERC spokesman lawyer Rexie Digal said in an interview. Under ERC Resolution 4, Series of 2015, generating facilities are required to submit a report to the ERC, within 48 hours from the occurrence of an unplanned outage. “For this particular reason, the ERC has reminded the plants who went on outage to submit the detailed reasons for the outage. Once the reports are submitted, the ERC will evaluate,” Digal said.

Surge in WESM prices

The Philippine Electricity Market Corp. (PEMC) said the other day that it monitored “surges in market prices.” However, the PEMC said these surges did not necessitate the imposition of a secondary price cap. “Taking into account the several yellow- and red-alert notices issued by the System Operator [NGCP] during the week of July 25 to 31, the secondary price cap mechanism was not imposed, as breach of cumulative price threshold was not triggered, as provided in ERC Resolution 20, Series of 2014,” said PEMC, operator of the WESM. A s e cond a r y pr ice c ap of P6.245 per kWh is implemented as a price-mitigating measure so consumers are protected from steep WESM prices when supply is tight in the spot market. The secondary price cap is implemented once an average threshold of P9 per kWh threshold is reached over a 168-hour period. billion Inclusive Partnerships for Agricultural Competitiveness, which aims to enhance market access and competitiveness of smallholder farmers in the target agrarian-reform communities clusters. The list also includes two ongoing airport projects of the Department of Transportation (DOTr) with proposed changes. These projects are the expansion of the Passenger Terminal Building (PTB) Area of the P4.79billion Bicol International Airport Project and the change in scope of the P7.77-billion New Bohol Airport Construction and Sustainable Environment Protection Project. The Neda said the expansion of the PTB w ill not increase project cost. For the Bohol airport, the DOTr said the project will involve the construction of an airport in Panglao Island,

“As of August 2, the cumulative price threshold has not yet been breached,” PEMC said. Based on PEMC’s preliminary data, “there are surges in market prices on few intervals,” but prices remain low in the weekend of July 30 and 31, due to decreased demand and lower temperature. “WESM ushers in transparency in a liberalized regime where spikes in prices provide signals on tightness of supply condition due to forced and planned outages. The secondary price cap and other measures, such as lowering of offer price cap and setting of offer price f loor, were instituted by the DOE, ERC and PEMC to address sustained high prices and volatilities inherent in a competitive electricity market,” PEMC President Melinda L. Ocampo said. Ocampo vowed that the PEMC would remain steadfast in maintaining transparency in market processes as it continues to reflect market prices that signal the supply and demand relationship.

Higher power rates

Meralco said power rates are anticipated to go up because of the frequent incidence of yellow- and red-alert status issued by the NGCP. However, since these incidents occurred late July, any adjustment would be reflected in the September Meralco bills. Fernandez said there “maybe upward pressure on market prices this August,” The Meralco official was referring to electricity prices in the WESM. “This is because of the successive yellow and red alerts experienced by the Luzon grid. This may eventually affect September generation charge,” Fernandez added. DOE Spokesman Felix William Fuentebella, meanwhile, said that, “As a general rule, if supply is down and demand is up it may drive prices.” Bohol, to replace the existing Tagbilaran Airport. The ICC consists of the secretary of finance, as chairman; the Neda director general, as cochairman; and the executive secretary, the secretaries of agriculture, trade and industry, budget and management and the governor of the Bangko Sentral ng Pilipinas, as members. The ICC evaluates the fiscal, monetary and balance of payments implications of major national projects, and recommends to the President the timetable of their implementation on a regular basis. It also advises the President on matters related to the domestic and foreign borrowings program; and submits a status of the fiscal, monetary and balance of payments implications of major national projects.

Immigration laws. . . Robbins said the goal of the study was to convince members of Congress that immigration was essential to their state economies. To further that goal, the organization plans to release additional reports that are specific to individual congressional districts by the end of the year. Cosponsors of the study continuously cited the statistics and economic benefits as one of the primary reasons to support immigration. In Florida, where one in five people were born outside the United States, immigrants contributed almost $6.4 billion in state and local taxes in 2014 and employed more than 506,000 people, according to the reports. Those numbers are even higher in Texas: Immigrants paid $8.7 billion in state and local taxes in 2014. Immigration also provides a boost to less immigrant-dense states, according to the reports. For example, immigrants in Rhode Island—which had fewer than

Continued from A1

7,000 immigrants move to the state from 2010 to 2014—employed more than 27,000 people and contributed roughly $336 million in state and local taxes. “It’s easy to see immigration at the national level,”Robbins said.“But understanding what it means in your state and in your community, that’s what members want. They want to bring growth; they want to bring jobs back home.” Immigration restructuring could also help farmers, who face a labor shortage. Up to 40 percent of farmers can’t harvest everything they produce, said Tom Nassif, the president of Western Growers, a California-based association. Nassif said the concern that foreigners took jobs from Americans simply wasn’t true for farm labor. “I don’t think many people in this country understand the blessing that has come from this foreign community that has come here to help us and to help us feed the world,” he said. TNS

BMReports BusinessMirror Friday, August 5, 2016

‘Slow Internet due to weak competition’

By Lorenz S. Marasigan

@lorenzmarasigan

HEN the two incumbent carriers co-acquired a budding third player in the telecommunications industry in the Philippines, competition in the sector started to weaken, a scenario that could potentially have ill effects in other markets that are dependent on the Internet. In its latest commentary on the telco sector in Southeast Asia, credit-rating agency Fitch Ratings said the Philippine telco industry suffered a blow on competition when PLDT Inc. and Globe Telecom Inc. allied to acquire the spectrum holdings of San Miguel Corp. “In the Philippines, the two incumbent telecom operators’ joint bid for San Miguel Corp.’s telecommunications business should ease escalating competition in the sector, giving the incumbents access to, among others, the 700-megahertz [MHz] spectrum-frequency,” the debt watcher said on Thursday. Internet Society of the Philippines Chairman Winthrop Yu agreed, saying that the current state of the Internet in the Philippines is reflective of the lack of competition in the local telco industry. “Extremely poor Internet quality, where the Philippines has consistently ranked at or close to the bottom and has been falling behind for over a decade, clearly indicates the lack of competition in the Philippine telcoms sector,” he told the BusinessMirror. He noted that the takeover of the telecommunications business of San Miguel will not help improve the Internet quality in the country over time. Rather, this may even have harmful effects on industries dependent on the information and communications technology (ICT) sector. “The takeover of San Miguel’s telcom assets—e.g., 700 MHz—will not significantly improve Internet quality and affordability in the long run,” he said. “Instead, this elimination of potential new players will, perhaps irreversibly, reduce competition and contestability, thereby negatively impacting all other sectors dependent on ICTs and the Internet.” Mary Grace Mirandilla-Santos, an

independent researcher on ICT and telecommunications policies, echoed this statement, saying weakened competition could also be threat to a potential third player. “I think having less competition between the only two market players could threaten a potential investor, as this is a sign that the incumbents can and will work together to prevent a new player from coming in,” she told the BusinessMirror. She added: “This also means less contestability in the telecom market. Without the threat of entry by new players, incumbents can become complacent and comfortable in their position.” Globally, almost all of the industries are now being disrupted by the Internet. The digital realm today is the new economy, and bandwidth, now, is the new currency. The two Filipino telcos acquired San Miguel’s telco business for P69.1 billion on May 30. This transaction freed up the coveted 700-MHz frequency band, which, according to the players, is the key to improve the current state of the Internet in the Philippines. According to the two telcos, the transaction has been “deemed approved” by virtue of the transitory rules of the Competition Law. But according to the Philippine Competition Commission (PCC), the deal was not “deemed approved” and has to be evaluated. The two telcos have sued the competition council before the Court of Appeals for its alleged blocking of the deal. The appellate court then junked Globe’s petition for injunction, while that of PLDT has yet to be decided on. Globe moved to consolidate its petition with its rival, and was approved by the appellate court on July 28.

Without the threat of entry by new players, incumbents can become complacent and comfortable in their position.”—Santos

Megaworld to open 8 more office towers in Visayas M

egaworld, the country’s largest developer and lessor of office spaces, is mapping out the so-called Visayas BPO triangle with its three huge township developments in Iloilo, Cebu and Bacolod. “We are targeting around 175,000 square meters of office spaces for the business-process outsourcing (BPO) industry in these three key cities in the next three years to form the so-called Visayas BPO Triangle. By 2020, our target is to bring it up to 225,000 square meters, depending on market demand. So far, the demand goes up, so we see this as a big possibility,” said Jericho Go, senior vice president-Megaworld, who is at the helm of the company’s office-property business. Once completed, Megaworld expects to generate around 50,000 full-time direct jobs in the BPO sector in these Visayan cities. “If we talk about direct and indirect jobs, we see around 300,000 for Cebu, Iloilo and Bacolod by end-2019. These include jobs that can be generated within our townships, such as those from transport and retail,” Go said. In its ongoing 30-hectare development in Lapu-Lapu City, Cebu, called The Mactan Newtown, inventory of office spaces will be around 80,000 sq m by next year,

