Businessmirror August 07, 2018

INDUSTRY LEADER SEEKS ACTION ON DECLINING EXPORT FIGURES A

By Elijah Felice E. Rosales

@alyasjah

N industry leader on Monday appealed to the government to act fast in resolving the country’s declining export performance, as the sector is feeling the pang of global trade uncertainty.

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc., said the trade Furniture and home products are displayed in this BusinessMirror file photo of a trade expo meant to open doors to local and international buyers of the country’s premium home, fashion, holiday, architectural and interior products. Furniture products comprise some of the country’s best exports. ALYSA SALEN

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See “Industry,” A2

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A broader look at today’s business n

Tuesday, August 7, 2018 Vol. 13 No. 297

DA chief: Food tariff cut risks ‘war with farmers’

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

S policy-makers mull over the proposed reduction of tariffs on certain food imports, Agriculture Secretary Emmanuel F. Piñol stands firm that any duty adjustments would mean “war with farmers.”

“I have talked to Secretary [Ernesto M.] Pernia and told him that any move to reduce to zero the tariff on meat and fish would mean war with farmers,” Piñol told the BusinessMirror in a text message hours before attending a late-Monday Cabinet meeting, where the proposal to cut tariffs on meat and fish imports, as an inflation-busting measure, was expected to be tackled.

Piñol a lso vehement ly denied Presidentia l Spokesman Harry L. Roque Jr.’s statement that he was the proponent of the reduction on tariffs of meat and fish imports to ease inf lation even before Speaker Gloria Macapagal-Arroyo proposed the aforementioned measures.

“Dakdak nang dakdak ’yang si Roque [That Roque keeps talking].

Did he even validate that with me?”

Piñol said in a text message to the BusinessMirror.

During a press briefing on Monday, Roque said that the reduction on tariffs of certain food imports had been considered by the government long before.

Sought for clarification on his statement on Piñol, Roque affirmed to the BusinessMirror that it was the agriculture chief who pitched the zero tariffs on certain food imports:

“Yes, dati pa [way before].”

Roque disclosed that the government is expected to come up with a decision on Arroyo’s proposal to reduce tariffs on certain farm products on Monday’s Cabinet meeting.

Last week Arroyo proposed to economic managers that President Duterte consider reducing the tariffs on meat and fish imports to zero to ease inflation. The two food items accounted for about 0.9 percentage point of the 5.2-percent June inflation.

Arroyo, an economist, had a wide-ranging discussion with the managers on ways to arrest inflation, which had been posting higher-than-expected figures, and was being blamed on the first package of the Comprehensive Tax Reform Program, the TRAIN law.

TRAIN, which stands for Tax Reform for Acceleration and Inclusion, took effect in January, but the government economists said it was not to blame alone for inflation, See “Tariff,” A2

Peso gets back to 52 territory T

HE local currency regained strength at the start of the trading week, as the market sets its eyes on the Bangko Sentral ng Pilipinas’s (BSP) policy rate action this week.

Data from the Bankers Association of the Philippines (BAP) showed the local currency closed trade on Monday back to the 52 territory, to end the day at 52.85 to a dollar.

This is stronger than Friday’s 53.15 to a dollar. It is also the strongest value of the peso since June 8, when it hit 52.7 to a dollar.

See “Peso,” A8

war between the United States and China has been prompting hesitation among several exporters. The protectionist policies being taken by the world’s largest economies, he argued, compelled exporters to stick to providing for the domestic market.

“Everybody knows that one of the issues is trade war. While it should not affect us directly, it becomes self-fulfilling because people are afraid of it,” OrtizLuis said in an interview with the BusinessMirror.

“Exporters of agricultural products, in spite of the fact that export figures went down, some of them stuck to [supplying] the domestic [demand],” he added. Exporters apparently saw that supply in the local

Foreign investments supporting economy Manny B. Villar

THE ENTREPRENEUR

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he Philippines remains an excellent site for job-generating foreign direct investments (FDI), given the country’s highly skilled work force, competitive labor cost and strong macroeconomic fundamentals.

The government continues to make the business environment more conducive to investors. President Duterte, addressing the business community during the 30th founding anniversary of Toyota Motor Philippines Corp. on August 2, said: “This government will protect you and your investments, and will ensure a level playing field for you to thrive in as long as you obey the laws of the land and safeguard the welfare of your people and the general public.”

Continued on A6

PHL economists back tariff-free food imports pitched by Arroyo @cuo_bm

& Jovee Marie N. dela Cruz

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PESO exchange rates n US 53.1460

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By Cai U. Ordinario

SEWERAGE CONCERNS Sen. Cynthia Villar asks Atty. Patrick Lester Ng Ty, chief regulator, Metropolitan Waterworks and Sewerage System (MWSS), to explain why 21 years into its concession agreements with Manila Water and Maynilad, Metro Manila has only met 14 percent of its required number of sewerage-treatment plants. The chief of the Senate Committee on Environment and Natural Resources said the dumping of untreated wastewater in waterways “may lead to an ecological and public health disaster.” ROY DOMINGO

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OCAL economists threw their support behind the proposal of Speaker Gloria MapacagalArroyo to cut tariffs on certain food items to temper inflation.

However, some of them urged the government to calibrate the tariff cuts to ensure that farmers and fishermen would not be harmed by the entry of more imports.

Last week Arroyo proposed to the President’s economic team the temporary removal of the tariffs for meat and fish products to stabilize commodity prices.

“Allowing more imports of food by lowering tariffs will be a temporary solution. In the long run, the fishermen and farmers will be adversely affected,” Ateneo Eagle

Watch fellow Leonardo A. Lanzona Jr. told the BusinessMirror.

Philippine Institute for Development Studies (PIDS) senior fellow Roehlano Briones said, however, that the entry of more imported farm products at lower tariffs would help keep food affordable.

The proper implementation of the zero-tariff scheme for some food items, according to Ateneo Center for Economic Research and Development (ACERD) Director Alvin P. Ang, should be of paramount importance to the government.

Albay Rep. Joey Salceda, Arroyo’s special focal person for CounterInflation Measures, said “vigorous economic measures” would cut inflation to 4.4 percent by December.

Salceda said the Duterte administration has committed to import fish, feed wheat, vegetables and rice. However, “no firm figures on

n japan 0.4778 n UK 69.1589 n HK 6.7713 n CHINA 7.7826 n singapore 38.9063 n australia 39.3015 n EU 61.4952 n SAUDI arabia 14.1711

See “PHL,” A8

Source: BSP (6 August 2018 )

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BusinessMirror

A2 Tuesday, August 7, 2018

Grain retailers: Allow NFA to import 500K MT more rice

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HE Grain Retailers’ Confederation of the Philippines Inc. (Grecon) is backing the proposal to allow the National Food Authority (NFA) to import more rice to tame the country’s inflation and bring down the retail prices of the staple.

Grecon President Jaime O. Magbanua said they suppor t Speaker Gloria Macapagal-Arroyo’s proposal to allow the NFA to purchase an additional 500,000 MT to 800,000 MT of rice with staggered deliveries over the next five to six months.

“She is right. We support her proposal. The imported volume of NFA is not enough to have an effect on the market,” Magbanua told the BusinessMirror in an interview.

“We support [the additional imports], and we hope that it could arrive the soonest possible time so that we could ease tension [on

prices],” Magbanua added.

As the country is at its lean season of rice production, farm-gate price of palay has been steadily increasing, according to Magbanua.

For example, the buying price of wet palay in Western Visayas has now reached P25 per kilogram, which would be around P29 per kilogram when dried, he explained. This, according to Magbanua, easily translates into a retail price of P50 to P58 per kilogram of rice.

The industry’s rule of thumb is that the retail price of rice is double the farm-gate price of palay.

“We are appealing [to the government] to increase the volume of NFA rice in our area so that prices would go down,” he said.

Arroyo proposal

In a Facebook post, Albay Rep. Joey S. Salceda disclosed that Arroyo proposed that the NFA should purchase an additional 500,000 MT to 800,000 MT of well-milled rice with staggered deliveries over the next five to six months.

“In particular, the most basic item—rice, there is a plan to import 500,000 MT up to 800,000 MT with staggered delivery to minimize impacts on farm prices during the harvest season,” said Salceda, Arroyo’s special focal person for Counter-Inflation Measures.

The NFA has purchased 500,000 MT of rice abroad to revitalize its depleted stockpile and to resume the presence of affordable rice in the market.

The food agency is currently completing the unloading of the 250,000 MT it imported via government-to-government scheme.

Meanwhile, the remaining 250,000 MT the NFA purchased via open tender is set to start arriving by end of the month.

Last month, NFA Administrator Jason Y. Aquino said they are proposing to import an additional 500,000 MT of rice before the year ends to prevent the depletion of its stockpile and the loss of affordable rice in the domestic market anew. Jasper Emmanuel Y. Arcalas

We support [the additional imports], and we hope that it could arrive the soonest possible time so that we could ease tension [on prices].”—Magbanua

Fishers hit plan for ‘unli’ rice, fish imports

By Jonathan L. Mayuga @jonlmayuga

T

HE Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) on Monday slammed the proposal of former President and now Speaker Gloria Macapagal-Arroyo and the Duterte administration’s economic managers to allow what it described as “unli” or unlimited rice and fish importation through the lifting of the quantitative restriction on rice and the imposition of zero tariffs on imported fish.

Hog risers and poultry raisers had earlier cautioned against the strategy of scrapping the tariffs on meat and fish imports, which Agriculture Secretary Emmanuel F. Piñol was quoted to have expressed qualified support—that whatever move is taken will not “sacrifice” the local food producers.

A national organization of small fisherfolk federations and organizations, Pamalakaya described Arroyo’s proposal as the last nail

Industry. . .

in the coffin for Filipino farmers and fishermen.

A major producer of fish, the Philippines has experienced slight drops in production since 2015.

Fish production dropped by 5.62 percent to 4.194 million metric tons in 2016, from the 4.444 million MT in 2015. This continued in 2017 when fisheries production was down by 1 percent to 4.150 million MT from 4.194 million MT in 2016. The price of wild-caught fish —such as tuna, blue marlin, skipjack and grouper fish—is higher, with some reaching up to P300 to P450 per kilo.

Tilapia and bangus, the most common fish species raised in fish cages, cost P180 to P220 per kilo, depending on the size. The Philippines imports meat and fish to augment its local supply and keep prices down to an affordable level.

Arroyo, along with the economic managers of the Duterte administration, said the proposed policy on importation will address inflation as prices of goods,

Continued from A1

market is running low, so they decided to take advantage of the situation, which, Ortiz-Luis admitted, is to the detriment of the country’s export performance.

Export receipts in May amounted to $5.76 billion, down by 3.77 percent from $5.99 billion during the same month last year, according to data from the Philippine Statistics Authority. Moreover, this was the fifth consecutive month that figures declined year-on-year, with the export sector yet to post positive growth throughout the year.

Exporters, still, are optimistic they can bounce back, as they are heavily banking on the approaching holiday season to rebound them from their slow performance in the first semester, Ortiz-Luis explained.

This positive outlook was shared by Senen M. Perlada, director of the Department of Trade and Industry’s Export Marketing Bureau. He said the weakening peso—a competitive advantage exporters enjoy—as well as the growing demand from traditional export destinations, and even the trade war, could push the export sector to recover in the second half of the year.

“On the upside, I am quite confident that, [in the] second semester, merchandise exports will rebound. The exchange rate is more favorable to Philippine merchandise exports,” Perlada told the BusinessMirror.

