Businessmirror August 14, 2018

R.C.E.P. ONLY WAY TO CUT TARIFFS ON PHL BANANAS–S. KOREA ENVOY

By Jasper Emmanuel Y. Arcalas @jearcalas

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HE only way South Korea can reduce the tariffs slapped on Philippine banana exports is through the forging of the ambitious Regional Comprehensive Economic Partnership (RCEP), its top envoy to Manila has said.

South Korean Ambassador to the Philippines Han Dong-man said that the conclusion of the

Bananas are on display at a public market in Pasay City in this file photo. According to Korean Ambassador to the Philippines Han Dong-man (inset, gracing a BusinessMirror Coffee Club forum), Seoul’s hands are tied by WTO rules in cutting tariffs on Philippine bananas, and the only route it can do this is through the Regional Comprehensive Economic Partnership. Alysa Salen

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RCEP remains as the priority avenue for Seoul to cut tariffs on Manila’s banana exports, which are currently levied with 30-percent duty.

“We will try to reduce the tariff with the accomplishment of RCEP. If they conclude the RCEP, then we can have whatever free-trade agreement [FTA] where we can reduce such tariff,” Han said during the recent BusinessMirror Coffee Club forum in Makati City.

“This is a very important issue for me because Davao and Mindanao, where the bananas are coming from, is the hometown of President Duterte,” Han added.

In June Manila sought a preferential trade agreement (PTA) with Seoul to cut tariffs on its fruit exports, including bananas, to 5 percent, but to no avail.

Han said they could not have a PTA with the Philippines as World Trade Organization (WTO)

member-countries could red-flag it.

“I asked my deputy prime minister and my secretary for commerce to give a special tariff on the Philippines, but they said it is not possible.

Because, if we do that, the other WTO membercountries will raise it as an issue against the rules of the WTO,” he explained.

“The only one way to reduce the tariffs is through FTA. That is why, for the moment, RCEP is the No. 1 [priority]. After RCEP, then we will continue to tackle this issue,” he added.

The South Korean diplomat vowed to do his best to iron out the reduction of tariffs on Manila’s banana exports with his colleagues.

“As an ambassador to the Philippines, I ask sometimes and I try to twist their arms to favor the Philippines because that’s part of my job. But sometimes I face difficulties,” Han said.

See “RCEP,” A8

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Tuesday, August 14, 2018 Vol. 13 No. 304

DOF: Federalism to lead to ₧1.2-T deficit in 1st year

By Rea Cu

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@ReaCuBM

HE shift to a federal form of government may lead to a deficit in the first year of its implementation, estimated at P1.2 trillion, and this may require trimming the federal government’s expenditure program by P560 billion to keep within the target deficit of 3 percent, the Department of Finance (DOF) has pointed out.

DOF Undersecretary Gil S. Beltran told financial reporters on Monday that the deficit of the government would bloat to around P1.2 trillion since carrying out the draft

As good as it can get Teddy Locsin Jr.

free fire The Global Compact on Migration Conference in the Philippines, August 14 and 15, preparatory to its formal adoption in Morocco in December 2018.

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ODAY we tackle issues that have confronted mankind since way before the League of Nations was born, drew first breath out of the womb and struggled mostly without success until it famously died from being ignored by the public and the politicians in the smoke of the greatest war in history—the very war it was established to prevent.

Continued on A2

Continued on A7

Senators await House move vs cash-based budget, halt hearings

By Butch Fernandez & Jovee Marie N. dela Cruz

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@joveemarie

ENATORS, meeting in an unscheduled caucus on Monday, opted to adopt the House move suspending consideration of the Palace-proposed P3.757-trillion 2019 national budget to compel the Duterte administration’s economic managers to scuttle their cash-based scheme imposing huge cuts in the annual money measure.

Senate President Vicente C. Sotto III and Majority Leader Juan Miguel F. Zubiri, in separate interviews after their closed-door meeting, confirmed the leadership’s consensus for the Senate to await final action on the issue by their Congress counterparts, citing the rule that all money measures emanate from the House of Representatives.

“We are still studying it [pinagaaralan pa],” Senate President Sotto told the BusinessMirror. “Tomorrow [Tuesday], we will have a clear picture,” Zubiri told reporters after their meeting, even as he admitted they also agreed to “postpone the Senate budget hearing” scheduled for Tuesday.

Zubiri, who also chairs the Senate’s Rules Committee, pointed out that senators “cannot tackle the budget bill on our own,” adding that “it has to emanate from the House.”

He confirmed their decision to

Agri growth seen flat sans higher investment

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that is a 44- percent increase, which is still bad news for consumers, and the poor are greatly affected here,” Dimagiba argued.

The SRP applies to more than a dozen products, namely, canned sardines in tomato sauce, processed milk, coffee refill, bread, instant noodles, iodized salt, detergent soap, bottled water, candles, canned meat, condiments, soap and batteries. “When we excluded the 17 items of bottled water and 28 items of candles, that is an unconscionable 113-percent increase in the listed items,” he added.

HE country’s farm sector will continue to post a measly growth if the government will not ramp up its funding to ensure the improvement of farmers’ productivity, according to Agriculture Secretary Emmanuel F. Piñol.

Piñol’s statement comes after Socioeconomic Planning Secretary Ernesto M. Pernia expressed his “grave concern” for the “stagnant” growth of the agriculture sector, which dragged the economy’s expansion to a slower rate of 6 percent in the second quarter.

“Agriculture posted a positive growth, however small. Besides, didn’t they [economic managers] say that agriculture isn’t that important in the country’s economic growth?” he told the BusinessMirror via SMS. “Now it is being blamed for the [economy’s] slow growth. How’s that?” he added. Piñol said he hopes that the Department of Agriculture’s budget would be increased following the move of the House of Representatives to return the cash-based 2019 National Expenditure Program to the Development Budget Coordination Committee (DBCC).

Members of the House of Representatives were firm in opposing the cash-based budgeting system proposed by the budget department for next year.

The shift from obligation-based to cash-based has resulted in several cuts in various agencies’ budget for next year, they noted.

See “Prices,” A8

See “Agri,” A2

“Having a reenacted budget is an unacceptable scenario, especially as 2019 will be an election year.... It means literally stuffing the President’s war chest with funds in an election year.”—Pangilinan

@butchfBM

also “postpone our scheduled hearings” on the budget.

Asked if he was backing the House leaders’ move suspending action on the awaited 2019 budget bill, Senate President Pro Tempore Ralph G. Recto said it is up to their congressional counterparts. “That [deferring budget deliberations] is the prerogative of the House,” Recto told the BusinessMirror.

Former Senate President Aquilino L. Pimentel III, however, said he was not endorsing it when asked if he was supporting the House move to compel economic managers to abandon cash-based budget. “No,” Pimentel replied, adding: “I am interested about this cash-based budgeting.”

Sen. Francis G. Escudero, in a text message to the BusinessMirror, invoked “inter-chamber courtesy” when sought for his reaction on the brewing controversy.

“That is their decision and interchamber courtesy dictates that I should not interfere with House decisions,” Escudero said in a text message to the BusinessMirror.

Continued on A2

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The additional allotments to federal regions, based on the formula of the 50:50 revenuesharing scheme, which could be entailed by implementing the provisions of a federal constitution

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Rows of various products are seen in a supermarket in Makati City. A consumer group claimed prices of 93 basic commodities, including processed milk and canned meat, increased by as much as 11 percent since January. NONIE REYES

Grocery bag reflects inflation: Prices up 11%

By Elijah Felice E. Rosales

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@alyasjah

RICES of 93 basic necessities and prime commodities, including processed milk and canned meat, increased by as much as 11 percent since January, according to consumer group Laban Konsyumer Inc. However, Trade Undersecretary Ruth B. Castelo refuted this report. She branded it inaccurate, as computations made by the Department of Trade and Industry’s (DTI) Consumer Protection Group claimed only 84 items have seen

higher prices in the first seven months of the year. In a news release on Monday, Laban Konsyumer President Victorio A. Dimagiba Jr. said his group reviewed items with suggested retail prices (SRPs), and found 93 commodities of the 132 in the original SRP list have higher prices as of July 16. The expanded SRP list now has 211 goods. “[This is] bad news for the consumers because in the old SRP list of 132 items, 93 items had increased prices since January to date, meaning 70 percent of the goods increased prices. If we use the new denominator in 211 items in the expanded SRP,

n japan 0.4811 n UK 67.7643 n HK 6.7694 n CHINA 7.7639 n singapore 38.7006 n australia 38.6564 n EU 60.4369 n SAUDI arabia 14.1684

Source: BSP (13 August 2018 )

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DOLE: Regularized workers to reach 600K

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By Samuel P. Medenilla

@sam_medenilla

ROUND 600,000 contractual workers are now expected to be regularized before the end of the year after the Employment Confederation of the Philippines (Ecop) gave its support to the government’s anti-illegal contrtactualization drive.

Senators await House move vs cash-based budget, halt hearings Continued from A1

Escudero, however, earlier expressed “serious reservations” about the same issue during the Senate‘s plenary deliberations on the 2019 budget bill. The senator recalled citing “its negative impact on the administration’s ‘Build, Build, Build’ projects given the foregone fiscal space of a cash-based budgeting.”

Escudero also noted the “lower agency allocation as the solution to underspending/ low absorptive capacity instead of identifying and rectifying choke points/bottlenecks in the implementation of government programs; and, the absence of fiscal space that will give the administration enough elbow room to address unforeseen events, such as natural [i.e., flooding and earthquakes] and man-made [rising inflation and conflagration calamities].”

Sen. Sherwin T. Gatchalian told reporters he was still fixing a date for the Senate Committee on Economic Affairs to conduct hearings on the issue. “It was referred to the Economic Affairs, we are just fixing the schedule,” he said.

Middle ground This developed as Minority Sen. Francis N. Pangilinan held out hopes that Malacañang and Congress leaders can find a middle ground to avert the scenario where the Duterte administration would be forced to operate under the old budget in 2019.

“Nothing is insurmountable in the disagreement between the Executive and Congress on the 2019 proposed budget,” said Pangilinan, adding: “Having a reenacted budget is an unacceptable scenario, especially as 2019 will be an election year.” Pangilinan pointed out that a reenacted budget “would mean that the President will have blanket authority to declare the capital outlay component as ‘savings,’ which will give it power to use the same for whatever programs, activities and projects the President wants.”

The senator added: “It means literally stuffing the President’s war chest with funds in an election year.” As it is, he said, “there are a number of lump-sum items in the budget,” aside from the billions of pesos in intelligence and confidential fund at the President’s disposal.

Reenacted budget?

AS the House and DBM are headed for an impasse on the adoption of annual cash-based appropriations, a lawmaker on Monday said a reenacted budget for 2019 was very possible.

Albay Rep. Edcel C. Lagman said House members are all against Budget Secretary Benjamin E. Diokno’s cash-based budgeting system in lieu of the traditional obligation-based budgeting.

“The looming deadlock makes a reenactment

Agri. . .

Continued from A1

In a Facebook post on August 13, Piñol said the government must invest more in the agriculture sector if it wants to ramp up local production.

“The 0.2-percent growth shows that agriculture, without added intervention from government and with the reduction of its budget, is levelling off and will remain that way unless the reforms are made,” Piñol said.

“I am happy that recent developments, where the economic managers are pointing at the lackluster performance of agriculture and the inflationary effect of the price of rice as the

of the 2018 GAA imminent as the remaining budget hearings have been suspended and the preparation of the General Appropriations Bill [GAB] for first reading has been stopped pending the necessary amendments by Diokno and the Executive of the President’s budget proposal for the next fiscal year,” Lagman said.

In cash-based budgeting, only projects and programs which are implementable for completion and payment within the fiscal year and during the three-month extension period after the year-end are included for funding in the GAA. Obligation-based budgeting, on the other hand, includes in the GAA projects and programs the implementation, completion and payment of which could be made beyond the year-end—provided they are obligated within the fiscal year by contract or other modes of incurring obligation.