50,000

The number of jobs that will be generated in the BPO sector in the Visayas once Megaworld completes construction of the office towers

as the company is set to open two more office towers. These two new office towers are Tower One Plaza Magellan (to be completed this year) and Pacific World Tower (to be completed in 2017), offering an additional 34,000 sq m of fresh office spaces in The Mactan Newtown. Other towers that have been previously launched are One World Center, Manulife Center and 8 Newtown Boulevard. “In Cebu, there is a growing preference for BPO locators to be in Mactan Island because of the traffic problem and congestion in Cebu City. We see LapuLapu City as a big alternative location for BPOs in Central Visayas, especially that the new and bigger Mactan-Cebu International Airport will be completed soon. The Mactan Newtown is only 15 minutes away from the airport, while

going to Cebu City takes you around one and a half hours in today’s traffic condition,” Go said. In the company’s 72-hectare Iloilo Business Park township, inventory of office spaces will reach around 33,000 sq m by the end of this year with the expected completion of one more office tower, Three Techno Place, offering around 8,700 sq m of fresh office spaces. The first four office towers, namely, Richmonde Tower (5,800 sq m), One Global Center (9,400 sq m), Two Global Center (9,100 sq m) and One Techno Place (8,700 sq m) have already been fully leased. Two more office towers are up for completion next year up to 2018. These are Two Techno Place (10,000 sq m) and Festive Walk Office Tower (12,000 sq m). “By end-2018, we will have around 65,000 sq m of office spaces in Iloilo Business Park and we will have more first-time locators lined up for Iloilo,” Go added. In Bacolod the company plans to build office towers in its 34-hectare The Upper East township with an initial inventory of 30,000 sq m. To date, the company has already started the land development of the area, which was formerly the site of the Bacolod-Murcia Milling Co. VG Cabuag

UK central bank to help economy through Brexit with stimulus

ONDON—The Bank of England (BOE) is expected to cut its key interest rate closer to zero on Thursday and possibly inject billions in new money into the financial system, as it tries to shore up an economy weighed down by the uncertainty over the vote to leave the European Union (EU). Surveys of business activity carried out since the June 23 vote suggest that the economy is contracting at its sharpest rate since 2009. Manufacturing, services and consumer spending are falling, the pound is down 10 percent and questions linger over what trade relations the country will have with the rest of the EU in coming years. As a result, the BOE is expected to cut its key interest rate from a record-low 0.5 percent, diverging from policy-makers at the US Federal Reserve, who, in December, raised their benchmark for the first time in seven years. The bank may also expand its stimu-

lus program called quantitative easing under which it buys government bonds from banks with newly created money, effectively pumping extra money into the economy. “The United Kingdom is facing a serious crisis here,” said Nariman Behravesh, chief economist for consulting firm IHS. “The BOE needs to do something and it needs to do something bold.” While many analysts forecast a 0.25-percentage point rate cut, Behravesh suggested that this might not be enough to revive a stalling economy. A bold move would be, for example, to return to bond-buying at the level seen during the financial crisis—that is, £375 billion—and other efforts to stimulate lending. The expectations of action grew after a gauge of business activity published last week and closely watched by investors and policy-makers fell in July to its lowest since early 2009. The sur-

People exchange their currency in London. AP/Adela Suliman

vey of 1,200 company executives covers manufacturing and services and showed a broad-based decline in production, orders and hiring intentions. One of the main concerns is that the immediate drop in confidence caused by the vote could become ingrained, with employers delay ing ex pansion—and

hiring—and consumers putting off purchases of big-ticket items, such as cars and appliances. Others are worried that with interest rates already so low, it may not help. During the financial crisis, cutting rates to 0.5 percent had a bigger impact, because rates stood at 5 percent. Some experts say there is only

so much the central bank can do to help the economy—that even with lower interest rates, businesses and households will remain worried about the future so long as the Brexit talks with EU drag on. In a note headlined “shock and awe or bubble and squeak,” Michael Hewson of CMC Markets suggested monetary policy alone may not be able to offset structural problems in the UK economy. The experience of Europe and Japan showed that using monetary policy alone “is starting to reach its limits.” “In fact recent easing measures by both the ECB [European Central bank] and Bank of Japan have failed to generate the desired response from markets that policymakers had intended, which is a warning in itself that monetary policy is starting to reach its limits,” he wrote. “Knowing all of this and the fact that the UK government have decided to wait...to

formulate its fiscal response, in order to get a clearer picture of recent events and their effects on the UK economy, surely it would make more sense for the BOE to do the same.” Some may see action by the central bank as another confidence-building move to ease worries in the markets and among the general public about credit drying up. With uncertainty over the impact of Brexit lingering, Britain is possibly heading toward recession, defined as two consecutive quarters of economic contraction. The National Institute of Economic and Social Research estimated there is a 50-50 chance of re c e s s io n o v e r t he ne x t 18 months. The inf luential think tank said growth would hit 1.7 percent overall this year with a decline of 0.2 percent in the third quarter and risk of “further deterioration.” AP

BMReports BusinessMirror

A4 Friday, August 5, 2016

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Duterte issues marching orders on shift to federalism–Pimentel P By Butch Fernandez @butchfBM & Jovee Marie N. dela Cruz @joveemarie

resident Duterte has issued marching orders to his partymates in the ruling PDPLaban, which now controls both chambers of Congress, to fast-track passage of legislation authorizing the Senate and the House of Representatives to convene as a constituent assembly (Con-ass) and amend the Constitution to pave the way for a shift to federalism.

“Toward this end, President Duterte has tasked PDP-Laban to take the lead in advocating for a federal system of government in our country,” Senate President Aquilino “Koko” Pimentel III said at a Senate forum on Wednesday, indicating the presidential directive also covered Speaker Pantaleon D. Alvarez, also a PDP-Laban stalwart. Pimentel disclosed that in compliance with President Duterte’s directive, “the PDP-Laban convened our leaders from across the country in a conference on federalism and charter change to consult them about moving forward in building a federal republic.” “We have also convened study groups composed of experts, scholars and practitioners to help us craft our party position,” he said. Speaking at the same forum, former Senate President Aquilino Pimentel Jr., PDP-Laban founder, backed President Duterte’s decision to ask lawmakers to craft the proposed constitutional amendment as a Con-ass, agreeing that the other option to elect delegates to a constitutional convention (Concon) to do the job is more costly for the taxpayers. “The original idea to convene a Con-con is expensive. The same thing can be done by lawmakers in a constituent assembly,” Pimentel Jr. told reporters after the forum. He added that in order to obviate the danger that lawmakers’ interests will prevail over the people’s interests, the enabling law should “obligate holding public hearings

on the federalism issue all over the country to get the sense of the people.” Pimentel Jr. said explaining the federalism issue “needs to be done by its advocates, because the voters should understand what federalism is all about,” adding that the process should be started now. In his speech, Pimentel III acknowledged that federalism’s complex nature demands careful study: “Scholars contend that there is not one model in the world that fits all. Each country must discern its own version of federalism according to peculiar conditions of their societies. Therefore, it is important to learn from the experiences—whether good or bad—of existing federations.” Pimentel III conceded they “do not see federalism to be the cure-all to all our problems.” “In fact, there is no cure-all to our nation’s ills. Federalism is not a perfect system; but it may be the answer to the country’s lingering problems rooted in our country’s multicultural nature,” he said. “Maybe it is time to recognize the Filipino identity as a ‘diversity of identities’ and not one single monolithic artificial construct. I submit that it is the recognition of differences that make communities prepared to embrace a common identity with others.” He added that in the end, federalism is not the only step after devolution “but it is the next logical step, if the Philippines chooses to further decentralize.”

the House of Representatives will increase the number of its deputy speakers to 12.

The PDP Laban convened our leaders from across the country in a Conference on Federalism and Charter Change to consult them about moving forward in building a Federal Republic.”—Pimentel The Senate president asserted that the people’s decision on the issue “should be well-informed, well-thought of and participatory.” In the ultimate analysis, federalism is a covenant that is made by citizens and, ultimately, the decision to federalize should reflect the will of the people who choose to unite amid their diversity. Meanwhile, the House of Representatives will increase the number of its deputy speakers from five to at least 12 in prepa-

ration for the federalism form of government. House Majority Leader and PDP-Laban Rep. Rodolfo Farinas of Ilocos Norte, in a news conference, said the 12 deputy speakers will be chosen from 12 federal-like states that will be created from the country’s current regions. According to Farinas, the lower chamber is trying to divide and group themselves in harmony to the proposed federal states as a way of initially determining their

political viability. “Since the thrust of the Duterte administration is into federalism, we look at the possible creation of states under a federal system of government. So we came up with 12 [deputy speakers]. We will see. Perhaps, we could try if its viable here in the House. We will divide ourselves into 12 like states to see everything,” Farinas said after the lower chamber’s recent caucus. The leadership of the lower chamber is planning to change the country’s form of government from presidential to federal system via Con-ass. “Initially, we will have 12 [like] states [from these 12 deputy speakers] under a federal system, among these states are Northern Luzon, Central Luzon, Metro Manila or National Capital Region, Southern Tagalog and Bicol. With these we clearly divided the Luzon

island,” he added. “In the Visayas there are three— western, eastern and central—while there are also three in Mindanao— western eastern and central plus the Bangsamoro. So in total, we have 12 [like states],” he said. Meanwhile, the majority leader assured that poor regions would not be independent states under the new proposed government. “We have to regroup them [regions] in such a way that there are rich and poor. They are saying Region 8 will not be able to survive, or perhaps, Region 9 as we know it, they will be regrouped,” he added. Also, Farinas said these deputy speakers will get their region’s concerns on the plan to change the 1987 Constitution. Farinas said the lower chamber will still hold another caucus to gather other ideas on how the states will be divided.