“There is also more robust demand from traditional consumer markets, such as the US, European Union, Japan and now China. In the very short run, the so-called trade war between [China and the US] could possibly benefit the Philippines in the sense that the dislocation of supply, say, agricultural products of the US

particularly basic commodities —mainly staple food, meat and fish—continue to go up.

Like hog raisers and poultry suppliers, Pamalakaya said the lifting of QR and zero tariffs on rice and fish will bring economic disaster to local food producers.

“We are already importing an average of 500,000 metric tons of fish every year. To set the tariff on imported fish down to zero will completely kill the livelihood of Filipino fisherfolk because the domestic market will primarily depend on marine and aquatic products coming from the foreign market. Everything on our table from rice to entrée will be imported,” Fernando Hicap, Pamalakaya chairman, said in a statement.

The fisherfolk group claims shortage can never be the reason for the country’s relying on imports because, in the first place, it exports tons after tons of fish products every year. The group said, from 1994 up to the present,

to China, could translate to bigger demand for Philippine fruits going to China,” he added.

Perlada, however, warned that should the trade war be protracted, the Philippines, like any other economy, will certainly be at the short end of the stick. “But in the long run, the trade war, especially an expanded and prolonged one, which will go against globalization, will not benefit any country,” he made clear.

Inflation, or the general increase in commodity prices, could also temper whatever growth the holiday season presents to exporters.

“On the downside, I have also heard feedback that domestic inflation is already eroding whatever competitiveness the Philippine currency depreciation is offering to our exporters.

If creeping inflation persists, that again may dampen second-semester exports,” the trade official added.

June inf lation soared to 5.2 percent, higher than the 2.5 percent recorded during the same month in the previous year and the 4.6 percent in May. With this, headline inf lation now stands at 4.3 percent after the first semester.

Ortiz-Luis, for his part, called on the government to take necessary action that will cushion the impact of domestic and global uncertainties surrounding the export sector.

For one, he wants lawmakers to immediately renew the Magna Carta for Micro, Small and Medium Enterprises (MSMEs), which is scheduled to lapse this year.

He also reiterated his call to the government to divert at least 20 percent of the funding for the conditional cash transfer program to MSME interventions. On top of this, the industry leader urged this administration’s economic team to find ways to simplify loan applications in banks to make financing more accessible to small enterprises.

the Philippines’s marine exports rose to 120 percent, or a total of 333, 465 metric tons in 2013 alone.

Pamalakaya noted the robust exports figure comes vis-a-vis the 15-percent loss of fish consumption in the country yearly.

“The unlimited importation of rice and fish will render the domestic market and local prices unstable. But, moreover, it will leave small farmers and fishers at the losing end because, while the government focuses on imports, local production remains backward as ever due to agriculture and economic policies dictated by foreign markets,” said the Pamalakaya head.

“Flooding our local market with imported agricultural products will never bring food sustainability,” he added. What is needed is “to develop our agriculture through livelihood subsidy and our country to separate from unfair global economic and trade deals that promote liberalization, such as the World Trade Organization.”

Tariff. . .

Continued from A1

as certain other factors like the global oil-price hikes, the rice supply shortage and the currency exchange, among others, impacted inflation, as well.

‘Don’t sacrifice farmers, fishers’

Piñol earlier told the BusinessMirror that he would convene a special meeting with the stakeholders within the week to discuss Arroyo’s proposals, particularly the cutting of tariffs on fish and meat imports.

The agriculture chief said the government “should not unduly sacrifice” the farmers and fishermen just to tame inflation.

Hog and poultry industry stakeholders have also supported Piñol’s stance, adding that the lowering of tariffs on imports would harm local producers, particularly small-scale farmers.

“The problem is in the retail market, not in the production. We have sufficient supply. I hope that [Arroyo’s proposal] would go through a process of consultation so that we can determine the necessary steps that should be taken,” United Broiler Raisers Associtation President Elias Jose Inciong told the BusinessMirror.

Pork Producers Federation of the Philippines Inc. President Edwin G. Chen said the government must recognize that the production costs incurred by hog raisers and poultry growers have gone up due to the increase in the price of raw materials.

“I don’t think it is right to just single out the meat and fish sectors to solve inflation. The government should come up with a comprehensive solution to address the issue,” Chen told the BusinessMirror. “[Arroyo] always wants to sacrifice agricultural products like before. The real culprit is our rising fuel costs, power and weak peso,” he added.

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‘Biased’ Caguioa must inhibit from poll protest vs Robredo–Bongbong

By Joel R. San Juan @jrsanjuan1573

F

ORMER Sen. Ferdinand “Bongbong” Marcos Jr. on Monday filed a petition before the Supreme Court, sitting as Presidential Electoral Tribunal (PET), seeking the inhibition of Associate Justice Alfredo Benjamin Caguioa from his election protest against Vice President Leni Robredo.

In a 13-page extremely urgent motion to inhibit, Marcos listed several grounds in seeking Caguioa’s inhibition, including what he claimed was a recently discovered proof that would reinforce his allegation that the magistrate is biased against him.

Justice Caguioa is the ponente in Marcos’s election protest, thus, he is in charge of overseeing the progress and the resolution of the election protest.

Marcos told the PET that his camp recently found out that Justice Caguioa’s wife, Pier Angela “Gel” Caguioa, was not only an anti-Marcos advocate but was also a staunch supporter of Robredo, having actively campaigned for her in the May 2016 elections.

The former senator cited the supposed screenshots of Viber messages purportedly coming from Mrs. Caguioa in her Viber chat group, which have been circulating online.

The series of Viber messages were part of a video, titled “The Conjugal Conspiracy,” posted in the Facebook account of former Baguio City Council Tabora on July 13, 2018, which has gone viral with 8,8000 shares and 312,000 views.

Marcos also noted that an article on the viral video was posted in an online article, which he submitted as evidence to support his motion to inhibit.

He noted that, in one of Mrs. Caguioa’s comments in the Viber chat group, she said :” [i]f BBM wins and if he wins because of the youth, it’ll be [the] failure of our generation. We were the main catalysts of Edsa 1 and yet we failed to impart its lessons upon the generation that followed us.”

“The Viber messages reveal that Mrs. Caguioa was still an ardent supporter of protestee Robredo and even actively campaigned for the latter when she ran against protestant Marcos in the May 2016 elections,” the motion read.

Under Section 4, Canon 4 of Administrative Matter. No. 03-05-01-SC prohibits a judge or justice from participating in the determination of a case in which any member of his/her family is associated in any manner with the case.

While he was aware of Justice Caguioa’s fraternal bond with former President Benigno S. Aquino III because they were classmates from grade school, high school and college at the Ateneo de Manila University which led to his appointment in the Supreme Court, Marcos said he still tried to give the former the benefit of the doubt.

“Given the evident bias, manifest partiality and blatant prejudice show

by Associate Justice Caguioa and Mrs. Caguioa in favor of Noynoy Aquino and protestee Robredo, the undersigned protestant is left with no other recourse but to file the instant motion for the inhibition pursuant to the mandate of Canons 3 and Canon 4 of the New Code of Judicial Conduct for the Philippine Judiciary,” Marcos pointed out.

Marcos also cited the PET’s several resolutions that tend to delay the resolution of his election protest and show bias

in favor of Robredo.

These include the PET resolution issued on March 21, 2017, requiring Marcos to pay a cash deposit of P66.22 million for his election protest.

He noted that the resolution was kept from the public and was only received by his lawyers on April 10, 2017—a few days before Holy Week, thus, leaving their camp with only four days or until April 14, 2017, to pay half of the month or else his protest would be dismissed.

On the other hand, Marcos noted that Robredo was allowed to defer payments on the second installment of her cash deposit and, up to this day, she has not paid the installment.

Marcos added that Justice Caguioa kept on postponing the preliminary conference of the election protest.

He said it took the PET almost one year after he filed his protest on June 29, 2016, to hold the preliminary conference of the election protest.

In contrast, Marcos said it only took the PET just two months and 22 days to schedule the preliminary conference on the election protest filed by former Sen. Mar Roxas against former Vice President Jejomar Binay.

Marcos also cited the Pansol outing of several PET staff, which was attended by Roberdo’s party revisors.

The former senator said he asked PET to investigate the said “highly irregular and unethical” outing on July 9, 2018, but two days after Robredo’s camp filed a reply and said that an investigation was already conducted and that the personalities involved in the outing were already meted out penalties.

Marcos said on July 12, 2018, that he received a PET resolution dated July 10, 2018, denying his request to investigate the Pansol, Laguna, because PET has already commenced and concluded its investigation. As of Monday, Marcos said he had yet to receive a formal notice or information on the concluded investigation.

“Due process necessarily requires that a hearing be conducted before an impartial and disinterested tribunal because unquestionably, every litigant is entitled to nothing less than the cold neutrality of an impartial judge. All the other elements of due process, like notice and hearing, would be meaningless if the ultimate decision would come from a partial and biased judge,” the motion read.

“In light of the clear and convincing evidence of bias, partiality and prejudice inhibited by Associate Justice Caguioa and Mrs. Caguioa in favor of protestee Robredo, the continued presence and participation of Associate Justice Caguioa as the ponente of the case is a gross violation of the undersigned protestant’s Constitutional right to due process of law,” it added. The ongoing recount covers three pilot provinces—Camarines Sur, Iloilo and Negros Oriental—covering a total of 5,418 clustered precincts.

Depending on the results of the recount, the PET will decide whether or not to proceed with the recount on a total of 132,446 precincts in 39,221 clustered precincts covering 27 provinces and cities identified in the protest of Marcos.

Marcos filed the protest on June 29, 2016, due to alleged massive cheating perpetrated by the camp of Robredo in the May 2016 national polls.

Robredo won the vice presidential race in the May 2016 polls with 14,418,817 votes, or 263,473 more than Marcos’s 14,155,344 votes.

Oil-price rollback due Aug. 7

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IL firms announced on Monday a price reduction in petroleum products following last week’s oil-price hike.

Phoenix Petroleum, Total Philippines and PTT Philippines said in separate advisories that gasoline and diesel prices will go down by P0.10 per liter, respectively.

They will implement the price rollback at 6 a.m. of Tuesday (August 7). Seaoil Philippines will also implement the same price adjustment. It said Seaoil stations will sell

kerosene by P0.25 per liter cheaper. The oil firm’s downward price adjustment takes effect at 12:01 a.m. of August 7.

Other oil firms are expected to follow suit.

Last week oil companies increased the price of gasoline by P1.15 per liter, diesel by P0.95 per liter and kerosene by P0.85 per liter.

Local pump prices are mainly influenced by the crude prices in the world market, the peso-dollar exchange rate and taxes. Lenie Lectura

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The Nation BusinessMirror

Senators hail okay of Natl Identification System law

By Butch Fernandez @butchfBM

A

landmark legislation embodied in the Philippine Identification System Act recently signed into law

by President Duterte is expected to fast-track government transactions for all Filipino citizens, Senate Minority Leader Franklin M. Drilon, the bill’s main author, said on Monday.

“With the national ID system in place,” Drilon said, “identification of individuals seeking basic services from government would be faster and more accurate.”

As provided in the new law, all existing the government-initiated identification systems will be consolidated into an integrated and efficient identification system for citizens of the Philippines in order to help improve and speed up the delivery of public services in the country, Drilon said.