Absorptive capacity Diokno said Malacañang’s proposed 2019 cashbased national budget is slightly lower than the previous year’s because it is based on each agency’s absorptive capacity and the readiness of the projects and programs for implementation.

For his part, House Committee on Appropriations Vice Chairman Luis Raymund F. Villafuerte Jr. of Camarines Sur called on national government agencies to get their act together in implementing infrastructure projects.

Villafuerte said the low absorptive capacity of certain national government agencies in implementing projects—as conceded by Diokno—has affected the allocation for infrastructure projects at the local government level.

According to Action for Economic Reforms, in the United States, Congress is duty-bound at all times to legislate an appropriations act on time, and when it fails to do this, federal programs literally shut down.

However, in the Philippines, the group said Congress is not subject to the same kind of pressure as the government agencies simply operate on the basis of the previous year’s budget.

Amid issues on the country’s shift to cashbased budgeting system, the House Committee on Appropriations has temporarily suspended the deliberations of the 2019 proposed P3.757trillion national budget.

Andaya: No reenacted budget Majority Leader Rolando G. Andaya Jr. said the issues over the budgetary system would not result in a reenacted budget, saying the lower chamber is not moving toward that scenario.

Andaya said Speaker Gloria MacapagalArroyo told lawmakers to just do their job and understand the 2019 proposed national budget submitted by the DBM.

causes of the slowdown in economic growth, are providing me with the best arguments that agriculture must be given its fair share of attention and, of course, budget,” Piñol added.

In his social-media post, Piñol also listed government programs and projects that should be tweaked to ensure the expansion of agriculture output.

First, he said the government’s ambitious infrastructure program—the “Build, Build, Build”—”should be extended to the arterial and farm to market roads leading to the food production areas.”

“While the government has poured hundreds of billions of pesos widening the highways and destroying still usable highways to re-pave these

The Department of Labor and Employment (DOLE) doubled its target number of regularized workers for 2018 following Ecop’s commitment it will compel its members to absorb 300,000 of their contractual employees.

“This is a significant number which demonstrates the employers’ cooperation with the government,” Labor Secretary Silvestre H. Bello III said in a statement.

He said they are now drafting an agreement with Ecop to embody the details of that commitment.

The BusinessMirror tried contact-

ing Ecop executives for their views on the planned agreement, but they have not responded as of press time.

Labor Undersecretary Joel B. Maglunsod welcomed the development since it will greatly help in their efforts to regularize more workers He said he hopes Ecop will fulfill its pledge before the end of the year.

“They made this commitment with the understanding that the memorandum of agreement [contains] the details for its execution. If they will not be able to comply with it, they will be held li-

able [by the DOLE],” Maglunsod told the BusinessMirror.

The DOLE attributed the increase of employers’ compliance with regularization laws to the strict enforcement of its anti-illegal contractualization drive.

In June the DOLE released its list of top 20 firms, which it inspected, with the most number of illegal labor-only contracting (LOC).

During that period, it also submitted to Malacañang the list of 3,377 companies, which are suspected or engaged in LOC. Labor Assistant Secretary Benjo M. Benavidez said the release of the list “encouraged” more companies to voluntarily regularize their workers.

“We noticed a significant increase.

Actually, in February alone, [in the] NCR [National Capital Region] there were already 51,000 workers who were voluntarily regularized,” Benavidez said.

With the said trend, the labor official said they are confident of achieving their goal of regularizing 300,000 contractual workers before the end of the year. As of August, the DOLE said it got business to regularize 213,000 employees for 2018.

Inflation dims rosy outlook on PHL consumption

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ONSUMPTION in the country is seen to continuously outperform its regional counterparts for this year and the next, but the upward trajectory of local prices is seen to pose a threat to this sector, an international think tank said.

In its latest industry trend analysis on the Philippines, Fitch Solutions—the research arm of Fitch Group—said the consumer outlook for the Philippines remains “bright” on the back of a strong economic growth trajectory, high levels of remittance inflows and falling unemployment levels.

“The Philippine consumer will continue to outperform over 2018 and into 2019, driven by an ongoing boom in the services sector and one of the fastest-growing economies in South East Asia,” Fitch Solutions said.

“Our favorable outlook for the Philippine

consumer is further underpinned by an improving labor market…. We forecast unemployment to come in at 7 percent for 2018, remaining stable from 2017, and [falling] lower to 6.9 percent in 2019,” it added.

Consumption is one of the key pillars of the Philippine economy.

Despite the rosy outlook, the international think tank warned about the effect of rising inflation on Philippine consumers, saying the price pressure is a risk to consumption as inflation keeps rising due to higher excise taxes and global oil prices, as well as sustained high credit growth.

“Inflationary pressure does present a downside risk over 2018 and beyond, driven by an upward revision in our forecast for the oil price, which will drive inflation higher,” Fitch Solutions said.

In their latest monetary policy briefing, the Bangko Sentral ng Pilipinas (BSP) said inflation is 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 has already averaged at 4.3 percent, with the latest print at 5.7 percent in July.

For 2019, the BSP said inflation is expected to hit 3.7 percent, up from the 3.3 percent as earlier forecast.

The BSP also announced its 2020 inflation forecast, which was at 3.2 percent.

While the 2018 forecast is an acceleration, both the 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 are the higher transportation and utility fares during the month, as well as the higher taxes on tobacco. Bianca Cuaresma

DOF: Federalism to lead to ₧1.2-T deficit in 1st year Continued from A1

Charter change in order to transition to federalism entails additional expenditures for the government.

“That’s right, that’s additional P1.2trillion deficit if we follow what we think they [Consultative Committee] are talking about,” Beltran said.

The P1.2 trillion translates to a 6.7-percent deficit to gross domestic product (GDP) ratio.

Beltran explained that provisions under the draft federal constitution entail additional allotments to federal regions which can go up to P744.9 billion, based on the formula of the 50:50 revenue-sharing scheme, with capital transfers reaching P251.1 billion, resulting in around P1 trillion.

The proposed equalization fund would need about P131 billion and taxes transferred to the federal regions would reach around P168 billion. The Bangsamoro block grant as well as the Cordillera block grant are each estimated to need around P100 billion, as well.

The government’s deficit target for this year is at 3 percent or P523.6 billion, moving to a 3.2-percent deficit target come 2019 or P624.3 billion, and back to a 3-percent deficit come 2020 up to 2022.

“If you add all of those, it will be about P560 billion. Which would be taken out of

with concrete, the farm-to-market road program has received a pittance—P9.5-B—good only for 900-kilometers,” he said.

“The current backlog in the Farm to Market Road Program is 13,000 kilometers and at the rate we are building FMRs it will take us about 12 years before we will complete the network,” he added.

Piñol renewed his call to review the government’s Pantawid Pamilyang Pilipino Program (4Ps) and argued that it “hardly cushioned the effect of inflation on the poorest of the poor.”

“I am not an economist but I have always contended that this money is better spent for programs which would assist the poorest of the

the federal government [and] would mean we would be cutting federal government expenditures, that’s you know the P560 billion it’s about 95 percent of the personnel services...,” he added.

Finance Secretary Carlos G. Dominguez III earlier said that based on the fiscal provisions of the draft federal Charter, the federal government would incur a deficit of 6.7 percent, which may result in a credit-rating downgrade for the Philippines, which currently enjoys an investment-grade rating.

According to the finance chief, to avoid this negative economic consequence and maintain the current deficit target of 3 percent, “the federal government will have to cut its expenditure program by P560 billion.”

“This means the national government may have to lay off 95 percent of its employees, or reduce the funds for the ‘Build, Build, Build’ program by 70 percent, or a combination of both,” Dominguez said.

He again pointed out that the draft federal constitution contains ambiguous provisions on the allocation of expenditures for the would-be federated government and its federated regions, which underscore the urgency of opening more discussions on this proposed document crafted by the Consultative Committee tasked to review the 1987 Constitution.

Dominguez made it clear that while

poor become productive rather than give this out, expecting such intangible and unquantifiable results as increased attendance in schools of poor children and more visit to the clinics by mothers,” he said.

“Let me make this clear: I am not proposing the abolition of 4Ps, rather a review of the program where instead of cash dole-outs, this would be given in the form of livelihood assistance especially in food production where the barometer of success would be the reduction in poverty incidence,” he added.

Like before, he urged the use of the P120billion 4Ps funding for livelihood programs for the poor instead of giving them as dole-outs.

“The key word is Pump-Priming rather than

the economic team is not against federalism, it has the responsibility to point out the ambiguous and unclear provisions in the proposed draft Charter, “especially when the possible repercussions could result in dire, irreversible economic consequences.”

He pointed out that while the draft Charter contains provisions on the taxation powers of the Federal Government and the Federated Region and a provision on revenue assignment in which the Federated Regions shall be given a 50-percent share in income, excise, value-added taxes and customs duties, “there is no provision on expenditure assignment.”

Citing an example, Dominguez said that although the draft constitution provides for an Equalization Fund, which shall not be less than 3 percent of the annual General Appropriations Act, it does not state whether this will be taken from the share of the Federal Government or of the Federated Regions.

The Equalization Fund refers to the allocation for the federated regions that would be distributed based on the needs of each region, with priority given to those that require greater support to achieve financial and economic sustainability as determined by a “Federal Intergovernmental Commission.”

pouring water down a pipe, as in helping the poor build water pumps rather than quenching their thirst by rationing water,” Piñol said.

“To put it in plain and simple language: Gamitin natin ang P120 billion para makatulong sa mga mahihirap at maparami ang pagkain sa bansa [Let us use the P120 billion to help the poor and to produce more food for the country],” Piñol added.

Piñol also pointed out that people should erase the bias against rice production as the DA’s annual banner program. “My answer is straightforward and simple: Because it is what Filipinos eat.”

“Should Filipinos decide to accept the Cardava Banana as their staple food, then the

DA will shift its Banner Program to producing more bananas,” he added.

Furthermore, Piñol said there is a need to reset the mind-set of the government’s economic managers, particularly their view on the farm sector.

“The Philippines, no matter what they say, is still and will always be an agricultural country where the lifeblood of the economy is agricultural production,” he said.

“Abandon agriculture and years from now, we will suffer the same fate as that South American country, where food riots are now taking place because at the time their revenues from oil were overflowing, they abandoned agriculture,” he added. Jasper Emmanuel Y. Arcalas

The Nation BusinessMirror

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Duterte relieves 20 AFP-MC execs, employees over alleged corruption

By Bernadette D. Nicolas @BNicolasBM

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resident Duterte has ordered the relief of some 20 officials and employees of the Armed Forces of the Philippines Medical Center (AFP-MC) over alleged ghost transactions and anomalous purchases of medical equipment.

Presidential Spokesman Harry L. Roque Jr. said in a briefing that the alleged corruption activities involving hundreds of millions of pesos, including a single transaction of ghost deliveries amounting to P1.491 million, was brought to the attention of the President.

Roque added that, the President has since read the reports of the Presidential Anti-Corruption Commission and AFP Chief of Staff General Carlito Galvez, and was “ballistic” over the “institutional corruption.”

“President Duterte has ordered their relief and court martial proceedings against the top military brass [AFP-MC] which includes Brig. General Edwin Leo Torrelavega, commander of the AFP Health Service Command [HSC]; Col. Antonio Punzalan, Commander of the V. Luna Medical Center, Chief of Management and Physical Office and the Logistics Office of the AFP-HSC, among others,” Roque said, adding that replacements are yet to appointed.

Based on the report, several high-ranking officials and employees of AFP-MC and AFP-HSC, undertook anomalous purchases of equipment, and allegedly engaged in fraudulent transactions, including ghost purchasing, splitting of contracts to circumvent mandatory bidding processes and conceiving fictitious suppliers.

