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Friday, August 10, 2018 Vol. 13 No. 300

BSP delivers biggest rate hike in a decade

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By Bianca Cuaresma

@BcuaresmaBM

HE Bangko Sentral ng Pilipinas (BSP) delivered its biggest rate hike in over 10 years on Thursday, as it tries to protect next year’s inflation from steering away from their target range. 

The Central Bank also announced its decision to hike both inflation forecasts for 2018 and 2019. BSP Governor Nestor A. Espenilla

Jr., following the Monetary Board’s fifth monetary-2policy meeting for the year, announced a 50-basispoint hike to their overnight reverse

repurchase interest rate. The hike—which will be effective on Friday, August 10—is the biggest rate hike the BSP has

“In deciding to raise the BSP’s policy interest rate anew, the Monetary Board noted that latest baseline forecasts have shifted higher over the policy horizon, indicating some risk of inflation exceeding the target in 2019.”—Espenilla

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@cuo_bm

ESPITE the slower-thanexpected economic expansion in the second quarter of the year, the National Economic and Development Authority (Neda) said it remains confident that it can attain its GDP growth target for 2018. In a briefing on Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia said the economy needs to expand by 7.7 percent in the second semester to hit the government’s GDP growth goal of 7 percent to 8 percent this year. In the April-to-June period, the country’s economy grew by 6 percent, slower than the 6.6 percent recorded in the first quarter and the second quarter last year. GDP expansion in the first half of the year averaged 6.3 percent, lower than the previous year’s 6.6 percent. “[On the] 7.7 percent, yes we will have to work double time to encour-

‘TARIFF CUTS IN PLACE TILL INFLATION TARGETS MET By Jasper Emmanuel Y. Arcalas @jearcalas Cai U. Ordinario @cuo_bm & Bernadette D. Nicolas @BNicolasBM

pulled since mid-2008. It also comes on the heels of two 25-basispoint hikes made in the May and June monetary-policy meetings of the BSP, making it the third consecutive meeting for the year with a rate hike action from the country’s central monetary authority.

HE President’s economic managers are proposing to maintain reduced tariffs for select food items until inflation slows to government targets, according to the National Economic and Development Authority (Neda). In a briefing on Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia said the economic managers are pushing for the reduction of tariffs on select food items to 5 percent as a temporary measure to stem inflation.

See “BSP,” A2

See “Tariff,” A2

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7.7 percent

The rate at which the economy needs to expand in the second semester to hit the government’s GDP growth goal of 7 percent to 8 percent this year age sectors to be more productive and efficient in their activities,” Pernia said. The Neda chief said the country’s economic performance was adversely affected by the slowdown in the agriculture sector. Data from the Philippine Statistics Authority (PSA) showed that the agriculture, fishery and forestry sector grew by a measly 0.2 percent. Pernia said the palay, corn, sugarcane and mango harvests for the quarter were “dismal.” He added that coconut, including copra, Continued on A12

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Govt unfazed as Q2 Gdp growth slower at 6 percent By Cai U. Ordinario

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Lopez backs 35% sugar tariff, clearance for importation By Elijah Felice E. Rosales @alyasjah

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UNMILLED rice (palay) grains are being dried under the sun by two farmers along a highway in San Simon town in Pampanga. Reporting on the second-quarter GDP growth on Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia noted “the almost stagnant output of the agriculture sector,” adding, “this supports our premise that the main reason behind the high inflation is the gross deficiency in the domestic production of food, which was not augmented by imported goods, especially rice.” NONIE REYES

RADE Secretary Ramon M. Lopez is lobbying for the uniform tariffication of sugar at 35 percent to allow local manufacturers to directly import the staple at any given time. However, an industry leader wants the government to bring down sugar duty to as low as 20 percent. Either way, he told the BusinessM irror the confectionery industry is backing Lopez’s proposal to permit manufacturers to directly procure imported sugar. In an interview with reporters, Lopez said he recently pitched to economic managers his motion to permit sugar-based industries to directly import the sweetener.

n japan 0.4778 n UK 68.3174 n HK 6.7558 n CHINA 7.7615 n singapore 38.9260 n australia 39.4029 n EU 61.5726 n SAUDI arabia 14.1400

See “Lopez,” A2

Source: BSP (9 August 2018 )


News

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A2 Friday, August 10, 2018

‘GDP growth doesn’t mean much to ordinary Filipinos’

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By Cai U. Ordinario @cuo_bm & Samuel P. Medenilla @sam_medenilla

he 6-percent expansion of the country’s economy in the second quarter may be on a par with the economic performance of other Asean countries, but this does not automatically translate to higher incomes and more jobs.

Economists, such as University of Asia and the Pacific School of Economics Dean Cid Terosa, issued the statement after the Philippine Statistics Authority released the National Accounts of the Philippines on Thursday. “I don’t think it means much to ordinary Filipinos. The GDP does not totally translate to income and jobs because it does not account for who gets what,” Terosa told the BusinessMirror. In terms of alleviating the impact of rising prices on household incomes and consumption, however, Terosa said a high economic growth may help Filipinos cope with inflation. However, Terosa said, this can only happen if Filipino households are part of sectors that are considered drivers of economic growth. Those that are part of industries that are regarded as growth drivers will see their incomes and productivity increase, making them more resilient to price shocks. Local economist Calixto V.

Tariff. . .

Continued from A1

Pernia said the Bangko Sentral ng Pilipinas (BSP) expects inflation to moderate by the end of the year and hit its inflation target of 2 percent to 4 percent by next year. “[A uniform tariff] is a good strategy because it doesn’t affect consumption much [and] it is also easier to implement and to monitor. The measure is only going to be temporary. It’s [tariffs are] going to revert once we get back to our normal inflation targets of between 2 percent to 4 percent,” Pernia said.  Neda Undersecretary for Planning and Policy Rosemarie G. Edillon told the B usiness M irror, however, that the uniform tariff rate of 5 percent could still change pending the results of the stakeholder consultation on Friday, August 10.  Edillon said stakeholders have already been submitting their position papers ahead of the consultations this week.  The consultations, Edillon said, will include determining the extent the proposed uniform tariff will impact the local industry,

Lopez. . .

Continued from A1

He argued there is a need to simplify the procedure to reduce the cost manufacturers have to bear. “What we are saying is that sugar importation must not be limited to identified importers. It has to be open to all, like the plan to impose tariff on rice,” Lopez said in a mix of English and Filipino. Under his proposal, the Sugar Regulatory Administration will be virtually stripped of its supervising power on importation. “Actually, [my plan] is quiet on the SRA. Similar to rice tariffication, as long as there is a tariff, technically, anyone can import. Now, what we are studying is [if] we have to put a certain quota,” Lopez added. If a quota system is implemented, the trade chief said allocation will be per-industry, and the government has to make sure the allotment process is fair and transparent. “Under the current system, the importers are selected and have fees to pay to planters and to millers. That is what I do not understand, [because] the end cost of that will still

Chikiamco said enabling the poor to access the benefits of high economic growth means making it more inclusive. This means growth should translate to better jobs; raise agricultural productivity, where a third of the country’s poor are; and competition to help temper price hikes.

‘Don’t blame farmers’

R aul Q. Montemayor, national business manager and program officer of the Federation of Free Farmers (FFF), said “it is hard to reconcile the increase in food prices with higher outputs of agriculture products.” “Proposals to rely more on imports for food supply will discourage local production,” Montemayor told the BusinessMirror. “Relying on imports to curb inflation is a lazy solution and will imperil the long-term prospects of the agriculture sector.” Montemayor said to ensure food prices are stable and farm-sector growth is sustainable the government

should help farmers to “become more efficient and productive.” “They are placing the burden of inflation arising from TRAIN on the backs of small farmers,” he said. The FFF official made the statement after Socioeconomic Planning Secretary Ernesto M. Pernia said in a news briefing that he is “gravely concerned” about the “almost stagnant” output of the agriculture sector. “This supports our premise that the main reason behind the high inflation is the gross deficiency in the domestic production of food, which was not augmented by imported goods, especially rice,” Pernia said.

Belt-tightening

Despite the minimum-wage hikes in several regions, labor groups said on Thursday that workers are now tightening their belts amid the rising of cost of living. “Even with the increase and their wages, many [workers] are still careful when it comes to spending because of the increase in their expenditure,” Partido Manggagawa Chairman Renato Magtubo told the BusinessMirror an ambush interview after the Senate hearing on contractualization on Thursday. As of this month, the National Wages and Productivity Commission reported there are currently 10 regions, which have already issued and implemented new wage rates in their respective regions for 2018. Magtubo noted the wage increase in the said regions maybe only enough to offset the surge in inflation in the second quarter, which already reached 5.7 percent.

as well as the assistance industry players would need, if any. Once the stakeholder consultations are completed and the position papers have been submitted, these will be escalated to the Committee on Tariff and Related Matters, one of the seven interagency committees under the Neda Board. “Offhand I would say that the market would be able to absorb it. They are not able to address the demand but for sure we will be hearing their case to find out [their concerns],” Edillon said.  Based on Section 1608 of the Customs Modernization and Tariff Act, the President can modify dut y rates—upon the recommendation of the Neda—when Congress is not in session.  Congress could also withdraw or terminate the President’s executive order (EO) through a joint resolution when it resumes session.  However, Pernia expressed confidence that the Congress will not rescind the impending EO because the proposed move to create a lower uniform tariff is backed by both chambers.  “The reduction on tariffs on those food

items [was made] with the concurrence [and] encouragement of Congress,” Pernia said. Budget Secretary Benjamin E. Diokno said on Wednesday  that the economic managers have formally recommended to the President the reduction to 5 percent of the tariffs on fish, corn and meat, particularly chicken, and wheat imports. Diokno said, however, what they proposed was a “uniform” reduction to 5 percent of tariffs on these food items, not zero, noting that the tariff reduction can be done through an EO by the President when Congress is not in session.

come out to be a high-cost sugar,” he explained. Should there be a quota, Lopez said the import volume can be placed at 200,000 metric tons (MT)—similar to the current import volume approved by SRA—per a certain period of time. However, he admitted this is still up for consultation with stakeholders, as well as discussions with economic managers. “The last [sugar order] was 200,000 MT [because] that is the current requirement, the urgent requirement, but it can be around that number maybe again. We might need to maintain a quota period just to protect the farmers,”he said. Lopez, however, was reluctant to state how the government will monitor manufacturers that might sell their imported sugar to the retail market, instead of utilizing the staple for industrial use. He confessed, though, that it is a concern, and the government has to track the supply chain to see whether imported sugar is really used for production. The trade chief, in a statement late Wednesday, revealed he wants the government to adopt the same regulation on sugar as to that of rice under a tariff system. “On sugar, we propose a similar system as rice tariffication. Anybody can import as long as they pay tariff, even 35 percent,

as protection to sugar producers, [which] is revenue to [the] government, instead of traders and millers,” Lopez said. “Instead of [the] current system of prior approval needed by [the] SRA and quota given to select groups and fees paid to planters and millers, why limit to a select few? These charges also result in higher domestic prices of sugar for consumers and user industries, which makes them uncompetitive. The revenues from these tariffs can also be used to help back the sugar farmers and millers to improve efficiencies through inputs, machineries and modernization program for the industry,” he added. Kissinger S. Sy, president of the Philippine Confectionery Biscuits and Snacks Association, threw his group’s support behind Lopez’s proposal. “That is exactly what we are trying to work for, [that] importation [be] open to anybody, not just a select few,” he pointed out. However, Sy suggested tariff on the sweetener be reduced to 20 percent, instead of 35 percent as pushed for by Lopez. Most favored nation rates on sugar currently stand at 50 percent, but are set only at 5 percent if imported from a member-state of the Association of Southeast Asian Nations, as stipulated under the Asean Trade in Goods Agreement.

Palace: No zero tariffs

Malacañang said on Thursday that no one in the Cabinet is pushing for zero tariffs on imported goods, but it confirmed that the reduction of import tariffs is possible.  Presidential Spokesman Harry L. Roque Jr. said there is still no final decision on the lowering of tariffs for select imported food items, as discussions are still ongoing.  “[Agriculture] Secretary Emmanuel F. Pinol says it’s going to be ‘war’ with domestic agricultural producers,” he said. “There is no

Federation of Free Workers Vice President Julius Cainglet agreed with Magtubo and pointed out this should serve a signal for employers to further raise the wages of workers. “Employers should give wages that approximate the living wage and not just the minimum wage,” Cainglet said. “Workers, with their meager wages, have not benefitted or felt this growth, what with the continuous increase in the prices of basic commodities, record inflation and the ill effects of the TRAIN [Tax Reform for Acceleration and Inclusion] law,” he added. Aside from the spending habits of workers, Magtubo said another factor, which could have contributed to the decline in GDP, is the surge in fuel prices. “The increase in price of petrol may have raised the price of production of companies discouraging them from producing more,” Magtubo said. The labor leader expressed concern that some employers may use the drop in the GDP to scrimp on the provision of benefits to labor unions during collective bargaining agreements (CBA). He said organized labor should be wary of such tactic and continue to insist in using a more historical approach in looking at the finances of the company during a CBA. “In a CBA, we usually look at the financial statements of company in the last three years, then projection [on the earnings of companies] in the next five years,” Magtubo said . With a report from Jasper Y. Arcalas and Bernadette D. Nicolas

one advocating for zero [tariffs] right now.” He also said he verified from the economic team, and they said they listened to the suggestion of former President and now House Speaker and Pampanga Rep. Gloria Macapagal-Arroyo, but no one actually agreed that the tariff reduction to zero of certain food items should be done. “So there’s a possibility of reducing tariffs, but no one in the Cabinet has told me that they will actually endorse zero tariffs,” he said. Arroyo’s special focal person for CounterInflation Measures Albay Rep. Joey S. Salceda said in a Facebook post last week that Arroyo proposed at least five inflation-busting measures, including the reduction to zero tariffs of certain imported food items, including fish and meat. 