At the same time, the senator assured the remedial legislation will “not affect” data privacy, as pertinent provisions of the Data Privacy Act will still apply. “We have provided enough safeguards to protect the individual’s right to privacy and to prevent unscrupulous persons from accessing confidential information,” he added.

He explained personal data to be included in the national ID system would not be different from information currently present in all government-issued IDs. Drilon pointed out that under the new ID law, a Common Reference Number (CRN) will be given to all Filipinos containing essential information, such as full name, address, date and place of birth, sex, civil status, signature, and date of card issuance, along with a recent photo.

The senator assures the CRN/ ID can be used by a Filipino citizen transacting with any branch of the government, thus, “making it more convenient for Filipinos to avail [themselves] of govern-

ment services.”

He added the ID will also be honored when transacting with banks and other private institutions.

The senator suggested that Filipinos living and working abroad can register at embassy or consular offices in their countries of location to get their assigned CRN. At the same time, Drilon clarified that application for the ID system shall be free of charge, as part of the government’s social responsibility.

Sen. Panfilo M. Lacson Sr., principal sponsor of the measure in the plenary deliberations on the bill, said he expects Filipinos will now have an easier time transacting with the government and with private entities, soon after the National ID bill is finally signed into law by President Duterte.

In a news statement, Lacson said Republic Act 11055, which harmonizes and integrates the redundant government ID cards into a single system, would also help deter criminality. “At long last, we now have a law that breaks the formidable barriers between the government and the downtrodden and the poor due to the lack of identification,” Lacson added.

He noted there are 33 different forms of “functional” identification cards issued by various government agencies­—a situation that may lead to “duplication of efforts, wastage of resources, and uncoordinated identity approaches.”

A former National Police chief, Lacson said the National ID system could help deter criminality and terrorism by facilitating the processes of apprehension and prosecution. Under the bill, a foundational ID system, dubbed PhilSys, will be in place. It will have three components: the PhilSys Number, PhilID and PhilSys Registry. PSN is a randomly generated, unique and permanent identification number for each individual to be incorporated in all identification systems of government agencies. It will remain with the person even after death.

SC orders govt to comment on bid vs sale of 44-hectare Manila Bay property

By Joel R. San Juan @jrsanjuan1573

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HE Supreme Court (SC) has directed the government to answer a petition to declare the sale of 44 hectares of reclaimed land in Manila Bay as “unconstitutional.”

In a recent resolution, the SC directed the respondents—the Philippine Reclamation Authority (PRA), the Commission on Audit (COA), the Register of Deeds for Parañaque City, the Light Railway Tr a n s it A ut hor it y a nd M a ni l a Bay Development Cor p.

(MBDC)—to submit t heir comments on the petition filed by Party-list Rep. Rodante Marcoleta of 1-Sagip last April that sought to void the sale of the property by the PRA (then known as Public Estates Authority) to MBDC, a company belonging to banker Jack Ng, that is now worth P60 billion.

The petition said that the sale contravenes the constitutional prohibition that no land of the public domain may be sold to a corporation. He pointed out that the subject 44 hectares of reclaimed lands were clearly lands of the public domain.

The order was issued after the petitioner informed the Court in a manifestation last week his supposed discovery that no original certificate of title was actually issued by the Parañaque Register of Deeds covering the said 44 hectares.

He explained that the 44-hectare property that was sold by PEA to MBDC formed part of a 190-hectare

property that is covered by an illegal title issued by the Register of Deeds of Parañaque.

Citing the letter dated June 4, 2018, sent to him by Parañaque Register of Deeds Raymond R amos, Marcoleta said that the said title appears to refer to a Special Patent signed by then-President Corazon Aquino that covers the said 190 hectares of reclaimed land.

The phrase “certificate of title No. 1” appears to have been superimposed on the top portion of the Special Patent, Marcoleta said.

He stressed that under the rules and regulations of the Land Registration Authority, Judicial Form No. 45 should have been used to issue an original certificate of title covering the said 190 hectares.

Under Spec i a l Patent No. 3517 that was issued on January 19, 1988, the national government conveyed and transferred to the then-Public Estates Authority the said 190 hectares of reclaimed land as part of the Manila-Cavite Coastal Road and Reclamation Project.

Marcoleta, likewise, reiterated his request that the Supreme Court immediately issue a temporary restraining order against the possible conveyance or transfer of said 44 hectares to third parties as the titles covering the same were derived from Certificate of Title No. 1 that was, in turn, illegally issued.

However, the Court merely noted Marcoleta’s plea for the issuance of a TRO.

Editor: Vittorio V. Vitug • Tuesday, August 7, 2018 A3

DENR reminds mining firms to ‘shape up’ as ‘new era’ dawns on extractive industry

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By Jonathan L. Mayuga

@jonlmayuga

ecretary Roy A. Cimatu of the Department of Environment and Natural Resources (DENR) on Monday told mining companies to “shape up,” as he bared plans to come up with a new set of guidelines that will usher in a “new era” of mining in the country.

Cimatu issued the statement as he bared some of the more significant findings of the review teams that submitted their respective reports to the Mining Industry Coordinating Council (MICC) recently.

The DENR chief had earlier verified the claim of the Department of Finance (DOF) that only four of the mining companies reviewed by the MICC review teams failed the audit.

In a news statement, Cimatu said the review specified major reforms are needed, citing, for instance, the inadequate mine tailings pond and the very slow rehabilitation of “disturbed” mined areas.

“Mining companies need to shape up. The review specified [that] major reforms [are] needed, for example, on inadequate mine tailings pond and the very slow rehabilitation of the disturbed mined areas,” he said.

Cimatu said the review also pointed to unacceptable practices regarding stockpile areas, the location of tailings storage facilities and dumping of toxic and hazardous waste.

“They have to address all of these issues or they will be closed,” Cimatu added.

According to Cimatu, the MICC, which he cochairs with Finance Secretary Carlos G. Dominguez III, adopted the report of the MICC technical review teams.

The “objective fact-finding and science-based review” covered the performance of 27 mining companies, which were issued suspension by former Environment Secretary Regina Paz L. Lopez in February 2017.

The review covered 19 nickel mines, three gold and gold and copper mines, three chromite mines and two magnetite/iron mines.

It assessed the mining companies’ practices in terms of legal, technical, environmental, social and economic aspects. The review also measured the companies’ practices as acceptable (3.0), minor corrections needed (2.0), major reforms needed (1.0) and not acceptable (0).

Upon the MICC’s adoption of the report, it is now the task of the DENR

to determine the actions on the motion for reconsideration filed by 13 mining companies on the suspension and cancellation orders slapped against them.

“We will definitely use the comprehensive report made by the MICC review teams in evaluating whether or not a mining company should continue to operate. However, I am inclined to put more premium on the environmental considerations in the mining operations,” Cimatu said.

Cimatu cited the directive of President Duterte in his State of the Nation Address (Sona), where he emphasized that in the utilization of natural resources, environmental protection is non-negotiable and is a top priority.

Meanwhile, Cimatu said the Philippines is entering a new era of doing mining.

“This is definitely a new era of

ated by the mining industry.”

The DENR chief said that the innovative and sustainable practices of some mining firms that may be adopted or replicated to other sites should also be recognized.

On the part of the DENR and the Mines and Geosciences Bureau (MGB), Cimatu affirmed that they will have to implement radical policy changes, including the strengthening of monitoring and permitting functions; and improve the review of the technical, financial, environmental and social feasibility of mining.

“You will expect new administrative guidelines from the DENR to operationalize these reforms. The mining industry is in deep need of radical change. And, to reiterate the message of the President in his Sona, the people of the Philippines must benefit first and foremost from the

Mining companies need to shape up. The review specified [that] major reforms [are] needed, for example, on inadequate mine tailings pond, and the very slow rehabilitation of the disturbed mined areas.”—Cimatu doing mining in the country. We are serious about reinventing mining in the Philippines,” he said.

He added: “As the President said, he is more concerned with the actual benefits to the people, not just the government revenues to be gener-

utilization of the country’s mineral resources.” Cimatu said.

The report of the MICC will be submitted by the DENR to the President, including the actions taken on the mining companies that were ordered suspended and canceled.

Retired Fil-Am sailor remains briefs senate sets probe into media killings missing in Paris since July 14

Senate probers are poised to open an inquiry on Wednesday into increasing incidents of reported violence against media workers.

The upcoming Senate inquiry spearheaded by the Committee on Public Information, chaired by Sen. Grace Poe, is keen to look deeper into cases involving violence victimizing media workers.

In seeking the inquiry, Poe specifically cited the latest incident resulting in the death of local journalist Joey Llana of Daraga, Albay, last July 20.

The senator earlier filed Senate Resolution 800 directing the Committees on Public Information and Mass Media, and on Public Order and Dangerous Drugs to “conduct an inquiry, in aid of legislation, on the performance of the Presidential Task Force on the Violence Against Media Workers. ” Butch Fernandez

C

hristopher Buluran, a retired Filipino-American US Navy sailor, remains missing in Paris, France, since Bastille Day on July 14, 2018.

Buluran, a 50-year-old diabetic, has been taking insulin shots, which means, he may have no medicines, money, or a mobile phone in the French capital.

The retired Navy sailor is married to Aura “Au” Adlaw Buluran, daughter of Estrella “Esther” Gallardo, a journalist and official of the Publishers Association of the Philippines Inc. Gallardo learned about her missing son-in-law from her grandson, Ianne, the only child of the Buluran couple.

Ianne also posted on his Facebook page the incident about his father.

The family has been in France for a vacation during the Soccer World Cup, and they were touring Paris when the father lost consciousness on a street.

His wife and son brought him to a hospital for treatment. That’s from where he had gone missing.

“We are in Paris, France, and my father, Christopher Buluran, has gone missing,” said his son’s post on his Facebook update on July 16, “from the hospital since [he] fainted during the Bastille Day [commemoration], he was admitted to Hospital Europeen Georges Pompidou near the Line-8 Balard metro stop and was supposedly last seen at 10 p.m. of July 14th.”

Among the elder Buluran’s features include having a tattoo on his finger labeled “TPB,” with black hair, and brown eyes.

The son said his father was last seen wearing a gray shirt and brown shorts, the only clothes he had when he left the hospital.

He added that they have already filed a “missing person” report with the US Embassy in Paris, “but due to the World Cup finals there is less manpower to go around.”

exercise caution, d.f.a. reminds pinoys in kabul The Department of Foreign Affairs (DFA) has advised remaining Filipinos in Afghanistan to exercise “extreme caution” in the wake of escalating violence that has left more than 200 dead last month alone.

The DFA, likewise, extended its condolences to Afghanistan, and said the Philippine Embassy in Islamabad strongly advises against any travel there until further notice.

The embassy issued the advisory to the 1,500 Filipinos who are working mostly in military bases in Kabul and other locations in Afghanistan after two suicide bomb attacks at a mosque last Friday killed 30 people, including women and children.

“Our thoughts and prayers are with the people of Afghanistan who continue to suffer from the senseless violence being inflicted upon them,” Foreign Secretary Alan Peter S. Cayetano said in a news statement issued on Monday. Recto Mercene

Ianne Buluran thanked all those are trying to help locate his father.

He explained that, per information from the hospital, his father was confirmed to have left the hospital at 9:50 p.m. “We believe he left on his own and was not discharged formally from the hospital.”

Ianne added that during their visit to the emergency room they were adviced to keep Buluran’s valuables such as mobile phone, wallet and eyeglasses, leaving him at the hospital with only his clothes.

In short, the missing Buluran has no money with him, no eyeglasses, phone and no identification card.