Asked on the President’s reaction when he learned about the alleged corrupt activities, Roque said: “He’s ballistic. Because only recently he ordered that the sum of P50 million a month be released to V. Luna to make sure that V. Luna will have sufficient funds to cover all medical requirements of members of the Armed Forces of the Philippines. And of course, only to find out that bulk of the funds or much of the funds may be going to pockets of corrupt officials of the Armed Forces.”

Pressed for more details on how the alleged anomalous acts were d iscovered, Roque sa id there was a whistleblower who went to the proper channels until the initial investigation. “ The President ordered the Presidential Anti-Graft Commission to investigate, and he also ordered the Chief of Staff to look into the matter,” he said, adding that the report came on the day of the Cabinet meeting when the President expressed his exasperation over corruption.

“But the reports came in last Monday which explains why the President was very aggravated in talking about corruption in the last Cabinet meeting because there was the issue of both Nayong Pilipino and V. Luna—information which he had just received concerning [alleged] fraudulent activities in both agencies,” he added.

According to Roque, Galvez said that he will immediately relieve Torrelavega and Punzalan, and convene court martial proceedings against them without prejudice to the investigation to be conducted by the Ombudsman for the military.

Last week Duterte sacked the entire board and management of Nayong Pilipino Foundation for a lease contract that President Duterte found “grossly disadvantageous.”

The Palace announcement came amid the launch of a $1.5-billion NayonLanding project, an integrated casino resort inside the 100-hectare Entertainment City.

Editor: Vittorio V. Vitug • Tuesday, August 14, 2018 A3

Amid monsoon flooding, PNP chief orders CIDG to nab hoarders, price-freeze violators

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By Rene Acosta

@reneacostaBM

ational Police (PNP) chief Director General Oscar D. Albayalde ordered on Monday police intelligence operatives and members of the Criminal Investigation and Detection Group (IDG) to arrest hoarders and violators of the price freeze imposed on basic commodities in areas that are under state of calamity as a result of incessant monsoon rains and torrential flooding.

The directive was issued by Albayalde as cities and municipalities in Metro Manila and Rizal and in Central, Southern and Northern Luzon reel from the effects of the torrential rains and heavy flooding that have forced the evacuation of thousands of families over the past days.

“In the aftermath of massive flooding in Luzon, the Philippine National Police…will also assist the Department of Trade and In-

dustry and local government units in enforcing a price freeze on basic commodities in areas under state of calamity to prevent profiteering, hoarding and illegal acts of price manipulation,” the PNP chief said at a news briefing on Monday.

“This augurs well with ongoing PNP efforts in support of the national policy on food security and consumer protection. I have directed our unit commanders in these calamity

areas to take the initiative in coordinating with local DTI [Department of Trade and Industry] offices to ensure we effectively protect the interests of the general public,” he added.

As of Monday, a state of calamity has been declared in the entire province of Cavite, in the cities of Marikina, San Mateo, Olongapo and Balanga and in some municipalities in Bataan, Pangasinan, Nueva Ecija and Tarlac.

“I have directed our unit commanders in these calamity areas to take the initiative in coordinating with local DTI offices to ensure we effectively protect the interests of the general public,” Albayalde said.

“I am directing the CIDG and the police intelligence units to closely assist in the enforcement of the price freeze and take appropriate action in support of [the] DTI,” he added.

The PNP chief said that Republic Act 7581, or the Price Act of 1992 mandates a minimum of a 60-day price freeze on basic and essential commodities or automatic price control upon declaration of state of calamity due to “major damages to property, disruption of means of livelihood, roads and normal way of life of people in the affected areas as a result of the occurrence of natural or human-induced hazard in disaster-

stricken areas.”

Thousands of affected families in Rizal, Metro Manila and in the provinces of Bulacan, Pampanga, Tarlac, Pangasinan, Bataan, Zambales and in Northern Luzon and Southern Luzon have sought shelters in government-run evacuation centers due to massive flooding brought by torrential rains over the weekend.

The PNP has deployed at least 4,058 personnel for assistance in flood-stricken and other areas affected by monsoon rains and has mounted 591 for search and rescue (SAR) activities. It has also put on standby another 3,467 personnel for SAR operations.

While heavy rains appeared to have ceased in some areas, including in Metro Manila and Rizal, flooding, however, rose and persisted in bigger areas in Central and Northern Luzon as most dams in the uplands dams

have released excess water, prompting affected families to remain in evacuation centers.

In Pampanga alone, at least 128 barangays have been reported to be under water.

In San Mateo, Rizal, which declared a state of calamity on Monday, almost 80 percent of the city is flooded, affecting at least 5,680 families or 27,493 people. The residents blamed the heavy flooding to the presence of quarry sites in the city and in the neighboring municipality of Rodriguez.

In Marikina City, more than 21,000 individuals remained in government-run shelters. Several evacuees were also reported in Bagong Silangan, Quezon City, and at the Baseco Compound in Tondo, Manila.

So far, the National Disaster Risk Reduction and Management Council reported at least two fatalities.

I am directing the CIDG and the police intelligence units to closely assist in the enforcement of the price freeze and take appropriate action in support of [the] DTI.”

—Albayalde

CBCP eyes to ‘level up’ Church’s role in disaster preparedness, response

By Samuel P. Medenilla @sam_medenilla

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Catholic Bishops’ Conference of the Philippines (CBCP) official on Monday said they are now eyeing a “more sustainable” disaster-risk reduction intervention (DRRI), amid the increasing incidents of calamities in the country.

National Secretariat for Social Action Executive Secretary Fr. Edwin Gariguez said the Church should play an active role in times of calamities

through each of their dioceses.

Among the “sustainable” mitigating measures the bishops are now considering, Gariguez said, is the stricter enforcement of the solid- waste management law in urban areas.

“This also puts us in an urgent position to campaign with the government and our communities for proper law enforcement, sustained cooperation and better appreciation of continuing DRRI and climatechange initiatives,” he said.

Gariguez, also executive secretary of the Caritas Philippines,

said the recent flooding brought about by incessant rains enhanced

by Typhoon Karding in Metro Manila showed there is still a need to improve in the prevention of the perennial urban inconvenience.

He issued the statement during their recently concluded 39th National Social Action General Assembly.

During the event, Gariguez, together with representatives from 61 Diocesan Social Action Centers, discussed not only how to boost their capacities to respond to the needs of calamity victims but also to mini-

mize the public harm of disasters.

He said this will allow them to complement the interventions of the government and other humanitarian organizations in disaster areas.

Fr. Rex Paul Arjona, Diocesan Social Action director of Legazpi City, agreed with Gariguez to “level up” the disaster-preparedness capacity of the Church, especially in widereaching man-made calamities like the Marawi City crisis and Mayon Volcano eruption.

“It is imperative for the socialaction centers to be able respond

Groups reiterate call vs. single-use plastics

By Jonathan L. Mayuga @jonlmayuga

M

other Nature, indeed, has her way of fighting back as heavy rains brought about by the southwest monsoon triggered strong waves that washed ashore tons of garbage along the shores of the historic Manila Bay in Manila.

T he incident prompted var ious environmental groups to reiterate the call for concrete action from the Duterte administration, pitching in solutions on what government must consider in addressing the problem, inc lud ing t he nat ionw ide ban on single-use plastics.

The groups reminded anew about the failure of concerned government agencies, including local governments to address the problems brought about by poor solid-waste management, particularly single-use and food-packaging plastic products that made Manila Bay one of the most polluted bodies of water in the country—perhaps 10 times worse than the water quality around Boracay Island—is the subject of a continuing mandamus issued by the Supreme Court, mandating various government agencies led by the Department of Environment and Natural Resources to clean up Manila Bay and cause its restoration back to its pristine state.

The continuous rain over the past few days flooded many parts of the National Capital Region, one of the most populated regions in the Philippines with its over 12 million residents, which produce about 9,000 tons, or almost a quarter of the average 40,000 tons of garbage produced in the country nationwide.

Garbage and water is a deadly mix,

which they say poses very serious threats not only to the country’s already degraded coastal and marine environment but, more important, to the health and well-being of the people.

Saturated with garbage

“Manila Bay has long been saturated with tons of garbage, which resurfaced because of the coastal flooding. This constant severe pollution disrupts the bay’s ecosystem health through debris entanglement and ingestion, contamination and poisoning that worsens through biomagnification, and other adverse impacts,” Leon Dulce, national coordinator of Kalikasan-People’s Network for the Environment, said.

He explained that the food web, nutrient cycle and the health of “the remaining thriving biodiversity in Manila Bay are disrupted and stunted, which eventually redound to our people reliant on fisheries and coastal resources to survive.”

“The problem is very systemic and cannot be addressed by Boracay cesspool style of PR stunts. Our waste-management programs remain underfunded and underimplemented because the government does not provide sufficient subsidies for this. At the core of the crisis is our reliance on dirty and wasteful manufacturing industries from abroad,” Dulce said.

He cited a trash audit conducted by various environment groups in five major cities, which showed that 75 percent of residual waste is comprised of single-use plastic packaging by multinational corporations.

Strategic solution needed

“This situation requires strategic solutions. The State must increase its subsidies

for waste management and pollution control. We must develop and incentivize local eco-friendly manufacturing industries to end the reliance on pollutive and wasteful imports,” he said.

According to Dulce, in the interim, there must be regulations, such as tariffs and quotas on plastics-heavy multinational consumer products.

“If the Duterte [administration] sticks to rash, short-term environmental gimmicks, and does not ensure ecological sustainability in the planning and development of our national economy, the bigger and worse cesspool of Manila Bay will remain an ugly phenomenon in one of the country’s most important bodies of water,” he said.

Far-reaching effects

Greenpeace campaigner Abi Aguilar, for her part, said “the impacts of the visible garbage in Manila Bay have wide and far-reaching negative effects not just to the health of our ecosystems but on the health and well-being of Filipinos dependent on our sea for food and livelihood, as well,” she said.

According to Aguilar, garbage does not only choke critical fish habitats, but can also contaminate the fish that we are all eating.

“We need a strong movement of people to prevent leakage of plastics to our waterways if we all do our part.

The people are doing their part. Many of us want solutions to this plastics crisis, and there are many initiatives. But if corporations who rake in money will not do theirs, we are doomed to stay in this crisis. Unfortunately, if corporations don’t reduce their production, the garbage Manila Bay is bringing back to us will only increase,” she said.

appropriately and fast during disasters,” Arjona said.

To further improve local disaster preparedness, Gariguez said they are supporting the call of President Duterte for the creation of a new department that will handle disaster preparedness and response.

“It is very urgent that we have a single government agency in charge of disaster preparedness, mitigation and response to be able to provide consistent training, craft better policies and act on pressing DRRI concerns,” Gariguez said.

DBM stands pat on health dept’s 2019 budget slash

T

he Department of Budget and Management (DBM) on Monday stood pat to its decision to slash the proposed national health budget or next year.

Citing that the cut was the “biggest” in the proposed 2019 cash-based budget, the DBM explained that the “massive reduction” was because of the “dismal spending performance” of the Department of Health (DOH) in the implementation of the Health Facilities Enhancement Program (HFEP).

Only P50 million was allocated for HFEP in the proposed budget, down from its P30-billion allocation in the 2018 General Appropriations Act (GAA) and P24-billion allocation in the 2017 General Appropriations Act, the DBM noted.

Data from the DBM also showed that the proposed 2019 DOH budget was down by 8 percent, or P12.3 billion to P141.4 billion from its 2018 cash-based equivalent at P153.7 billion.

As of March 31, 2018, the total disbursements for the HFEP have only reached around P13.5 billion, less than 10 percent of the total P138-billion appropriation provided for the program since 2008.

“The agreement with the Department of Health is that they will undertake a careful assessment of the program—that is what the P50 million is for,” Budget Secretary Benjamin E Diokno said. “Is the HFEP cost-effective or is it wasteful use of taxpayers’ money?”

The DBM statement came after a number of legislators noted several decreases in the appropriations of several line items in the proposed 2019 budget.