No meat tariff cut—GMA

However, Arroyo clarified on Wednesday that she did not propose the lowering of meat-import tariffs, since this would hurt the country’s livestock sector. On Wednesday Budget Secretar y Benjamin E. Diokno said the economic managers have formally recommended to

BSP. . .

Continued from A1

Espenilla said the strong policy action was made as inflationary pressures were starting to creep up on the 2019 price growth projection. “In deciding to raise the BSP’s policy interest rate anew, the Monetary Board noted that latest baseline forecasts have shifted higher over the policy horizon, indicating some risk of inflation exceeding the target in 2019,” Espenilla said in his statement on Thursday.  “Upside risks also continue to dominate the inflation outlook, as the sustained increase in core inflation suggests broadening price pressures amid resilient aggregate demand conditions,” he added.  The governor said the 50-basis-point hike is “necessary to rein in inflation expectations” and “prevent sustained supply-side price pressures from driving further second-round effects”even as the previous monetary-policy responses continue to work their way through the economy.  He also expressed readiness to “take all necessary policy actions to address the threat of high inflation and deliver on its primary mandate of price stability.”

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Briones vows to plug unfilled DepEd posts

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DUCATION Secretary Leonor M. Briones has vowed to plug the unfilled teaching and teachingrelated positions within the year as the agency continues to encourage and hire more qualified applicants. On June 14 the Department of Budget and Management (DBM) reported a total of 125,065 unfilled positions. The number decreased to 119,412 as of July 30. “Our numbers are as of July; We still have how many weeks to be able to fill these up.... When we got an exemption from the Civil Service Commission’s (CSC) procedure—we are fortunate that the Civil Service exempted us--I am very sure that these 119,412 unfilled positions will be drastically reduced this year,” Briones said at a recent Department of Education (DepEd) press conference. She referred to the CSC’s Omnibus Rules on Appointment and Other Human Resource Actions requiring the publication and posting of vacant positions in three conspicuous places for at least 10 calendar days for national agencies; and prohibiting the publication of vacant positions earlier than 60 days before the anticipated vacancy in cases of retirement, resignation or transfer. For his part,  Undersecretary for Planning Service and Field Operations Jesus Mateo explained,  “What this means is, if there is a vacancy, our department cannot simply fill it up, up to the school level, for as long as it has not been published.” However, he added, in June of this year they were able to secure an exemption from CSC  that they can already publish 60 days prior to vacancy. “That will allow us to fill up and advertise those positions. That is why are explaining this, because it has a bearing on the chain of promotion,” he added.  Mateo clarified that the 119,412 total unfilled positions already include the 75,242 items created in Fiscal Year (FY) 2018, wherein 33,094 (which in-

clude Teacher I, Teacher II and Master Teacher items) have been filled as of July 30; the 19,049 items created between FY 2010 and FY 2017; and the 4,403 natural vacancies (due to retirement, resignation, transfers and other forms of separation). Nonteaching and teaching-related items include 19,996 items for schools and Schools Division Offices (5,596 school heads, 5,005 finance service personnel for schools, 4,172 guidance counselors, 2,664 administrative support staff, 314 school health and nutrition personnel, 153 administrative personnel for SHS, and 2,0912 other technical positions); 354 items for Regional Offices; and 368 items for the Central Office. To help ensure the hiring of qualified and competent applicants, improved qualification standards are set. Aspiring principals are required to pass the Principals’ Test; applicants for Administrative Assistant II and III (bookkeeper and senior bookkeeper) are now required to have a bachelor’s degree in business administration, major in accounting, from the previous qualification standard of completing two years in college; and would-be guidance counselors need to obtain a master’s degree in guidance and counseling on op of their license—which the DepEd seeks to compensate adequately by requesting additional funds from the DBM to increase the salary of guidance counselors, from P21,000 to P31,000, and make the profession more attractive to students who take up guidance counselling or psychology.  “This is still a good announcement, for [the] media to announce to the public that there are these vacancies as long as they qualify. You can search the Civil Service Commission or DepEd web site, the qualifications are posted there. We need not just teachers, we also need administrative staff like accountants to help us,”Mateo concluded.

the President that the tariffs on fish, meat, particularly chicken, corn and feed-wheat be reduced to a uniform 5 percent. Diokno said this is because this would be simpler and more neutral in a sense that it doesn’t affect the consumption of goods.  He also said that their recommendation will “most likely” be adopted by the President, and the President can change the tariff if Congress is not in session.  Congress will be on recess from August 16 to 27, which Diokno said will be an “opportunity for us to cut tariffs.” He also said they are also considering the importation of these food items, including rice, which they have yet to determine the specific volume to be imported.  He also defended their position of lowering the tariffs, as this would be beneficial to consumers.  Fish imports in the country are levied a duty of 3 percent to 10 percent, while 35-percent tariff is slapped on corn imports within the minimum access  access volume, while those outside the quota are levied with 50-percent duty. Feed-wheat imports are subject to a 7-percent duty, according to a Global

Ag r i c u l t u r a l I n f o r m at i o n N e t wo r k (Gain) report. The Gain report noted that feed-wheat imports are exempted from the 12-percent value-added tax. Feed-wheat imports from signatories to the Asean-Australia-New Zealand free-trade agreement are duty-free. Meanwhile, tariffs imposed by the Philippines on meat products range from 10 percent to 40 percent. Under Republic Act 10863, or also known as the Customs Modernization and Tariff Act, the President has the power to increase or decrease rates of import duty.  This power must also be  exercised by the President when Congress is not in session, and that power may be withdrawn or terminated by Congress through a resolution.  July inflation was recorded at a new fiveyear high at 5.7 percent. This was higher than the June inflation at 5.2 percent.  The Development Budget Coordination Committee revised earlier its 2018 inflation forecast, from 2 percent to 4 percent to 4 percent to 4.5 percent.  Year-to-date inflation is already at 4.5 percent. 

Higher inflation forecasts

of a 6-percent gross domestic product growth in the second quarter of the year, lower than market expectations. Espenilla said the main reason BSP is very “vigilant”about keeping inflation on track is the fact that it is a key driver to keeping the economic growth sustainable. He further added that the rate hikes will not compromise the 7-percent to-8 percent growth target of the government in the medium term. 

BSP Deputy Governor Diwa C. Guinigundo also announced that the BSP decided to hike both inflation forecasts for 2018 and 2019. In particular, Guinigundo said this year’s inflation is now expected to hit 4.9 percent, from the previous meeting’s projection of 4.5 percent.  In the first seven months of the year, inflation had already averaged at 4.3 percent, with the latest print at 5.7 percent in July.  For 2019 the deputy governor said inflation is expected to hit 3.7 percent, up from the 3.3 percent as earlier forecast.  The BSP also announced their 2020 inflation forecast, which was at 3.2 percent.  While their 2018 forecast is an acceleration, both their 2019 and 2020 forecasts are within the 2-percent to-4 percent target range set by the BSP.  Among the factors behind the higher 2018 projection include the higher transportation and utility fares during the month, as well as the higher taxes on tobacco. 

Effect on growth

Espenilla said while the rate hike action toward tighter monetary-policy conditions was stronger for this meeting, their move was not“anti-growth.” This, following the government’s announcement

Claudeth Mocon-Ciriaco

Further action

ING Bank Manila economist Joey Cuyegkeng welcomed BSP’s strong policy action and its readiness to act further. “BSP delivered an aggressive policy response to anchor inflation expectations as BSP signaled last month. The move also supports the Philippine peso which has contributed to rising inflation,” he said.  Cuyegkeng also said the economy can absorb monetary tightening. He predicted further tightening from the BSP within the year.  “We believe that this is not the end of BSP’s tightening as the immediate objective to anchor inflation expectations would need further action since inflation is yet to peak and would remain elevated for the rest of the year and early-2019,” Cuyegkeng said. 


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The Nation BusinessMirror

DOJ to OGCC: Probe NPFI casino-resort deal By Joel R. San Juan @jrsanjuan1573

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USTICE Secretary Menardo I. Guevarra on Thursday directed the Office of the Government Corporate Counsel (OGCC) to determine whether the controversial lease agreement between the Nayong Pilipino Foundation Inc. (NPFI) with a casino resort developer is aboveboard. The justice chief, however, stressed that the termination of the Nayong Pilipino Board does not affect the implementation of the project, adding that two developments may possibly have an impact: the current reevaluation of the subject transaction by the DOJ/OGCC, and the appointment of a new board for NPFI. Guevarra’s order was in response to President Duterte’s directive for the DOJ to  to review the agreement forged by NPFI and Chinese firm Landing Resorts Philippines Development Corp. (LRPDC). Under the lease contract, the LRPDC, a subsidiary of Hong Kong’s Landing International Development Ltd., will develop a $1.5-billion casino-resort in the NPFI property at the Entertainment City in Parañaque City. Duterte, however, expressed belief that the contract was “flawed” due to lack of public bidding. The contract also provides for a 70-year lease term with low rental payment, which the President found to be “irregular,” which may have

prompted Duterte to sack all the board and management officials of NPFI. “I have instructed the office of the government counsel, as statutory counsel of all government-owned and -controlled corporations, under the direct supervision of the Department of Justice, to immediately review all the relevant facts and reevaluate and examine all contracts, agreements and other documents pertaining to this questioned transaction, including the legal opinions previously rendered by the Office of the Government Corporate Counsel to its client, Nayong Pilipino Foundation Inc., and to submit a report with recommendations on the proper course of action for the government as soon as possible,” Guevarra said in a text message to reporters. Guevarra said OGCC Officer in Charge lawyer Elpidio Vega would be the one to supervise the review of the lease transaction. The DOJ chief said he would also ask his legal staff to do their own evaluation. “The removal of all the members of the Nayong Pilipino board, by itself, does not affect the implementation of the project,” the justice secretary added. It can be recalled that, last May, Maria Fema Duterte, a distant relative of President Duterte and his appointee to the NPFI board, filed a complaint against her coboard members with the Office of the Ombudsman, including Chairman Patricia Yvette Ocampo.

‘Trabaho’ bill mandates private schools, hospitals to ensure service or pay fine By Jovee Marie N. dela Cruz

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Correspondent

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NGELES CITY—Two resolutions have been enacted by the Sangguniang Panlungsod (SP) of this city requesting President Duterte and enjoining members of Congress to rename Clark International Airport (CIA) into Diosdado Macapagal International Airport (DMIA). The two resolutions, sponsored by Councilor Edgardo “Edu” Pamintuan Jr., said this is in honor of the late President Diosdado Macapagal, the ninth president of the Republic of the Philippines who was also known as “the poor boy from Lubao, Pampanga, who became President.” The two resolutions, PR-804-0818 and PR-805-08-18, were unanimously approved during the SP regular session held on Tuesday.

The resolutions were ratified “in keeping with the revised guidelines of the National Historical Commission specifically stating that the proposed names must have historical and of cultural significance and must contribute to the positive development of national pride through the good example exhibited by the name being used.” On September 28, 2001, during the 91st birthday of Macapagal, the Board of Directors of the Clark Development Corp. approved a resolution renaming CIA into DMIA, only to be reverted back to its former name during the time of former President Benigno S. Aquino. The resolutions said the right to name our airport is part of our national patrimony, and the Angeleños expressed their disapproval of the decision made by then by the Clark International Airport Corp.

Rep. Dakila Carlo E. Cua of Quirino, the panel chairman, said from the current 10 percent, the government may impose 15-percent to 20-percent taxes depending on the performance of schools and hospitals once the proposed Trabaho law becomes a law. “Our objective is to put some discipline here. If your school is performing, you have the right sets of faculty with masteral degrees and it’s improving, then you should enjoy the [current] 10-percent [tax rate] by all means. But if your quality is suffering and your students [are] not really getting the value of their investment in your school,

to rename DMIA into CIA. The resolutions said changing the name into DMIA will have no significant bearing on the airport’s current operation, capacity and potential as a premier international airport. “The name Diosdado Macapagal is important to the people of Pampanga, as it honors one of its respected leaders who became the first Capampangan president of the republic and the father of land reform.” Pamintuan said Macapagal is one of the better presidents the country ever had and deserved to be honored and emulated by young Filipinos and aspiring leaders for his character and perseverance in overcoming poverty. Clark is in  honor of Harold M. Clark, an American aviation pioneer who had no known ties with the Philippines, he said.