“We hope he did not board a bus or train as the weekend was busy with Bastille Day and eventual World Cup final. [The] police have been sent the footage [of him leaving the hospital] and the US Embassy is in contact with both the hospital and police network,” the young Buluran said. Edd K. Usman

N.C.R.P.O. CITES MAYOR ABBY Binay’S lEADERSHIP The National Capital Region Police Office (NCRPO) has named Makati Mayor Abby Binay as one of the outstanding local chief executives for 2018, citing her exceptional support for the projects of the Philippine National Police and her commitment to improve the logistics of the Makati police.

The mayor received a plaque of recognition from NCRPO Acting Regional Director, Police Chief Supt. Guillermo Lorenzo Eleazar during the culminating ceremony of the 23rd Police Community Relations (PCR) Month Celebration held at the NCRPO grandstand at Camp Bagong Diwa, Taguig City.

The mayor thanked the NCRPO for the recognition, reiterating her continued support for the local police force.

“I am deeply grateful to the National Capital Region Police Office for honoring me with this rare achievement in my journey as a public servant. We in the city government of Makati are inspired all the more to provide our full support to national agencies like the PNP that are our indispensable partners in keeping Makatizens safe and sustaining our city’s progress and development,” said Binay.

A4 Tuesday, August 7, 2018 • Editor: Vittorio V. Vitug

Economy BusinessMirror

DOF lists 645 enterprises accorded with P86-B ‘redundant’ perks in ‘15

T

By Rea Cu

@ReaCuBM

he Department of Finance (DOF) has identified a total of 645 registered enterprises that continue to receive tax incentives even after 15 years in the business, adding that such investment perks usually accorded to big or multinational firms have become redundant and unnecessary

Finance Undersecretary Karl Kendrick T. Chua said data reported by investment promotion agencies (IPAs), as mandated under the Tax Incentives Management and Transparency Act (Timta), also showed that, for 2015 alone, the government gave away P86 billion worth of income-tax incentives to firms that paid out a total of P83 billion combined in dividends.

“According to the data from the Timta, there are 645 firms receiving incentives for at least 15 years. Also, in the data we submitted, we gave away in 2015, P86 billion in income- tax incentives. But the firms receiving these incentives combined take dividends of P83 billion more than the incentives they get,” Chua said during a recent House Committee on Ways and Means hearing.

The committee, chaired by Rep. Dakila Carlo E. Cua, has so far conducted five hearings on House Bill 7458, which aims to lower corporate-income tax, while reorient-

ing the country’s complicated investmentincentives system that has led to such redundant and unnecessary perks extended to select enterprises registered with the Board of Investments, Philippine Economic Zone Authority and 12 other IPAs. “So our question is, why are we supporting certain firms if they are inherently profitable, and they pay even more dividends than the incentives they receive? And these are dividends, which is just a fraction of profit because part of profit is the one you retain as earnings,” he added.

Chua explained that, when the DOF undertook a cost-benefit analysis of the registered firms on IPAs receiving tax incentives, it came out with three main factors to determine if the perks they are getting are necessary or not, or if these are redundant or nonredundant.

These factors include: the length of the availment of incentives, to find out whether a firm has

been receiving incentives for more than 15 years; profitability, to verify whether the firm is inherently profitable or not and whether it is already earning three times the median of the industry it belongs to; and the motivation to invest, to find out why they chose to relocate here.

He added that the DOF study showed that 43 percent of the firms registered with IPAs are worthy of being granted incentives, while the remaining 57 percent are receiving incentives that are already unnecessary or redundant.

For 2016 the gover nment lost P178.56 billion in potential revenues as a result of tax incentives given out to only 3,102 firms registered with various IPAs, according to Chua.

Based on data from the Bureau of Internal Revenue and Bureau of Customs, the government had foregone P74.53 billion in revenues from income-tax holidays, P46.66 billion from special income-tax rates, and P57.38 billion in customs duties. The incentives from value-added tax (VAT) and local taxes have yet to be computed.

Chua said the data collated by the DOF for 2016 do not yet include foregone revenues from the VAT exemptions on imports and local VAT that enterprises registered with IPAs also get to enjoy. It also does not yet include the foregone local taxes and leakages that may arise as a result of abuse of transfer pricing.

www.businessmirror.com.ph

Trade exec to LGUs, NGAs: Comply with EODB law

By Elijah Felice E. Rosales

T

@alyasjah

he trade department is enjoining all national government agencies (NGAs) to revise their Citizen’s Charters to ensure that such will adhere to the provisions of the ease of doing business (EODB) law.

In a recent speech at the Bangko Sentral ng Pilipinas, Trade Assistant Secretary Mary Jean T. Pacheco exhorted agency heads to begin reviewing their systems and procedures in transacting business. She cited Section 5 of Republic Act 11032, or the EODB and Efficient Government Service Delivery Act, requiring government services to be evaluated and simplified as part of the law’s objective of cutting red tape.

“The EODB Act took effect last June 17 and, under the law, all LGUs [local government units] and NGAs are directed to initiate review of existing policies and operations and commence with the reengineering of their systems and procedures, even without the IRR [implementing rules and regulations]. We urge you to update your Citizen’s Charter,” Pacheco said.

Section 5 of the EODB law states that “all offices and agencies, which provide government services, are hereby mandated to regularly undertake cost-compliance analysis, time and motion studies, undergo evaluation and improvement of their transaction systems and procedures and reengineer the same, if deemed necessary, to reduce bureaucratic red tape and processing time.”

Agencies are also mandated under the EODB law to complete simple transactions within three working days, complex transactions seven working days and highly technical transactions

20 working days. On the other hand, applications for license, clearance, permit and authorization that require the approval of local Sangguniang Bayan, Sangguniang Panlungsod or Sangguniang Panglalawigan must be processed within 45 working days, but could be extended for another 20 working days.

To facilitate quicker transactions with businesses, the law slashed the number of signatories for all documents to three.

Under Section 6 of the law, agencies are also obliged to set up a Citizen’s Charter that details a comprehensive and uniform checklist of requirements for each type of application or request; the procedure to obtain a particular service; the person/s responsible for each step; and the maximum time to conclude the process. It should also specify the document/s to be presented by the applicant or requesting party, if necessary; the amount of fees, if necessary; and the procedure for filing complaints.

Should any government official demand additional requirements or fees not listed in the Citizen’s Charter, he or she shall be suspended for six months for the first offense. On the other hand, second offense entails dismissal from public office, forfeiture of retirement benefits and imprisonment of one to six years, with a fine ranging from P500,000 to P2 million.

“For the government agencies to effectively put [the] EODB law at work, we should reengineer our systems and procedures by undertaking cost compliance analysis, time and motion studies, evaluation and improvement of transaction systems and initiate review of existing policies and operations, in compliance with the provisions of [the law],” Pacheco added.

Let’s talk bribery...

improper benefits to customers, agents, contractors, suppliers or employees thereof.

Political contributions

The company, its employees or intermediaries, should not make direct or indirect contributions to political parties, party officials, candidates or organizations or individuals engaged in politics, unless the political contributions are transparent and made in accordance with applicable law.

Charitable contributions and sponsorships

The company should ensure that charitable contributions and sponsorships are not used as a subterfuge for bribery and that they are made in a transparent way and in accordance with applicable law.

Facilitation payments

Facilitation payments are prohibited under the anti-bribery laws of most countries; companies should just eliminate them.

Gifts, hospitality and expenses

E

By Henry J. Schumacher

verybody in business understands that one of the main reasons a salesperson would make a bribe is to make a sale. This kind of corrupt practice is common, and even expected in many areas of the world. It is why sales and anticorruption compliance are so often uttered in the same breath.

Sales and compliance is a pairing that must be examined closely and continuously. However, risk assessments often are not thorough; internal controls do not catch suspicious transactions; one side does not know (or trust) what the other one is doing.

When the compliance and sales functions are not aligned with respect to how they approach anticorruption risk, all of the above missteps can happen. Even more frustrating is that most sales leaders want to behave ethically; they want to close sales based on their own skill rather than by cheating. Winning is that much sweeter when they do. So then, how do things keep going awry in practice?

In developing programs for countering bribery, companies should identify and assess specific areas that pose the greatest risks from corruption. The programs should, at a minimum, cover the following areas:

Bribes

The company must prohibit bribery in all business transactions that are carried out either directly or through third parties, specifically including, subsidiaries, joint ventures, agents, representatives, consultants, brokers, suppliers or any intermediary under its effective control.

The company should prohibit bribery in any form, including on any contract payment or portion of a contract payment, or by any means or channels to provide

The company should prohibit the offer or receipt of gifts, hospitality or expenses whenever such arrangements could improperly affect, or might be perceived to improperly affect, the outcome of procurement or other business transactions. Company programs should include controls and procedures, including thresholds and reporting procedures to ensure that the company’s policies relating to gifts, hospitality and expenses are followed.

To provide a framework for good business practices and risk-management strategies for countering bribery, companies should: eliminate bribery; demonstrate their commitment to countering bribery by signing the Integrity Pledge of the Integrity Initiative Inc. and live up to the commitments that are included in the Pledge, such as

we will prohibit bribery,

we will maintain a Code of Conduct to guide our employees toward ethical and accountable behavior,

we will conduct training programs for our employees to promote integrity,

we will implement appropriate internal systems and controls to prevent unethical conduct,

we will maintain appropriate financial reporting mechanisms that will be accurate and transparent,

we will maintain channels by which employees and other stakeholders can raise ethical concerns,

we will enter into integrity pacts with other businesses and with government agencies, and we will refrain from engaging in business with parties who have demonstrated unethical business practices; and

make a positive contribution to improving business standards of integrity, transparency and accountability wherever they operate.

Encouraging ethical conduct rather than merely “teaching compliance” will position your organization for greater success.

Feedback is welcome—contact me at Schumacher@ eitsc.com

www.businessmirror.com.ph

The World BusinessMirror

Editor: Angel R. Calso • Tuesday, August 7, 2018 A5

China meets Trump’s tariff UK trade minister: ‘No deal’ Brexit more hardball with vow to endure likely than not

A

fter a weekend of claims by US President Donald Trump that he has the upper hand in the trade war with China, Beijing responded through state media by saying the nation is ready to endure the economic fallout.

China is prepared for a “protracted war” and doesn’t fear sacrificing short-term economic interests, according to an editorial in the nationalist Global Times on Sunday evening. “Considering the unreasonable US demands, a trade war is an act that aims to crush China’s economic sovereignty, trying to force China to be a US economic vassal.”

The exchange of barbs between the two sides follows the release late Friday in Beijing of a tariff list designed to retaliate against the US threat to impose new duties on $200 billion of Chinese imports.

The worsening of the tension comes amid a slowing of China’s economy, declines in the currency and a bear market in stocks.

Trump told an audience of diehard supporters on Saturday that playing hardball on trade is “my thing.”

“We have really rebuilt China, and it’s time that we rebuild our own country now,” Trump said on Saturday during about an hour of freewheeling remarks at a rally outside Columbus, Ohio. China’s market declines weaken that nation’s bargaining power in the escalating trade war, he added.

Trump continued his focus on tariffs on Sunday morning, tweeting that the duties are working “big time” and that imported goods should be taxed or made in the US. He also suggested duties will allow paying down “large amounts of the $21 trillion in debt that has been accumulated” while reducing taxes for Americans.

“Every country on earth wants to take wealth out of the US, always to our detriment,” Trump tweeted, “I say, as they come, Tax them.”