In the meantime, Diokno said, the DOH can spend its obligation balance it has incurred over the years for HFEP. Based on the DOH figures, its unliquidated obligation amounted to P57.5 billion, while the unobligated allotment reached P27.4 billion, or a total of P84.8 billion.

Diokno also challenged the DOH to explain how they will implement this obligation balance, which is higher than the DOH-proposed budget for 2019.

Along with the DOH study, the DBM will also ask the Commission on Audit to perform another special audit of the program.

The HFEP first became a budget line item in the 2008 GAA, with an allocation of P1.66 billion.

HFEP is also a multiyear program that began during the Aquino administration. This is meant to improve health facilities, such as hospitals and barangay health stations, but was recently mired by controversies due to alleged irregularities in its implementation.

Bernadette D. Nicolas

A4 Tuesday, August 14, 2018 • Editor: Vittorio V. Vitug

Economy BusinessMirror

Duterte remains undeterred on federalism push–Palace

N

By Bernadette D. Nicolas

@BNicolasBM

otwithstanding the concerns raised by economic managers and influential business groups on the shift to federalism, Malacañang on Monday said President Duterte is still inclined to push for Charter change, but done in a manner that will not place the nation in jeopardy.

Presidential Spokesman Harry L. Roque Jr. said at a Palace news briefing that Duterte, who is the foremost proponent of Charter change toward federalism, is already aware of the concerns, which he considers as “not insurmountable.”

“That can be studied and be given a solution. It is not a complete block to Charter change,” Roque said, adding the administration as welcome such discussions.

“We want people to think deeply about the ramifications [of Charter change]. And we welcome all sorts of inputs from all members of society.

So this is, of course, an input that the President will consider. And we’re hoping the legislature that will tackle Charter change will also consider the position of the business community,” he added.

On Sunday business groups appealed to legislators to weigh carefully the costs, risks and uncertainty associated with the shift to federalism.

In their joint statement, they also

echoed the concerns of fiscal and economic experts about the ambiguous provisions on the division of revenue and expenditure responsibilities between the proposed federal government and the federated regions.

The statement also cited that preliminary estimates range from P72 billion by Philippine Institute for Development Studies to P130 billion by the National Economic Development Authority (Neda).

These business groups include the Cebu Business Club, Employers Federation of the Philippines, Financial Executives Institute of the Philippines, Makati Business Club, Management Association of the Philippines, Philippine

Chamber of Commerce and Industry Inc. and Philippine Exporters Confederation Inc. Earlier, Finance Secretary Carlos Dominguez III warned that the draft federal charter would lead to the federal government incurring a deficit of 6.7 percent, which may result to a credit-rating downgrade.

Dominguez also noted previously that the federal government will have to cut its expenditure program by P560 billion and that the national government may have to lay off 95 percent of its employees or reduce the funds for its “Build, Build, Build” program by 70 percent or a combination of both.

In July Socioeconomic Planning Secretary Ernesto M. Pernia said the economic team had a lot of misgivings regarding federalism, and said transitioning to a federal form of government in the medium term could disrupt the country’s economic momentum.

Pernia said the Neda had recommended that the transition to federalism be done in no less than 15 years to ensure that the Philippine economy can maximize its growth momentum.

The Consultative committee is proposing a three-year transition, which will start soon after the new constitution is approved in the 2019 plebiscite.

We want people to think deeply about the ramifications [of Charter change]. And we welcome all sorts of inputs from all members of society. So this is, of course, an input that the President will consider. And we’re hoping the legislature that will tackle Charter change will also consider the position of the business community.”—Roque

Only 30% of Boracay hotels seen opening by October 26

By Ma. Stella F. Arnaldo @Pulitika2010 Special to the BusinessMirror

A

TOURISM industry leader warned would-be tourists about making vacation plans on Boracay Island, especially for the forthcoming long All Saints’ Day weekend, because of the distinct possibility that their booked resorts would not be open by October 26.

This developed as an official of the Department of Tourism (DOT) confirmed that the agency is targeting the reopening of just 30 percent of the hotels and resorts on the island.

Local airlines, however, have already started selling seats to the island, with most returning to their regular flight schedules to Caticlan and Kalibo, in anticipation of the island’s reopening, as announced by Environment Secretary Roy A. Cimatu.

“We’ve always believed that October 26 would just be a partial reopening of the island. We did not expect it to be fully opened by then,” said Tourism Congress of the Philippines President Jose Clemente III. “The conditions imposed by the interagency Task Force Boracay, especially with regard to the construction of mandatory sewage-treatment plants for hotels with 49 rooms and up, have made it difficult for all establishments to be open by then. As a result, the island may only have a limited number of rooms available once October 26 comes around.”

As such, he warned, “people planning to go to Boracay should first check if the resorts they booked with have already been accredited by the DOT, as this is the condition for their reopening.”

This was confirmed by Assistant Secretary for Tourism Regulation, Coordination and Resource Generation Ma. Rica C. Bueno who

said the DOT Region 6 (Western Visayas) office is targeting “3,000 to 5,000 rooms” to be open by October 26. As of March 2018, the DOT estimated the total number rooms on Boracay at some 15,000.

The DOT earlier announced its “no accreditation, no reopening” policy for Boracay. For a tourism accommodation or enterprise to reopen, it must first comply with the new guidelines of the Departments of Environment and Natural Resources (DENR), and of the Interior and Local Government (DILG) regarding relevant permits. (See, “DOT chief quotes DU30: No casinos on Boracay,” in the BusinessMirror, July 30, 2018.)

According to Charo Logarta Lagamon, Cebu Pacific (CEB) Air’s Director for Corporate Communications, “we never stopped selling flights October 28 onwards based on the six-month timeline [of Boracay’s closure].” This means at least nine flights to and from Caticlan from Clark and Manila, she said, from the current zero flights. As per its web site, starting on October 28, flights between Manila and Kalibo are twice a day, everyday, while between Cebu and Kalibo, flights are at least six times a day. The airline had downscaled its flights from Manila to Kalibo at 14 times a week during the island’s closure.

Lagamon said they had also asked DOT for a “written notice” of the island’s reopening because CEB’s foreign markets like the Japanese and South Korean clients need one.

Before the island’s closure, the airline had two times a week scheduled flights between Kalibo and Incheon, and chartered flights to Kalibo from several destinations in China “about once or twice a month.”

The DOT, however, has yet rescind its memorandum order to its tourism attaches abroad to stop selling Bora-

cay to foreign tourists. The memorandum order was signed in April, a week before the closure, by thenSecretary Wanda Corazon T. Teo. For pioneering flag carrier Philippine Airlines (PAL), its winter schedule shows 30 times a week flights from Manila to Caticlan, 12 times a week flights from Manila to Kalibo, and flights to Kalibo from Beijing (six times a week) from Busan (four times a week), and from Seoul (14 times a week), all starting October 28. No flights from Cebu and Clark to either Kalibo or Caticlan were available on the carrier’s web site.

“Initially, these are the scheduled flights. When booking improves, we will increase frequency,” said PAL President Jaime J. Bautista.

On its web site, AirAsia Philippines has also started offering 30 flights a week between Manila and Caticlan starting on October 28.

All three government agencies­— the DOT, DENR and DILG—have set up a one-stop shop at CitiMall in Station 3 for Boracay stakeholders to start processing their environmental clearance certificates, business and other relevant permits, and tourism accreditation.

President Duterte ordered the closure of Boracay Island, once dubbed the “best beach in the world” by travel magazines, for six months beginning on April 26. It was to make way for the government rehabilitation program, which entails the restoration of environmentally stressed areas, completion of the sewerage system, removal of easement obstructions, widening of the main road, construction of a diversion road and decongestion of the island of transport vehicles.

In 2017 the island attracted some 2 million visitors, more than half of which were foreign tourists. Visitor receipts generated by the island reached P56 billion last year.

www.businessmirror.com.ph

Do you know what corruption is?

I

By Henry J. Schumacher

have been involved in corruption (a long time ago) and in anti-corruption for a good number of years now. I have signed the Integrity Pledge of the Integrity Initiative Inc. and I am living up to the commitments laid down in the Pledge.

Having said this, I am still amazed that a lot of people still have difficulties to understand what corrupt practices are. Allow me to highlight a number of the bad practices: Abuse of functions Abuse of functions occurs when an employee or office holder uses his or her position to perform an illegal act, or an act that he/she has no legal authority to do, to pursue a private gain. One form of abuse of functions is the misuse of information (e.g., when an employee or official acts on private information acquired by virtue of her/his position to speculate or help another on the basis of this information).

Agent An agent is a person (natural or legal) with the authority to act for or represent another person or party.

Companies can be held liable for their agents’ acts of corruption, including for channeling bribes, for not reacting to corrupt acts, or for acts the agent should have known about given the presence of clear signs of the acts taking place.

Bid rigging Bid rigging is a form of collusion in which bidders on a contract decide between themselves which bidder should be successful in the tender, and then draft their bids accordingly. Forms of bid rigging include bid rotation, complementary bidding and cover pricing. Bid rigging can constitute a cartel or antitrust offense, which is also regulated by the Philippine Competition Commission (PCC).

Bribery Bribery is, according to Transparency International “the offering, promising, giving, accepting or soliciting of an advantage as an inducement for an action which is illegal, unethical or a breach of trust. Inducements can take the form of gifts, loans, fees, rewards or other advantages [taxes, services, donations, favors etc.].”

Bribery occurs during an interaction between two parties. Usually, both the giving and the receiving parties of the bribe commit a crime.

Cartel A cartel is an agreement (formal or informal) among competing companies to coordinate prices, marketing or production of a good or service. Cartel members may agree on matters, such as prices, total industry output, market shares, allocation of customers, allocation of territories, bid rigging, establishment of common sales agencies, the division of profits or a combination of these. The PCC is “hunting” cartels.

Collusion Collusion is a noncompetitive agreement, usually secretive, between two or more persons or businesses to limit open competition, typically by defrauding or gaining an unfair advantage. It can involve an agreement among companies to divide the market, to set prices, to limit production or to share private information. It may also involve bid rigging. The aim of collusion is to increase individual members’ profits. The PCC will be right behind you.

Conflict of interest A conflict of interest exists when an individual has competing professional obligations or personal or financial interests that have the potential to influence the exercise of her/his duties. Private or personal interests include family and other relatives, personal friends, the clubs and societies to which an individual belongs, private business interests, investments and shareholdings and any person to whom a favor is owed.

Corruption There is no single globally accepted definition of corruption. Transparency International, the leading international NGO in curbing corruption, defines it

as “the abuse of entrusted power for personal gain.” The main forms of corruption are bribery, embezzlement, fraud and extortion.

Cronyism Cronyism is a form of favoritism shown to close friends.

A typical situation of cronyism would be the political appointment to office of a friend without regard to the person’s qualifications.

Demand side/passive bribery Demand side or passive bribery entails an individual or entity asking for or accepting an advantage in return for acting or not acting in relation to one’s official duties.

A typical form of demand side bribery is the denial of goods or services.

Donations A donation is understood as a monetary or nonmonetary gift to a fund or cause, typically for charitable reasons. If a donation is given with the purpose of giving a company an undue advantage, it will likely be considered bribery.

Many companies address the use of political donations in their code of conduct.

Embezzlement Embezzlement is the fraudulent appropriation of money or property for personal gain by an individual entrusted to safeguard assets in another’s interests (e.g., governments, organizations or companies). Embezzlement can be committed by a person entrusted with private or public resources.

Extortion Extortion is the unlawful use of one’s position or office to obtain money through coercion or threats. One example would be when Customs officials request undue “Customs duties” from importers as a condition to clear their goods.

Facilitation payments Facilitation payments (also known as “grease payments”) are a form of bribery made with the purpose of expediting or securing the performance of a routine action to which the payer is legally entitled to. Facilitation payments are typically demanded by low-level and low-income officials. In some countries, it is sometimes customary to provide small unofficial payments, but the practice is illegal in most countries.