PHL’s Maya-1 CubeSat to be deployed from Intl Space Station on August 10

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aya-1, a 1U or 1.75-inches height cube satellite developed by Filipino engineers in Japan, will be deployed into orbit from the International Space Station (ISS) on August 10, along with two other identical CubeSats from Bhutan and Malaysia. The CubeSat will be deployed through the Japanese Experimental Module Small Satellite Orbital Deployer in the “Kibo” module—the same module used to deploy Diwata-1 more than two years ago. Maya-1, along with Bhutan-1 of Bhutan and UiTMSAT-1 of Malaysia, are produced under the auspices of the second generation of the Joint Global Multi-Nation BIRDS Satellite Project, or simply the BIRDS-2 Project, of the Kyushu Institute of Technology in Japan. Among the missions of Maya-1 is the demonstration of the Store and Forward (S&F) System for 1U cubesats. The S&F is a remote data-collection system wherein a satellite collects data from remote ground segments within its footprint, store it and forward it to any member ground station. The S&F system provides a mechanism to enable collection of useful

data from remote locations that normally do not have access to regular communications infrastructure. Some of the possible applications of the S&F system include collecting data that can be used to generate early warnings for landslides and flash-floods, complementing systems for monitoring health conditions of people in remote areas, and systems for tracking endangered species and fish vessels. Within a few days after release, the global network of 10 amateur ground stations (GS) of the BIRDS program will confirm communication with the three CubeSats. The 10 GS are in the Philippines, Japan, Malaysia, Bhutan, Mongolia, Nigeria, Bangladesh, Ghana, Taiwan and Thailand. According to Joven Javier of the Advanced Science and Technology Institute of the one of the Department of Science and Technology (DOST-Asti) and one of the Filipino engineers who worked on Maya-1, focusing on the first contact with the CubeSat and confirming its operation is a main priority. “Right after the release, we will check which ground station will be the first to acquire the signal from the

@joveemarie

HE chairman of the House Committee on Ways and Means on Thursday warned that underperforming and low-quality private schools and hospitals will be slapped with higher taxes under the “Tax Reform for Attracting Better and High Quality Opportunities,” or the proposed “Trabaho” law.  

Angeles City council revives bid to rename Clark airport By Ashley Manabat

Editor: Vittorio V. Vitug • Friday, August 10, 2018 A3

CubeSats, then we will contact them live from there,” Javier said in Filipino. Several Filipino officials from the DOST and the University of the Philippines will be at the Tsukuba Space Center of the Japan Aerospace Exploration Agency to witness the release. The CubeSats will follow the ISS orbit at an altitude of approximately 400 kilometers. The CubeSats are expected to remain in orbit for about a year. Maya-1 is expected to pass over or near the Philippines an average of three to four times in a day, with each pass lasting around eight minutes. During these passes, the ground station, located at the Electrical and Electronics Engineering Institute in the University of the Philippines Diliman (UPD), will be attempting to upload commands and download data from Maya-1 as part of its scientific mission. Maya-1 was built under the Development of the Philippine Scientific Earth Observation Microsatellite Program, a multiyear collaborative research and development program funded by the DOST and jointly implemented by the UPD and the DOST-Asti.

then it should not be encouraged,” Cua said in an interview. Under the House Bill 7982, or the proposed Corporate Income Tax and Incentives Reform Act, proprietary educational institutions and hospitals shall pay a tax of 10 percent on their taxable income. Provided that they comply with established performance criteria to be determined and evaluated by the Commission on Higher Education (CHED), Department of Education (DepEd) and Department of Health (DOH).  The bill said education institutions and hospitals that fail to meet the established performance criteria

shall pay a tax of 10 percent on their taxable income two years after the effectivity of the proposal, 15 percent in the succeeding three years, and 20 percent thereafter. “Currently, all schools—except foundations, Catholic and religious schools are paying zero tax—but the proprietary or for-profit [schools], they are paying preferential rate of 10 percent. In the new regime, all low-quality standard schools and hospitals will [face] a higher tax rate,” he added. “Eventually, they [school and hospitals] actually be closed down because they are not complying with the standards,” he added. For his part, Finance Undersecretary Karl Kendrick T. Chua said companies should prove to the government that they deserve to keep their tax perks. “If they want to pay lower tax they have to be first good schools and hospitals,” Chua said. Moreover, Rep. Cua said they already asked the stakeholders from hospitals and schools to give the government the criteria that they think is fair to them. They were also offered to be part of the evaluation team for transparency.  T he law maker, however, assured that the incremental revenue from the payment of education institutions and hospitals will be

used back in a form of a voucher or subsidy from the government. Under the bill, incremental revenue from tax payment of education institutions that fail to meet the established performance criteria shall fund a student voucher program to be implemented under the CHED and DepEd.   The measure provides that the incrementa l revenue f rom ta x payment of hospitals that fail to meet the established performance criteria shall fund the universal health-care program to be implemented under the DOH.  Also, House Bill 7982, which was recently approved by the House Committee on Ways and Means, provides for the structural adjustment fund for five years to compensate workers that may be displaced by the implementation of this measure to mitigate its negative impact, as well as to improve the employability of workers.  Besides rationalizing fiscal incentives, the bill also seeks to lower corporate income tax.  From the current 30 percent, the bill said the rate of corporate income tax shall now be 28 percent beginning January 1, 2021; 26 percent beginning January 1, 2023; 24 percent beginning January 1, 2025; 22 percent beginning  January 1, 2027; and 20 percent beginning January 1, 2029.


A4 Friday, August 10, 2018 • Editor: Vittorio V. Vitug

Economy BusinessMirror

Senator to Duterte economic team: Show us ‘real’ employment figures

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By Butch Fernandez

@butchfBM

en. Francis G. Escudero awaits the submission of “real” unemployment data from the Duterte administration’s economic managers that, he stressed, should accurately reflect the number of jobless Filipinos from Aparri to Jolo.

The senator requested Executive officials to give the senators the “real picture” listing how many Filipinos of the right age, ablebodied and employable are not in the work force. Escudero conveyed the request to the National Economic and Development Authority (Neda), even as he noted the definition of unemployment currently used by the government is “somehow confusing since it does not include those who are unpaid family workers.” Escudero recalled that during the Arroyo administration, the government shifted the definition of employed workers and opted to follow International Labour Organization’s (ILO) standards.  He pointed out this immediately lowered unemployment rate from 11 percent to 7 percent, “because the ILO definition

of employed, which we adapted and which we are still using today, would include unpaid family workers, as well as those who worked for at least one hour in the previous week.” Escudero noted that “according to the Philippine Statistics Authority [PSA], employed persons include those who work even for an hour during the past week that the survey was conducted, unpaid family members, or those who work without pay on a business operated by a member of the same household, and those who have a job but not at work due to temporary illness, vacation, among others.” On the other hand, the senator said, unemployed persons include all individuals, who are 15 years old without work, currently available for work and are willing to take a

paid employment, and those who are actively seeking for a job, as defined by the PSA. The senator also quoted Socioeconomic Planning Secretary Ernesto M. Pernia as saying that in 2017, unemployment rate was recorded at 5.7 percent, or about 2.4 million individuals, but this had gone down to 5.4 percent in the first half of 2018. “But what is really the level of unemployment instead of making us all feel better that it’s going down? It’s only through the gaps and cracks of the nitty-gritty of defining it that it actually went down,” Escudero said, adding: “It would also be nice to know the level of employable work force among Filipinos.   Ilan na ba talaga ’yung may trabaho na kumikita ng sapat [Just how man are employed with sufficient income]?” At the same time, Escudero questioned Neda’s claim during the Senate   briefing that the increase in the average income of individuals would compensate for inflation, which reached a five-

year high of 5.7 percent in July. “There was an 8.82-percent income hike, so even if there’s 5.7-percent inflation rise, it may remain tolerable. But if we do this, how do we raise the income of farmers? Through subsidies? Such a scenario could have been triggered by TRAIN, and we subsequently approved subsidy for jeepney drivers, but the delivery is highly inefficient. The subsidies which are supposed to be mitigating measures aren’t rolled out as fast,” he said in a mix of Filipino and English. Escudero voiced apprehension that “the numbers do not add up since the increase in income that the Neda is talking about does not take into consideration the minimum-wage earners,” adding that he was also “concerned about the minimum-wage earners because they’re the poor. They’re the ones who need help.  “When you want to reduce poverty, you look at the minimum-wage earners,” he said.

But what is really the level of unemployment instead of making us all feel better that it’s going down? It’s only through the gaps and cracks of the nitty-gritty of defining it that it actually went down.”—Escudero

Bill seeks to delete foreign restriction in bidding for locally funded public infrastructure projects

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en. Sherwin T. Gatchalian has filed a bill to discard investment restrictions in a 78-yearold law that prevents foreign contractors from bidding on locally funded government public works projects. In filing Senate Bill (SB) 1907, the lawmaker said he seeks to “provide a more level playing field and extend equal opportunities to eligible and qualified domestic and foreign bidders to participate in the bidding by the government for public works projects.”   “This bill should be considered in the context of positioning the Philippines more competitively and attracting new investments in the construction industry, to enable the government to deliver the much-needed infrastructure that would support the country’s initiatives in provid-

ing a business climate conducive to investments in the country,” he said. SB 1907 amends Commonwealth Act 541 (CA 541), or “An Act to Regulate the Awarding of Contracts for Construction or Repair of Public Works,” to extend equal opportunities in awarding or negotiating contracts to eligible and qualified domestic and foreign contractors.   Under the existing law, only firms with 75 percent Filipino ownership or more are allowed to bid on locally funded public works.   “This amendment is timely and very much needed given that the current thrust of the government is infrastructure development via the ‘Build, Build, Build” program,” said Gatchalian, the chairman of the Senate Committee on Economic Affairs. “The reason we have traffic jams

is because we are sorely lacking in roads and bridges, hence the need for a massive infrastructure program. But for simultaneous construction to happen, we need to have foreign contractors who can also participate in government projects,” he added. The lawmaker said CA 541 was enacted on May 26, 1940, “at a time when the Philippines was still transitioning to full independence, setting up its own government, promoting local capital and industrialization, and establishing the basis for national defense while World War II was looming.”   “Clearly, the principle of competitiveness enshrined in the 1987 Constitution and in the Philippine Competition Act was not a priority in the minds of the National Assembly that enacted CA 541, during a time when a domestic

preference policy was adopted by the government in the awarding of public works projects to the local construction industry,” he said. Gatchalian said this domestic preference policy has confined competition in the construction industry within the Philippines for 78 years and has discriminated in favor of domestic businesses with substantial market power and political influence.   He also noted that between 2010 and 2015, public construction grew by only 8 percent, while private construction grew by 58 percent. “The lack of genuine competition in the public construction industry impairs public welfare, as there are fewer incentivesforexistingdomesticfirmsto innovate, and puts at risk the delivery of reliable, safety-compliant and quality public works,” he said. Butch Fernandez

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Marketing and product devt account for largest chunk of DOT’s 2019 proposed budget By Ma. Stella F. Arnaldo @Pulitika2010 Special to the BusinessMirror

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HE Department of Tourism (DOT) has proposed some P3.4 billion for its budget in fiscal year 2019, as it targets foreign visitor arrivals to reach 8.2 million that year. At the Committee on Appropriations hearing on Wednesday, DOT officials led by Secretary Bernadette Fatima Romulo Puyat, defended their proposed budget for 2019, which is a little less than the P3.48 billion that was approved for this year. She told the BusinessMirror the slight decrease in DOT’s proposed budget was due to the Department of Budget and Management’s shift to a cash-based budgeting program, and has affected other government agencies, as well. O f ne x t y e a r ’s pro p o s e d budget , some P3.0 8 bi l l ion will be allocated to the Office of the DOT Secretar y (Osec), while the rest will go to the I nt ra mu ros A d m i n i st rat ion (P66 million) and the National Parks Development Committee (P241.27 million). “In accordance with the implementation of the program expenditure classification which started this year, more than half [52.56 percent] or P1.62 billion of the DOT-Osec budget will be spent for market and product development, including the implementation of the branding program,” revealed DOT Spokesman and Undersecretary for Tourism Development Planning Benito C. Bengzon Jr. in his budget presentation to lawmakers. While he didn’t disclose the exact amount that will be spent for the brand ing campaig n, Bengzon said, the DOT will be bidding out for a media buying agency that will coordinate and organize the advertising for the branding campaign. He also told lawmakers that the DOT strategy will be to expand and tap new markets next year, such as Turkey, Israel, and “other countries in Europe and even those in the Asean,” even as promotions will still continue in the Philippines’s key markets, such as South Korea, China, Japan, Taiwan, Australia, among others. He stressed that part of the agency’s marketing strategy is

to “go to the digital platform” as research has shown that more tourists are now relying on their tablets and mobile phones in making decisions on travel plans and holidays. Meanwhile, Las Piñas Rep. Ruffy Biazon pressed the need for increased safety procedures and trained personnel in the wake of the recent fatal accidents involving foreign tourists. He said the DOT should ensure that tour guides and boatmen be properly trained in first aid and safety procedures, such as CPR. In response, Romulo Puyat vowed to allocate 30 percent of the agency’s P26-million training budget next year for safety training. The lawmaker, an active scuba diver, also asked the DOT to provide hyperbaric chambers in the popular diving spots in the Philippines. Such chambers are vital in treating scuba divers who have not properly decompressed when rising to the surface. According to the Tourism Infrastructure and Enterprise Zone Authority (Tieza), about P200 million has been allocated by the government firm this year for the procurement of hyperbaric chambers and construction of housing facilities. In an interview, Tieza COO Poc holo Pa raga s sa id t hese hy perbaric chamber systems (HCS) have already been turned over to the Southern Philippines Medical Center in Davao, and Ospital ng Palawan, both of which will be operationalized after the training of qualified medical personnel. HCS have also been procured for Anilao, Batangas, Camp Navarro in Zamboanga, and Panglao in Bohol. Other HCS locations are up for approval by the Tieza Board, he said, in Boracay Island, Apo Reef and Siargao. Tieza is the infrastructure arm of the DOT. For 2019 the DOT is also targeting tourism revenues amounting to P2.89 trillion, from the projected P2.6 trillion this year; an 8.6 percent share to the gross domestic product (from 8.4 percent); an increase in employment to 5.8 million (from 5.6 million); a 13.6-percent share to total employment (from 13.4 percent); and 79.3 million domestic travelers from (76.3 million).