The yuan extended gains following a rally triggered by a surprise

Saudi suspends diplomatic ties with Canada over activist row

S

audi Arabia halted new trade and investment dealings with Canada and suspended diplomatic ties in a dramatic escalation of a dispute over the kingdom’s arrest of a women’s rights activist.

The kingdom recalled its ambassador to Ottawa and ordered the Canadian envoy to Riyadh to leave within 24 hours, according to a foreign ministry statement cited by the Saudi Press Agency.

Canada is “seeking greater clarity” about the matter, a spokesman for Foreign Minister Chrystia Freeland said.

The Saudi foreign ministry cited remarks last week by Freeland and the Canadian embassy in Riyadh, criticizing Saudi Arabia’s arrests of women’s rights activists including Samar Badawi.

She is a Canadian citizen whose brother Raif Badawi, a blogger who was critical of the Saudi government, was already in jail in the kingdom.

“The kingdom views the Canadian position as an affront to the kingdom that requires a sharp response to prevent any party from attempting to meddle with Saudi sovereignty,” according to the statement.

The standoff pits a Saudi government that’s slowly opening the door to women’s rights against Canadian Prime Minister Justin Trudeau, an outspoken champion of women’s advancement, who named a gender-balanced Cabinet shortly after his 2015 election.

Just two months ago, Saudi women were given the right to drive a car, yet several of the country’s most prominent women’s rights activists—including some who fought for years to drive— were arrested earlier this year on national security grounds.

“We are seriously concerned by t hese med i a re por t s a nd are seeking greater clarity on the recent statement from the Kingdom of Saudi Arabia,” Marie-Pier Baril, a spokesman for

Freeland, said in an e-mail.

“Canada w il l a lways stand up for the protection of human r ight s, ver y muc h i nc lud i ng women’s rights, and freedom of expression around the world. Our government will never hesitate to promote these values and believes that this dialogue is critical to international diplomacy.”

Saudi investments in Canada include G3 Global Holdings Ltd., a joint venture between Bunge Ltd. and Saudi Agricultural & Livestock Investment Co., which purchased the former Canadian Wheat Board in 2015. Saudi Arabia has invested about $6 billion in Canadian businesses since 2006, data compiled by Bloomberg show.

Tanks, armored vehicles and parts and motor vehicles accounted for about 45 percent of Canada’s 2016 exports to the kingdom, while crude oil and copper ores comprised about 98 percent of imports, according to a government report.

Saudi Arabia supplies oil to the Irving refinery in Saint John, New Brunswick.

The arrests were in line with Saudi laws, and those detained have been provided with due process during investigation and trial, according to the foreign ministry statement.

Freeland said in a tweet on August 2 that she was “very alarmed to learn that Samar Badawi, Raif Badawi’s sister, has been imprisoned in Saudi Arabia,” and that “Canada stands together with the Badawi family in this difficult time, and we continue to strongly call for the release of both Raif and Samar Badawi.”

So far this year, Canada has exported C$1.4 billion ($1.1 billion) in merchandise goods to Saudi Arabia and imported C$2 billion worth of goods, leaving it with a cumulative year-to-date trade deficit with the kingdom of about C$640 million, according to Statistics Canada data. Bloomberg News

China central bank move to make it more expensive to bet against the currency. China stepped in on Friday to try to cushion the yuan after a record string of weekly losses saw the currency closing in on the key milestone of 7 per dollar.

Duties ranging from 5 percent to 25 percent will be levied on 5,207 kinds of imports from America if the US delivers its proposed taxes on another $200 billion of Chinese goods, the Ministry of Finance said in a statement on its web site late Friday.

Including the new tariffs already in force, China has now identified almost 6,000 items for higher import taxes, including liquid natural gas, soybeans and other products.

That covers more than two-thirds of the value of China’s imports from the US, but it excludes products such as big airplanes and some computer chips, which China struggles to produce domestically.

“Chinese buyers don’t have any bargaining power on these products. Even if the trade war escalates, China would rather lift the 25 percent tariffs to 50 percent, instead of imposing any tariffs on integrated circuits or big airplanes,” according to Larry Hu, head of China economics at Macquarie Securities Ltd. in Hong Kong. “What’s the point of imposing tariffs? Chinese companies would have to pay all the additional costs.”

In addition, more than 500 goods on the lists aren’t traded at all, and China imported less than a million dollars worth of about another 2,000 items, according to a Bloomberg analysis of 2016 trade flows. Hu says one speculation about these phantom items is that the government is bluffing to create a longer list.

President Trump last week ordered officials to consider imposing a 25-percent tax on $200 billion worth of imported Chinese goods, up from an initial 10 percent rate.

The move was intended to bring China back to the negotiating table for talks over US demands for structural changes to the Chinese economy and a cut in the bilateral trade deficit, but China’s response suggests that tactic hasn’t worked.

“In the face of the bullying of the Donald Trump administration, Beijing must remain soberminded and never let emotion override reason when deciding how to respond,” according to an editorial by the China Daily, the f lagship state-run English newspaper. “Given China’s huge market, its systemic advantage of being able to concentrate resources on big projects, its people’s tenacity in enduring hardships and its steadiness in implementing reform and opening-up policies, the country can survive a trade war.” Bloomberg News

L

ONDON—Britain’s international trade minister says it’s likely the UK will fail to agree upon a divorce deal with the European Union before it leaves the bloc in March—the latest in a growing chorus of warnings that the negotiations are in crisis.

Trade Secretary Liam Fox told the Sunday Times newspaper that “intransigence” by EU officials “is pushing us towards no deal.” He put the chance of Britain crashing out without a deal at 60 percent.

Britain and the EU say they aim to hammer out an agreement on divorce terms and future trade by October so that it can be approved by all individual EU countries before the UK leaves the bloc on March 29.

But the talks have stalled, and the British government is trying to heap pressure on the other 27 EU nations to compromise by stressing the economic harm to all sides that would come from a “no-deal” Brexit that imposes tariffs and other barriers on UK-EU trade.

Fox accused EU officials of putting a “theological obsession” with sticking to the rules ahead of “the economic well-being of

the people of Europe.”

EU officials say Britain has failed to make realistic proposals about future ties.

They accuse the UK of seeking to retain the benefits of EU membership—such as free trade—without accepting the bloc’s rules, including the free movement of people among member-states.

As the clock ticks down, British Prime Minister Theresa May’s Conservative government remains split over how close an economic relationship it should seek with the EU. Fox is one of several ministers who back a clean-break “hard Brexit,” while others, including Treasury chief Philip Hammond, want to keep Britain closely aligned with the EU, its biggest trading partner.

British business groups by and large agree. They say a nodeal Brexit could cause economic turmoil, bringing higher food prices, logjams around UK ports and disruption to everything from aviation to medicine supplies.

Bank of England Governor Mark Carney warned last week that the risk of an economydamaging no-deal Brexit was “uncomfortably high.” AP

At least 91 dead after strong quake rocks Indonesian tourist island M

ATAR AM, Indonesia— Rescuers still haven’t reached some devastated parts of the Indonesian tourist island of Lombok after a powerful earthquake flattened houses and toppled bridges, killing at least 91 people and shaking neighboring Bali, authorities said on Monday.

The death toll is expected to rise.

It was the second deadly quake in a week to hit Lombok. A July 29 quake killed 16 people and damaged hundreds of houses, some of which collapsed in Sunday evening’s magnitude-7.0 temblor, killing those inside.

National Disaster Mitigation Agency Spokesman Sutopo Purwo Nugroho told a news conference that damage was “massive” in northern Lombok. In several districts, more than half the homes were destroyed or severely damaged.

Some areas still hadn’t been reached, with rescuers battling against collapsed bridges, electricity blackouts and damaged roads blocked with debris. Lack of heavy equipment was hampering attempts to find victims beneath the rubble of a mosque that collapsed in northern Lombok while villagers prayed inside, Nugroho said.

The death toll had risen to 91 and will “definitely increase,” he said, adding that two of the deaths were in Bali and the rest in Lombok. More than 200 people were

People affected by an earthquake take shelter in tents erected on the side of a road in Sembalun on Lombok Island, Indonesia, on August 6, 2018. The powerful earthquake struck the Indonesian tourist island of Lombok, killing a number of people and shaking neighboring Bali, as authorities on Monday said thousands of houses were damaged and the death toll could climb. AP Photo/Adrial Pranandi

seriously injured. Thousands of homes and buildings were damaged and 20,000 people are in temporary shelters.

The quake, measured at magnitude 7.0 by Indonesian authorities and a still-powerful 6.9 by the US Geological Survey, struck early Sunday evening at a fairly shallow depth of 10.5 kilometers (6 miles) in the northern part of Lombok.

Shallow quakes tend to cause more damage than deeper ones.

“We were sitting there having dinner at about 7 o’clock last night, we just felt really big sort of shaking and the lights went off and everyone just ran,” said Australian tourist Kim Liebelt as he waited with other travelers for a flight out at Lombok’s international airport.

“And then the roof started fall-

ing down on us, rocks and rubble and then just everyone running to get away,” he said.

V ideos showed sc rea m i ng people running in panic from a shopping mall and a neighborhood in Bali, where parked vehicles swayed. On Lombok, soldiers and other rescuers carried injured people on stretchers and carpets to evacuation centers. AP

Lisbon breaks record for hottest temperature

L

ISBON, Portugal—Lisbon broke a 37-year-old record to notch its hottest temperature ever as an unrelenting heat wave baked Portugal and neighboring Spain. New heat records were set in 26 places around Portugal.

Portugal’s weather service said the capital reached 44 degrees Celsius (111.2 degrees Fahrenheit) on Saturday afternoon, surpassing

the city’s previous record of 43°C (109.4°F) set in 1981.

The day’s hottest temperature of 46.8°C (116.2°F) was recorded at Alvega in the center of Portugal. The country’s highest temperature on record is 47.4°C (117.3°F) from 2003.

Portugal’s weather service said new maximum highs were recorded at 26 places from measurements taken at a total of 96 weather sta-

tions around the country. More than 60 percent of the country registered temperatures of over 40°C (104°F).

The hot, dusty conditions across the Iberian Peninsula are the result of a mass of hot air from Africa and have increased the risk of forest fires. Over 700 firefighters were still battling a forest fire near the Portuguese town of Monchique

in the southern Algarve region, a popular tourist destination.

Six people were injured late Saturday as they escaped a separate blaze near the Portuguese town of Estremoz, civil protection officer Jose Ribeiro told the Portuguese state television RTP. Sunday’s forecasts called for temperatures to dip slightly while remaining extremely high. AP

A6 Tuesday, August 7, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Feeling the pinch

F

amilies of workers receiving fixed wages are suffering the most from the sudden jump in the cost of rice and other food commodities.

Cost of food in the Philippines increased 6.1 percent in June 2018 over the same month last year.

Inflation is edging close to 6 percent in August.

Agriculture Secretary Emmanuel F. Piñol said he does not believe food should be included in the list of items that contribute to inflation, because the rise in food prices is only indicative of the increased cost of production—the cost of fuel, fertilizers, farm inputs and transport.

While this may be true, consumers, most of whom are ordinary wage earners, do not care why or how food prices get so high. It does not matter if the inflation rate is higher because of TRAIN (Tax Reform for Acceleration and Inclusion) or because oil prices are going up or the peso has depreciated. They just know that when they go to grocery stores and wet markets they can only buy less rice, meat, fish, fruits and vegetables with the money they have. They are feeling the pinch because they spend up to three-fourths of their wages on food, and food prices tend to increase at a faster rate than nonfood products.