Fraud Fraud involves the use of deception, trickery and a breach of trust to gain an unfair or unlawful advantage. Occupational fraud entails the use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the company’s resources or assets.

Gifts and hospitality Gifts and hospitality (including travel and entertainment) are legitimate expenses and common business practices to build relationships or to express appreciation. Disproportional gifts and hospitality are sometimes offered, given, solicited, or received with an obligation or expectation to provide a benefit in return. Accordingly, gifts and hospitality may be corruption offenses, may be used to facilitate corruption, or may give the appearance of corruption.

Graft Graft is a form of political corruption in which an official acquires financial gain by dishonest or unfair means, especially through the abuse of one’s position.

Unlike bribery, graft does not require the official to provide an undue advantage; it is enough that she/he gains something of value apart from her/his official pay when working.

Kickbacks Kickbacks are a form of bribery where one party obtains an undue advantage, and a portion of the undue advantage is “kicked back” to the individual who gave or will give the undue advantage. It differs from other forms of bribery in that it implies a form of collusion between the two parties.

Money laundering Money laundering is a process in which the ownership, destination and origin of illegally obtained money is concealed or disguised. The objective of money laundering is to make illegally obtained money appear to originate from a legitimate source.

Patronage Patronage is a system in which a number of organizations, companies and/or individuals bestow support or financial benefits upon one another. Political patronage occurs when political supporters are rewarded for their support (e.g., by being appointed to public office or receiving contracts, subsidies or other benefits), regardless of merits.

Price-fixing Price-fixing is an agreement between competing businesses to buy or sell a product, service, or commodity at an agreed upon price. It can also entail maintaining the market conditions so that the price is kept at a given level by controlling supply and demand. Price-fixing seeks to coordinate pricing for the mutual benefit of the traders.

The group of “market shapers” involved in price-fixing is sometimes referred to as a cartel. Antitrust laws commonly criminalize price-fixing and the PCC is watching you closely.

Supply side/active bribery Supply side/active bribery entails the promise, offering or giving of an undue advantage (directly or indirectly) as an inducement for an official, a person or an entity to act (or fail to act) in a manner inconsistent with her/his official duties. Common forms of supply side bribery are direct payments, gifts, hospitality, and donations or contributions to political parties.

The “Corruption Directory” is much longer, but the main areas I have tried to cover. I would appreciate, however, if you could comment and give additional examples of corruption. Please email me at schumacher@eitsc.com

www.businessmirror.com.ph

The World BusinessMirror

Editor: Angel R. Calso • Tuesday, August 14, 2018 A5

Newest US sanctions against Russia hit an economic nerve

W

ASHINGTON—Russia typically brushes off new US sanctions. Not this time.

The Trump administration announcement of export restrictions in response to accusations Moscow used a nerve agent to poison a former Russian spy in Britain sent the ruble tumbling to a two-year low and drew a stern warning from its prime minister. While the initial sanctions may have a limited impact, a second batch expected within months could hit the Russian economy much harder and send already tense relations into a tailspin.

If sanctions are expanded even further to target Russia’s top statecontrolled banks, freezing their dollar transactions — as proposed under legislation introduced in the Senate this month—it would amount to a “declaration of economic war,” Russian Prime Minister Dmitry Medvedev said on Friday.

So much for President Donald J. Trump’s hopes for better relations with Moscow.

On his watch, the US has imposed a slew of sanctions on Russia for human-rights abuses, meddling in the US election and Russian military aggression in Ukraine and Syria. For the most part, they have punished

Russian officials and associates of President Vladimir Putin rather than targeting broad economic sectors.

In 2014 both the US and European Union introduced sanctions that restricted Russia’s access to global financial markets and to equipment for new energy projects. Those measures were punishing, but the sanctions announced by the Trump administration this past week could be even worse.

The restrictions were triggered under US law on chemical weapons following a formal US determination that Russia used the Novichok nerve agent to poison former Russian spy Sergei Skripal and his daughter in the English city of Salisbury in March.

The first tranche, due to take effect August 22, will deny export licenses to Russia for the purchase of many items with national security implications. Existing sanctions already prohibit the export of most military and security-related items, but now the ban will be extended to goods such as gas turbine engines, electronics and calibration equipment that were previously allowed on a case-by-case basis. The State Department said it

could potentially affect hundreds of millions of dollars in trade.

“It’s a significant step, but not an overwhelming one,” said Daniel Fried, a veteran State Department official who served as chief US coordinator for sanctions policy until he retired last year.

The penny could drop, though, in three months’ time.

Russia has 90 days to “provide assurances” that it will not use chemical weapons in the future and allow inspections. If Russia does not comply, Trump will be obligated to impose a second set of sanctions, applying restrictions on at least three from a menu of options: opposing multilateral bank assistance to Russia, broad restrictions on exports and imports, downgrading diplomatic relations, prohibiting air carrier landing rights and barring US banks from making loans to the Russian government.

That could do significantly more economic harm and have a lasting, destabilizing effect on the currency and stock markets.

Senior Russian lawmaker Vyacheslav Nikonov said a second set of sanctions may be inevitable and predicted it would pitch relations to new low. The relationship is already routinely described as at its worst since the Cold War. “They are demanding that Russia [accepts] an obligation to refrain from any further use of chemical

Malaysia’s Mahathir to scrap multibillion-dollar China deals

P

U T R A JAYA , Ma l aysia— Malaysia’s prime minister said on Monday he will seek to cancel multibillion-dollar Chinese-backed infrastructure projects that were signed by his predecessor as his government works to dig itself out of debt, and he blasted Myanmar’s treatment of Rohingya Muslims as “grossly unjust.”

Mahathir Mohamad made the comments during a wide-ranging interview with The Associated Press days before the 93-yearold leader heads to Beijing for his first visit there since returning to power in an electoral upset three months ago.

Mahathir said he wants to maintain good relations with China and welcomes its investment, so long as the projects benefit Malaysia.

But he took his toughest stance yet on Chinese-backed energy pipelines and a rail project along peninsular Malaysia’s eastern coast that were struck by his predecessor, Najib Razak. The former premier faces trial on multiple charges related to the alleged multibillion-dollar looting of the 1MDB state investment fund. He denies wrongdoing.

“We don’t think we need those two projects. We don’t think they are viable. So if we can, we would like to just drop the projects,” he said from his office in the administrative center of Putrajaya.

During his time in power, Najib drew Malaysia closer to China, which sees the multiethnic Southeast Asian country as a key part of its ambitious “One Belt, One Road” global trade initiative. The former prime minister reached deals for the 688-kilometer (430-mile) East Coast Rail Link and the two gas pipelines in 2016.

Malaysia’s new government has already suspended work on the projects, being built by Chinese state-backed companies, and called for drastic cuts in their bal-

Mahathir Mohamad AP looning cost, which it estimates at more than $22 billion. Some of that money has already been paid and could be difficult to recoup.

If scrapping the projects altogether isn’t doable, Malaysia will need to at least put them on hold until the future, Mahathir said.

Mahathir also urged China to respect the free movement of ships throughout the South China Sea. China and multiple Southeast Asian nations including Malaysia have competing claims on islands and reefs in the sea—along with the rich fishing grounds and potential fossil-fuel deposits around them.

China claims much of the sea as its own and has built up several man-made islands equipped them with runways, hangers, radar and missile stations to bolster its claim. It has accused the US, which routinely deploys aircraft carriers, other warships and planes to the sea, of meddling in a purely Asian dispute. Chinese ships also patrol the sea.

“We are all for ships, even warships, passing through, but not stationed here,” Mahathir said. “It is a

warning to everyone. Don’t create tension unnecessarily.”

Mahathir was scathing in his criticism of Myanmar, a country whose inclusion into the Association of Southeast Asian Nations he had pushed for in 1997 despite concerns over human-rights abuses and protests by the US. “It is grossly unjust to do what they have done, killing people, mass murder, t hat ’s not t he way civilized nations behave,” he said.

The previous government of predominantly Muslim Malaysia strongly supported the Rohingya, a persecuted minority in Myanmar who have fled by the hundreds of thousands to neighboring Bangladesh after a crackdown last year that some have called ethnic cleansing. Malaysia has said the displacement of Rohingya is no longer a domestic issue for Myanmar, in a rare departure from Asean’s noninterference policy in each other’s affairs.

Mahathir added that he was “very disappointed” in Myanmar leader Aung San Suu Kyi’s failure to halt the oppression. AP

and bacteriological weapons, which amounts to our acknowledgement that we have used it. But we haven’t,” he said.

Things could get even worse if the Defending American Security from Kremlin Aggression Act, which a bipartisan group of senators introduced on August 2, makes its way through Congress. It would target Russia’s state-controlled banks and freeze their operations in dollars, which would deal a heavy blow to the Russian economy. The prospects for the legislation becoming law remain uncertain.

Medvedev warned the US that such a move would cross a red line and would warrant a Russian response by economic, political or “other means” he did not specify. His tough tone was a departure from past nonchalance from Putin and his lieutenants over the impact of Western sanctions on the Russian economy.

Vladimir Vasilyev, a researcher with the Institute of the US and Canada, a government-funded Moscow think tank, said US-Russian ties were now approaching “the point of no return with no prospect for improvement” in sight.

Fried said that in addition to uncertainty over sanctions, Moscow’s strong response this time is likely also being fueled by larger inconsistencies in US policy toward Russia. While Trump has hankered

for closer ties with Putin, the government he leads has been far less accommodating.

“Whatever deal the Russians had or thought they had or thought they could get from President Donald Trump, they’re not able to get it from Trump’s administration,” Fried said.

The State Department denied inconsistency in US policy and maintained that sanctions were aimed at encouraging improved behavior from Russia. “We’d like to have a better relationship with the Russian government, recognizing that we have a lot of areas of mutual concern,” spokeswoman Heather Nauert said.

Congress has a less diplomatic view.

Trump has repeatedly come under fire from lawmakers, including from his own Republican Party, for his conciliatory statements on Russia, particularly at his joint press conference with Putin at their summit in Helsinki last month where he appeared to doubt US intelligence conclusions that Russia intervened in the 2016 election.

Rep. Ed Royce, chairman of the House Foreign Affairs Committee, was among lawmakers who welcomed the US sanctions announced this week. “It’s critical that we use every tool at our disposal to confront Putin’s use of chemical weapons, as well as his efforts to undermine our democracy,” the Republican from California said. AP

South Korea’s Moon Jae-in to meet Kim in Pyongyang

K

im Jong UN and South K o r e a ’s M o o n J a e - i n agreed to meet in Pyongyang next month, a summit that comes as nuclear talks between the US and North Korea show signs of stalling.

The two Koreas announced the plan for the summit on Monday after more than three hours of talks on their shared militarized border. The meeting would be the third between Moon and Kim this year, and the first trip by a South Korean leader to the North Korean capital since 2007.

“The South, together with the North, reviewed the progress of implementing the Panmunjom Declaration, and discussed further methods to fulfill the Declaration in a sincere manner,” the two Koreas said in a joint statement, referring to an agreement signed by Moon and Kim during their first meeting in April. The document called for “establishing a permanent and peaceful Korean Peninsula peace reg ime” and “complete denuclearization.”

Moon will have a tricky balancing act at the summit: Maintaining momentum for inter-

Kim Jong UN and South Korea’s Moon Jae-in

K ore a n d i a lo g ue w h i le a l so nudging Kim to make progress on denuclearization with the US, an ally of South Korea. Since Kim met President Donald J. Trump in June, the two sides have failed to make much headway on eliminating North Korea’s nuclear-weapons program.

US Secretar y of State Michael Pompeo has pressed other countries to continue enforcing sanctions against Kim’s regime while seeking a concrete time frame for Kim to abandon his nuclear weapons. North Korea has rejected his approach, with state-run media lambasting the US’s “pressure diplomacy” and saying it’s relying on “outdated gangster-like logic.”