PHL, Malaysia, Indonesia ink joint patrol pact By Rene Acosta @reneacostaBM

alaysia, Indonesia and the Philippines have agreed to hasten the implementation of trilateral patrols within their maritime borders to address maritime threats and curb high seas crimes, including terrorism and poaching. The decision to implement joint air and naval patrols within the three countries’s “maritime areas of common concern” was agreed upon during a recent meeting held in Bali, Indonesia. The meeting was attended by Defense Secretary Delfin N. Lorenzana and his Indonesian and Malaysian counterparts, General Ryamizard Ryacudu and Dato’ Seri Hishammuddin Tun Hussein, respectively. In a statement, the Department of National Defense said the three defense chiefs agreed to put into action the systems covering the trilateral patrols, along with the exchange of information. “The three defense leaders agreed to encourage the operationalization of the Standard Operating Procedure for Maritime Patrol and Rendering Immediate Assistance; Operating Guidelines on Information and Intelligence Sharing and Combined Communication Plan,” it said. The joint air and maritime patrol agreement was signed on July 14 in Jakarta, Indonesia, by

The three defense leaders agreed to encourage the operationalization of the Standard Operating Procedure for Maritime Patrol and Rendering Immediate Assistance; Operating Guidelines on Information and Intelligence Sharing and Combined Communication Plan.”—DND

Lorenzana and his two Asean counterparts. During this week’s meeting, the three defense officials also agreed “to further explore coordinated activities among the armed forces of the three countries, a trilateral database sharing mechanism, and the concept of the Malacca Strait Patrol to address maritimesecurity concerns.” They also “reiterated their stand against violent extremism and terrorism, and concern over the repeated incidents of armed robbery and kidnapping at sea in the maritime areas of common concern to the three countries.” Likewise, Lorenzana and his Malaysian and Indonesian counterparts tackled the territorial

problem involving the South China Sea, but the defense department did not give any details. Other than joint patrols, the trilateral agreement would also establish joint military command posts at “designated locations, including ad hoc military liaisons on board.” Maritime Command Centers, which have overall responsibility for the tasking and deployment of each country’s respective assets, would be put up for the patrols. Also, the agreement would identify a transit corridor within the borders of the three countries that would serve as designated sea lanes for mariners entering the maritime areas of common concern.

Philippine Navy men on sea patrol

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As talk swirls of what to do if he quits

‘A sense of panic rising’ in GOP over Trump

ASHINGTON—Donald Trump’s relations with the Republican Party— and his political fortunes— worsened dramatically on Wednesday, as party leaders fretted openly about the inability of his campaign staff to control him and even began to discuss what to do if their unpredictable nominee suddenly quit the race.

“A sense of panic is rising” among GOP-elected officials and operatives, said Ed Rogers, a former Republican White House official. “Serious, senior lawyers” have begun researching how the rules would work if the party had to replace Trump on the ticket, a senior GOP figure in Washington with close ties to the party hierarchy confirmed. Though the chance of Trump quitting remains extremely unlikely, the fact that Republican officials were conducting such semiopen discussions spoke loudly about how far panic has spread, prompted by Trump’s actions of the last few days: his extended quarrel with the family of a soldier killed in action, his pointed refusal to endorse House Speaker Paul D. Ryan and Sen. John McCain in their GOP primaries, and even less weighty matters, like telling the mother of a crying baby to leave a rally. His volatility—and wishful thinking on the part of some—forced party leaders to reckon with any possible turn of events, including Trump ending his candidacy. Republican officials can’t force Trump out of the race, and the strong support he still has from many GOP voters makes elected officials reluctant to publicly oppose him. But their plotting makes clear the extent to which he is likely to be running alone, without the kind of help he was depending on from the party’s more organized campaign apparatus. “He just seems willfully destructive and willfully sort of sadistic about other Republicans,” said Rick Wilson, a Florida-based GOP consultant who has spoken out against Trump for more than a year. “Finally, people

are like, ‘No more. We’re done. We’re not playing this game anymore.’” All of the flare-ups point to a singular frustration: Trump’s refusal to take advice. Combined, they have also helped restore Hillary Clinton to a solid lead in most polls, renewing fears among Republican leaders that Trump could drag down-ballot GOP candidates down with him. The last two weeks have been terrible for the Republican nominee, conceded Barry Bennett, a former senior campaign adviser to Trump. “I can’t deny the obvious,” he said. Bennett said even the smaller controversies, like the crying baby, are creating the type of image problems that “would have ended the Mitt Romney campaign” in 2012. But Trump’s willingness to shock set the bar much higher, and also attracted GOP primary voters. Bennett called the notion of Trump leaving the race “crazy talk” and noted that the nominee, despite his foibles and missteps, remains in a very competitive race. “The bottom-line is that he has to get more disciplined,” said Bennett, still a Trump supporter. “There’s no doubt about it. We can’t have unforced errors.” Trump showed no signs he would heed that advice. Instead, during a rally in Daytona Beach, Florida, on Wednesday, he recounted controversial moments from his primary campaign: vulgar comments about Fox News anchor Megyn Kelly and his imitation of a reporter with a disability. He ran through a long list of other grievances, insisting the media had unfairly criticized him at every turn. And he pronounced that his cam-

Republican presidential candidate Donald Trump shakes hands with Louis Dorfman, after Dorfman gave him his Purple Heart medal, during a campaign rally at Briar Woods High School on Tuesday in Ashburn, Virginia. AP/Evan Vucci

paign has “never been so united.” His declaration defied intensifying leaks about discord within the campaign and between his staff and the Republican National Committee (RNC). The chatter grew significant enough to force campaign Chairman Paul Manafort to deny the infighting. But even Manafort’s comments left the impression that Trump may be shutting out his closest advisers. “The candidate is in control of his campaign,” Manafort said on Fox News. “We are organized, we are moving forward, and the Clinton machine may not like it, but we’re prepared for the fight.” Trump’s running mate, Indiana Gov. Mike Pence, made a separate attempt at damage control, endorsing Ryan in another Fox television interview. Trump “strongly encouraged me to endorse,” Pence said, awkwardly trying to bridge the gap on his own. Both tactics have become familiar in recent weeks: blaming the Clinton campaign and sending Pence to mend fences. Neither has stanched the problems. And the concerns have reached

Trump’s older children, who have closely advised him throughout his campaign. They “all recognize that there’s a lack of focus, and that this race is eminently winnable if they just focus,” according to one person who keeps in contact with them. The person didn’t say whether they have convinced their father or even spoken with him about it. Other GOP luminaries have made their own efforts. One highly placed Republican said Trump met on Tuesday with former New York Mayor Rudolph Giuliani for about two hours, and spoke by phone with Newt Gingrich, the former House speaker who has counseled and supported Trump. “This is not October. It’s August,” said Charlie Black, an informal Trump adviser, cautioning against drawing fixed conclusions from his bad week. The array of bad news for Trump has overshadowed some political opportunities. Figures released late last week showed anemic economic growth, Clinton claimed inaccurately that the Federal Bureau of Investigation director vouched for her

honesty about her e-mail, and a staff shakeup plagued the Democratic National Committee. “You can never recoup the time you lose in the media cycle. So every day that he’s on defense or trying to explain some utterance, he’s losing,” said Rick Tyler, a former spokesman for Trump’s top primary-season rival, Texas Sen. Ted Cruz. Converting potential advantages into votes will not only require more discipline from Trump, but also money and organization in battleground states. The Trump campaign announced on Wednesday that it had raised a combined $80 million with the RNC and state parties in July, the vast majority from small-dollar donors who gave online or through mail solicitations. That was less than Clinton, but stronger than prior efforts. Trump did not indicate how much is available to his campaign and how much will remain under the party’s control, a crucial issue given his apparent tension with the RNC. Trump will need the money. Not only is Clinton ahead, she also has a

big advantage among the major donors. Many of the GOP’s so-called whales have declined to help Trump. Among them is Meg Whitman, the Hewlett Packard Enterprise chief executive who ran unsuccessfully for governor of California in 2010. A prominent Republican fundraiser with a net worth of $2 billion, Whitman announced on Tuesday that she was backing Clinton, saying, “Trump’s demagoguery has undermined the fabric of our national character.” Even if Trump were to pick up his fund-raising pace, he faces stiff organizational challenges, particularly if he loses support from the RNC. In “these critical battleground states, the states that absolutely Trump must win, they’re undermanned and outgunned in every way,” Wilson said, and he pointed to one of the most crucial battlegrounds, his home state of Florida. Wilson said Clinton has more staff exclusively targeting Latino voters in Orlando alone than Trump has in the entire state. “Even if they had $1 billion that walked in the door tomorrow,” he said, “these things can’t just happen.” TNS

At least 33 U.S. troops have US to continue deportations to Central America contracted Zika, including 30,000 and 26,000 W 10 from Southern command

IAMI—At least 33 US troops, including a pregnant woman, have tested positive for the Zika virus, US military spokesmen said on Wednesday. Ten of those troops are men who answer to the Southern Command (Southcom), the Pentagon subsidiary with oversight of troops in Latin America and the Caribbean. Southcom Spokesman Jose Ruiz said those 10 got infected in five locations— Brazil, Colombia, the Dominican Republic, Jamaica and Martinique. They serve in all five branches that answer to Southcom, he added, the Army, Navy, Air Force, Coast Guard and Marines. The 10 “are all asymptomatic now,” said Ruiz, meaning they’re not currently sick. All were tested between February and July to make the list of confirmed cases. In addition, a woman relative of a US service member working for Southcom got the infection in one of those five countries, he said. She is not pregnant and is asymptomatic, too, he said. Southcom has liaison troops in four of the five nations. They generally work out of US embassies on cooperation agreements, such as military exercises or providing humanitarian relief. In the instance of Martinique, Ruiz said, a Coast Guard Cutter

docked there as part of its antitrafficking work with Southcom’s Joint Interagency Task Force and someone got sick. One of the other 23 is a pregnant female service member, said Air Force Maj. Benjamin Sakrisson, a Pentagon spokesman. He declined to divulge where they are based or got sick. “At the moment, it’s protected health information,” he said. The Military Times first reported the figure of 33 on Monday. Sakrisson added that the figure of 33 confirmed infected military members disclosed by the Pentagon on Wednesday was the tally as of last week, and was already counted in the global figure reported by the Centers for Disease Control and Prevention. A week earlier, the military had 27 confirmed cases, meaning the figures could have already risen by Wednesday’s disclosure. Because Southcom personnel account for only 10 of the cases, the gap leaves at least two possibilities. Some service members may have contracted the virus while on leave or vacation in the Caribbean or South America, and returned to home bases with it. Other Florida-based troops who do not answer to Southcom could be among those infected. Guantanamo spokesmen said no one was infected there. TNS

ASHINGTON—Homeland Security Secretary Jeh Johnson said on Wednesday deportations of Central Americans would continue despite recognition by the administration that a humanitarian crisis had enveloped El Salvador, Honduras and Guatemala. The administration does not plan to stop some 15 to 18 flights a week back to Central America, where homicide rates are now some of the highest in the world. The United States does not have open borders, Johnson said. Those apprehended trying to enter the country illegally and who have been ordered removed by immigration courts after exhausting their appeals will be sent home. “There is a right way and a wrong way,” Johnson said. “As long as we have border security and as long as our borders are not open borders. We have to be consistent with our priorities.” Johnson spoke on a host of issues that also included terrorism, cyber security and family detention during a breakfast organized by The Christian Science Monitor.