Nine regional wage boards have already approved increases in workers’ basic pay, but whether such increases are enough to actually help them cope with the rising prices of goods is another matter.

Filipino workers reportedly have one of the highest daily wages in Southeast Asia, but statistical wages alone don’t tell the whole story, because on the other hand you have to consider what those wages can actually buy in the country in order to live decently.

Going by government statistics, Filipino workers even need to earn more.

Socioeconomic Planning Secretary Ernesto M. Pernia was quoted as saying in an interview with GMA-7 that an average Filipino family would actually need an aggregate income of P42,000 to live above the poverty line. This means each worker should have an additional P1,200 to support a family of six, based on the estimate of the National Economic and Development Authority.

If we compare the wage differentials between the Philippines and other countries, starting with our neighbors in the region, then we must also consider the cost of living differentials between us and them.

The cost of electricity here is the highest in Southeast Asia, and high enough that a lot of manufacturing businesses simply choose to move to other countries in the region, because electricity accounts for one-third of the total cost of production.

Utilities eat up about 20 percent to 30 percent of the household budget here compared to just 5 percent or less in other countries, even the richer ones. Perhaps this is why, even in cities in the Philippines, one can still find residents using firewood and coal for cooking.

Eating out is relatively more expensive, even in common fast-food joints, because of the value-added tax.

If you don’t want to go through that hellish ordeal of what passes for public transportation here, then the price of owning a car is easily double than the purchase prices in the United States or Europe.

Then there’s the cost of quality education. Public education here is supposedly free, but quality is not generally assured. And if you have to send your kids to good private schools, then prepare to lose a good chunk of your savings.

Yes, workers are getting squeezed. Food, housing, electricity, water, medical care, tuition and other costs of living keep rising. Only those with loads of money from various sources, both honest and corrupt, are not complaining.

Amid the surge in consumer prices, newly installed House Speaker Gloria Macapagal-Arroyo recently called on the country’s economic managers to discuss several possible measures to tame inflation, including a new feed-intariff allowance for electricity, removing tariffs on meat imports and having the National Food Authority purchase more rice for distribution.

Both the Executive department and Congress should indeed work together to help ease the troubles of ordinary wage earners. And if they want to tackle inflation, the first step would be to review the government policies that are driving it up.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua Founder Publisher Editor in Chief Associate Editor News Editor Senior Editors

T. Anthony C. Cabangon

THE Entrepreneur Continued from A1

D

ata from the Board of Investments (BOI), one of the government’s tax incentive-giving bodies, show that newly approved investments surged 165 percent to P14.5 billion in the first six months of 2018, from P5.5 billion in the same period in 2017.

Including domestic projects, total investment approvals increased 27 percent in the six-month period to P238.9 billion, from P188 billion a year ago.

Trade Secretary Ramon M. Lopez said the growth in investment pledges was a concrete proof of the continued confidence of both foreign and local investors in the Philippines. These figures represent the private sector’s investment commitments in the country. Actual FDI flows are even more impressive.

The Bangko Sentral ng Pilipinas reported that FDI net inflows reached $3.2 billion in the first four

months of 2018, up by 24.3 percent from the same period last year. The BSP said such inflows were boosted by continued favorable investor sentiment, solid macroeconomic fundamentals and strong growth prospects.

The BSP now expects FDI inflows to reach $9.2 billion in 2018, amid the sustained positive developments in the domestic economy and with the implementation of various infrastructure projects.

“FDI uptick is further seen in 2018 in line with the continued fast-tracking and modernization of the country’s soft and hard

Trade war realities

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Foreign investments supporting economy

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OUTSIDE THE BOX

T

here are certain topics that are best left not being discussed at all, like the Black Arts and Ancient Roman Brothels, unless you actually know the subject matter.

But since 1998 and the advent of the Google search engine, if people can “Google” it, then they have enough expertise to talk and talk and talk.

In the past few months, it is about “trade wars” that brought out everyone’s wisdom. The general themes center on the idea that trade wars hurt everyone, primarily the instigator, and that no one actually wins a trade war. Of course, it might help to understand what a trade war means.

A silly but accurate comparison might be that when one nation encroaches on the territory or resources of another, the offended party fights back. King Harry starts fishing in King Rudolph’s waters, so Rudolph starts cutting down the trees in Harry’s forests. In the modern set-

ting, a nation starts exporting its goods at or below production cost to drive the other country’s domestic producers out of business and take over market share.

The second nation retaliates by imposing high tariffs to make the prices of local and imported goods about the same. Strangely enough, most nations have laws to make sure that there is fair competition between domestic producers so that unfavorable monopolies do not exist.

But if the same standard is held between nations, it is called a trade war.

The United States has been run-

infrastructure, growing interest from nontraditional investment sources, and improved global perception of the Philippines as an investment destination,” the BSP said.

Foreign direct investments hit record highs in the past two years, reaching $8.28 billion in 2016 before climbing to $10 billion in 2017, as the Philippines was viewed as a favorable investment destination.

These figures are already comparable to the amount of foreign funds going to other Southeast Asian countries and are likely to continue to grow in the coming years, given the Philippines’s investment-grade credit rating.

Fitch Ratings, one of the three major global debt watchers, said the country’s credit score of “BBB” with a stable outlook remains intact. This score is a notch above the minimum investment grade.

Fitch said the Philippines was expected to keep its “place among the fastest-growing economies in the Asia-Pacific region.”

Fitch noted that domestic demand would sustain the country’s strong growth of 6.8 percent in 2019 and 2020. The gross domestic product grew 6.8 percent in the first quarter, in line with market expectations, but below the government’s target

of 7 percent to 8 percent.

The government aims to boost growth to 8 percent annually, on the back of infrastructure spending, which is expected to increase from 6.1 percent of GDP in 2018 to 7.3 percent of GDP by 2022.

Aside from foreign investments, there is enough liquidity in the financial market to support infrastructure spending and overall domestic demand.

The BSP, which celebrated its 25th anniversary on July 27, said the growth of the domestic banking industry would support the economic expansion. A sound and strong financial sector is critical to the continued growth of the economy. “The banking system is healthy and profitable,” BSP Governor Nestor A. Espenilla Jr. said.

Other factors being considered by investors are political stability and peace and order, where President Duterte is doing a good job as a leader. His political will and commitment to rid the Philippine society of illegal drugs will prove beneficial in the long run, as this will make our labor force more productive and our economy more vibrant.

ning a trade deficit—buying more than it sells—since 1976. As it is, that either means the US is really terrible at making its own products with a fair profit margin and at affordable price or all the other countries are much smarter and efficient. Another possibility is that other countries have been using their taxpayer money to subsidize their exporters, manipulated their currency to make their goods cheaper, or even spent money making sure the US laws were crafted to allow cheap imports.

In the Philippines the economy and domestic manufacturing were simply screwed by the US Bell Trade Act: It placed preferential tariffs on US products imported into the Philippines, fixed the exchange rate between the peso and the US dollar, and gave “parity rights” granting US citizens and corporations rights to Philippine natural resources equal to those of Philippine citizens. All that forced the Philippines to change the 1935 Constitution.

In return, the Philippine government received $800 million ($11.3 billion today) from the US government.

The idea that “no one wins a trade war” is always justified by

the 1930 Smoot-Hartley Act, which was more like nuclear Armageddon, raising tariffs on 20,000 imported goods from every country. What no one seems to talk about is the 1963 “Chicken War” when France and Germany increased tariffs on cheaper US chicken exports. The US raised duties on some European goods. However, eventually the US capitulated.

Europe won.

In 1981 the US raised tariffs on Japanese automobiles. Japan retaliated on US agricultural imports.

But Japan quickly agreed to the US demand for a Voluntary Export Restraint program, which cut back on the number of exported Japanese cars. The US won.

The initial trade target from the US has been steel imports answered

by China on US agricultural products.

US farmers are complaining, but then again they did not say much as the US steel industry was destroyed by cheap imports. A nation must protect its industries, as well as its territory.

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Opinion

Free trade is rare and certainly no utopia

A US lawmaker and the Aquino regime spread fake news to destroy the Marcoses

By Gary Shilling Bloomberg Opinion

P

r e s i d e n t D o n a l d J. Trump recently suggested the removal of all tariffs and nontariff barriers to global trade.

Sounds intriguing, but free trade is rare, and it’s certainly no utopia.

Historically, it’s been largely confined to periods when a major global power promoted the free exchange of products in its own enlightened self-interest. That was true of Great Britain in the 19th century after it spearheaded the Industrial Revolution and wanted to insure the easy flow of raw materials for its factories from abroad and foreign markets for their output. After World War II, Americans used trade to rebuild Western Europe and Japan to counter the Soviets, and accepted the lack of reciprocity by some of those lands, notably Japan. This was cheaper and more acceptable in the Cold War era than garrisoning more American troops around the world and risking more military confrontations.

The classical foreign-trade theory espoused by English economist David Ricardo (1773-1823) held that unfettered trade made all trading partners richer. To Ricardo, even if one country is more competitive in every area than its trading partners, that nation should concentrate on the areas in which it has a competitive advantage, leading to mutual benefits accruing to all economies involved. He used the example of English-produced wool being traded for French wine.

Subsequently, economists noted that Ricardo’s simple trade model requires economies in static equilibrium with full employment and neither trade surpluses nor deficits, and similar living standards. These aren’t true in the real world. Also, Ricardo didn’t consider countries at different stages of economic development and different degrees of economic and political freedom, or exchange-rate manipulations and competitive devaluations, since gold was universal money in his day.

Ricardo also didn’t factor in trading partners with huge wage differences, such as exists between the US and China. China can produce almost any manufactured good cheaper than America, which has a competitive advantage in almost nothing.

The result has been huge and chronic US trade and current-account deficits. Last year the US trade deficit grew 12 percent to $566 billion, the largest since 2008.

Completely free trade is unlikely because countries have vastly different economies in different stages of development, different degrees of domestic economic and political freedoms and separate currencies.

To achieve free trade, governments would have to reverse much of the involvement in their economies and financial markets they’ve gained since the 1930s. They’d have to surrender considerable sovereignty to market forces and could no longer keep out imports in the name of health and safety, either to support

BusinessMirror

local industry or due to true civic concerns. Where is the dividing line between imported recreational marijuana and narcotics? Completely free trade would also require completely free-floating currencies with no government interference. It’s hard to imagine politicians giving up all that control.

Still, what would this unlikely utopian world look like? It would probably be more cyclical without government actions to redress trade imbalances. In the absence of devaluations, currency controls and other stabilizing techniques, trade deficits would accumulate in weak countries.

Their currencies would collapse as foreign investors and locals fled and depleted foreign-exchange reserves.

It cost China $1 trillion to accommodate a capital flight in 2014. Political revolutions would be more frequent and international relations strained as the strong get stronger and the weak get weaker.

Without China’s demand for technology transfer as the price for American firms doing business there and outright theft of US technology, the American trade and current-account deficits would shrink. More production and profits for Americans would benefit the US economy, but that current-account deficit provides the liquidity the rest of the world needs to finance growth, and its shrinkage is highly deflationary.

Globalization would probably persist due to the continuing vast differences in the cost of production between developed and developing countries. Even as Chinese incomes rise, India, soon to overtake China as the world’s most populous country, has a huge supply of unemployed and underemployed cheap labor. Ditto other Asian lands.