House members want ₧93-B DPWH budget slash restored

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awmakers on both sides of the political fence have united to push for an increase in the budget of the Department of Public Works and Highways (DPWH) for next year. During the budget deliberations of the House Appropriations Committee on the DPWH’s proposed P544.521-billion budget for 2019 on Thursday, Albay Rep. Edcel C. Lagman rallied lawmakers to support the restoration of cuts made by the Department of Budget and Management (DBM) and an augmentation of the DPWH’s budget. “ The majority and minority must be united in supporting a realistic budget of the Department of Public Works and Highways in order to make a truism of the oft-repeated invocation that infrastructure is the is the engine of growth and help pursue the government’s “BBB” [Build, Build, Build] agenda,” Lagman said. “I reiterate my call that the majority and minority should mend differences for the time being in order to forge a collective decision to support the budget of the DPWH, restore what had been cut, and augment its budget once justified and

imperative,” Lagman added. Lagman said the DPWH budget is one of the “major casualties” of the cash-based budget, noting a total slash of P93.34 billion. The P544.521-billion budget for next year saw a downward trend of 14.63 percent, from this year’s P637.864-billion budget. Lagman said there is “absolutely no reason to inordinately reduce” the budget of the DPWH, considering that its absorptive capacity has improved during the first six months of 2018 and that DBM has also approved the employment of more DPWH personnel. He also noted that the policy statement of Speaker Gloria Macapagal-Arroyo that all congressmen will receive allocations for their respective districts cannot be “completely pursued” with inadequate funding. “How can this be completely pursued if the budget of the DPWH is not adequate even as the lost infrastructure projects this year because of the zero allocations cannot be offset by additional funding next year if the proposed budget of the DPWH is frozen at its present decimated level,” he said.

House Appropriations Committee Chairman Karlo Alexei B. Nograles of Davao City echoed Lagman’s sentiment, saying they would strive to at least restore the budget that the DPWH has originally proposed. “The majority will join with the minority and the independents in consolidating our forces to restore at the very least, what we’re really looking for is what has been proposed [by the DPWH],” Nograles said. He said it was the sentiment of the House during an all-member caucus that “we are not going to support the cash-based budgeting.” Zamboanga City Rep. Celso L. Lobregat asked Public Works Secretary Mark A. Villar how the agency can support the administration’s massive infrastructure program when its capital outlay was cut by more than P90 billion. Villar said, while the shift to a cash-based budgeting is “challenging” as it requires disbursements to be made within the fiscal year, the department has made several adjustments for that. “We are adjusting to this new policy which is in contrast to the

previous shift. It is the mandate of this department if they tell us to disburse in one year, we have to adjust our assumptions based on that,” Villar said. “We have to make sure that our timelines are extremely accurate. We have to make sure preparation of our projects are all on time... It’s more challenging, [but] it’s not impossible. It’s a different form of budgeting and we will do our best to adjust to it,” he added. In an annual cash-based budget, contracts intended to be implemented for the fiscal year should be fully delivered by the end of the year. On the other hand, the multiyear obligation-based budgeting system allows the government to enter into a contract or “obligate funds” without requiring the actual delivery of goods and services within the year. Budget Secretar y Benjamin E. Diokno said having an annual cash-based appropriations leads to greater fiscal discipline and prudent use of budget, faster and improved delivery of essential public services, and a more open and accountable government. PNA


Agriculture/Commodities BusinessMirror

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Editor: Jennifer A. Ng • Friday, August 10, 2018

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Farm-gate price of palay dips slightly By Jasper Emmanuel Y. Arcalas

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@jearcalas

he farm-gate price of unmilled rice as of the third week of July declined by 0.28 percent to P21.55 per kilogram (kg) after hitting an all-time high during the previous week, according to the Philippine Statistics Authority (PSA).

Data from the PSA showed that the country’s record-high average farm-gate price at P21.61 per kg was observed in the second week of July, surpassing the previous record of P21.53 per kg. From July 18 to 24, the PSA recorded the highest farm-gate

price of palay in Ilocos region at P22.75 per kg. The lowest palay quotation was observed in the Autonomous Region in Muslim Mindanao at P18.50 per kg. However, the PSA’s week ly price monitoring report showed that the quotation during the

period was still higher by 10.57 percent compared to last year’s P19.49 per kg Farmers and traders said the average farm-gate price of palay remains high due to more expensive fuel and inputs which raised their production cost. Despite the slight reduction in the average palay quotation on a weekly basis, both the retail and wholesale prices of regular-milled and well-milled rice varieties sustained increments during the reference period. “ R e l at ive to t he pre v iou s week ’s level of P42.09 per kg, the average wholesale price of well-milled rice at P42.03 per kg this week moved up at a faster rate of 0.50 percent,” the PSA said in the repor t published on Thursday. “Compared to the price in the

Photo taken from the Philippine Rice Research Institute web site

same period of the previous year, it likewise rose by 8.21 percent,” it added. The retail price of well-milled r ice rose by 0. 38 percent to P44.98 per kg, from the previous week ’s P44.81 per kg. On a yearly basis, the latest figure was 7.27 percent higher than the

COA to DA: Hasten rollout of farm infrastructure projects under PRDP T he Commission on Audit (COA) urged the Department of Agriculture (DA) to fasttrack the implementation of projects under the World Bank-backed Philippine Rural Development Program (PRDP). The COA noted that the DA failed to complete 14 subprojects (SPs) worth nearly P1 billion last year. In its annual audit report, the COA called out the DA as it was only able to complete four SPs out of the 16 slated SPs under the PRDP for 2017. “Out of the 49 SPs approved for implementation during the year costing P3.756 billion, 16 SPs costing P1.124 billion were targeted for completion, of which only four SPs were completed and the remaining 12 SPs costing P957.678 million

were not yet complete as of yearend,” the state auditors said in the report published on its web site recently. The SPs include farm-to-market roads (FMRs), bridges, communal irrigation systems (CIS), potable water systems (PWSs), production and postproduction facilities and other postproduction facilities and other infrastructure, such as fish landings, fish sanctuary/protected area guardhouses, among others. The SPs are under the Intensified Building-Up of Infrastructure and Logistics for Development (IBuild) component of the PRDP. The program is funded by a loan from the World Bank. The COA urged the DA to identify bottlenecks in implementing

the SPs to ensure the immediate completion of the projects. “We recommended and Management agreed to promptly resolve the identified issues in the delayed project implementation/completion,” the report read. Furthermore, the COA recommended that the DA should “revisit the implementing guidelines for the IBuild Component for the enhancement of the mechanics and evaluate the feasibility of the proposed project to ensure smooth and successful implementation thereof.” “Any delay of implementation will also result in the delay of project completion, thereby depriving the intended users on the immediate benefits that will be derived therefrom,” the state auditors said.

The COA report noted that the 12 uncompleted SPs under the PRDP last year were in Region 4A and Region 6. There were seven uncompleted projects for Region 4A costing about P522.11 million, which involves PWS and FMRs. The five uncompleted SPs for Region 6 include FMRs, warehouse for coco geonets and road improvements, which amounted to P435.567 million. “As of December 31, 2017, PRDP PSO [Project Support Office] Luzon B generated a total of 116 SP proposals from interested proponent LGUs within Regions 4-A, 4-B and 5 amounting to P9,296,225,589.64,” the state auditors said in the report. Jasper Emmanuel Y. Arcalas

Organic dairy farmers vow to compete in changing industry

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AIRFIELD, Iowa—Small family-operated dairy farms with cows freely grazing on verdant pastures are going out business as large confined animal operations with thousands of animals lined up in assembly line fashion are expanding into the organic market. Many traditional small-scale organic farmers are determined to fight back against the industry transformation by appealing to consumers to look closely at the organic milk they buy to make sure it comes from a farm that meets the idyllic expectations portrayed on the cartons. While the large operations say they’re meeting standards of the United States Department of Agriculture (USDA) for organic milk, the smaller farms say federal regulators under Republican

and Democratic administrations have relaxed enforcement of strict organic standards for dairy farms, allowing confinement dairies to grow and put intense competition on small familyoperated dairies. “There’s a higher authority than the USDA. There’s a higher authority than the federal courts where we’ve litigated some of these issues. And that’s the consumer. Their dollar has power,” said Mark Kastel at the Wisconsin-based Cornucopia Institute, a nonprofit farm policy public interest group. The dairy industry, like much of US farming, has trended toward fewer but larger farms since the 1980s, when organic milk was available only at farmers markets or specialty grocers and the milk came from small-scale

dairy farms selling to a local cooperative. Now organic dairy products are widely distributed by mainstream grocers and mass retailers, including Costco, Target and Wal-Mart. But much of those companies’ store-brand milk comes from dairies with thousands of cows maintained in immense confinement operations. Kastel says that style of farming is contrary to what the founders of the organic movement envisioned and what consumers believe they’re buying. His group on Thursday is releasing an updated Organic Dairy Scorecard , which will rank 160 brands evaluated for their organic practices including quality of pasture, how frequently cows graze and how often they’re milked. A spokesman for Aurora Organic

Dairy, the industry’s largest supplier to grocery chains, such as Costco, Safeway and Wal-Mart, said activists who believe organic food should come from only small producers are the primary critics inaccurately portraying large-scale organic production. Sonja Tuitele said the company’s farms have more than 10,000 acres (4,046 hectares) of organic pasture for grazing and the farms exceed minimum requirements for grazing days and percent of diet from grazing. The company has nine barns in Colorado and Texas with about 26,000 cows. The largest has 4,400 cows and the smallest, 900 cows. Aurora CEO Scott McGinty said in a statement released in April that the company maintains two USDA-accredited certifiers for each farm. AP

P41.93 per kg average quotation recorded in the third week of July last year. “At the wholesale trade, the average price of regular-milled rice at P38.86 per kg during the week posted a slower increment of 0.08 percent from a week ago level,” the PSA said. “Relative to

the previous year’s price of P35.34 per kg, it picked up at a higher rate of 9.96 percent.” The average retail price of regular-milled rice during the reference period reached P41.21 per kg, 0.12 percent and 8.89 percent higher than its previous week and year level, respectively.

NIA turns over 5 irrigation projects to Basilan groups

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he National Irrigation Administration (NIA) recently turned over five completed irrigation projects costing P27 million to irrigators’ associations in Isabela City, Basilan. NIA Administrator Ricardo R. Visaya said the turned over projects will benefit a total of 117 farmers and their families. The five irrigation projects are the Mahayahay Communal Irrigation System in Maluso; Tabiawan Communal Irrigation System in Isabela City; Kalayan Communal Irrigation System in Lantawan; Semut Small Irrigation Project in Akbar; and Colonia Communal Irrigation System in Lamitay City. Visaya, who led the turnover ceremony held in Basilan, reminded regional NIA officials to “use budget accountably and wisely.” “I always advocate completion of irrigation projects on time, and even ahead if possible, because delayed projects mean depriving the beneficiaries of the benefits that they should be enjoying. Project implementation must be strictly monitored and inspected. It’s up for us to do what is right and what is legal,” he said in a statement. In his message, Visaya took the opportunity to address issues and concerns arising from the current status of irrigation development in the area. “ T he production of 60 cavans per hectare is saddening.

We should maximize the investment,” he said. In coordination with the Department of Agriculture and local government units, Visaya encouraged NIA regional officials to help the farmers in increasing their yields. Along this line, he instructed the regional office to bring the recipients of the five turned over projects to irrigation system with IAs in other provinces/regions that are successfully operating and maintaining the system and whose average farm yield ranges to 80 to 100 cavans per hectare. The NIA chief said this approach w ill give the farmers firsthand information on agricultural production. For this year, the NIA’s target is to irrigate 33,247 hectares of new areas and restore irrigation in 14,460 hectares. However, the agency has only irrigated 2,193 hectares of new areas, or about 7 percent of its 2018 target, as of July 31. As for restored areas, it was only able to cover around 1,258 hectares, or 9 percent, of its full-year goal. For next year the NIA is eyeing to irrigate an additional 36,700 hectares of land, which is smaller compared to its target area of 47,707 hectares for 2018. Of the total target next year, about 31,400 hectares are new areas, while 5,300 hectares are for restoration.


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Friday, August 10, 2018

Editor: Angel R. Calso | www.businessmirror.com.ph

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Fed’s Barkin sees higher rates needed amid strong economy

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he US central bank should follow through on gradually raising interest rates to more normal levels, though “how high rates will ultimately need to rise depends on economic growth,” said Federal Reserve Bank of Richmond President Thomas Barkin. “It is difficult to argue that lower than normal rates are appropriate when unemployment is low and inflation is effectively at the Fed’s target,” he said on Wednesday in Roanoke, Virginia as he described the case for further gradual rate hikes. “In addition, we don’t want to risk the credibility of our commitment to low and stable inflation.” Barkin, 56, is a voter this year on the rate-setting Federal Open Market Committee (FOMC). The former senior executive at global consulting firm McKinsey & Co. took the Richmond Fed’s helm in January. His public comments on monetary policy, which place him

in the center of the consensus on the FOMC, were his most substantive on the topic since he became a central banker. US central bankers next meet on September 25 and 26 after leaving rates unchanged last week. Investors are pricing in an almost certain probability that the FOMC will raise the benchmark lending rate another quarter point to a range of 2 percent to 2.25 percent. “It is easy for me to imagine that we will get to a place where we will want to pause a little longer and look around,” Barkin told reporters after the speech. “It is also easy for me to imagine that we will continue on the pace. It depends a lot on how

the data comes out.” The US economy added 157,000 jobs in July, the Labor Department reported on Friday, while a measure of annual wage gains held steady at a 2.7-percent increase. Inflation is around the Fed’s 2-percent target, with the headline measure rising 2.2 percent in June and 1.9 percent minus food and energy.