The number of people traveling as families and unaccompanied children, respectively, who have been apprehended at the border trying to cross illegally this year

The strong message reflects the United States’s challenge in carrying out its responsibilities to stop illegal migration while confronting the crisis in Central America, where, it acknowledges, many migrants cannot return home safely. The White House reached an agreement with Costa Rica last week to host up to 200 Central American refugee applicants, while the United States assessed their asylum claims. It was part of a large package of measures intended to protect migrants that included expanding the number of people who could apply to the US refugee program for children. Advocates, such as Kevin Apple-

by, the senior director of international migration policy at the Center for Migration Studies of New York, praised the expansion as acknowledgment by the Obama administration that Central American migrants are fleeing a humanitarian crisis and not an economic one. But implementation of the program is a years-long process. Nearly 30,000 people traveling as families, and 26,000 unaccompanied children have been apprehended at the border trying to cross illegally this year. The administration has been criticized for focusing more on enforcement than protection. The administration has carried out mass raids, and thousands of children and their parents have been held in large family detention centers. Meanwhile, the expansion of Central American refugee centers, announced by Secretary of State John Kerry in January, hasn’t involved any refugees coming to the US, and only 267 have been admitted to the US under the twoyear-old Central American Minors Program.The government

has received 9,500 applications. “The concern is that they place enforcement first and think about due process as an afterthought,” Appleby said. “And they go in tandem.” Appleby and others urged the administration to halt deportations until the expanded refugee program was up and running and the backlogged asylum system could be improved. Johnson said the administration wasn’t happy with the small numbers of people approved under the minors program, which is why the government was expanding the program. He noted that the administration worked with Congress to spend $750 million to help El Salvador, Guatemala and Honduras fight poverty and violence. But he said the Central American crisis also was affected by the refugee crisis in the Middle East. There are only so many people to screen asylum applicants. “We have a finite level of resources that we can dedicate to these huge humanitarian situations,” Johnson said. TNS

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Friday, August 5, 2016 A7

As China tech concerns fade

Taiwan is Asia’s hottest investment area

lobal investors can’t get enough of Taiwan. Overseas funds poured $5.4 billion into the island’s equities last month, taking inflows for the year to $11.6 billion and making Taiwan the most popular destination for investors among nine Asian markets tracked by Bloomberg. That’s helped send both the benchmark stock gauge and the currency to one-year highs. Fueling gains are bets that the imminent release of Apple Inc.’s iPhone 7 will boost profits at Taiwan suppliers and relief that the new political era, under President Tsai Ing-wen, hasn’t led to a conspicuous deterioration in ties with China. While a stronger currency may crimp overseas earnings for exporters, Prudential Financial Inc.’s local unit sees room for further gains as Asia’s second-highest dividend yield and belowaverage valuations lure investors. “Taiwan is especially strong, because everyone knows the new iPhone will be launched in September or October and production begins in the second quarter,” said Hsienwen Yeh, head of greater China investment at Prudential Financial

Securities Investment Trust Enterprise in Taipei. The increased investor enthusiasm toward the island’s stocks is a reversal from May, when global funds rushed for the exit amid concern slower smartphone sales growth would hit the local supply chain and the new president would strain ties with China. Tsai has avoided provoking China directly, saying in her inauguration speech that Taiwan will maintain peace and dialogue. Since Tsai assumed the presidency on May 20, the Taiex index has rallied 15 percent on a dollar basis, the fifthbiggest gain among 94 global benchmark indexes tracked by Bloomberg. The Taiwan dollar has strengthened 3.3 percent, the most in Asia after the

Street scene in Taipei

Bloomberg News

$5.4B

The amount of overseas funds that was poured into Taiwan’s equities last month currencies of Japan and South Korea. Technology companies have driven the advance. Taiwan Semiconductor Manufacturing Co., the island’s largest listed company and a major Apple supplier, climbed to a record this week after forecasting third-quarter sales that beat estimates as the new iPhone’s release neared. Apple added

to positive sentiment after reporting sales that fell less than projected in the April-to-June period. “I will increase allocation to some names related to iPhone 7 production” after reducing exposure in the first half, said Stevie Chou, Taipei-based head of equities at Manulife Asset Management (Taiwan). “The third quarter is a hot season for information-technology products.” Chou sounded a word of caution, saying the index’s rally may be limited by the island’s lackluster economy. GDP expanded 0.69 percent on a yearly basis from April through June, after three straight quarters of contraction. A stronger Taiwan dollar is also a threat to exports, which have shrunk for 17 months in a row.

Global investors have overlooked these challenges of late as they hunt for high yields amid receding returns around the world and decreasing odds of a Federal Reserve interest-rate increase this year. The island’s 4.03-percent dividend yield is Asia’s highest after Australia, and its 16.2 price-toearnings ratio is still less than its fiveyear average of 17.4. “Taiwan’s dividend yield is better than most emerging markets,” said Peter Tzeng, senior vice president at IBTS Investment Consulting Co. in Taipei. “While there’s some uncertainty over global economic growth, the earnings of Taiwan’s listed companies haven’t been too bad. So when there’s a lot of money around, funds come to Taiwan.” Bloomberg News

Private sector added 179,000 jobs in July

ASHINGTON—Private employers added a solid 179,000 net jobs last month, payroll-processing firm Automatic Data Processing (ADP) said on Wednesday in an indication that the labor market has regained its health after stumbling badly in May. The July job growth follows an upwardly revised 176,000 net new private-sector positions added the previous month. The new figures were in line with analyst expectations. “Job growth remains strong, but is moderating as the economy approaches full employment,” said Mark Zandi, chief economist at Moody’s Analytics, which assists ADP in preparing the report. “Businesses are having a more difficult time filling open job positions, which are near record highs,” he said. “The nation’s biggest economic problem will soon be the lack of available workers.” Manufacturers increased their payrolls by 4,000 workers in July, the first monthly gain since January, ADP said. But construction companies shed 6,000 positions in July, the second straight month of job cuts in that sector. The ADP data were consistent with forecasts that the Labor Department will report on Friday that the US added 185,000 net jobs in the private and public sectors last month. The unemployment rate is forecast to tick down to 4.8 percent, near the nine-year low. But the ADP and Labor Department data, which come from different sources, can be sharply at odds. In May ADP said the private sector added 181,000 net jobs, while the Labor Department reported overall job growth of just 11,000. That surprising stumble in the jobs market—the worst monthly Labor Department report in more than five years—triggered concerns of a sharp hiring slowdown. Los Angeles Times/TNS

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Friday, August 5, 2016

I.S. announces new leader of Boko Haram in Nigeria

The World

AGOS, Nigeria—Nigeria’s Boko Haram Islamic extremists have a new leader who is threatening to bomb churches and kill Christians, while ending attacks on mosques and markets used by ordinary Muslims, according to an interview published on Wednesday by the Islamic State (IS) group. He also says there is a Western plot to Christianize the region and has accused charities of using their aid for that purpose, according to a SITE Intelligence Group translation of an interview published on Wednesday in the IS newspaper al-Nabaa. The newspaper identified Abu Musab al-Barnawi as the new “wali,” or governor, of its so-called West Africa Province. The “wali” title was previously used to describe long-time Boko Haram leader Abubakar Shekau. The report did not say what Shekau’s current status was, although there have been rumors for weeks that he had been replaced. The interview with al-Barnawi indicates a major shift in strategy for the Nigerian extremists, who have killed many more Muslims than Christians in attacks in mosques with suicide bombers and gunmen. There have also been attacks on crowded marketplaces in predominantly Muslim areas and the killings and kidnappings of schoolchildren. The targeting of students accounts for its nickname Boko Haram, which means Western education is sinful or forbidden. “They strongly seek to Christianize the society.... They exploit the condition of those who are displaced under the raging war, providing them with food and shelter and then Christianizing their children,” SITE Intelligence quotes the new leader as saying. Al-Barnawi says the militants will respond to that threat by “booby-trapping and blowing up every church that we are able to reach and killing all of those [Christians] who we find from the citizens of the cross.” Wednesday’s announcement indicates a coup by Boko Haram breakaway group Ansaru against Shekau, and follows a trend of extremist Islamic groups moving away from al-Qaida to the IS, analyst Jacob Zenn said. Ansaru broke away from Boko Haram because it disagrees with the indiscriminate killing of civilians, especially Muslims. Al-Barnawi is the pseudonym of a Nigerian journalist allied with Ansaru, which is known for kidnapping foreigners, according to Zenn. In March 2015 Shekau switched allegiance from al-Qaeda and declared that Boko Haram be known as the IS’s West Africa Province. At the time, Boko Haram was the most powerful military force in northeast Nigeria, controlling a huge area and was better equipped and motivated than Nigerian forces. Under Shekau, the seven-year insurgency spread to neighboring countries, killed more than 20,000 people and drove more than 2.2 million from their homes, and created what aid workers are calling a catastrophic humanitarian emergency with children dying of starvation daily. Boko Haram last week ambushed a humanitarian convoy, killing three civilians including a UN employee and causing the suspension of UN aid to newly liberated but still dangerous areas of Nigeria’s northeast. Since last year, Nigeria has a new leader, President Muhammadu Buhari, a former military dictator who has better armed and motivated security forces. He is also fighting corruption that diverted $2.1 billion that was meant to buy weapons to fight the Islamic uprising, and is cooperating with a multinational force that has the extremists on the run. In the interview, al-Barnawi said that under his leadership the militants would work to seize back territory. He said that increasing numbers of youth are joining the cause, though Nigeria’s military reports that hundreds of its fighters have surrendered as aerial bombardments and ground assaults cut supply routes. AP