A t t he t a l k s on Mond ay, North Korean official R i Son Gwon said the two Koreas had “ become fr iends that cannot betray one another.”

W hen asked to specify the date, Ri demurred, saying only that it would be in September.

“We didn’t tell you the date, so we can make the reporters curious.” he said, according to the Yonhap News Agency. “It’s all decided.” Bloomberg News

BLOOMBERG

Oil holds steady as Iran supply fears offset jitters over Turkey

O

il traded near $68 a barrel after Iran ruling out talks with the US heightened concerns over global supply, countering fears of wider market turmoil from a crisis in Turkey.

Futures in New York were little changed after climbing 1.2 percent on Friday. Iran’s foreign minister said Iran won’t meet with the US at the United Nations General Assembly in New York in September, with sanctions on the Middle Eastern nation’s oil industry set to be implemented on November 5.

Global risk assets declined as investors grew nervous of contagion from financial strife in Turkey after the lira extended its precipitous slide.

Global production has been a focal point in the oil market in recent months as investors weigh the outlook for supply declines against the Organization of Petroleum Exporting Countries’ (Opec) decision in June to ease curbs on its output.

Prices have been suppressed below $70 this month as fears of a trade war between the US and China temper gains, with neither side showing signs of backing down.

While uneasiness about scarce oil supplies have cooled somewhat after Opec-member Saudi Arabia and other producers pumped more, the International Energy Agency warned that renewed American sanctions on Iran and disruptions elsewhere could be challenging. Meanwhile, US output, which had surged to a record last month, has slowed in recent weeks, while the number of oil rigs rose to the highest in more than three years.

‘Price supportive’

The Iran sanctions concerns will be “price supportive” in the short term, Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. Despite the US rig count being at a high for this year, the “production level has stalled and that raises questions on whether or not there’s capacity for the US to increase production further, which is why we’re seeing firmer markets.”

West Texas Intermediate (WTI) crude for September delivery rose as much as 32 cents to $67.95 a barrel on the New York Mercantile Exchange and traded at $67.60 at 2:50 p.m. in Singapore. The contract climbed 82 cents to $67.63 on Friday. Total volume traded was about 33 percent below the 100-day average.

Brent for October settlement traded at $72.61 a barrel on the London-based ICE Futures Europe exchange, down 20 cents. The contract advanced 74 cents to $72.81 on Friday. The global benchmark crude traded at a $5.78 premium to WTI for the same month.

Futures for September delivery increased 1.2 percent to 519 yuan a barrel on the Shanghai International Energy Exchange. The contract lost 1.2 percent on Friday and was little changed last week.

No meeting

While President Donald J. Trump had said he would negotiate with Iran “without preconditions,” Iran’s Foreign Minister Mohammad Javad Zarif told the semi-official Tasnim news agency that “no meetings will take place” with America during the UN event next month. The Trump administration was said to forecast a 50-percent cut, or as much as 1 million barrels a day, in Iranian oil sales when it reimposes sanctions in November.

In America the number of working rigs targeting oil rose by 10 to 869 last week, rising to the highest level since March 2015, Baker Hughes data showed. Producers have announced billions of dollars in new investments in the Permian and elsewhere lately as they chase oil prices near threeyear highs. Bloomberg News

A6 Tuesday, August 14, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Economic success should be inclusive

T

he country’s economic managers expect that tax reform under the Duterte administration, specifically the TRAIN (Tax Reform for Acceleration and Inclusion) series, when completed, will help create an environment that is more conducive to high growth and investment, jobs generation and faster poverty reduction.

TRAIN 1, which took effect in January, is projected to boost government revenues in 2018 to 16 percent of gross domestic product. TRAIN 2, barring hitches in Congress, is projected to boost revenues to 16.7 percent of GDP in 2019.

All these projections are well and good but a recent story in this paper also cautions against just using numbers and percentages for measuring national success and the general well-being of a country’s people.

Some local economists, for instance, said even GDP numbers are not the end-all and be-all of everything. They said the 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.

“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,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror.

Terosa said a high economic growth may help Filipinos cope with inflation, in terms of alleviating the impact of rising prices on household incomes and consumption, but this can only happen if Filipino households are part of sectors that are considered drivers of economic growth.

Another economist, Calixto V. 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 healthy competition to help temper price hikes.

We agree with their views. GDP is simply a measure of the money that changes hands within the economy. It may be a good indicator of economic prosperity but it is also not a complete one. GDP can measure a country’s wealth but it cannot tell us whether this wealth is going to most of our poor citizens or only the executives of the big companies and the rich who live in exclusive villages. GDP also does not show that the record remittances, which make our economic figures so rosy, also leave a heavy social toll in terms of broken families.

Our country’s GDP numbers have been good enough to maintain our status as one of the fastest-growing economies in Asia, following Vietnam and China, but this performance has not benefited most working families—not the overseas Filipino workers who still cannot find decent jobs in their own country and not those who can barely eke out a living here.

Further overhauling our tax system to solve its inequities and boost economic growth is not enough. Ordinary workers and the poorest of the poor must feel the gains of our so-called robust economy, especially now that they are being bled dry by the high prices of goods and basic necessities.

Workers are doing their part, paying taxes dutifully. But where is the money going? What is the government doing with the taxes?

Can workers even count on the government to provide safe, efficient mass transportation to get them to their workplaces? Or solve pollution, worsening traffic gridlocks, floods and crime? Can workers who need health care go to any public hospital and get quality treatment? Can they send their kids to public schools and get quality education? Can workers rely upon the government to take care of them if they lose their jobs, or when they grow old and retire?

The government must be able to guarantee the basic things its citizens need.

Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua

Solid fundamentals Manny B. Villar

THE Entrepreneur

T

he economy may have suffered a hiccup when the inflation rate seems to be acting up and the peso depreciating below the 53:$1 mark. But these are minor setbacks in the economy. Major indicators point to a robust economy despite the stock market turbulence and the temporary rise in prices of goods and services.

The inflation rate, for one, albeit over 5 percent, is certain to go down toward the end of the year. The abrupt surge in rice prices will also come to an end once the government floods the market with imported commodity soon. The trade deficit is swelling due to the combination of surging imports and weak exports.

It should be noted, however, that imports are surging because of the noticeable increase in the inbound shipments of capital goods after the government accelerated its infrastructure program.

The Philippines is weathering these disturbances, if you may call them as such, because the country’s macroeconomic fundamentals have remained solid. The Philippines

registered a 6.8-percent economic growth rate in the first quarter of 2018, the second fastest in Asia.

The labor situation, meanwhile, is improving. The country’s unemployment rate as of April this year dropped to 5.5 percent, down by 0.2 percent from the same period last year with 625,000 jobs created.

Of this number, 605,000 Filipinos were employed in manufacturing and construction.

The country’s economic managers, led by Finance Secretary Carlos “Sonny” G. Dominguez III, have so far kept the macroeconomic fundamentals intact with strong revenues and a manageable fiscal deficit. Reputable foreign financial institutions noticed the

The next cycle begins

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John Mangun

Lourdes M. Fernandez

OUTSIDE THE BOX

I

N June of 2015, I began talking about how the political/economic cycle that bottomed in the middle of 2011 was about to peak and will turn down again in October 2015. The bottom of the cycle in 2011 also coincided with the Philippine Stock Exchange Composite Index (PSEi) breaking above its previous historic high below 4,000 and began its run to 8,000 in 2015.

Stock markets have the “supernatural” ability to often move before the events to justify the breakouts and breakdowns. The October 2015 top of the cycle was the beginning of the change in global politics that saw power being transferred from existing political establishments into the hands of individuals like Rodrigo Duterte and Donald Trump.

The political changes that began in 2015 have continued well into 2018. Turkey experienced a coup attempt in 2016 that saw over 300 people killed and 40,000 arrested.

Great Britain voted to leave the European Union. Brazil and South Korea removed their presidents —interestingly both women—by

impeachment. Emmanuel Macron formed his own political party and became France’s president, shutting out the two traditional parties for the first time in many decades. Xi Jinping effectively became China’s president for life in March.

Last month populist Andrés Obrador became president of Mexico.

This is the first time that a candidate not from the Institutional Revolutionary Party or its predecessors has done so since the Mexican Revolution in 1920.

These are not isolated events that happened coincidentally. The names of the western leaders during World War II—Winston Churchill, Franklin D. Roosevelt, Joseph Stalin and

Philippine growth story and gave the nation a good housekeeping seal of approval.

The relatively good reviews from the International Monetary Fund (IMF), World Bank and global debt watcher Moody’s Investors Service are proof that macroeconomic fundamentals of the Philippines have remained solid. The IMF retained its 2018 growth forecast for the Philippines at 6.7 percent but warned that rising inflation and external developments, such as the trade tension between bigger economies might threaten sustained expansion. IMF mission chief Luis Breuer, however, noted that the Philippine economy was performing well. His team predicted that the Philippines would sustain the pace in 2018 and 2019, “underpinned by strong consumption and investment, including public investment.”

Moody’s agrees. Strong GDP growth, it said, could accelerate even further, especially if the government achieved higher spending on infrastructure. It sees further progress “on improving government revenue on the back of additional reforms and ongoing enhancements in tax administration, which would also help keep government debt stable.”

The World Bank also kept its 6.7-percent growth forecast for the

Philippines this year and in 2019, as sustained private consumption and higher government spending are seen offsetting the uncertainties coming from the external front.

“Overall, it is anticipated that real GDP growth will increase towards the end of 2018 and into the first half of 2019 with higher election-related spending,” the bank said.

Birgit Hansl, World Bank lead economist for the Philippines, noted that higher private investment levels would be critical to sustain the economy’s growth momentum as capacity constraints became more binding.

Having strong macro-economic fundamentals will attract foreign investments that, in turn, will create more jobs. I believe the country’s economic managers are doing a good job in reining the economy despite the volatilities in the global financial markets and the threat of a trade war among the world’s major economies.

The steady remittances from our overseas Filipino workers and increasing tourism receipts will also help protect the peso. In sum, the economy has built a strong base and is resilient enough to assist businessmen, including the small entrepreneurs.

The political changes that began in 2015 have continued well into 2018. Turkey experienced a coup attempt in 2016 that saw over 300 people killed and 40,000 arrested.

Great Britain voted to leave the European Union. Brazil and South Korea removed their presidents— interestingly both women—by impeachment. Emmanuel Macron formed his own political party and became France’s president, shutting out the two traditional parties for the first time in many decades. Xi Jinping effectively became China’s president for life in March.

interest rates to 40 percent to keep its currency from further collapsing, down 38 percent this year. The Turkish lira has fallen 40 in two weeks.

The US dollar index against the major currencies is at its highest level in more than a year.

In 2015 we knew Britain would stay in the European Union, Secretary Manuel Roxas would probably be the next Philippine president and Hillary Clinton appeared guaranteed to be elected president of the United States.

For the past year, the news has been that the US dollar is dead or in intensive care. China will not use the US dollar to buy oil and anyone trading with China must pay in renminbi. Crude oil eventually will not be priced in dollars, killing the “petrodolla.” Trump will depreciate the US dollar to limit Chinese imports.

Now we are moving to the next high in the cycle at the end of November. From there we will go down until January 2020. The political chaos since 2015 will now be economic chaos until 2020. It has begun.

Watch the dollar.

Adolph Hitler will be remembered for hundreds of years. Two of the greatest military leaders of their countries and in history—Arthur Wellesley (Duke of Wellington) and Napoleon Bonaparte—fought the Battle of Waterloo in 1815, changing the face of Europe forever.

After the cycle change top of 2015 and the subsequent political events, we recently reached a shortterm bottom on July 12th. Is it mere “coincidence” that that is when the PSEi broke from its bottom at the 7,200 area and is now about 5 percent higher?

Argentina recently had to raise

For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

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As good as it can get Teddy Locsin Jr.