Longer-run growth

Barkin noted that the longer-run growth rate of the economy is challenged by slow population growth and a decline in the labor force participation rate as people retire. He said the Richmond Fed forecasts a 2-percentage-point drop in participation over the next five years, and productivity is rising around a 1.25-percent pace. In a slow-growth environment, “interest rates are likely to be lower,” he said. “The gradual path we are on seems like a sensible one to me and I am supportive of it, which I describe as raising rates at a measured pace and looking around and seeing what you see in the data,” Barkin said. Some Fed policy-makers have argued for raising rates until they reach the so-called neutral level, where policy is neither supporting

nor hindering growth. Officials put neutral at 2.9 percent, according to their median projection in June. But there is a range of views around that estimate and Barkin said it was hard to pin it down to a precise number.

Hurt growth

R a ising rates too far cou ld hurt growth, though “given the strength of the underlying economy and the recent additional fiscal stimulus, the risk of normalization is reduced,” he said. The Richmond Fed district includes several large exportoriented industries, particularly in South Carolina which is home to the largest BMW plant in the world. Barkin said the impact of tariffs on the broader US economy isn’t very large yet, though “tariff concerns are making people more nervous.” The main channel where it could have an impact is business spending, he said. “The contacts I talk to are very interested where the tariff conversation” is going to end up, Barkin said. “It is very expensive to reconfigure a supply chain. People are hesitant until they figure out where things are going to land to make those big investments.”

Oil holds loss near 7-week low as US-China trade war escalates

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il held losses near a sevenweek low as China vowed to retaliate against the US administration’s latest tariffs, raising trade tensions between the world’s two biggest economies. Futures in New York were little changed after sliding 3.2 percent on Wednesday. China will slap 25-percent duties on an additional $16 billion worth of imports from the United States from August 23, including gasoline, diesel and other petroleum products. Investor concern that the trade spat will limit energy demand growth overshadowed Energy Information Administration data released on Wednesday that showed US crude inventories fell the second time in three weeks. Crude has struggled to gain near $70 this month after retreating from the highs of June as the US and China showed no sign of backing down from the trade fight, raising concer ns over global economic growth. Meanwhile, investors are closely watching whether Saudi Arabia

and other producers will increase output to replace potential supply losses from Iran as President Donald J. Trump is set to impose sanctions on the country’s oil exports from November. “Oil had been largely immune from the escalating trade dispute, however the recent application of tariffs by China on US petroleum products does represent a step change for the energy market,” said Daniel Hynes, a Sydney-based analyst at Australia & New Zealand Banking Group Ltd. “It’s clearly worrying investors at the moment.” West Texas Intermediate (WTI) crude for September delivery traded at $66.99 a barrel on the New York Mercantile Exchange, up 5 cents, at 7:50 a.m. in London. The contract declined $2.23 to $66.94 on Wednesday, the lowest close since June 21. Total volume traded was about 33 percent below the 100-day average. Brent for October settlement traded at $72.44 a barrel on the London-based ICE Futures Europe

exchange. Prices dropped $2.37 to settle at $72.28 on Wednesday. The global benchmark crude traded at a $6.08 premium to WTI for the same month. Futures for September delivery lost 1.1 percent to 517.7 yuan a barrel on the Shanghai International Energy Exchange, after falling 2.6 percent on Wednesday. With its latest tariff threat, China on Wednesday matched an earlier move from Washington in another ratchet higher for the trade war between the two nations. The Ministry of Commerce said the US decision to levy tariffs on Chinese goods is “very unreasonable,” and the Asian nation will have to retaliate to protect its rightful interests and the multilateral trading system. Oil from American fields was among goods the Chinese had designated as subject to eventual tariffs on a list in June. But the commodity was spared from the 11-page series of 333 product classifications that will incur levies released on Wednesday. While crude

hasn’t been targeted this time, the Asian nation may reimpose duties at a later date if Trump doesn’t back down, according to Li Li, a research director at ICIS-China. As recently as June, China was the top foreign buyer of US crude, importing a record 15 million barrels that month. A the same time, President Xi Jinping is urging China’s state-owned energy giants to boost domestic oil and gas output. Refiners in China are unlikely to increase purchases of American crude even after the Ministry of Commerce removed oil from its list of US goods slated for tariffs, according to Michal Meidan, an analyst with Energy Aspects Ltd. In the United States nationwide crude stockpiles dropped 1.35 million barrels last week, according to the EIA, while supplies stored in the key hub of Cushing, Oklahoma, slid for a twelfth straight week, declining by 590,000 barrels. Gasoline inventories increased by 2.9 million barrels, the data show. Bloomberg News

Saudi investment freeze doesn’t amount to much in Canada

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he decision by Saudi Arabia to halt new investments and unload assets in Canada is likely to have limited impact. Saudi assets in Canada are confined mainly to stakes in upscale hotel operators, some small stock holdings in companies like Canadian National Railway Co. and grain facilities. Most investments have been made by Saudi billionaire Prince Alwaleed Bin Talal through his Kingdom Holding Co., a Riyadh-based conglomerate with investments in hotels, real estate and equities. The company’s international hotel unit joined Bill Gates’s Cascade Investment and Canadian Isadore Sharp in a 2007 buyout of management company Four Seasons Hotels Inc., taking a 47.5-percent stake. “The matter does not affect the day-to-day operations of Four Seasons,” Spokesman Sarah Tuite said in an e-mail. “It is business as usual as we continue to welcome guests to our hotels and resorts worldwide.”

Alwaleed ’s inf luence in the kingdom has diminished after his arrest last year in an anti-corruption sweep by Crown Prince Mohammed bin Salman, who is seen to be sending a message to critics of his leadership with this latest reaction against Canada.

Wheat Board

G3 Global Grain Group, a joint venture between state-owned Saudi Agriculture & Livestock Investment Co. and US agri-food company Bunge Ltd., bought a 50.1-percent stake in the Canadian Wheat Board for C$250 million ($192 million) in 2015. SALIC boosted its stake to 75 percent a year later. The partnership also holds an interest in a grain export terminal being built near Vancouver. On Tuesday officials of the Winnipeg, Manitoba-based G3 said the company continues to buy and sell grain as usual. Officials didn’t immediately return requests for comment on Wednesday. Last year Toronto-based tech-

nology start-up QD Solar Inc. received funding from a group that included Saudi’s King Abdullah University of Science and Technology and Netherlands-based venture capital firm DSM Venturing. Saudi lender National Commercial Bank has an asset manager that held investments in 41 Canadian companies including Suncor Energy Inc., Canadian Natural Resources Ltd. and Canadian Pacific Railway Ltd. in its AlAhli North America Index Fund, according to May 2017 filings. CN Rail, at $473,500, was the largest Canadian investment of the fund’s $148.2 million portfolio. Two-way trade between the two countries is tiny—around 0.4 percent of Canada’s total trade in 2017. Canada exported C$1.37 billion worth of goods to Saudi Arabia last year, mostly tanks and other armored fighting vehicles and their parts, according to Statistics Canada. The country imported C$2.63 billion in goods from Saudi Arabia over

that period, mostly crude imported to the Irving Oil Ltd. refinery in Saint John, New Brunswick. The tanks and armored vehicles are manufactured by Genera l Dy namics Land Systems Canada, based in London, Ontario, a unit of US defense giant General Dynamics Corp., under a C$15-billion contract with Saudi Arabia signed by the Canadian government in 2014. Export Development Canada, the countr y’s trade financing agency, has exposure of about C$2 billion to Saudi Arabia, and about 250 customers operating in the kingdom, Jessica Draker, an EDC spokesman, said in an e-mail. “Canada stands up firmly and respectfully for human rights,” Canadian Prime Minister Justin Trudeau told reporters on Wednesday in Montreal, sidestepping questions on the impact of the Saudi moves. He also declined to say whether Canada would apologize for its statements about the women’s activists. Bloomberg News


A8

Friday, August 10, 2018

The World BusinessMirror

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strong earthquake shakes Rival Koreas set high-level talks Third Lombok as death toll tops 220 to prepare for leaders’ summit T

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EOUL, South Korea—The rival Koreas will meet on Monday for high-level talks meant to prepare for a summit between North Korean leader Kim Jong Un and South Korean President Moon Jaein, South Korea said, the third such meetings between the leaders in recent months.

The announcement on Thursday by the South’s Unification Ministry, which handles interKorean issues for Seoul, comes amid attempts by Washington and Pyongyang to follow through on nuclear-disarmament vows made at a summit in June between President Donald J. Trump and Kim. Pyongyang has also stepped up its calls for a formal end to the Korean War, which some analysts believe is meant to be the first step in the North’s effort to eventually see all 28,500 US

troops leave the Korean Peninsula. Washington is pushing for the North to begin giving up its nuclear program. A South Korean official at the Unification Ministry, who spoke on condition of anonymity because of office rules, said the two Koreas will also discuss ways to push through tension-reducing agreements made during an earlier summit between Kim and Moon. Among the agreements was holding another inter-Korean summit in the fall in Pyongyang.

The rival Koreas may try to seek a breakthrough amid what experts see as little progress on nuclear disarmaments between Pyongyang and Washington despite the Singapore summit in June and US Secretary of State Mike Pompeo’s several visits to North Korea. Pyongyang insisted that the United States should reciprocate to the North’s suspension of missile launches and nuclear tests and other goodwill gestures, such as the return of remains of American troops killed in the Korean War. The United States has dismissed calls to ease sanctions until the North delivers on its commitments to fully denuclearize. The inter-Korean meeting on Monday w ill be held at Tongilgak, a North Korean-controlled building in the border v illage of Panmunjom. It wasn’t clear who wou ld attend the ta l ks, but such meetings have ty pically been handled in the past by South Korea’s unif ication minister and his counter part in t he Nor t h. It a lso wasn’t c le a r whe n a not he r s u m m it might happen, but if the April

27 summit agreements are followed through, the leaders w ill likely meet in Pyong yang in the next couple of months. In the meantime, both Koreas are seeking an early end of the Korean War. South Korea’s president i a l spokesm a n sa id last month that Seoul wants an early declaration of the end of the 1950-1953 war sooner than later. The Korean Peninsula is still technically in a state of war because the fighting ended with a cease-fire, not a peace treaty. Earlier on Thursday North Korea’s Rodong Sinmun said in a commentary that ending the Korean War is “the first process for ensuring peace and security not only in the Korean peninsula but also in the region and the world.” Seou l said it accepted the North’s proposal after Pyongyang first suggested a meeting on Monday to discuss another summit. Kim and Moon met in April at a highly publicized summit that saw the leaders hold hands and walk together across the border, and then again in a more informal summit in May, just weeks before Kim met Trump in Singapore. AP

ANJUNG, Indonesia—The Indonesian island of Lombok was shaken by a third big earthquake in little more than a week on Thursday as an official said the death toll from an earlier quake had topped 220. The strong aftershock, measured at magnitude 5.9 by the US Geological Survey, caused panic and damage. It was centered in the northwest of the island and didn’t have the potential to cause a tsunami, Indonesia’s geological agency said. Videos showed rubble strewn across streets and clouds of dust enveloping buildings. In northern Lombok, some people leaped from their vehicles on traffic-jammed roads, while an elderly woman standing in the back of a pickup truck wailed “God is Great.” The aftershock had caused more “trauma,” said National Disaster Agency Spokesman Sutopo Purwo Nugroho. Nyoman Sidekarya, chief of the provincial search and rescue agency that covers Lombok, told The Associated Press that the death toll from Sunday’s magnitude 7.0 quake is now 227. Several agencies have been releasing higher death-toll figures than the 131 announced on Wednesday by the National Disaster Mitigation Agency, which has a coordinating role in disaster relief. The agency says it is has not verified these other figures but expects the toll to climb. Grieving relatives were burying their dead and medics tended to people whose broken limbs hadn’t yet been treated in the days since Sunday’s quake. The Red Cross said it was focusing relief efforts on an estimated 20,000 people yet to get any assistance.

In Kopang Daya village in the hardhit Tanjung district of north Lombok, a distraught family was burying their 13-yearold daughter who was struck by a collapsing wall and then trampled when the quake on Sunday caused a stampede at her Islamic boarding school. Villagers and relatives prayed outside a tent where the girl’s body lay inside covered in a white cloth. “She was praying when the earthquake happened,” said her uncle Tarna, who gave a single name. “She was trying to get out, but she got hit by a wall and fell down. Children were running out from the building in panic, and she was stepped on by her friends,” he said. Thousands of homes were damaged or destroyed in Sunday’s quake, and more than 150,000 people are homeless. The earlier earthquakes also left cracks in walls and roofs, making the weakened buildings susceptible to collapse. The Indonesian Red Cross said it’s focusing its relief efforts on an estimated 20,000 people in remote areas in the island’s north where aid still has not reached. Spokesman Arifin Hadi said people need clean water and tarpaulins most of all. He said the agency has sent 20 water trucks to five remote areas, including one village of about 1,200 households. “People are always saying they need water and tarps,” he said. He also said they’re continuing to look for people with untreated injuries. In Kopang Daya, injured villagers got their first proper treatment on Thursday after medics arrived with a portable x-ray and other supplies. AP


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The Regions BusinessMirror

Editor: Dennis D. Estopace • Friday, August 10, 2018

A9

ARMM open to replacement entity named in organic law

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AVAO CITY—The current administration of the Autonomous Region in Muslim Mindanao (ARMM) said it would not pose objection to being replaced by another political entity stipulated in the Bangsamoro Organic Law (BOL).