China lawyer gets 7-year prison term

Zhou Shifeng arrives for his trial at the Tianjin No. 2 Intermediate People’s Court in northern China’s Tianjin Municipality on Thursday. Zhou, a Chinese lawyer, was in court on Thursday in the third of a series of subversion trials demonstrating the ruling Communist Party’s determination to shut down independent human-rights activists and government critics. CCTV via AP Video

EIJING—A Chinese lawyer was sentenced to seven years in prison on Thursday in the third of a series of subversion trials demonstrating the ruling Communist Party’s determination to shut down independent human-rights activists and government critics.

The sentence handed down to Zhou Shifeng results from his actions related to his role as director of Beijing’s Fengrui Law Firm that took on sensitive cases and represented people who dared challenge the party. Zhou, 52, accepted the ruling and will not appeal, the official Xinhua News Agency reported. His half-day trial in the northern city of Tianjin followed those of two related legal activists earlier this week, both on charges of subversion. As with the others, Zhou was detained in July of last year amid a sweeping roundup of activists and lawyers. About 300 of them were ini-

tially seized and questioned before most were released. Zhou “played a major role in a group of activists who attempted to manipulate public opinion and damage national security by spreading subversive thoughts,” state media quoted the verdict as saying. It said Zhou worked with activists Hu Shigen, Zhai Yanmin and Li Heping “to encourage lawyers to highlight sensitive cases and hired protesters to disturb the judicial system.” Hu was given seven-and-a-half years on Wednesday and Zhai a suspended three-year sentence on Tuesday, while Li is being tried separately. Zhou also “asked administrative

officers in the law firm to post antigovernment comments online to stir up public sentiment,” the verdict said. Zhou established Fengrui in 2007, and the following year took on one of the country’s biggest dairies in a massive tainted infant-formula scandal that the government had tried to squelch. The firm has also represented clients targeted by the government, including members of the banned Falun Gong meditation sect and activist artist Ai Weiwei. Zhou’s final case involved Zhang Miao, a news assistant for the German weekly Die Zeit who was detained for nine months after helping with the magazine’s coverage of prodemocracy protests in Hong Kong. Zhou had been meeting Zhang at a hotel in suburban Beijing following her release when he was seized, hooded and driven away by agents. This week’s trials are part of a pattern established under the administration of President Xi Jinping to use more sophisticated legal means to attack perceived opponents as it maintains pressure on activists and non-governmental organizations. Several of those detained, including Zhou and fellow Fengrui lawyer Wang Yu, have made televised apologies for the crimes they are accused of, saying their legal activism was directed by unidentified “hostile for-

300

The number of activists and lawyers who were part of those rounded up last year and were initially seized and questioned before most were released eign forces” to smear and attack the Chinese government. Fengrui often worked with activists to gather evidence of government abuses and lead clients and the disgruntled in street protests, while spreading word online. Their actions were harshly denounced by the authorities as thuggery and interference in the legal process. Many family members of those being held say they and their retained lawyers have been denied access to the detainees for more than a year, receiving only occasional updates by word of mouth. Some have been briefly detained themselves while seeking information. Zhou and others were assigned government-appointed lawyers who work closely with the court. AP

Syrian journalists cover civil war at home from Jordan exile

MMAN, Jordan—From a small office in Jordan’s capital, two dozen Syrians and Americans talk daily by Skype with activists and civilians on both sides of the conflict in neighboring Syria to get a unique perspective on the civil war and the scope of the suffering. The setup of Syria Direct, a US-funded nonprofit group, is similar to that of news organizations that cover the conflict largely from a distance because on-the-ground reporting in Syria is either restricted or deemed too dangerous. Yet, Syria Direct also has a goal beyond reporting—it wants to influence decisionmakers. “What we’re trying to do is talk about ordinary Syrians and what their daily life is like after the decisions are made,” Managing Director Orion Wilcox said. Syria Direct is funded by the US State Department and a US charity, but Wilcox said money from Washington does not influence what is published. The group writes about abuses by both

the government of Syrian President Bashar alAssad and rebel groups fighting him, he said. Remote coverage of the five-year-old war, which devastated large parts of Syria, killed more than a quarter-of-a-million people and uprooted millions more, has been a major challenge. Information is often difficult to obtain or vet. At the same time, global interest in the daily bloody grind in Syria has dropped off as other crises command attention. Syria Direct said it is targeting readers who are already well informed about Syria and want a more granular view than what most news outlets typically provide. The web site has about 50,000 page views per month, while its Facebook page has 77,000 followers. Both are published in English and Arabic. In the group’s Amman office, two dozen Syrian and American journalists, translators and trainees met in small groups on a recent morning to discuss story ideas. Two or three pitches are usually pursued per day, with Syrian journalists tapping into their network of sources to gather information.

Stories reported and written by the Syrian journalists in Arabic are translated to English, then fact-checked and edited before being translated back to Arabic. A recent story reported on the rise of miscarriages in rebel-held Madaya, one of four Syrian towns where the UN says over 62,000 people are besieged in rapidly deteriorating conditions. As part of the story, Syria Direct interviewed a Madaya woman who said she suffered a miscarriage after United Nations food aid stopped coming. “We have sources that we’ve worked with for a long time and know are reliable,” said Syrian journalist Mohammed al-Haj Ali, who fled to Amman in 2012. “When we hear news...we check the news with several eyewitnesses.” When hundreds in a rebel-controlled suburb of Damascus suffered from food poisoning in June, Syria Direct spoke to residents who said the cause was spoiled food distributed by a rebel-administered charity. Eliot Higgins, a British blogger and Syria

watcher, said he considers Syria Direct a reliable news source—within the limitations of remote coverage. “You’re getting stuff that people choose to share, so it’s not always representative of the entire conflict or what’s going on in a certain area,” he said. Higgins said some pro-government groups have claimed Syria Direct focuses more on abuses committed by the government than by rebel groups, but that this may in part be due to greater media savviness and social-media presence of the Syrian opposition groups. Syria Direct Cofounder Amjad Tadros, a veteran news producer for the US network CBS, said the group covers all sides of the conflict. “From the opposition, to the government, to the Kurds, they all insult us because we tell the truth,” he said. For example, supporters of one Kurdish group criticized Syria Direct on Twitter after it reported that a Kurdish militia had forcibly displaced Syrian Arabs from their homes. AP

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Woman killed, 5 hurt in London knife attack; suspect held

ONDON—The Police put more officers on London streets on Thursday after a man stabbed a woman to death and injured five other people near the British Museum, just days after authorities had warned the public to be vigilant in light of attacks inspired by the Islamic State (IS) group in other parts of Europe. Assistant Commissioner Mark Rowley, head of counterterrorism at the Metropolitan Police, said early indications suggested that mental health was a factor in the attack, which occurred at around 10:30 p.m. on Wednesday in central London’s Russell Square. The police used a stun gun to subdue the 19-year-old suspect, who was arrested on suspicion of murder and is in custody at a London police station. “We are keeping an open mind regarding the motive, and terrorism remains one line of inquiry being explored,” Rowley said. The police said the victim who died was a woman in her 60s but gave no other details. Two victims remain in the hospital, while others have been discharged. Helen Edwards, 33, who lives in the area, came out for a walk and found armed police near a subway station. In a city where memories of the July 7, 2005, attacks on public transport remain raw, she immediately suspected that an attack had occurred. “There is always that thing in the back of your mind,” she said. “You live with that threat of terrorism or other crimes in the back of your mind. It wasn’t a huge shock I guess.” London Mayor Sadiq Khan urged the public to keep calm and remain vigilant, urging people to be the first line of defense against any form of attack. “We all have a vital role to play as eyes and ears for our police and security services and in helping to ensure London is protected,” he said. The incident came within hours of an announcement by London police that they were putting more armed officers on the streets. The idea was to sustain public confidence following attacks by IS-inspired groups in Europe. The move was important because the police in Britain do not carry guns for the most part—a principle that remains unchanged. Even with the additional armed officers, most of London’s 31,000 police officers will not be armed. “In some of our big iconic locations, we’ve already got armed patrols—if you look at Parliament, Downing Street—so it’s not entirely new,” Metropolitan Police chief Bernard Hogan-Howe said on Wednesday. “I think people understand that where you are going to have people as enemies who’ve got guns, we’ve got to have guns.” The deployments underscore the challenge the police face in responding to situations in which they may be outgunned—or face a pressing need to subdue a suspect. Hogan-Howe warned over the weekend that an attack in Britain was a case of “when, not if.” AP