Free fire Continued from A1

B

ut unknown to most, the League achieved a great deal that was of enduring value that would provide solid and sizable stones for the foundation of its reincarnation in the United Nations. In particular, the issue of migration, which increased to unprecedented levels following the World War that pushed for the creation of the League.

Far from being a failure, the bright young professionals working for the League of Nations rather than the old diplomats who misused it for their countries’ malignant purposes, took the League as far as it was possible to go on such issues as migration— along with the issues of refugees in general; of sex and drug trafficking, prostitution and organized crime; and other abuses committed against the most vulnerable people on the planet regardless of where they fled from and where they ended up: people on the run for their safety, for their lives, for the survival of those they loved, or—in the best situation—to give themselves and their families a better life.

And last but not least, and in many cases, first and foremost, those who believe in themselves strongly enough to act on the belief—or delusion if you will—that their lives are completed and their talents best tested by the challenge of new places and new faces; along with the satisfaction of starting all over in another place among other people who will benefit from their presence. They

answer the primal call of primal nature, first heard by the first humans in Africa to venture out when there was, really, nothing out there.

Far from encountering abroad new peoples, new cultures, new ways of living: they populated empty spaces, creatively recreated the old ways of life they had left behind in new ways to adapt to new places; and thereby created the fruitful and enriching diversity of the world, and of every country in it that is ever the gift of strangers to the strange lands into which they come.

The League of Nations died but it left so much of itself behind that much of the work of establishing the new United Nations after a Second World War required mostly the reassembling of the best that had come before—in many cases by the same young professionals who had done the good work, and as old men saw their work come to life again with a renewed sense of the same grand purpose with a better grasp of the hard and harsh reality in which it must be achieved.

Of course the League’s more fa-

Helping an execution is a bad look for a drugmaker

By Noah Feldman Bloomberg Opinion

O

n the surface it sounds like a sick joke. The German drug manufacturer Fresenius Kabi is suing to block an execution in Nebraska—not because it opposes capital punishment, but because it would be bad for the company’s public relations for its drugs to be used to kill. It’s not the first time.

Other drug companies have also tried to block executions using their products for similar reasons.

A federal district judge rejected Fresenius’s suit on Friday, but the company has appealed. Regardless of whether the Nebraska execution, scheduled for Tuesday, is delayed or halted, the effort is worth examining.

There is something morally bizarre, even horrifying, about the idea that a human being should live or die based on the PR concerns of a company thousands of miles away. Yet these efforts demonstrate what you might call the banality of good: Their official worries are based on ordinary corporate profit, but their actions nonetheless play a meaningful role in the long, slow process of reducing and maybe ultimately eliminating executions in the US. Lethal injection is just the latest in a long string of efforts to make capital punishment more “humane,” a dubious aspiration that had its European birth sometime in the 18th century and is a classic product of Enlightenment.

Humane execution is a kind of paradox: We want to end a person’s life as a punishment, but we want to do so with minimal pain for the subject and minimal horror for the public.

In the European Middle Ages, this paradox didn’t exist. Execution was generally intended to create spectacle and convey moral condemnation. Pain and suffering were part of the equation.

Burning witches was biblically inspired (if not strictly biblical). Drawing and quartering, a particularly horrible practice, was the punishment for treason against the crown. Hanging, the prescribed English punishment for ordinary felons, often had a torture component when the drop of the gallows wasn’t long enough to break the subjects’ necks and they strangled slowly instead.

The guillotine, named for the French

doctor Joseph-Ignace Guillotin (17381814) who helped create it, was popularized during the French Revolution as a “humane” method of execution appropriate to an enlightened age. In its aftermath, executions have reflected new technological innovations, from electricity to poison gas.

Seen in this historical light, the use of drugs to paralyze and kill convicted murderers should come as no surprise. We live in an age of big pharma and trust in medications. No wonder we think drugs are a solution to the execution paradox.

Enter the death-penalty abolitionists. Many, probably most, abolitionists think that it is always wrong to take a human life by execution—the view recently adopted for the Catholic Church

by Pope Francis.

Yet because the strong abolitionist argument has not had the moral force to convince everybody, death-penalty opponents have long relied on various pragmatic arguments in public and in the courts.

When the US Supreme Court in 1972 declared what turned out to be a temporary moratorium on all executions, it didn’t hold that capital punishment was inherently wrong. In fact, the justices in the case of Furman v. Georgia couldn’t agree on a single rationale for why the death penalty was cruel and unusual. The key element in most of their opinions was the arbitrariness of how the death penalty was applied, with evidence drawn from racial disparities.

Death-penalty opponents have also focused on the fallibility of the judicial system. Successful attempts to show that some death-row prisoners were actually innocent have undoubtedly contributed to the gradual decline of the number of executions in the US in recent decades.

That brings us to the European drug companies. They assert, accurately enough, that capital punishment is outlawed in the European Union. And they say that the public climate of condemnation there gives them a reason to intervene in US courts. Fresenius also says that neither it nor its authorized distributors provide drugs for executions, so Nebraska’s supply must have been obtained without its authorization. The company’s strongest argument is probably that mishandling of the drugs might hamper their effectiveness.

mous political aspect died the death it deserved; but the professionals who worked for the League made sure enough remained to make a second attempt much easier and faster.

They left such enduring monuments of organizational know-how and data gathering which they housed in indestructible institutions like the International Labour Organization, along with tried and tested practices of scientific disciplines like statistics, economics, sociology, demographics and myriad others which—unlike the strong opinions which generate passionate attachment but which time easily disproved—proved enduring enough to support new accretions of data and evolution of methods. These are the parts of the League that continue in the life of the United Nations. So what we do in the United Nations today is not a fad but a continuation of the best of the work done before. Rarely understood, this work is hardly ever consulted by publics and politicians. It deliberately covers itself in a blanket of terms of art—or jargon the amateurs complain—sufficiently dense to deter the dangerous which is to say the politicians who are prone to misunderstand and misuse them. The young professionals of the League then went on to build yet another commonwealth of the good and called it the United Nations. (From there, old and wiser, they became the leaders of the Free World and while fresh generations of professionals took up their work). The most recent example is the 2030 Agenda of Sustainable Development Goals which is the global consensus of the right goals to improve life and the right approaches to achieve those goals—a consensus that spans capitalist superpowers and the last com-

If not everything in the compact is an enforceable right, indeed the compact is nonbinding except by conscience; nonetheless everything pertinent to the migration experience has been mentioned, touched upon, debated, taken apart and put together, and finally set down with a clarity no one who had read the first draft thought possible.

And it went as far as it is possible to go in an imperfect world so that none may say when they abuse the stranger in a strange land, “Oh, that’s wrong? That’s a bad thing to do? We did not know.” munist behemoths. All agree, these are goals that governments of any kind must want for their people to be worthy to be called governments.

It always embarrasses me when I mention national development plans which do not cite the SDGs as their sole bases, for then I suspect the plans are attempts to reinvent the wheel without any grasp of the perfect model of the wheel in the SDGs. There is only one way to do economics and that is with classical economics; and there is only one way to attain sustainable development for the great benefit of the greater number of people “without leaving anyone behind,” as a rather tiresome UN slogan goes.

Today the world is still at war—although the absence of open warfare between great powers perpetuates the delusion of the Long Peace of the Cold War between two superpowers that diverted public attention from the hot wars they sponsored and where as many people died as in the Second World War. And it continues to this day.

There’s hardly a place in the world

Tuesday, August 14, 2018 A7

where there is no violence and scarcity, where atrocities are not committed mostly by those who are technically guiltless of them because they are not governments (which alone are covered by human-rights conventions); where more people are dying of worse hunger amid the greatest supply of readily available food in the history of mankind.

And yet some things of great value are still being done—rationally, soberly, patiently, with all the knowledge possible to attain, and all the intelligence of which the best educated and dedicated are capable.

Things again that will endure on which the future again can build with confidence that these things will bear the weight of what comes next regardless of what happens to the United Nations in this era so hostile to multilateralism and global cooperation in work for the greater benefit of mankind—and not for their easier exploitation by great powers who think it is now their turn at the trough on the excuse they had been shoved away from the trough in the past by their declining rivals today. As if anyone’s grievance justifies their mistreatment of those who never did them any harm.

The Global Compact on Migration will be one of these monuments. A monument to those who worked hardest, longest and the most on it: The young experts of all the UN missions—all from every UN member state avidly for, actively against, or just overly cautious about—but all of them interested in solving the crises of migration today alongside the bureaucracy of the United Nations.

When the Compact was approved a month ago at the General Assembly without fanfare, for adoption in the Marrakech Conference in December,

most of the experts and their ambassadors said with a pleasing modesty that the Global Compact on Migration is not perfect, that more work needs to be done, that it is a work in progress. But I told them that is false modesty, that they have much to be proud of, and they had best shut up.

That was one of my few contributions to the Compact and I think it was necessary.

This Compact is as good as it gets, given the evil times into which migration has come. No, more, this is not just as good as it can get in times so filled with hate, division and envy.

This is as good as it will ever get, even in the good times sure to come when the pendulum swings in the opposite direction—when it will seem obvious that we had achieved and gotten the world to accept all that is indeed necessary and imperative to make the migrant experience that humblest of things for which to aspire: a decent one.

So that the only thing that remains is for governments and people to implement them—both for the sake of migrants and for their own self-respect as human beings.

To be decent: the highest aspiration of mankind.

If not everything in the compact is an enforceable right, indeed the compact is nonbinding except by conscience; nonetheless everything pertinent to the migration experience has been mentioned, touched upon, debated, taken apart and put together, and finally set down with a clarity no one who had read the first draft thought possible.

And it went as far as it is possible to go in an imperfect world so that none may say when they abuse the stranger in a strange land, “Oh, that’s wrong? That’s a bad thing to do? We did not know.”

A US lawmaker and the Aquino regime spread fake news to destroy the Marcoses Cecilio T. Arillo

database Part Seven

How anti-Marcos forces distorted history

I

N Hubris (page 45), a 545-page comprehensive historical book published in the Philippines in 2000 by the Truth and Justice Foundation and written by noted historians Karla Sohmer, Salvador Escalante and J. Augustus Y. de la Paz, the authors said: “Philippine history has indeed been subjectively distorted by dozens of anti-Marcos writers according to their agenda. It may be profitable, but the profits cannot cover the truth: The practice is intellectually unethical, and is made more repugnant by the resulting miseducation of the Filipino youth.

“But, despite years of sustained and officially sanctioned indoctrination, the masses have not been tricked into losing all reverence for the late President Marcos. The masses persist in measuring succeeding leaders against the Marcos benchmark. Are they resolute and politically willful? Are they able to stand up to the Americans? What were they able to build? What did they do for the homeless, the landless, the illiterate, the sick and the poor?

“To this day, one often hears among the common folk: It was better during the Marcos era [Mabuti pa noong panahon ni Marcos]. Coming from humble citizens who presumably suffered under his rule, this accolade is more precious to the Marcoses than many a formal tribute.”

The Marcos era was indeed better in many ways, for the leadership was of higher quality, and with loftier commitment. From the dawn of prehistory, Malakas at Maganda (Strong and Beautiful) have journeyed to lead their progeny across perilous period, with not just survival in

mind, but a superior future.

Prof. Teodoro A. Agoncillo, the late eminent historian, in his 637page History of the Filipino People, never referred to President Marcos as a dictator.

Here’s what Agoncillo said: “The mortal life of President Marcos came to an end on September 28, 1989. But his death did not put a stop to the obsessive efforts of his foes to stigmatize him for perpetuity. The pseudo-gods have consigned him to perdition.

“There is an explanation: Marcos the man is dead, but his legacy lives on. While his people continued to govern and be governed through the barangays, Marcos lives. While citizens continued to oppose communist control, Marcos lives. While the poor clamor for a return to the socialized pricing of basic commodities, the control of housing rentals, the protection of Philippine industries from foreign competitors, and the regulation of key industries like petroleum and power distribution, Marcos lives.