American consumers would benefit from continuing cheap imports from low-cost countries, including goods from Asia and legal, accounting and other services from India. Americans with the skills and knowledge to compete in a free market world would continue to thrive, but the rest would suffer lower incomes as globalization wiped out more service jobs, as well as manufacturing positions.

In agriculture, US grain producers would gain from unrestricted exports to developed and developing economies. Rice exports would lock out expensive domestic rice from Japan, where that grain is still considered sacred and imports are severely limited. American farmers would benefit as European governments are forced to remove GMO restraints on grain and meat imports. Wisconsin dairy farmers could export freely to Canada. Canadian maple syrup would decimate Vermont’s output, and free sugar imports would wipe out American producers of cane and beet sugar that are now protected by import quotas. As a result, the domestic price is 30 cents pound, compared with 11 cents on the world market. Unrestrained Canadian timber imports would squeeze American producers.

The dollar would be stronger as a haven in a volatile currency world.

There would be no currency manipulation to contain the greenback.

Cecilio T. Arillo

database Part Five

Supreme Court dismissed 28 behest loans cases

T

HE Presidential Commission on Good Government behest loan panel, like the rest of the PCGG, would be notable for its lack of success. In early-December 1998, the Supreme Court upheld the Ombudsman’s dismissal of a case filed by the PCGG against Alice L. Reyes, in connection with a loan given to Vital Agro Industrial Corp. when Reyes was still chief executive of the Development Bank of the Philippines.

The Supreme Court had similarly dismissed petitions by the PCGG regarding behest loans on June 29, August 26 and November 11, all in 1998.

At least 28 behest loan cases have been dismissed or dropped, leaving 12 still pending as of December 1998. Andrew Ammuyutan, chief legal counsel of the Ombudsman, explained that cases were junked because of “insufficient evidence presented by the PCGG that the loans were behest.”

Some fingers must have gotten sticky in the groping for the Marcos gold and the cronies’ treasures.

On August 20, 1988, Vice President Salvador Laurel was compelled to denounce the Aquino government as a “den of thieves.” Two days later, a more damning story came out in Newsweek: “Once the spearhead of Aquino’s anticorruption battle, the PCGG has become a symbol of its disarray. One

PCGG commissioner was forced to acknowledge to a Senate committee last week that he didn’t know what had become of more than a dozen airplanes seized by the commission.

Last week former solicitor general Francisco Chavez, who went on leave last month after clashing with the PCGG, accused the commission of “ineptness, incompetence and corruption” in the management of 286 firms it has seized and in the handling of its cases against Marcos-era cronies.

“At least two of Aquino’s appointees, including current chairman Adolfo Azcuna, turned out to belong to law firms that once represented companies they are supposed to be investigating. Five PCGG agents face graft charges, and 13 more are under investigation by the commission itself and a government prosecutor.

“Last week the nation’s House of Representatives moved to cancel the immunity from civil legal action that

Bloomberg Opinion

I

was at a hackers conference in Taipei a few years ago when I got talking to one of the country’s leading cybersecurity experts.

I wanted to know the state of play in the ongoing cyber war between Taiwan and China.

“There’s no war,” came the response. I was flummoxed. All day, stories had been flowing about attacks from China and the ongoing risks.

“It’s only a war if you fight back,” was the explanation. “ Taiwan doesn’t fight back.”

For more than a decade, Taiwan

has been ground zero for attempts to breach its computer networks.

Beyond obvious targets such as political parties, government departments and national security apparatuses, many businesses have been attacked. In one breach, a major flat-panel display maker’s patent department was infiltrated, and all the evidence pointed to Chinese hackers.

Security specialists around the world turn to small independent teams in Taiwan for advice on the latest techniques, because quite often, it’s the first to be targeted by new tools and methods developed by mainland hacker armies.

T his brings me to Taiwan

PCGG members and employees now enjoy. The commission’s follies have provided ample grist for Aquino’s opponents. ‘I don’t think the sequestration of crony-owned companies was intended to provide employment and a source of income for the cronies and friends of the new [administration],’ opposition Sen. Juan Ponce Enrile said last week.”

In any event, Cory inconvenienced the Marcoses and some Marcos associates much more successfully than her hounds were able to recover “illgotten wealth” in the volumes expected. Was harassing the Marcoses a victory in itself?

The Supreme Court was not awed by the PCGG’s sweeping powers. In 1987 the Court reminded the PCGG that freeze and sequestration orders were merely provincial remedies that must be followed within the constitutionally prescribed period by judicial proceedings. On April 15, 1988, the Court restrained the PCGG from exercising the voting rights represented by sequestered shares of stock, in the case Bulletin Publishing v. PCGG (GR 79126).

By November 21, 1991, the number of firms freed from PCGG sequestration by the Sandiganbayan had topped 180 of the 350 firms sequestered since 1986. On this day, the PCGG was ordered to desequester within 30 days 97 companies and other assets of Roberto S. Benedicto and 17 of his close associates. The Benedicto assets included the Philippine Daily Express and its presses, three television stations (BBC-2, RPN-9 and IBC-13), six radio stations, an aircraft, 11 ships, the Republic Planters Bank, a school and 31 sugar plantations.

The PCGG could have settled for P1 billion worth of assets that Benedicto had earlier offered in exchange for the dropping of all civil and criminal cases against him. But some unidentified officials—perhaps coveting everything—opposed the compromise deal. And so Benedicto went to the Sandiganbayan, which agreed with him that the PCGG had violated the two-commissionersas-signatories rule. Although given a reprieve by the anti-graft court, Benedicto remained willing to enter into a deal that would put a permanent end to his ordeals.

Long after Cory had left the presidency, the Supreme Court would still be rebuking the PCGG for its quickness in sequestering assets and slowness in properly disposing of sequestered assets. Ruling on July 31, 1998, in Republic/PCGG v. Sandiganbayan, et al. (GR 119292), the high tribunal held that the burden of proving whether the assets sequestered were ill-gotten properly belongs to the PCGG. The court held that: “Beyond such custodial powers, the PCGG must hurdle its more important task: that of proving the ill-gotten nature of the sequestered assets and of causing their reversion or reconveyance to the people.

The tragedy was that the media, the same biased media that prejudged the Marcoses as thieves, just ignored the findings of the court and the foreign investigative bodies that found the Marcoses innocent.

To be continued

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

From Amazon to Alibaba, grocers’ pain is endless

By Andrea Felsted Bloomberg Opinion

W

ant to know what Amazon.com Inc. will be doing in physical retail tomorrow? Look at what is happening in China today.

If you’d taken this advice, you wouldn’t have been surprised when the behemoth spent $13.7 billion last year buying Whole Foods. Eighteen months earlier Alibaba Group Holding Ltd. had launched Hema, a technologically advanced blend of online grocery shopping, dining and bricks and mortar.

Alibaba currently has 57 Hema stores, and plans to have 100 by the end of its financial year in March 2019. In five years there could be as many as 2,000. Rival JD.com Inc. has already launched its high-end response, 7Fresh, with two locations in Beijing offering all three services.

It could have hundreds over the next few years.

If Amazon is chasing Alibaba, and Alibaba’s watching JD.com, grocers in the United States and Europe need to pay attention to all three.

Hema is a digital venture at its heart. It includes a traditional supermarket, but the locations also

fulfill online grocery orders and offer restaurants. The Hema app, which connects to a customer’s Alipay account, is the glue that holds all the different elements together.

China may have got there first in debuting alternatives to the traditional grocery store. BingoBox, which dispenses with the usual checkout lines, opened in southern China in mid-2017, ahead of the January 2018 public launch of Amazon Go. But the lead is a short one. Amazon’s answer to cashierless shopping is more advanced than what BingoBox, Hema or 7Fresh currently offer. The Seattle shop uses a mobile app and some of the same sensing systems used in self-driving cars to track what customers have picked from shelves. When they leave, purchases are billed to their Amazon account.

However, China’s Internet giants are catching up fast. Alibaba is experimenting with grab-and-go

Now maybe Taiwan will take cybersecurity seriously

By Tim Culpan

Tuesday, August 7, 2018 A7

Semiconductor Manufacturing Co. (TSMC), which this morning is mopping up after a virus spread among its production facilities over the weekend. The company expects a real financial hit, saying: We estimate the impact to thirdquarter revenue to be about 3 percent, and the impact to gross margin to be about one percentage point.

Security experts are no doubt swarming over TSMC’s factories, analyzing the code and seeking to understand its origins. TSMC believes its network systems weren’t breached, and that it wasn’t specifically or maliciously targeted. It wasn’t a hack, executives said. I believe them. Which is to say, I believe

that they believe that.

And yet, it appears lines of code were deliberately written for semiconductor-production machinery with the intent of causing havoc.

This virus somehow made it onto at least one piece of equipment that was then placed inside TSMC factories, and because of what appears to be poor execution of the company’s installation protocol, the virus wasn’t found or isolated, and instead spread via internal networks to other production facilities.

Perhaps the virus writer was some script kiddie in Europe who never imagined his code would make it into the wild. Maybe

technology at a corporate souvenir shop at its Hangzhou headquarters, and both it and JD.com are using facial recognition to smooth the payment process. The latter already has about 20 unmanned stores across China, and has teamed up with real-estate developer China Overseas Land & Investment Ltd. to open hundreds more.

The lesson for US and European supermarkets is not just that they’ll need to throw capital at updating payment processes. Chinese companies are already making other breakthroughs that have the potential to upend multiple parts of the traditional store, forcing competitors into even more investment.

Chinese companies are already tackling other pain points, such as difficulties with store navigation and unruly shopping carts.

Their progress hasn’t always been straightforward. JD.com has introduced a robotic cart that follows customers around the store.

Shoppers weren’t as keen on them as the company had hoped, and it is now upgrading them to address their feedback.

A Hema supermarket in Shanghai recently launched a robotic restaurant, where customers can pick their

main course from the grocery aisle (or just use their phone to order), and check in at their table with the app.

If diners have, for example, chosen their own live fish, staff sends it to be cooked via an overhead conveyor belt. Robots transport the meal from the kitchen to the customer. It’s an entertaining dining experience.

There is no reason why this threein-one concept—grocery, delivery hub, restaurant—couldn’t be taken further, with other elements, such as laundry or beauty added. The stores could almost become mini-malls in their own right, with shopping, dining and services in a central location, all powered by mobile apps.

This could actually be a model for Whole Foods under Amazon’s ownership, because, as my colleague Shira Ovide has noted, the retailing giant hasn’t done much with the supermarket yet.

But it is the traditional grocers who have the most to fear from developments in China. They are struggling to defend their thin margins against the rise of the no-frills supermarkets, Aldi and Lidl. They already had Amazon in their sights. US and European food retailers should make sure they’ve added China to their basket of worries.

someone wanting to fool around was throwing her software all over the place, and it just happened to stick on this piece of machinery.

Or perhaps there’s a state actor known to be targeting Taiwan’s key industries. One that’s already shown its willingness to go to extraordinary lengths to breach specific companies globally. Maybe that organization got lucky in that this code found its way into the fabs of Taiwan’s most important company, instead of some lesser-known chipmaker elsewhere.

Twelve months ago, Taiwan suffered blackouts that impacted some areas. I wrote a column relaying the anecdote of a friend who’d wished

that TSMC had been impacted (it wasn’t), because only then would the government be spurred into action to fix a looming power crisis that threatens the island’s economy and security.