Russian maverick prays for Trump win to cement new global order

OSCOW—For two and a half decades, Vladimir Zhirinovsky’s extravagant message of xenophobia and nationalism has kept him at the pinnacle of Russian politics. With the rise of Donald Trump, he sees a chance to take that ideology global. “Everyone would benefit if there was a Washington-Moscow axis,” Zhirinovsky said in an interview in his spacious 10th-floor office in the Russian State Duma, the lower house of parliament. “The world will be a more peaceful place.” Russian President Vladimir Putin has been careful not to express any preference in the US presidential race, limiting himself to welcoming Trump’s pledge to improve ties. But Zhirinovsky, leader of Russia’s Liberal Democratic party who befriended Iraq’s Saddam Hussein and Libyan dictator Moammar Qaddafi, doesn’t mince his words in praising the Republican nominee. “I found it easy to talk to him,” Zhirinovsky said, recalling a 2002 meeting with Trump in New York. “He’s doing everything right.” Zhirinovsky foreshadowed one of Trump’s signature proposals, a wall on the border with Mexico, with his own call in 2013 to cut off the North Caucasus, a restive mainly Muslim region, from the rest of Russia with barbed wire. While the firebrand politician is known for his outlandish statements—he’s called for Russia to retake Alaska from the US by force and said the former Soviet Baltic states will inevitably be occupied or destroyed—Zhirinovsky at times is a convenient mouthpiece for the Kremlin, says Evgeny Minchenko, head of the International Institute for Political Expertise in Moscow. Bloomberg News/TNS

The World BusinessMirror

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Police harassment familiar to young blacks, Hispanics

ETROIT—Crystal Webb cringes whenever a patrol car appears in her rearview mirror. She never wants to see the inside of a police station again. Her personal experience with the police, plus the recent fatal shootings of unarmed black men by white officers, has led the Apple Valley, California, mother of two to ask: Who are the good guys and who are bad? “You are the people I’m supposed to go to when I’m in trouble,” Webb says of the police. Two-thirds of young AfricanAmericans and four in 10 Hispanics say they or someone they know has experienced violence or harassment at the hands of the police, according to a new GenForward poll. That includes about two in 10 in each group who say that was a personal experience, including about three in 10 black men who say the same. But the poll also shows that young people still desire a police presence in their communities. GenForward is a survey of adults age 18 to 30 by the Black Youth Project at the University of Chicago with the Associated Press-NORC Center for Public Affairs Research. The first-of-its-kind poll pays special attention to the voices of young adults of color, highlighting how race and ethnicity shape the opinions of a new generation. Those poll results come after the killing of several young black men by the police around the country. Two of the more recent killings were the July 5 shooting death of Alton Sterling during a struggle with officers in Baton Rouge, Louisiana, and the fatal shooting of Philando Castile the following day by an officer in a suburb of Saint Paul, Minnesota. Those shootings were followed by the July 7 killing of five officers in Dallas by a black gunman during a protest against police shootings of black suspects. Two police officers and one sheriff’s deputy were shot and killed by a black gunman during a July 17 ambush in Baton Rouge, Louisiana. About six in 10 young adults consider the killings of black people by the police and violence against the police as extremely or very serious problems, according to the poll. But young AfricanAmericans and Hispanics see killings by the police as more serious problems, and young whites see violence against the police as more serious. Most, especially blacks and Hispanics, say not-guilty verdicts for three Baltimore police officers charged in the April 2015 death of Freddie Gray give them less confidence in the police. Gray, 25, was fatally injured while handcuffed and shackled in the back of the van. Webb, who is black, says she was arrested last November by two officers— one white, the other black. “They threw me in the police car and when I gave them my story, the other officer who was white gave me a look,” she said. “While the officer of color was asking questions and being nice, the other officer got in the car and started yelling at me. He told me to just shut up.” Webb, 29, said she was four months pregnant at the time and her hands were cuffed behind her back in the rear of the car. She said the white officer was driving and sped off. “The car jerked and it almost broke my arm,” Webb said. “He kept doing it all the way to the jail.” The charges, eventually, were dropped by a judge, she said. Webb said she believes the white officer was rude to her because of her skin color. “I think he looked at me like I was ghetto,” she said. The new poll shows young people, including young blacks and Hispanics, do want a police presence in their communities. In fact, most support adding more police or armed security guards in public places, like schools, movie theaters and malls. “We need good [police officers]” Webb said. “We need people who aren’t going to react so quickly to a person of color.” Billy Busby, 24, of Atlanta, says he was working a security job and helping police in Myrtle Beach, South Carolina, with crowd and traffic control during the popular Black Bike Beach in May when he was approached by a white officer. “The officer came up to me and said, ‘What are you doing here?’ I said, ‘I’m sorry, I’m doing my job.’ She said, ‘You need to move or I’m going to arrest you,’” Busby said. Busby said his supervisor showed up, vouched for him and defused the situation. AP

Editor: Lyn Resurreccion • Friday, August 5, 2016

Modi’s tax win clears way on harder India reforms

U.K. won’t pay EDF for Hinkley if plant is scrapped

he United Kingdom government said it won’t have to pay compensation to Electricite de France SA (EDF) if Prime Minister Theresa May decides to abandon the Hinkley Point C nuclear project, because there isn’t a signed contract for what would be the nation’s first new nuclear plant in decades. “The government is not responsible for any of the project costs until a contract is signed for Hinkley,” the Department of Business, Energy and Industrial Strategy said on Wednesday in an e-mailed response to questions. EDF’s press office in Paris declined to comment. Newspaper The Times reported on Monday that France was preparing to demand €3 billion ($3.4 billion) in compensation if the UK pulled out of the project. The state-run French utility’s board voted last week to proceed with development of the Hinkley Point project in southwest England, having already spent £2.5 billion ($3.3 billion) preparing the site. The £18-billion project was hailed by business groups as a vote of confidence in the UK after it decided in June to quit the European Union. However, just hours after EDF’s board gave the go-ahead, the UK government cast doubt on its future by saying it would review the project, which depends on a costly subsidy.

Subsidy agreement

A retail market scene in India Bloomberg News

rime Minister Narendra Modi can’t spend too long celebrating after pushing through India’s biggest reform since the 1990s: economists say even more politically sensitive measures are still needed. After a decade of wrangling, the upper house of parliament on Wednesday night unanimously approved legislation to establish a nationwide goods-and-services tax (GST). The move clears the biggest hurdle to unifying India’s 1.3 billion people into a single market for the first time by next year. Removing a jumble of taxes on interstate trade caps Modi’s push to make India more business-friendly since his landslide victory in 2014. The reform agenda now shifts to deregulating labor and land, tasks that can be tough to reconcile with political interests among India’s rural masses—especially given key state elections in the run-up to a 2019 national vote. “The reforms—the big ones left—are the contentious ones,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “Those would need to be handled very delicately. Getting a win in one of these would be a big leg up for the Indian economy, but they would be viewed in a mixed way as far as domestic politics is concerned.” GST proved hard enough to pass, even though most major parties broadly agreed on the concept soon after the Congress party-led government proposed it in 2006. Modi himself opposed it back when he led Gujarat state, then made a U-turn when he took national power. A frustrated and weakened Congress party then returned the favor by obstructing the bill. It finally passed after recent state elections increased the power

of pro-GST parties. For investors, a breakthrough was long overdue. Though Modi has made a number of significant changes since taking office—allowing more foreign investment, implementing an inflation target, reducing fuel subsidies—the GST has the most potential to transform what is already the world’s fastest-growing major economy. The nation’s stocks last week climbed near the highest level since August 2015. While the tax’s ultimate economic impact depends on details that will be negotiated over the next six months or so, executives are brimming with optimism. Deepak Garg, a former McKinsey and Co. consultant, said the GST may reduce shipping costs in India by as much as 50 percent. “This could be a game changer,” said Garg, who founded trucking company Rivigo Services Pvt. in 2014. “We hope the government will move fast to simplify procedures and upgrade road infrastructure to world-class levels.” The next steps will prove difficult, however. Farmer protests last year forced Modi to drop a proposal to make it easier for the government to acquire land for investment projects. Similarly, he has shelved plans to overhaul complex labor laws that contribute to India’s large informal economy, in part because of opposition from unions tied to his Bharatiya Janata Party (BJP). “Given the multiplicity of views within the BJP—not to mention

among the raucous opposition parties—Modi seems fixed on an incrementalist course,” said Milan Vaishnav, a senior associate at the Carnegie Endowment for International Peace. “To date, he has been remarkably cautious in pushing reforms, taking care to minimize political risk and disruption.” To speed things up, Modi has encouraged India’s 29 state governments to take the lead on reforms. He disbursed more funds to their administrations and sought to stimulate competition by ranking their performance in areas, like setting up a business, allotting land and complying with labor laws.

States compete

It appears to be having an impact. Since Modi took office, the BJP-run states of Rajasthan, Maharashtra and Gujarat made labor laws more business friendly. Andhra Pradesh, ruled by a regional party, tripled the tenure of government land leases to industry to 99 years. And Congressruled Karnataka allowed shops to stay open later. Once implemented, the GST could automatically accelerate local reforms because states won’t be able to offer tax breaks to woo companies. That means reforms in areas, like land, education and the bureaucracy, will “start bubbling up much faster,” said Arun Maira, a senior adviser to Boston Consulting Group and a former member of India’s Planning Commission. GST will be “the best example of cooperative federalism,” Modi wrote on Twitter on Wednesday. “Together we will take India to new heights of progress.” This isn’t the first time that theory has gained traction. Around the turn of the century, southern states like Andhra Pradesh, Tamil Nadu and Karnataka—home to Bangalore— began competing for information-tehcnology investments.