People form the foreground of a picturesque reflection of a coastal village in a fish port in Pagadian, Zamboanga del Sur, a province that occupies the southern section of the Zamboanga Peninsula in Western Mindanao. Mindanao is currently in flux as President Duterte signed into law on August 5, Republic Act 11054, or the Organic Law for the Bangsamoro Autonomous Region in Muslim Mindanao. Bernard Testa

“It would still be for the Bangsamoro [literally, Moro nation] and, besides, it would not be less than the ARMM,” ARMM Gov. Mujiv S. Hataman said. Hataman also urged the residents to support the new political entity named in the BOL, or Republic Act 11054. Section 2 of RA 11054 names the political entity under the BOL as the Bangsamoro Autonomous Region (BAR) in Muslim Mindanao. The current ARMM is composed of scattered provinces of Maguindanao and Lanao del Sur in Central Mindanao, the southwestern island provinces of Basilan, Sulu and Tawi, the cities of Marawi in Lanao del Sur and Isabela and Lamitan of Basilan. In his message circulated online to local governments, Hataman said the Bangsamoro people should extend their full support to the incoming regional government “that will help end the decades-long armed conflict and violence in the region.” Hataman explained the establishment of the BAR “does not mean the abolition of the ARMM government.” This is also not for abolishing the ARMM, he added. The BAR does not mean abolishing negotiations in the past, which has revealed the weaknesses of a few in the past and the need to have a new system under the Muslim nation, Hataman said in Tagalog.

He said the ARMM that he headed since he was designated caretaker in 2011 and when he was elected in 2016 “was there to try our best to prove to the nation that it is a misconception that a Moro is not fit to have its own government.” “Now, we proved it, and we got the trust again of the Bangsamoro,” he said. Undersecretary Nabil Tan of the Office of the Presidential Adviser on the Peace Process, lauded Hataman “for changing the negative image of ARMM as an institution into a good one.” “Many have doubted and lost confidence in the region, but Hataman improved the organizational structure of the regional government as part of his reform agenda significantly eliminating irregularities that led to the purging of ghost employees,” Tan said. During his term as ARMM vice governor from 1993 to 1996, Tan said the region has only P5 million in annual budget allocation. During Hataman’s administration, the region’s annual budget increased and is pegged at P33.569 billion this year. But Hataman said it was the unity among the Bangsamoro that helped the ARMM carry out reforms. He also credits this unity as helping the region gain the trust of investors. The ARMM’s annual investments have broken the P1-billion mark in 2012.

Cimatu cites rare bird sighting in push for Apo Reef protection

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NVIRONMENT Secretary Roy A. Cimatu underscored the importance of protecting the country’s National Parks, such as the Apo Reef National Park (ARNP) in the Province of Occidental Mindoro following the reported sighting of the Christmas frigatebird (Fregata andrewsi) by conservation experts recently. “The sighting of the endangered seabird is an indicator of a healthy environment and healthy ecosystems in ARNP, and that only means that conservation efforts there are bearing fruit and the people in charge of protecting the area are doing a good job,” Cimatu was quoted in a statement as saying. The Christmas frigatebird, a globally threatened species, is listed as critically endangered by the International Union for the Conservation of Nature. A juvenile Christmas frigatebird was seen last June 25 by a team from the Mindoro Biodiversity Conservation Foundation Inc. (MBCFI) during a scientific expedition at the ARNP. The ARNP is home to tremendous coral diversity, as well as numerous species of fish and mammals, such as the dugong. Located off the town of Sablayan in Occidental Mindoro province, the ARNP is the largest reef in the country and the second largest contiguous coral reef on the planet. It is nestled within the Coral Triangle, which is the epicenter of the world’s marine biodiversity and a global priority for conservation. The sighting of the bird species was first recorded in Tawi-Tawi province in 1995.

Since then, more than 150 sightings of the species in the Sulu Sea were recorded. In its report, the MBCI described the sighting as a “juvenile” seabird with “black upperparts, a pale cream head, has dark breast bands, and distinctly shaped white patch in its belly and under its wings.” This species of frigatebird is known to breed only in Christmas Island in Australia, located south of Java, Indonesia. It is considered the ninth-most evolutionarily distinct and globally endangered bird in the world. During the 12th Meeting of the Conference of Parties (COP) to the Convention for the Conservation of Migratory Species held in Manila last year, the Philippines pushed for “higher protection” for Christmas frigatebird by including it in Appendix I of the CMS. Appendix I covers migratory species that are considered endangered or with a high risk of extinction. The listing requires CMS party-states to protect these species by strictly prohibiting their capture, conserving and restoring their habitats and removing obstacles to their migration. The CMS, adopted by 124 nations and under the auspices of the United Nations Environment Programme, is the only global environmental treaty established exclusively for the conservation and management of terrestrial, marine and avian migratory species throughout their range. The COP is its main decision-making body that meets every three years to adopt policies and laws, and propose new species under the framework. Jonathan L. Mayuga

Hataman also recognized the efforts of Nur Misuari in pushing for the creation of the autonomous region in southern Philippines, following the signing of the Tripoli Agreement in 1976 that called for autonomy for 13 provinces and nine cities in Mindanao. He encouraged the new political leaders to continue serving the interest of the Bangsamoro people.

The framework now is much better compared to RA 9054, Hataman said referring to the Organic Act of 1988, which created the ARMM. But the challenge to everyone is how much better the vehicle is, he added. Hataman also noted the statement of Moro Islamic Liberation Front peace panel Chairman Mohagher Iqbal. Iqbal said the

BOL “signifies the closure of armed conflict between the MILF, representing the Moro people and the Philippine government.” “Now that we have the BOL, more than anything else, this is for the youth, for the future generations of the Bangsamoro. They will be the ones who will reap all these benefits,” the ARMM quoted Iqbal as saying. Manuel T. Cayon


A10 Friday, August 10, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Agriculturally ‘challenged’

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he second-quarter economic growth numbers were released and the government is contemplating significantly reducing the import duties on certain agricultural products. The two stories may seem unrelated. That’s not the case. The GDP increased by 6 percent in the second quarter, well below the optimistic expectations. You can find a tremendous amount of fingerpointing as to why the GDP came in at 6 percent instead of higher. Some of it will be reasonable analysis; some of it will be political agenda. However, the internals of the data highlight the problem that has been plaguing the country and the economy for decades, and is still not being addressed. Here is the year-on-year growth of the various economic sectors: Services—up 6.6 percent, Industrial Production—up 6.3 percent, Consumer Spending—up 5.6 percent and Government Spending—up 11.9 percent. So what is the problem? It is simply this: Agricultural production—up 0.2 percent. While the agricultural sector no longer accounts for more than 20 percent of the GDP as it did 20 years ago, its direct contribution is still about 10 percent. But the indirect contribution in the rural areas is highly substantial. Further, when the GDP grew by 7.2 percent in third quarter of 2017, agricultural growth was 2.32 percent. There are certainly seasonal variations due to harvest schedules. But look at the number for the second quarter of 2017: agriculture grew by 6.18 percent. In the second quarter of 2016, agricultural output declined by 2.34 percent. The prolonged dry spell due to the El Niño phenomenon negatively affected the production of the crops and fisheries subsectors. And again, “agriculture contracted by 0.37 percent in the second quarter of 2015. The downturn was traced to the intense heat during the quarter which negatively affected the performance of the crops and fisheries subsectors.” So what is the excuse for 2018? House Speaker Gloria Macapagal-Arroyo urged President Duterte to issue an executive order that will reduce tariffs on some food imports including—at last mention—rice, maybe poultry, corn, wheat flour and vegetables. Food price increases do have a greater impact on the lower economic classes as a great percentage of their income is spent on food. Probably reducing tariffs on food will lower inflation. But what does that tell us about the state of Philippine agriculture? We can import and sell to consumers at a lower cost—with reduced tariffs—than locally produced products. That is a terrible indictment of our agricultural state and of the government policies for agriculture. Further, the plan is to reduce tariffs for about six months before restoring the protection to domestic producers. A couple of questions: So that means that food costs will increase after this plan is finished? What then happens to the food inflation rate in six months? If local agricultural producers need this “protection,” how badly are they going to be affected for the next six months? In the late-1990s, one enterprising company was said to be importing “cheap [maybe duty-free] chicken” from the United States in quantities of dozens of container loads per month. Consumer prices went down, of course. But two major independent poultry producers were pushed to the edge of bankruptcy. One never recovered. Philippine agriculture is a borderline disaster. It is a 19th-century industry trying to feed a 21st-century population. This situation cannot continue much longer and government needs to get serious and proactive. The nation’s future depends on it. Since 2005

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inally got a copy of Republic Act (RA) 11054 today (Thursday)— the Organic Law for the Bangsamoro Autonomous Region in Muslim Mindanao, or the OLBARMM (an acronym which, unfortunately, lacks the elegant simplicity of BOL). It is a massive document, going all the way up to Article XVIII, and covering a total of 109 Official Gazette pages.

And within those pages lies the blueprint for a Bangsamoro autonomous region that addresses the grievances, sentiments and demands of Muslims in the region. Whether the new autonomous region will be superior to the Autonomous Region in Muslim Mindanao, which it abolished, remains to be seen. But the sheer volume of time, effort, and commitment that went into the crafting of the OLBARMM speaks well of its chances. It isn’t spin when you hear government officials hailing RA 11054 as a landmark piece of legislation—it truly is a momentous accomplishment. With the law now in the books and the publication requirement very nearly (as of this writing anyway) completed, the Commission on Elections is gearing up to hold the plebiscite to ratify the OLBARMM, which could be held as early as late

December 2018 or January 2019. To arrive at that estimate, we need to look at two provisions of the OLBARMM: Article XV, Section 2— which states that the plebiscite shall be conducted not earlier than 90 or not later than a 150 days after the law’s effectivity; and Article XVIII, Section 5—which declares that the law will come into effect “fifteen days following its complete publication in the Official Gazette and in at least two national newspapers of general circulation and one local newspaper of general circulation in the autonomous region.” As of this writing, the OLBARMM has definitely been published in the Gazette, but not yet in the other newspapers, so that has yet to be accomplished. Once that’s done, there will be a wait of 15 days before the Comelec can start counting out the 90- to 150-day period mentioned in

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The OLBARMM provides for a lot more innovations than just wealth-sharing arrangements between the Bangsamoro and the national government—innovations that will inevitably have an impact on the rest of the country. Needless to say, any vote on a document that will have such wide-ranging consequences must be thoroughly studied, not only by those who will identify as Bangsamoro, but by everyone who believes himself to be a Filipino. Article XV, Section 2. Following that prescription, the Comelec can hold the plebiscite once the minimum period of 90 days is reached. However, this is unlikely, given everything that needs to be accomplished beforehand—the promulgation of the rules of conduct for the plebiscite, special voter registration, and the all-important information/education campaigns, among other things. Instead, the most logical thing to do would be to take advantage of the breathing space, if you will, given by the OLBARMM; doing that gives us the estimate of a Bangsamoro plebiscite by the end of this year or very early next year. Which is a good thing because the OLBARMM is serious business. First off, the OLBARMM will potentially result in Lanao del Norte and Cotabato losing jurisdiction of six municipalities and 39 baran-

Rationalize the retirement program

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OLBARMM

Dr. Jesus Lim Arranza

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etirement is an issue that is close to my heart, not only because I am also a retiree, but rather because the program can be rationalized further to achieve equitable distribution of public wealth, equal apportioning of opportunities among the Filipinos and prudent disbursement of government funds.