While the people demand a leadership that gets things done over the protests of privileged minorities, Marcos lives. In the form of these legacies, Marcos is indestructible.”

Unable to erase President Marcos from the nation’s memory, his enemies have resorted to editing history to depict him as an archvillain—evil, vain, oppressive,

Unable to erase President Marcos from the nation’s memory, his enemies have resorted to editing history to depict him as an archvillain—evil, vain, oppressive, beyond redemption and universally loathsome. They have denigrated the medals for his war exploits as fakes. They have dragged him and his wife to various American courts on charges of plunder and massive human rights violations.

beyond redemption and universally loathsome.

They have denigrated the medals his war exploits as fakes. They have dragged him and his wife to various American courts on charges of plunder and massive human-rights violations. In trials by publicity, the Marcoses stood convicted of atrocious acts, which approximate crimes against humanity.

They have demonetized the P1 coin bearing his image, and all paper bills bearing his New Society catchphrase. They have produced history textbooks that demonized him as a tyrant, a dictator, a fascist, an American puppet, a thief, a murderer and a crook.

Dr. Sonia M. Zaide’s 241-page Philippine History and Government, has a six-page chapter on “the Marcos Dictatorship” which consistently quoted President Marcos as a dictator.

Zaide’s book has been approved for use in Philippine high schools. It is only one of the many publications instilling in the minds of the youth the fiction that President Marcos was “a dictator who was above the law.” The miseducation is obvious, given the odious application to the term “dictator.”

Newsweek’s story citing Mrs. Marcos one of “History’s 11 Greediest people” has been repeated many times over by her detractors. Even the Guinness Book of Records (GBR) mentioned her and President Marcos as thieves.

Mrs. Marcos reacted and said:

“Genghis Khan was on the Newsweek list, too, and he was the greatest conqueror of mankind; I did not conquer the world with weapons but with peace. Greedy? I plead guilty to being greedy for the true, the good and the beautiful,” she told a group of lifestyle editors in 2009.

What about the shoes her critics have repeatedly dished out to spite her?

“At least they did not find skeletons in my closets,” Mrs. Marcos said.

I asked her in my exclusive interviews with her for Imelda, the bestselling book I wrote about her life and published by Amazon, what was her most unforgettable experience.

Mrs. Marcos replied: “The most significant and most exacting for me was the honor of having brought the image of Our Lady of Fatima to be consecrated with the Liturgical Service in Moscow at the height of the Cold War. That was October 1985, the month of the Holy Rosary. As I left the Church together with a large retinue of Catholic bishops from the Philippines, a spray of snow descended on my face and before I could wipe them out, an old woman from nowhere sidled close and whispered: ‘Madam, for the blessings you have brought to Russia by opening our Church to honor the Virgin Mother, much will be exacted from your life!’

“Those words were indeed prophetic. In a few months, we were forced into exile, and shortly thereafter, the Union of Soviet Socialist Republics began to dissolve and the freedom of religion was restored along with other fundamental liberties throughout what was once the solid bastion of communism.

“It symbolized in a way the sacrifices expected of my own life, the life of my husband and the lives of my children, our country and our people.”

To be continued

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

2nd Front Page BusinessMirror

A8 Tuesday, August 14, 2018

www.businessmirror.com.ph

Cimatu halts Rizal quarrying; House probes fate of anti-flood fund

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By Jonathan L. Mayuga @jonlmayuga & Jovee Marie N. dela Cruz @joveemarie

NVIRONMENT Secretary Roy A. Cimatu has ordered the suspension of all quarrying operations in Rizal province following the massive flooding brought about by nonstop rain over the past few days.

Cimatu issued the order upon the instruction of Special Assistant to the President, Christopher Lawrence T. “Bong” Go, who visited Marikina City, one of the severely affected areas in Metro Manila.

Marikina City went under water as the Marikina River overflowed —something that experts had blamed on the extensive damage around the Marikina watershed.

In 2009 Tropical Storm Ondoy (international name Ketsana) inundated many parts of Metro Manila. The flood that severely affected Marikina City and other parts of Rizal and Metro Manila was attributed to the overflowing of the river.

More than 700 people were killed by that flooding, which prompted the declaration of the Marikina watershed, a Protected Area in 2012 called Upper Marikina River Basin Protected Landscape (UMRBPL).

Quarrying, an open-pit min-

ing method, shaves forests to extract boulders of rock, which are crushed to produce gravel.

The number of quarrying operations in the entire province, which partly covers the UMRBPL, is not immediately known.

Upper Marikina River, the area officially referred to as Protected Landscape, covers a total of 26,125.64 hectares covering the upper reaches of the Marikina watershed in the Province of Rizal, f lowing through the Antipolo, Baras, Rodriguez, San Mateo and Tanay towns.

In Rodriguez town, the river is dammed by Wawa Dam, a structure built during the early-1900s to provide water for Manila.

Aside from Marikina City, the Municipality of Taytay was also severely affected by flash floods.

In a statement released by the DENR , Go was quoted as s ay i ng t h at he w i l l a sk t he DENR to investigate whether

the f looding was indeed tr iggered by the unchecked quarr ying operations in the prov ince.

Go then spoke with Cimatu, who responded by suspending quarrying operations in Rizal, particularly in San Mateo and Rodriguez.

DENR Undersecretary for Mining Concerns Ana Liza R. Teh instructed Mines and Geosciences Bureau Regional Director Samuel Paragas to coordinate with Environmental Management Bureau Regional Director Noemi Paranada and EMB Director Engr. Metodio Turbella in issuing a joint Stoppage Order on the quarrying and crushing of plants in San Mateo and Rodriguez, Rizal

Flood fund

THE cha ir man of t he House Committee on Metro Mani la Development on Monday asked the Department of Public Works and Highways (DPWH) and Metropolitan Manila Development Author it y (MMDA) to report to Congress the status of the P25-billion Metro Manila Flood Control Management Project, which would have mitigated the incidents of massive flooding in the capital.

Quezon City Rep. Winston Castelo, the panel chairman, made a statement after huge parts of Metro Manila were again inundated by the continuous downpour during the weekend, spawned by a tropical storm and the southwest monsoon.

“Where is the anti-flood project?” Castelo asked the DPWH and MMDA. “I am now wondering what

OFF TO ASIAN GAMES Athletes bound for the Jakarta-Palembang 18th Asian Games make the signature clenched fist sign with President Duterte (seated, center) during a send-off ceremony in Malacañan Palace on Monday. Joining the team are (front row, from left) Special Assistant to the President Christopher Lawrence T. “Bong” Go, Philippine Sports Commission Commissioner Charles Maxey, Executive Secretary Salvador C. Medialdea, Philippine Olympic Committee President Ricky Vargas and Chef de Mission to the Games Richard Gomez. The Games open on Saturday and end on September 2. is taking the DPWH and the MMDA too long to even bid out the project, which is an obvious priority. Is it incompetence or pure insensitivity?” Castelo added.

The project, which received funding from the Asian Infrastructure Investment Bank and the World Bank, has been ready since the start of the year.

Castelo said he had called for these agencies to give priority to

RCEP. . .

Continued from A1

“The Philippines is also a member of the WTO and it is not easy [for us to give] unilateral benefit for special tariff to one country, which we will violate the WTO rules. I will do my best to sort this issue out,” Han added.

Han disclosed that Philippine bananas’ share in the South Korean market has declined from 90 percent to 80 percent due to the influx of produce coming from Central American countries, which have lower tariffs.

“With the free-trade agreement with South Korea and Central America, we are importing more bananas from Ecuador and other Central American countries,” he said.

Han said South Korea is now in the process of facilitating the entry of Philippine durian, pomelo and okra to its local market.

Prices. . .

Continued from A1

T he re we re 15 br a nd s of canned sardines, 22 brands of processed milk, 24 brands of canned meat and 16 brands of condiments that have seen price surges from January to July, according to Laban Konsyumer.

“The percentage increases range from 2 percent all the way up to 11 percent, or P0.25 to P1.95 per piece.

Six brands of canned meat and condiments had increased twice this year. For the month of July, three brands of sardines had increased prices. Under the expanded SRP, four brands of condiments had price increases,” Dimagiba said.

He said this is just “too high for the poor consumers,” and renewed his group’s call to the DTI to roll out a moratorium on any price hikes on commodities with SRP until the opening quarter of next year. Dimagiba explained pressures on supply and demand could trigger another round of

the project, with an eye to completing it before the onset of the rainy season.

“Several monsoon rains or habagat after, which placed Metro Manila residents in danger and the Metro Manila economy in a temporary standstill, there is no progress in the crucial project,” Castelo said.

The lawmaker said the two agencies should carry out their mandate

of mitigating the residents’ ordeal from floods by speeding up the bidding for the projects intended to reduce flooding.

Castelo said the slow action from the agencies may spur calls for the grant by Congress of emergency powers for the President to solve the flooding crisis. He, however, said government agencies should not wait for the President to step in.

“One day, [South] Koreans will enjoy Davao durian or pomelo. We are also now in the process of importing okra,” he said. “We are importing many agriculture products [from the Philippines], and this is important.”

Earlier, the Pilipino Banana Growers and Exporters Association (PBGEA) urged the government to expedite the forging of a freetrade agreement (FTA) with Seoul that would allow Philippine banana exports to enter South Korea at lower tariffs, and ensure that the country would not lose the East Asian market against South American competitors.

PBGEA issued the statement after South Korea signed an FTA that allows five Central American nations to export bananas to Seoul at lower tariffs.

“The Philippines could lose South Korea as a top export destination for locally produced bananas three years from now unless tariffs are removed on this agricultural product

to enable it to evenly compete with other banana exports entering this lucrative market,” the PBGEA said.

“Cheap banana imports from Central America have started to eat into the share of Philippine bananas in the Korean market, and these could totally push us out of the picture by 2022 unless we get the same zero-tariff treatment as they do,” PBGEA Executive Director Stephen Antig was quoted as saying in a news statement issued on Wednesday.

Based on the estimates of the PBGEA, losing the South Korean market would result in the country foregoing close to $300 million in export revenues, with the government losing P6.5 billion in local and national tax revenues. This would affect 32,000 workers and over 200,000 dependents in the domestic banana industry of their means of livelihood, according to PBGEA.

price surges with the holiday season approaching, starting with the so-called ber months.

The consumer group leader also urged trade officials to discourage manufacturers from making use of easy-open lid for canned goods. He said a can of premium sardines has a listed SRP of P16, but those with easy-open lid have a registered SRP of P16.50.

Laban Konsyumer has transmitted these measures, among others, to the DTI for consideration, as the government struggles to temper inflation, or the general increase in commodity prices. Inflation in July hit a five-year high at 5.7 percent, putting year-to-date inflation at 4.5 percent, well above the Central Bank’s target range of 2 percent to 4 percent.

In a text message to the BusinessMirror, Castelo of the DTI said Laban Konsyumer’s “numbers are not accurate,” and computations made by the agency prove otherwise.

“In DTI computations, only 84 out of the 209 SKUs [shelf-keeping units] increased their prices, [while

the other] 125 remained stable.

This comprised only 40 percent [of the SRP list], contrary to the 70 percent to 113 percent alleged

by Laban Konsyumer,” she said.

Castelo added this will still be the case even if bottled water and candles are excluded from the picture. “If you remove nonfood products, like water and candles, this will increase slightly to 45 percent, still far from the 70 percent to 113 percent claimed by Laban Konsyumer,” she argued.

Castelo, however, admitted price surges in the past months were mostly recorded on canned goods, as reported by Laban Konsyumer.

“Basically [increases were posted in] canned fish and meat products, although not all brands increased,” she said.

As of July 16 SRP on canned sardines range from P12 to P16.50, with the highest having an easy- open lid feature. On the other hand, SRP on luncheon meat vary from P31.50 to P32.50; meat loaf P16.50 to P19.45; corned beef P26 to P36.20; and beef loaf P16.25 to P24.90.