‘Real things are happening’

“It was not really sustained, so I was skeptical of the notion of ‘competitive federalism,’” said Richard

1.3B The population of India

Rossow, an India specialist at the Washington-based Center for Strategic and International Studies who has followed the country’s reforms since the 1990s. But under Modi, he said, “real things are happening.” There is reason to be skeptical. The GST could yet be held up at any number of steps: More than half of states need to approve the constitutional amendment, a GST Council needs to decide the rate, and parliament needs to pass at least another bill to implement the tax. Some richer states, like Tamil Nadu, stand to lose tax revenues and may put up a fight. What’s more, state elections are coming into focus, including Uttar Pradesh—India’s most populous state—in mid-2017. Populist rhetoric may intensify, as Modi battles to defeat caste-based parties and consolidate support among the Hindu majority. That’s all the more worrying given the impending exit of central bank Governor Raghuram Rajan, India’s chief inflation hawk. No matter how much investors praise Modi for pushing through the GST, it’s unlikely to help him much at the polls unless it creates more jobs before the 2019 election, said Nilanjan Mukhopadhyay, a political analyst who wrote a biography of Modi. While India has no reliable jobs data, a recent poll showed that his biggest failure so far has been an inability to boost employment. “GST was mainly a preoccupation of headline writers, politicians, businesspeople and intelligentsia,” Mukhopadhyay said. “The people will be happy only if they think it has benefited them.” Bloomberg News

The UK government had agreed to pay £92.50 for every megawatthour of electricity produced from the station for 35 years, about twice the current rate. This isn’t payable until the station is built and generating. The plant would provide 7 percent of the nation’s electricity and take 10 years to build. In April secretary of state for energy at the time, Amber Rudd, said that, even once the contracts are entered into, all the construction risk is borne by EDF, “except in the case of a narrow and extremely unlikely range of circumstances, such as a political shutdown or a change in law.” Supporters of Hinkley Point, including the Confederation of British Industry, say the project is crucial for sending a message to investors that the UK is open for business after the nation chose to leave the European Union in a referendum. The so-called Brexit vote triggered a slump in the pound, hammered confidence in the largest sector of the economy and may affect industries from agriculture to construction. The delay is also an early test of Prime Minister May’s commitment to the “golden era” of expanded ties with China promised by her predecessor, David Cameron. China General Nuclear Power Corp. plans to make a £6-billion investment in the Somerset plant, potentially paving the way for it to build a Chinese-designed reactor in the country. The Chinese government has urged the UK to come to a decision as soon as possible.

Poor value

Critics of the UK’s first new nuclear plant in more than 20 years have long said the project will prove poor value for millions of British consumers. Data published on a government web site last month showed subsidies are projected to reach more than £30 billion, twice the prediction made a year ago reflecting declining long-term forecasts for wholesale electricity prices. The UK’s decision to hold up approval of the project followed a meeting between Theresa May and French President FranÇois Hollande last month, where Britain’s new prime minister was noncommittal about the project, according to people present at the private talks. Bloomberg News

A10 Friday, August 5, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

The ‘Old Folks Club’

recent column in another newspaper was titled “A senior-citizen Cabinet” and examined the fact that the vast majority are in their middle to late 60s. We can respect the position of the author since he, too, may be carrying his own identification from the local “Office for Senior Citizens Affairs.”

Wisdom that comes from the experience of age does carry its own potential problems. The “wisdom” may stick a person in a place where their thinking and attitude is that “what worked before should work now” and that is not always the case. And it is true that many of these “Sr-Cits” may have had their most productive years long before all the time-saving and time-wasting communication gadgetry of 2016. But, then again, the BusinessMirror’s own founder, Ambassador Antonio L. Cabangon Chua, was still conceptualizing and completing important business deals—like creating CNN Philippines—well into his late 70s as have many others of his generation. The Ambassador preferred fax to e-mail. Being a member of the “Old Folks Club” also might mean that this group may not be properly able to cope with the stress of office. Perhaps, there is a video-game console or two sitting around the Malacañang Cabinet room that the youngsters could teach the oldsters how to use to relieve the pressures of office. Apparently, that has been tried before. However, there is validity to the point that if only Sr-Cits are continually put in the positions of power, responsibility and authority, it is difficult for younger people to gain necessary experience to move up the chain. That is the way the private sector works successfully. The problem is that, in certain government departments and agencies, there is an undeniable culture of corruption, inefficiency and ineffectiveness that would only be perpetuated by promoting from within. “Fresh blood” does not always have to mean “young blood”. However, it is not only in the government where important and visible positions are held by the older, leaving little room for the younger. We only have to turn on the nightly television newscasts to see another version of the Old Folks Club. The same can be said for the most prominent newspaper columnists that we read every day. Many people came of age and grew up reading and watching the same commentators and presenters that still grace our press and media today. Father Time and the Grim Reaper walk hand in hand and we have seen icons of the press and media, as well as from government service, sadly disappear, leaving us with their formidable legacy. In the current Philippine Senate there are many “young” faces and that is a positive. There is certainly nothing wrong with the Old Folks Club in the public and private sectors. But we need to think about who will be filling their shoes in the years to come.

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Is the ‘status quo’ broken? James Jimenez

spox

was in school when I first became aware of proposals to amend the Constitution. Central to such talk was the desire for a shift from a unitary form of government to a federal one. Now, more than a decade later, it looks as though charter change is really going to happen. Predictably, at the heart of it all is the conversation on federalism. You can’t watch television for more than an hour anymore without hearing about it. From a voter educator’s point of view, this is a good thing. Obviously, the more we talk about federalism, the more educated we will be, and better suited to vote for or against ratification. The question, however, is how much education are we getting from just listening to soundbites and talk-show interviews. The answer, unfortunately, is: Not enough. To make an informed and educated decision when the time comes, the electorate needs to develop a deeper

comprehension of what federalism is all about, beyond the notion that we dislike the “imperialism” of Manila. Quite simply, we need to know more about it than we currently do. It will be helpful to use, as a framework, one of the fundamental principles of parliamentary debate: in advocating a radical change in the way things are, you must first prove that the status quo is broken and that drastic corrective measures are justified. If it can be shown that the status quo is, indeed, in dire need of change, the second step is to prove that the

So, is the Philippines’s unitary system—the status quo— broken? Admittedly, many of us feel that it is. But since decisions of this magnitude cannot be decided on feels alone, it would be better if concrete examples of failure could be demonstrated. It would be helpful, too, if it could be shown that those failures cannot be fixed by mechanisms already existing within the unitary structure itself. proposed solution has a reasonable chance of succeeding. So, is the Philippines’s unitary system—the status quo—broken? Admittedly, many of us feel that it is. But since decisions of this magnitude cannot be decided on feels alone, it would be better if concrete examples of failure could be demonstrated. It would be helpful, too, if it could be shown that those failures cannot be fixed by mechanisms already existing within the unitary structure itself. Many, for instance, point to the concepts of devolution nested in the Local Government Code (LGC). Are

they right about this? Or is the apparent failure to implement those LGC concepts proof of the un-workability of the unitary system? Beyond just showing that the status quo needs an overhaul, educating the electorate also requires proving that the proposed solution—federalism—has a betterthan-average chance of working. How will things be different under a federal system? How will the developmental gridlocks be resolved if the country were organized into “states”? How will the ills of the unitary system be avoided? These questions just scratch the surface. Let’s hope the proponents of federalism won’t just rely on mass media exposure, but also give ample time and opportunity for voters to understand the answers to these questions, and others, as we move steadily toward this landmark event in our nation’s history. Being a good voter, after all, means resisting the urge to just go with the flow and actually knowing who—and what—you are voting for. James Arthur B. Jimenez is director of the Commission on Elections’s Education and Information Department.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Friday, August 5, 2016 A11

Republican Party burns down one last institution: Itself

By Francis Wilkinson | Bloomberg View

here used to be some exceptions to the Republican Party’s war on American institutions. The party began aggressively attacking the news media and the academy in the era of Nixon-Agnew, undermining confidence in the validity of news reports and the integrity of journalists, while condemning the pernicious ideological influence of university professors.

Republicans added public schools to the enemies list as desegregation orders trickled through the nation in the 1960s and 1970s. The courts, the ultimate source of such orders, were cast as a radical den, home to judges who were delegitimized as “unelected,” “liberal” and “activist”. Racial conservatives resisted integrated schools, while religious conservatives condemned public education as a godless swamp. More often than not, the religious and racial objections drew from the same well of resentment. Hollywood, which adds more than a half trillion dollars to US GDP each year, became a target as the religious right cemented its place in conservative politics. Like the academy, Hollywood was accused of poisoning the minds of American youth, turning them against decent conservative values. In the 1980s, Newt Gingrich began a sustained assault on the US Congress, seeking to undermine decades of Democratic control by bringing the entire institution into disrepute. Gingrich inherited the rubble he created in 1994, becoming speaker of the House. Republicans never stopped blasting at the institution, even when they controlled it. They called Congress wasteful, corrupt, arrogant and illegitimate. (It sometimes was.) Under Republican Speaker John Boehner, they grew increasingly comfortable with legislative anarchy and symbolic posturing in lieu of governing. Last year they drove Boehner out of office. His replacement, Paul Ryan, has been dangling ever since, powerless to legislate except in rare instances. The Republican assault on the presidency began as soon as Bill Clinton entered the White House in 1993. After an eight-year Republican respite, the attack intensified when Barack Obama became president in 2009, and expanded to include the entire Executive branch. Congressional committees were organized with the goal of destroying the Internal Revenue Service, which was attacked with phony allegations of political meddling by IRS agents into the activities of Tea Party groups. As its own demographic and ideological weaknesses grew more apparent, the GOP resorted to more attacks to bolster itself, even attacking the franchise itself, the root of American

The 9th Infantry Division and the local heroes TRUMP

democracy, with false claims of voter fraud. The attacks were aided by partisan media—Fox News above all— that echoed and advanced Republican messages and hyped stories, such as Benghazi, into “scandals” that further undermined conservative faith in governing institutions. Having been told the Obama administration was a source of major corruption, conservative voters were even more irate that there were somehow no legal consequences for the high crimes alleged. The obvious conclusion: The whole system must be corrupt. Enter Donald Trump. Before Trump, two institutions were off limits to Republican attacks. The military was one. Ever since Republican Sen. Joseph McCarthy, Trump’s forebear in scattershot, seat-of-the-pants demagogy, had tried and failed to damage the US Army in the 1950s, Republicans could be counted on to rally around the troops and their leaders. No more. Trump has called the US military “depleted” and “a disaster”. He has alienated its leaders. His attacks on the parents of a heroic soldier killed in combat have been so relentless and callous that they have prompted what the Washington Post called a “bipartisan constellation” of military figures to condemn Trump. The military seems likely to survive Trump’s assault. But the final institution on the Republican hit list, the one that had been immune to attack for decades, may not. The Republican Party is an institution, too—an old and once respected one. Having devoted much of the past half century to undermining other American institutions in pursuit of its own power, the party has at last turned on itself. The ethos of destruction preceded Trump. But he is a natural conclusion of it. Many years of bad faith, and bad practice, in American politics have culminated in Trump.