A similar kind of schadenfreude comes to mind here. Maybe TSMC is the victim of some software stupidity. Maybe I’m getting ahead of myself and have been influenced by too many stories of corporate targets from various state actors’ ongoing cyber campaigns.

Or maybe, like the impending power crisis, TSMC is the canary in the coalmine, and Taiwan needs to take a hitherto hidden problem seriously.

2nd Front Page BusinessMirror

A8 Tuesday, August 7, 2018

Palace: National ID law to stand constitutionality test, this time P

By Bernadette D. Nicolas @BNicolasBM & Cai U. Ordinario @cuo_bm

RESIDENT Duterte on Monday allayed the fears of the public on issues “peddled by some groups” on data privacy and security, among others, noting how such have prevented previous administrations from passing what he called a “monumental” landmark bill.

The President made this point in a speech during the ceremonial signing of the measure which also coincided with the presentation of Republic Act 11054 or the Organic Law for the Bangsamoro Autonomous Region in Muslim Mindanao, also known as the Bangsamoro Organic Law (BOL), which was signed days ago.

He said the approved measure means that millions of Filipinos will no longer have to present mul-

tiple identification cards to simply prove their identity.

He said the information that will be included in the Philippine ID (PhilID) will not be any different from the information already possessed by different government agencies, such as Philippine Statistics Authority (PSA), Philippine Health Insurance Corporation (PhilHealth), Government Service Insurance System (GSIS), and the

Pag-IBIG Fund, Commission on Elections, among others. Moreover, the PSA will also work closely with the National Privacy Commission, Department of Department of Information and Communications Technology and the multi-agency PhilSys Policy and Coordination Council (PSPCC) to address all concerns on data privacy and security.

“There is therefore no basis, if at all, to the apprehension about PhilID unless of course that fear is based on anything that borders [on] illegal,” he said. “If at all, the PhilID will even aid in our drive against social menace of our poverty, corruption and criminal issues as well as terrorism and violent extremism.”

Presidential Spokesman Harry L. Roque, Jr. said: “As we all know, the President is averse to bureaucratic red tape. Through PhilSys, we hope to improve efficiency and transparency of public services and

promote ease of doing business.”

Roque said in a briefing in Davao Occidental that the Palace is also confident that the new identification system will pass the test of constitutionality, noting that the previous National ID bill was declared unconstitutional by the Supreme Court due to the lack of system to protect its database.

“I would like to assure the people that unlike the National ID Bill which was earlier declared unconstitutional by the Supreme Court because—in Ople vs the Executive Secretary, because there were no safeguards to protect the database -- this time around, there is a Privacy Law and in the law itself it is specified that government has the obligation to [protect] the data gathered because of the National ID System. That’s why we are confident that this time around it will pass the test of constitutionality,” he said.

Plebiscite for Bangsamoro law, Cha-cha to cost P7B–Comelec

T

HE Commission on Elections (Comelec) on Monday said it will require at least P7 billion to hold the plebiscite for the newly enacted Bangsamoro Organic Law (BOL) and the proposed Charter change (Cha-cha).

During the budget hearing of the Ways and Means Committee of the House of Representatives, Comelec Chairman Sheriff Abas disclosed they will need at least P854 million for the BOL plebiscite.

He said the amount is based on the initial assessment of their Bangsamoro Committee headed by commissioner Al Parreño in the areas designated by the BOL. Under the BOL, the Comelec will |con-

duct a plebiscite in Mindanao to determine other local government units which would like to be included in the Bangsamoro Autonomous Region.

Abas said the budget for the BOL plebiscite is already included in their proposed 2019 budget, although not itemized. He said they expect to conduct the BOL referendum in December this year or January 2019.

When asked by AC T Teachers party-listRep. Antonio L. Tinio about the funding for the possible referendum for Cha-cha, the poll chief said they will need between P6 billion and P8 billion.

Abas said the exact amount will

depend on the manner of how it will be conducted as stipulated in the final Cha-cha legislation.

He said requesting the budget for the Cha-cha plebiscite is premature, since approval of the new draft charter is still pending in Congress.

He pointed out, though, that he is confident the government has the “contingency fund” for it in case it will push through next year. In a referendum for Cha-cha, Filipinos will decide whether to ratify the proposed constitution that Congress will churn out, based on its deliberations on the draft produced by the Consultative Committee. Abas pointed out it will

usually take the Comelec between four and five months to complete preparations for a referendum, which is usually conducted manually.

The Comelec will be seeking a P10billion budget for 2019—significantly lower than its P16-billion budget this year. Of the 2019 budget proposal, P3.8 billion will be used for the salaries of the personal services; maintenance and other operating expenses; and capital outlay.

The bulk or P6.2 billion of the funds will be used for the projects of the Comelec, including its Overseas Absentee Voting program; conducting the national and local elections; and its information systems strategic plan.

The remaining P198,711,000 of the budget will be for Comelec’s “automatic appropriations.” Samuel P. Medenilla

Peso. . .

Continued from A1

The total traded volume for the day is at $892.9 million, up from the previous trading day’s $595.15 million. ING Bank Manila Joey Cuyegkeng said the local currency saw a strengthening on Monday on the back of market expectations of an aggressive or strong BSP policy rate action.

The monetary board is expected to hold its fifth monetary policy meeting for the year on Thursday, August 9.

BSP Governor Nestor A. Espenilla Jr. earlier made pronouncements that they are willing to take stronger action in their August 9 monetarypolicy meeting to tame inflation expectations, even if the BSP already pulled the trigger on two consecutive rate hikes this year.

Aside from the monetary-policy meeting on Thursday, Cuyegkeng said markets are also on the lookout for the July inflation print, which is due for release on Tuesday.

“Sustained upward trend of inflation would likely raise the possibility of a 50-basis-point hike at the Thursday meeting,” the economist said.

“A second-quarter GDP [gross domestic product] growth at 6.5 percent or higher would indicate that the economic growth would continue and could absorb a strong dose of monetary tightening that would re-anchor inflation expectations while assisting in moderating the impact of a strong domestic economy on the external sector,” he added.

Meanwhile, foreign investors looking for short-term yields in the country seemed to be unbothered by the rising inflationary prospects in the Philippines, as foreign portfolio investments (FPI) reverted to the positive territory anew in July.

Data from the central bank showed foreign portfolio investments hit a net inflow of $355.18 million in the week ending July 20 this year.

This is a reversal of the $516.12-million net outflow in the previous month and the $472.89-million net outflow in the same period in the previous year. FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms in the slight change of global and local sentiment.

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PCOO told to justify federalism info fund after Mocha’s fiasco

S

ENATORS appalled by Presidential Assistant Secretary Mocha Uson’s disastrous effort to promote federalism through a controversial video featuring a lewd “pepedederalismo” jingle asked the Presidential Communications Operations Office (PCOO) to justify its huge budget.

This, as Uson’s boss, PCOO Secretary Martin M. Andanar, said in a radio interview that Executive Secretary Salvador C. Medialdea had told him to exclude Uson from the planned information campaign, following the uproar created by the video where she and a blogger friend discussed federalism, and the latter stood up and sang the jingle, with suggestive actions as he played on the words pepe and dede by repeating the first two syllables of the Filipino word for federalism, pederalismo.

Blogger Drew Olivar touched his chest and groin while singing pepe and dede, the Filipino slang terms for a woman’s genitals and breast.

An amused Uson stood watching.

Senate President Vicente C. Sotto III reminded the Palace official that federalism is a “serious issue” and should not be taken lightly.

Sen. Aquilino L. Pimentel III admitted he erred in expecting Uson could help promote federalism. “I was wrong,” said former Senate President Pimentel.

Sen. Francis G. Escudero saw Uson’s production of the pepedederalismo video as “vulgar and out of place” in whatever forum tackling federalism.

Sen. Emmanuel J. Joel Villanueva deplored the pepedederalismo video as “a big insult to the intelligence of the people,” deploring it was not the kind of public information material he expected from an official .

Sen. Nancy S. Binay, who earlier sought to summon Uson so she can explain her plans to disseminate information on federalism, could not hide her dismay. She said it should be clear to all that the federalism issue is “not an amusement piece or comedy material.”

For her part, Sen. Grace Poe noted that several agencies are getting deep cuts in their budget in the proposed appropriations for 2019.

While these agencies will suffer a slash, the PCOO will be gifted with a P100-million increase, she said.

Poe asserted that the PCOO must justify its budget increase.

“What are the deliverables? Are memes and blogs also hit by inflationary spikes? Is the cost of feeding the nation with government information adversely affected by TRAIN, too? Will the PCOO be hiring campaigners to explain federalism?”

PHL. . .

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the volume except for rice.”

Earlier, the lawmaker said Arroyo wants the President to consider reducing tariffs on fish and meat imports to zero but needs Congress to be in recess. Under its legislative calendar, Congress will take a break from August 16 to 27.

Salceda added that the Speaker also wants the National Food Authority to purchase 500,000 metric tons of rice with staggered deliveries over five to six months.

He said he suggested to the Department of Energy (DOE), Energy Regulatory Commission and other regulators to defer regulated price adjustments, “which add to cost pressures until inflation goes back comfortably to the 2 percent-to-4

Palace explains

Following the backlash on the controversial video, Malacañang said this is not the way it wanted to promote Charter change.

In a radio interview, Presidential Spokesman Harry L. Roque Jr. said Uson may have had good intentions, and she may have achieved it, but he said this is not how they wanted to raise awareness on federalism.

“What we wanted was for the people to understand what is federalism and how will it benefit their daily lives so that they will support Charter change,” Roque said in a mix of English and Filipino.

Roque said he is one of those involved in the federalism information drive, which he earlier said initially costs P90 million.

Earlier, Con-com Chairman and former Chief Justice Reynato S. Puno announced that it was the President who will be forming the intergovernmental group in charge of promoting federalism across the country. Puno said this group will be headed by Medialdea and Roque.

In a press briefing, Andanar said Medialdea also expressed displeasure on talk that Uson will be the official spokesman on federalism.

“The decision to give authority to Asec. Mocha did not come from the interagency. It came from the [Con-com] Spokesperson Ding Generoso,” Andanar said, noting that Generoso talked to Uson without informing the interagency and him as head of the PCOO. That is why he said he conf ronte d G e ne roso ye ste rd ay morning and told him to “disengage” talks with Uson because of the issue.

He also said that, so far, what they have talked about on the communication strategy of federalism is that the Department of the Interior and Local Government (DILG) will head the content creation of the federalism campaign, while the PCOO will manage the distribution of content.

Generoso said in a statement it was “unfortunate” that sort of video was posted on the day before their meeting last Friday together with the DILG communications group to discuss how she could help in the information drive.

He said they envisioned an information campaign focusing on federalism’s benefits and the economic growth it will bring across all regions.

He also clarified that Uson was not designated as spokesman for federalism and that having a particular spokesman for federalism is not part of the information dissemination program. Butch Fernandez and Bernadette D. Nicolas

percent target band.”

The Speaker, he said, also urged the DOE to consider deferring the implementation of a regulation that requires the addition of z-ethane in oil products, as well as the new feed-in-tariff allowance, which increased from P0.18 to P0.26/kwh, as this contributed to the hike in Meralco rates.

‘Alarming inflation’

Lanzona said the forecast of the Bangko Sentral ng Pilipinas that inflation would reach 5.8 percent in July is “alarming,” as this is above industry and government expectations.

To tame inflation, Lanzona said there is a need to improve the efficiency in the use of petroleum.

He added various infrastructure projects need to be implemented to bring down the cost of public transportation.