Over the years, I’ve been wondering how much of the government’s total retirement funds paid to retirees could have been more wisely disbursed to facilitate equitable distribution of government funds, address unemployment and encourage productivity among the Filipinos. On hindsight, the government can further strengthen its fiscal policy measures to maximize the socioeconomic impact of its retirement program by not hiring retirees. The government practice of hiring retirees deprives those in the labor pool (up for employment) of otherwise gainful jobs in the government,

even as hired retirees, although already receiving monthly retirement pensions, get additional income from their salaries. This is a socioeconomic bane that hurts the unemployed and poor Filipinos the most. As the biggest employer, the government can reduce the country’s unemployment and poverty level by spreading its employment opportunities to the most number of Filipinos, minus the retirees, of course. And hiring one person from every household, especially those with zero income, should be a good start. This would not only result in less poor Filipino

On hindsight, the government can further strengthen its fiscal policy measures to maximize the socioeconomic impact of its retirement program by not hiring retirees. The government practice of hiring retirees deprives those in the labor pool (up for employment) of otherwise gainful jobs in the government, even as hired retirees, although already receiving monthly retirement pensions, get additional income from their salaries. This is a socioeconomic bane that hurts the unemployed and poor Filipinos the most.

families depending only on the government’s Pantawid Pamilyang Pilipino Program, but more important, this would encourage productivity among them, boost their moral as productive Filipinos and not mendicants. Unfortunately, in most areas in the Philippines, the hiring of government workers is mostly politically influenced. And if only government hiring of workers would be rationalized and retirees are no longer

gays, respectively. Those areas did previously vote to be included in the ARMM, but their mother units thumbed the notion down; now, those municipalities and barangays get to try again. Second, the OLBARMM won’t just affect the Bangsamoro peoples—defined by the law as those who, at the advent of Spanish colonization, were considered natives or original inhabitants of Mindanao, the Sulu archipelago and the adjacent islands—but every Filipino, as well. OLBARMM mandates that 75 percent of the taxes, fees and charges collected by the national government in the Bangsamoro would go to the Bangsamoro, with the national government retaining only 25 percent. Under the ARMM law, this split was 70-30. And third, on top of this, the Bangsamoro also gets an annual block grant of 5 percent of the national internal revenue—almost P60 billion—as an automatic appropriation, no questions asked. The OLBARMM provides for a lot more innovations than just wealthsharing arrangements between the Bangsamoro and the national government—innovations that will inevitably have an impact on the rest of the country. Needless to say, any vote on a document that will have such wide-ranging consequences must be thoroughly studied, not only by those who will identify as Bangsamoro, but by everyone who believes himself to be a Filipino.

employed in the government, especially government retirees who receive much higher pension from the Government Service Insurance System (GSIS) than retirees from the private sector who receive their pension from the Social Security System (SSS), the government should be able to equitably distribute its resources and opportunities. Under the GSIS retirement program, government retirees get a monthly pension that’s equivalent to 80 percent of their average monthly salary (AMS) during the last three preceding years of service prior to retirement, while retirees from the private sector under the SSS retirement program who made 120 monthly contributions get a monthly pension of P300, plus 20 percent of the AMS credit for the 10 preceding years of service prior to retirement, and another 2 percent of the AMS in excess of 10 years, as the basis for computing the monthly pension of SSS retirees. Considering the sensitivity and socioeconomic impact of the hiring of retirees by the government, isn’t it about time for our economic managers to take a serious look at the issue?


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Opinion

Beating inflation

Coffee with manners

BusinessMirror

Alvin P. Ang

Tito Genova Valiente

annotations

EAGLE WATCH

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got a call from a radio station just after the news of a 5.7-percent inflation in July was released. The anchor asked me what is the effect of the 5.7-percent inflation to ordinary people. I was not able to answer immediately. As I organized my thoughts, I realized that the general understanding of inflation is fueling it further. Inflation is the impact not the cause of price increases. Under such an environment, the government is faced with a huge challenge in fighting a wildfire that people themselves are unfortunately fanning through unfounded fears called inflation expectations. How do we beat inflation then?

There is no single policy that can bring inflation down immediately. As prices are generally determined by supply and demand of products and services and inflation reflects the rise in prices, inflation, therefore, is also affected by supply and demand. Our current situation of rising prices is therefore not caused by a single factor but by a confluence of supply and demand factors. It means that there is not one solution that can bring it down. It is generally believed that the high inflation environment was due to the implementation of the TRAIN (Tax Reform for Acceleration and Inclusion) law. This is not fully accurate because while the TRAIN law anticipated an increase in prices, it was not to be this high as the affected products are not those that have large shares in the consumer basket such as food products. The tax on oil products was seen passing through at best a 1-percent increase in base inflation. However, as oil is an imported product and is subject to geopolitical tension globally, it is difficult to predict its price. By the time the TRAIN law took effect, the estimated oil prices have risen more than 50 percent of its assumed value in the new law. Furthermore, as an imported product, it requires foreign exchange to buy it. Similarly, the peso-dollar exchange rate weakened faster than anticipated. Hence, the pass-through effect of the TRAIN law broke through the maximum expected increase in inflation of about 1 percent. The higher oil prices and weaker foreign exchange are only part contributors. Rice, which is about 10 percent of the inflation basket, suffered a significant decline in supply as the National Food Authority was not able to bring in enough imported buffer stocks. This lack of supply pushed prices higher, leading to a domino effect to prices of basic commodities. The TRAIN also released into the system an additional P12 billion monthly due to the personal incometax cut and the subsidies on cash and fuel transfers. This gave people more money to increase their demand for goods and services. While in theory the increase in cash on hand would have allowed people to afford the rise in prices, the rise in prices was higher. We are now faced with high inflation expectations. What needs to be immediately done to cushion the high price expectations? The government needs to have a single communication plan explaining to the people why prices are rising and that they are addressing the supply constraints on basic

As we are all affected by high prices, there is a need for a concerted effort by all sectors to work together to beat inflation. This is not the challenge for the government alone. The private sector, media and consumers alike must also pitch in. Expectations can only be calmed by a prospective view that this condition is temporary. commodities, particularly rice. The tariffication of rice is a good policy option but its impact will not be immediate within a month. There are administrative processes that need to be addressed even if the law is passed soonest. Besides, the supply will come from other countries and there is considerable logistical considerations before it will reach the consumer markets. This is something that the government needs to explain to the people. The proposal of Congress through Speaker Gloria Macapagal-Arroyo on cutting tariffs on meat and fish are also welcome, but like rice, they will not come immediately. Plus, there are attendant issues that require again a competent bureaucratic handle beginning from the Bureau of Customs to the Department of Agriculture to importers to local governments and traders, which, sadly, we still are unable to manage well regardless of circumstance. These must be well-defined and well-executed in a timely and time-bound manner. As we are all affected by high prices, there is a need for a concerted effort by all sectors to work together to beat inflation. This is not the challenge for the government alone. The private sector, media and consumers alike must also pitch in. Expectations can only be calmed by a prospective view that this condition is temporary. The immediate and short-term government response is to raise interest rates, which does not directly affect the ordinary people but whose effect will slow down a currently robust economic momentum. As of today, the Bangko Sentral ng Pilipinas has probably raised interest rates by another 0.5-percent increasing the cost of doing business while the Philippine Statistics Authority has announced a still high secondquarter GDP growth of 6.7 percent. We are still growing fast. Let us not allow our own worries of higher prices to worry us down. Instead of blaming the TRAIN law, the better way to beat high prices is for all of us to work together to understand and respond to the current situation and not just insist on a single solution.

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hat makes a good coffee? That is not a simple question. Other people have even asked simpler questions. Conrad Aiken asked: What is the flower? Then, he answered: It is not a sigh of color…. He then asked: What is the frost? Then, he answered: It is not the sparkle of death. The poet went on and on, like any poet, till he exhausted all the answers without being exhausting. We become, as in the poet, what we ask and what we answer to what we ask. We, if we are Aiken with our frost and flower and coffee, become our coffee and mornings and breakfasts. But what happens if we have a rotten coffee, a breakfast with a sigh and a morning that is frosty? Those questions happened because of many things. One morning, over late breakfast, Lem, a good friend, noticed how the café we frequent, had become noisy and rowdy. What to do? We left the café. But the Americano in that place can make you say “lovely” to yourself without pretenses. The mug—if they use the mug—has a mouth that is not wide enough. You sip the coffee without the act of kissing in your mind. Kissing is one thing; sipping is another. Then the brew manifests itself: there is the bitterness that is product of the beans and not about memories of unrequited love. It is a bitterness that does not require the binary of sweetness, for that would make your equation, bittersweet and that is not coffee, but passion and love and sorrow already. We are talking of coffee here and, my point is, the café offers a drink that cannot be abandoned easily. That morning, though, had a crowd that did not seem to recognize the notion of proper meaning of public: In the open field of the public is also the notion of the private space, the boundaries of you and they, the arena where the self needs the respect of other selves. The second time we visited the

place, because we were really craving for that perfect brew or, at least, to our mind, the taste that satisfies our dream of perfection on this earth, there was a group of three men whose voices were so loud you could jot down the numbers they were screaming to each other. They were throwing millions at each other so loudly I wondered they did not do that in a board room where they, as trustees, could discuss their wealth to death as their seeds of eternal greed, to distort Aiken’s lines. Is there ever a café where there was a kind of silence, or a quiet that could make your croissant and butter melt into each other? Will there ever be a café in this nation where the strawberry jam can seduce you to forgive the effect of sugar in your diabetic life? Can I find a café where my space is slowly creating its own spaces because the other people do not think of themselves as imploding galaxies? “Make your own coffeeshop,” a friend suggested. To which, I said, I do not have that money. “Ask a café to have rules!” another friend advised. To which, I said, hmm, why not indeed. “The Café With Good Manners,” my sister offered a name.

The way of Jesus Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

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S we faced so many trials caused by people who don’t believe us, let us all remember what our Lord Jesus Christ has taught us that we should “bless those who curse us, pray for those who mistreat us. To the person who strikes us on one cheek, let us offer the other one as well…” (Luke 6:27-29).

This lesson from our Lord Jesus Christ means that “vengeance is never the way of Him” as “it is not the way of Jesus to return evil for evil; no, we can conquer evil only with good” (Romans 12:21). “Up to the last moment of His breath, He had nothing but words of mercy toward His tormentors, ‘Father, forgive

them for they do not know what they do.’” (Luke 23:34). Our Lord Jesus Christ wants us to be merciful and let the values of compassion be part of our life. It is indeed that we are being attacked sometimes by people who don’t see God in their life. However, it is not a reason for us to attack them, as well.

Hong Kong’s IPO takeoff is running out of runway By Nisha Gopalan Bloomberg Opinion

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race, brace. Hong Kong’s IPO takeoff is going to come to a screeching halt. There’s a flood of deals still in the pipeline, it’s true, from food delivery giant Meituan Dianping to biotech unicorn Innovent Biologics Inc. But investor fatigue is setting in, with many of the hot sales that helped to reignite the market in the past year trading below their offer prices or showing lackluster gains. China Tower Corp. closed unchanged  on its debut on Wednesday after completing the world’s biggest initial public offering in two years. That

mirrors the performance of smartphone maker Xiaomi Corp., another keenly anticipated listing that’s little changed a month after it started trading. Ascletis Pharma Inc., a Hangzhoubased maker of HIV drugs, has slumped 20 percent since making its entrance at the end of July. Even the online insurer that sparked a revival of Hong Kong’s IPO frenzy is in the red.  ZhongAn Online P&C Insurance Co., a company backed by Internet behemoths Tencent Holdings Ltd. and Alibaba Group Holding Ltd., surged on its  debut  in September, but now stands 42 percent below its price on listing. Two-thirds of IPOs that raised more

than $1 billion in the two years ended July 2017 were below their offer prices after six months; three-quarters had dropped after a year, data compiled by Bloomberg show. Ironically, the cause of the pain can be traced partly to measures Hong Kong Exchanges & Clearing Ltd. has taken to fight back against a US market that was luring away China’s neweconomy stars. Under Chief Executive Officer Charles Li, the exchange operator opened the gates to both dual-class stocks such as Xiaomi and “pre-revenue” biotech firms such as Ascletis.  The promise to IPO hopefuls  was simple: List in Hong Kong and get access to the trading pipes that allow

investors in mainland China’s partially closed capital markets to buy into the city’s stocks (another Li initiative). Often unable to list at home, this offered a way for Chinese pharma and tech companies to tap the wall of mainland investment money. It also helped Hong Kong to regain its crown as the world’s biggest IPO fund-raising venue. Hong Kong’s pitch also held out the prospect of a more direct route back into the mainland stock market, via China depositary receipts, though this didn’t pan out as hoped. China decided that CDRs were a concept whose time hadn’t yet come, forcing Xiaomi to postpone a sale that it had planned to conduct simultaneously with its Hong Kong IPO.

Friday, August 10, 2018 A11

“The Café With Good Manners a nd R ight Conduct,” I finally conceded. As this being of a café circulated around friends and acquaintances, more ideas started to filter in. The café will be open to public. The first time you use the café, you will be given copy of house rules. The rules are simple. They are basic good manners. They will pertain to a kind of order that transforms a café into a lovely place. Here are the basic rules: Keep your voice down. The person beside you may not always be interested about networking and the whitening products you are selling.

Keep your domestic squabbles at home. The Brooks Brothers shirts and the Kate Spade bag can never save you from damnation if you are loudmouthed and brash. If you are mad at your wife, do not transfer that rage onto the young man or woman at the counter preparing your latte. They do not care about your pinstriped and perfumed angst. The chairs in café are for you to sit on. Do not stretch your legs so that they extend to another chair. If your legs are edematous, use the special socks. Do not curl up into the chair unless you are an obese cat. This café does not prohibit

laughter; in fact, a nice laugh always contributes to the color of the morning. A slap of red there; a swish of yellow here. That is the function of a laugh. But, as you are not God, do not attempt to color the whole day with your laughter; worse, do not color with your huge laughter the day of others. Be conscious of your weight. My mentor in Sociology and my terrific teacher in Statistics, Dr. Ricky Abad, used to caution us about correlations. But let me venture into a kind of correlation here. Why is it that women and men who are big tend to laugh louder and with such espresso vulgarity in café? I cannot say, they are not in other places but, several times, I observe, how when a group of hefty men and women enter a café, they speak in loud, guttural sounds. Is that what is called throwing one’s weight around? Religion has no place in café—whether you are expressing your religious beliefs or selling them. In café, if you want to pray, pray quietly. I am certain if the man beside you want to join you in your “Hail Mary,” he will do so on his own or in a church, with you even. And really, I assure you, with the scent of all kinds of brewing in a café, your gods and my gods are open to listening to us. If you are selling religion, the café is not for you either. In a café, we repair in the morning to ask simple questions without anyone hearing our questions. In a café, we ask questions but do not seek answers because the coffee and the cake or bread shall answer for us. As regards the café with good manners, the first time you break a rule, you will not be allowed anymore into the café. Is this constitutional, you may ask. Who cares about constitutions! But, it is our human right to have coffee, you may say. Well, if you really want coffee, then you can brew yourself.