Tito Genova Valiente

annotations

f this is how the military mind works, then I am impressed. I am talking about the day I was invited by the 9th Infantry Division (9ID). The camp is located on a 40-hectare lot in the capital town of Pili, Camarines Sur. The invitation came with the request that I talk about local heroes in the region. Sgt. Mario de la Cruz fetched me at the place of assignation. After some minutes, we reached the boundaries of the camp. Our car stopped by a low building. An army man met me and ushered me into an office. The office had a solitary table at the center. Two tall officers extended to me their hands and one, Col. Nilo R. Perfecto, motioned me toward the low table. I sat

down in front of it and, having noted the special paper with my name on it, I pulled the sign pen from its holder and signed what I assumed to be the guest list. We all sat around a wide table. Soldiers came with fruit platters and glasses of orange juice. An old man, whose age I would learn to be 85, was introduced to me. He was Benjamin R. Arejola, the grandson of one of the local heroes we were honoring that day.

Nipping the bud Teddy Locsin Jr.

Free fire Continued from A1

his reaffirmed the standard by which police shootings in the United States are evaluated for prosecution. “What matters is the perspective of the officer,” Goldstein writes. An officer’s sense of danger is given significant, if not preponderant, weight. And what is the evidence of an officer’s sense of danger to himself? Why, the word of the officer himself that he felt endangered. This deference is now being questioned as CCTV cameras catch more cops gun down more black men, who

are patently not posing a danger to anybody. But who are almost always fat and slow runners and, therefore,

Japan’s new stimulus is just the same old thing By Noah Smith | Bloomberg View

apanese growth is still sluggish. Consumers aren’t consuming much, and businesses aren’t investing. The government doesn’t have many options to remedy this, and the Bank of Japan (BOJ), which has sent both long-term and short-term interest rates into negative territory, has basically no more room to maneuver. The dreaded Zero Lower Bound is starting to bite. The BOJ is buying more stocks, but this, too, has its limits—eventually companies become de facto nationalized, as the government becomes the majority shareholder. That’s scary both, because it would affect corporate governance, and because it would be politically unpopular. It’s also unclear how much of an economic boost the stock-purchasing program has given the country anyway. The BOJ could resort to policies like a

higher inflation target or the muchdiscussed “helicopter money” approach, but so far it has been afraid to take these steps. With the BOJ seemingly out of the game, demand-side macroeconomic policy is up to the parliament. So this week the government of Prime Minister Shinzo Abe proposed a new fiscal stimulus package. It is moderately sized: about $45 billion in US dollars this year, and about $60 billion in low-interest loans, to be followed by slightly less next year. That move might win a few halfhearted cheers from Japan’s battered consumers, but it’s unlikely to have much of an effect. First, it’s just another in a long series of such moves, none of which have done much to jog the country out of its long, grinding stagnation. Bloomberg News’s Maiko Takahashi and Isabel Reynolds have a great chart showing a quarter century of Japanese stimulus bills, including a

breakdown of their announced sizes and their actual spending amounts: It’s clear that the current effort is nothing special. Looking at this history, it’s obvious that Japan’s stimulus bills are not the temporary, recession-fighting measures typically employed in the US and advocated by most Keynesian economists. They are a “structural object”—a more-or-less constant flow of deficit spending. Abe’s new stimulus merely shows that he’s not going to deviate from this long-standing pattern. This is one big reason we shouldn’t expect the new spending to give Japan’s economic numbers much of a boost. Businesses and consumers have come to expect this regular flow of government spending— having experienced it nonstop for over two decades, they’ve already accounted for it in their investment and consumption plans. So while the stimulus might keep the economy from falling into a recession—as

might otherwise happen if people’s expectations of yet another government spending binge were suddenly dashed—it’s unlikely to alter the anemic trends of recent years. But there’s another, even bigger reason this stimulus isn’t going to do much to juice Japan’s economy. The economy is already at full employment. Demand-side measures, by their very nature, rely on putting unused resources to work. Idle factories and unemployed workers are matched, thanks to the flow of government spending that works its way through the economy. This is the classic mechanism that John Maynard Keynes and his followers envisioned. But it relies crucially on having those unused real resources sitting around. And Japan’s employment rate now stands at a historic high. Almost 73 percent of the population aged 15 to 64 have jobs. In the 1980s the rate was under 68 percent. There are simply very few Japanese people left

A few minutes more, and we were all asked to walk outside where a big tent was pitched in front of a building. The building was being named after Gen. Ludovico Arejola, one of the heroes in the last FilipinoAmerican war. Mr. Ben Arejola, who I met earlier, spoke with emotion and pride about his grandfather. We again moved to another building, where another tent was set up. Ms. Edna Ola Pallan, the granddaughter of Gen. Simeon Ola, spoke of the bravery of the general and how they are happy that a camp has bestowed his name on one of the buildings. Ola was the last general to surrender to the Americans. It was my turn to deliver my speech as the guest of honor. It was my first time to be in a military camp. As someone who grew up under martial rule, I spoke of how wary I am with the military. I thought of these men and women as trained to kill. That morning, with their precision and compleat

good manners, I could see them as men and women trained to defend the nation, as well. In the war between the Filipinos and the Americans, there were atrocities committed by both sides. The new ties between the two nations have made us strangely careful in honoring our own heroes. There is, indeed, a very thin line between celebrating murder and honoring those men and women who died for our country. I excused myself from lunch. I was already in another meeting when i got an SMS from Lt. Col. Culvera that they have a memento for me. In a few minutes, my sister sent a message that Sgt. de la Cruz, riding on a motorcycle, had delivered the souvenir. It was a photo of me giving a speech, around which were the smaller photos taken with the relatives of the two heroes. If this is how the military mind works, then I am impressed.

bigger and easier targets. In the case earlier mentioned the second jury absolved the cop but awarded the family of the black boy $5.9 million for their grief. The US Supreme Court has repeatedly ruled that cops cannot be second-guessed in their assessment of the lethality of the dangers they face. Therefore, it is almost always okay to shoot unarmed and innocent people who are evidently trying to comply with the police, but not fast enough to suit the cops who shoot them. Thus, a black man was shot three times when he reached back to turn off his Walkman the better to hear what the cop was telling him. So is police shooting a crime? Not in the US. Is it even wrongful? It is not that either. Yet, here comes Secretary of State John Kerry

expressing concern about the wave of apparently police executions. Hypocrisy? I don’t think so. The circumstances are different. In the US a black man reaches back and a cop shoots him dead three times for good measure. In the Philippines a man is first gift-wrapped round and round with packing tape so he won’t bleed on the crime scene and then shot. Or shot and then gift-wrapped. He was obviously not reaching for anything. His arms were taped to his sides with packing tape covering his eyes, his nose and his mouth. And yet, there is a certain very Filipino logic in all this. Reduce the age of criminality, and criminals do start young, there is nothing like nipping them in the bud with a bullet; thereby nipping criminality before it blooms. Keep well.

to put to work. Fiscal stimulus is not supposed to work very well under those conditions. Studies of fiscal multipliers—a measure of the effect of government spending on GDP— typically agree that return is much lower when unemployment is low. So we should expect this new bout of spending to get very little bang for the buck. In the meantime, the new spending will actually undermine one of Abe’s most overlooked accomplishments—fiscal sustainability. Thanks to the government’s salestax hike, zero interest rates and healthier corporate profits, Japan was moving toward having a deficit that was—just barely—sustainable in the long term. This stimulus, and the others that will inevitably follow if the pattern isn’t altered, will push the primary budget deficit back above the rate of long-term potential growth in nominal GDP. That wouldn’t put the country in

immediate danger of default, but it would raise talk of more consumption-tax hikes to plug the hole. Japan’s citizens are going to wonder where their money goes each time their taxes get raised. Everyone pays taxes, but not everyone benefits from spending of this sort. Eventually, that seems likely to raise the ire of Japanese voters. So what should Japan do instead of continual fiscal stimulus? At this point, there’s really no option except to focus on worker efficiency. Japan’s labor productivity has been essentially flat for a decade. Monetary and fiscal stimulus have put everyone in Japan into jobs, but they aren’t doing the kind of work that takes full advantage of their skills. Productivity-focused reforms—improving corporate governance, liberalizing labor markets and opening up protected domestic markets—are the best move, even though they will take years to have an effect.

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