E-mail: titovaliente@yahoo.com.

As children of God, we should not use violence toward our brothers and sisters nor hurt them through words. We should love each other and help them to reunite with Christ as they are the sheep of the Lord who lost their way. It is true that we should keep our good friends close, but we should keep the sinners closer to us so that they will find the way back to our Lord Jesus Christ who will bring us to the Almighty Father. We should “work only for God’s kingdom which is beyond this world”—so that we can start learning to live life “on Earth as it is in heaven” (Matthew 6:10). Let us remind ourselves that “worldly kingdoms may come and go,” but the kingdom of God will never vanish. Let us offer ourselves to God by remaining faithful to Him in spite of the challenges that we face every day. “Whatever we do, we should work at it

with all our heart, as working for the Lord, not for men” (Colossians 3:23). My dear brothers and sisters in Christ, our Lord Jesus Christ is telling us to trust and strengthen our faith to the Almighty Father while waiting for the upcoming breakthrough in our life. We should learn how to remain focused in doing the will of the Father for our common good. May our journey in life be full of blessings from God and may our Lord Jesus Christ guide us in our way toward the Kingdom of God.

That’s not all: China’s stock exchanges subsequently said they wouldn’t let mainland investors buy shares with weighted-voting rights, closing Xiaomi off from the Shanghai and Shenzhen stock connects. The takeaway? Hong Kong probably isn’t ready for companies that have yet to turn a profit. The two big gainers among listings since mid-2017 are Chinese new-economy firms that are making money: Tencent-backed online bookstore China Literature Ltd. and biotech  Wu X i Biologics (Cayman) Inc.  A biotech firm that’s further along than Ascletis in clinical trials, such as Innovent, may win more fans, but even

that’s no guarantee. Cancer-drug developer BeiGene Ltd. dropped on its debut on Wednesday. Chinese IPOs tend to be smaller in the US but their performance has been better, with lack of profitability no bar in a market that prizes growth. Conversely, earnings are no shield when growth prospects dim: Qudian Inc., a Beijing-based online lender that is profitable, plunged by more than half since March amid a regulatory crackdown on the industry. The lesson for China’s budding neweconomy stars is that Hong Kong may not be worth the hassle. And for the city’s IPO investors: Stick to firms that are already in the black.

To know more about Caritas Manila, visit or follow us on Facebook: CaritasManilaInc. For your donations, please call our DonorCare lines 5639311, 564-0205, 0999-7943455, 09054285001, and 0929-8343857. Make it a habit to listen to Radio Veritas 946 in the AM band, or through live streaming at www.veritas846.ph and follow its Twitter and Instagram accounts @veritasph and YouTube at veritas846.ph. For your comments, e-mail veritas846pr@gmail.com.


2nd Front Page BusinessMirror

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House panel returning 2019 budget to DBM, decries cuts T

By Jovee Marie N. dela Cruz

@joveemarie

HE chairman of the House Committee on Appropriations on Thursday said lawmakers have decided to restore the obligation-based budget system for 2019 national budget. They are preparing a resolution recalling the budget reform bill endorsed by the Department of Budget and Management (DBM), which proposes a shift from a multiyear obligation budget to an annual cashbased budget.  In an interview, Rep. Karlo Alexei B. Nograles of Davao City, the panel chairman, said several lawmakers have expressed their opposition to the cash-based budget system championed by the DBM as it slashed budgets of key agencies under the proposed P3.757-trillion national budget for 2019.    “We are not going to support the cash-based budgeting,” Nograles said.    He added the proposed 2019 budget—which is cash-based— was P10 billion lower than the current P3.767-trillion General Appropriations Act. According to Nograles, the budget of the Department of Health was decreased by P35 billion; the Department of Education, by P77 billion; and the Department of Public Works and Highways (DPWH) by P95 billion. There were also P5-billion reductions in the budgets of the Department of Social Welfare and Development (DSWD) and Commission on Elections (Comelec). The proposed 2019 national budget is cash-based as opposed to the traditional, multiyear obligations-based budgeting. The

DBM has described it as the more efficient budgeting method since it limits incurring obligations and disbursing payments for goods delivered and services rendered, inspected and accepted within the fiscal year. The obligations-based budgeting, meanwhile, is common budgetary practice in the Philippines. It allows appropriations and obligations until the next fiscal year, extending the validity of funds to two years. Budget Secretary Benjamin E. Diokno earlier stressed, however, that the proposed 2019 budget and the existing 2018 budget cannot be compared as “apples to apples” since one is cash-based while one is obligations-based.  

Budget reform bill

Moreover, Nograles said the cashbased system was the whole concept of the budget reform bill that was approved by the House in March and now pending in the Senate. With this, Nograles said a resolution is now being signed by lawmakers requesting the Senate to return House Bill 7302, or the Budget

Reform Act, in order for the lower chamber to introduce further perfecting amendments. The bill seeks to reform the budget process by enforcing greater accountability in public financial management (PFM), promoting fiscal sustainability, strengthening Congress’s power of the purse, instituting an integrated PFM system, and increasing budget transparency and participation.  There is a need for the House of Representatives to recall the enrolled copy of House Bill 7302 “in order to introduce amendments,” said the resolution authored by Majority Leader Rolando G. Andaya Jr., Nograles and Albay Rep. Joey S. Salceda.  Moreover, Nograles said members of the House of Representatives have agreed to sign a resolution seeking the recall of the approved budget reform bill. “The implication of recalling the budget reform bill is our opposition to the cash-based budgeting for 2019. So now, what the House is saying, we don’t want cash-based budgeting; what we want is to restore [the budget system to] obligation-based,” he added. 

Challenging

During the hearing of the House Committee on Appropriations, Public Works Secretary Mark A. Villar admitted that the shift to a cash-based budgeting is “challenging” for his agency. According to Villar, the department has made several adjustments due to the cash-based budgeting system as it requires disbursements to be made within the fiscal year.    “We are adjusting to this new policy which is in contrast to

the previous shift. It is the mandate of this department if they tell us to disburse in one year, we have to adjust our assumptions based on that,” Villar said.   “We have to make sure that our timelines are extremely accurate. We have to make sure preparations [for] our projects are all on time...  It’s more challenging, [but] it’s not impossible. It’s a different form of budgeting and we will do our best to adjust to it,” he added.  Meanwhile, lawmakers are pushing for the restoration of budget cuts of the DPWH. Last Wednesday Majority Leader Andaya said “there have been suggestions that we overhaul it, we return it, we tweak it, [or] we change the forecast.”  According to Andaya, the 2019 national budget submitted by the DBM may have made wrong projections on inflation. He said the 2019 budget should be adjusted considering the country’s soaring inf lation.  “The inflation target may already be inaccurate. So faced with that situation, economic managers should submit a higher budget adjusted to inflation,” Andaya said. “This is the first time that it will happen. There’s no precedent to this. Everything is uncertain maybe a little more study before we apply it,” Andaya added. In his 2019 budget message, President Duterte urged Congress to pass the budget reform bill to promote and implement pa r t ic ipator y budget mec hanisms in the different phases of the budget cycle to encourage citizen engagement and ensure a more responsive budget.

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PNOC offering banked gas from Malampaya, sets Sept. 3 deadline By Lenie Lectura

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@llectura

HE Philippine National Oil Co. (PNOC) is again soliciting offers for the sale of unused Malampaya natural gas, more known as banked gas. “PNOC invites interested parties to submit offers to buy its 97.67 Petajoules of Banked Gas,” it said in a bid invite published on Tuesday. PNOC requires that each offer be submitted in two identical sets in sealed envelope and these must be received on or before September 3 at 2 p.m. The maximum average daily quantity deliverable to the buyer is 32.22 terajoules per day. The enddate delivery is until February 23, 2024, and the delivery point is the Malampaya Onshore Gas Plant in Tabangao, Batangas. Those with acceptable offers will be required to submit qualification documents to establish their legal, technical and financial eligibility. PNOC earlier sent out a similar bid invite. However, PNOC Executive Assistant Atty. Jannefer Pelayo said “no one qualified.” “PNOC is offering it again for sale through submission of offers which will be evaluated and further negotiated to get the best value for the government. PNOC will negotiate for the best offer subject to the final approval of the board of directors. We will study if there is a need for Swiss challenge,” she said. PNOC said last year that proceeds from the sale of the banked gas, amounting to about P11.9 billion, will be utilized to finance government’s plan to put up a liquefied natural gas (LNG) hub. PNOC said it is swamped with

offers from foreign and local firms for a partnership in the former’s plan to put up an integrated LNG hub with storage, liquefaction, regasification and distribution facility, as well as a reserve initial power plant capacity of 200 megawatts. This is targeted to be completed in 2020. “We are still in the process of evaluating the unsolicited proposals with the ADB [Asean Development Bank]. We are strongly hoping to find our partner for the LNG project soon,” said Pelayo, adding that the intention is to finalize its LNG plan, including its preferred partner, within the year. PNOC earlier tapped the services of ADB as consultant for its planned LNG project. PNOC had said it received offers from First Gen Corp., Energy World Corp., PT Jaya Samudra Karunia, PT PGN LNG Indonesia/PT Bosowa Corporindo with local partner MOF Corp., Korea Electric Power Corp., Lloyds Energy Group and China National Offshore Oil Corp. The planned LNG project should be completed before the expected depletion of the Malampaya offshore gas find near Palawan island in 2024. The Malampaya project currently supplies fuel to five natural gas plants with a total installed capacity of 3,211 MW. This amounts to 21.33 percent of the installed capacity of the Luzon grid and almost 15 percent of the country’s total installed capacity. LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas.

Govt unfazed as Q2 Gdp growth slower at 6 percent Continued from A1

livestock and poultry production also reported weak output. “We are also gravely concerned about the almost stagnant output of the agriculture sector and this supports our premise that the main reason behind the high inflation is the gross deficiency in the domestic production of food, which was not augmented by imported goods, especially rice,” Pernia said. To remedy this, Pernia said the Department of Agriculture (DA) must conduct a comprehensive review of the policies and programs that restrict access to land and the use of land in the country. He added there is a need to review the current access of farmers to technology and extension services, access to finance and access to markets.

‘Fight cartels, smuggling’

The Neda chief also said the Department of Trade and Industry (DTI) and the Philippine Competition Commission (PCC) can help assess the market and determine the possibility of the existence of cartels and incidence of smuggling. Pernia said the tariffication of the country’s quantitative restriction on rice will help give Filipinos some reprieve from high commodity prices. The bill has already been passed on second reading at the House of Representatives and is at the committee level at the Senate. “Rice tariffication is a crucial measure to address food supply issues and their consequent impact on inflation. It will reduce the policy uncertainty in rice trade, and hopefully, encourage

more productive investments in the sector,” he said. The Neda chief also said some government policies, such as the temporary closure of Boracay Island, took a toll on the economy. The government decided to close Boracay Island to tourists between April and October 2018 to rehabilitate the island by addressing sanitation and environmental issues that have plagued the island for years. He said the decision of the President to close Boracay Island was not a “populist” decision. Pernia said the closure of Boracay Island diverted many tourists to lesser-known destinations in the country. Pernia remains confident that the reopening of the island will be able to shore up the muchneeded tourism revenues and activities that would create jobs for Filipinos. “Closing was a very sound decision by the President. Many of our other tourist destinations have received the tourism diversion from Boracay as witnessed in the case of Cebu, Bohol and Siargao [as well as] so many other tourist destinations,” he said. “It was a blessing in disguise.”

Government consumption

Data from the PSA also showed that the expansion in government consumption slowed to 11.9 percent in the second quarter, from 13.6 percent in the previous quarter. Pernia said this may have also contributed to the anemic performance of the economy. He attributed the cut in government consumption to lower disbursements for personnel services, maintenance and operating expenses, as well as subsidies de-

spite the higher allocation to local government units. Public consumption is expected to be boosted by the “Build, Build, Build” (BBB) program, as well as the government’s social spending particularly for cash transfers, the National Health Insurance Program, and utilization of the calamity fund for the reconstruction, rehabilitation and repair programs in calamitystricken areas. The growth in household consumption also slowed to 5.6 percent from 5.7 percent last quarter and 6 percent in the second quarter last year. This, Pernia said, was due in part to the increase in commodity prices. But the situation is expected to improve given the plans of the government to convert the rice QR into tariffs. Pernia said rice has a dominant weight in the food basket of consumers, especially the poorest 30 percent. “In the case of household consumption, higher disposable incomes resulting from the recently passed Tax Reform Package 1 and improved labor market conditions are seen to help sustain growth,” Pernia said. The Neda chief the entry of a third player in the telecommunications sector will boost the services sector in the second half of the year. Pernia said the third telecommunication player can encourage the development and growth of small and medium enterprises, particularly those engaged in retail trade. Among the major economic sectors, services recorded the fastest growth at 6.6 percent. Industry followed with 6.3 percent.

Businessmirror August 10, 2018  
Businessmirror August 10, 2018  
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