Businessmirror august 15, 2017

How does Corruption hurt you?

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By Henry J. Schumacher

or years the Integrity Initiative tries to create Integrity Nation, a nation where transparency and integrity rule and corruption is no longer part of everybody’s life. Have we succeeded? Obviously not if you read my last week’s column: Corruption is Dead! Long live Corruption!

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Given the fact that business allegedly does not like corruption, but unfortunately—at the same time—is not willing to financially support anticorruption, it may be useful to highlight once again how corruption hurts and convince society at large or better—every individual—to fight corruption and make a choice to only deal with companies that evidently are involved in anticorruption and have been verified or even certified that they adhere to transparency in business and implemented antibribery and anticorruption policies.

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Tuesday, August 15, 2017 Vol. 12 No. 306

Piñol places entire PHL under bird-flu monitoring By Jasper Emmanuel Y. Arcalas @jearcalas & Elijah Felice E. Rosales @alyasjah

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he government will regularly inspect all livestock and poultry farms nationwide, after the Philippines recorded its first avian influenza (AI) outbreak, Agriculture Secretary Emmanuel F. Piñol said on Monday.

Piñol directed Agriculture Assistant Secretary for Livestock Enrico P. Garzon Jr. to form a biosecurity team that would determine if the country’s livestock and poultry

WARS, DISASTERS MAKE BALAI FILIPINO A HARDER TASK FOR GOVT, BUILDERS By Cai U. Ordinario

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@cuo_bm

a r is an ex pensive undertaking for any government. To date, t he Depa r t ment of Nat iona l Defense has estimated that the Marawi City siege already cost the Philippine government around P3 billion due to the military’s offensive operations. While the amount is bound to increase as the war continues, the “silent” cost of war is the rebuilding of the lives of those affected. And this silent cost that will be borne, not only by the government but the citizens, as well, could be more than the amount needed to put down enemies of the state. This silent cost includes housing. The siege of Marawi City, for instance, has already displaced thousands of families. Housing and Urban Development Coordinating Council (HUDCC) Chairman Eduardo D. del Rosario said he recently visited evacuation centers that have given shelter to a total of 5,000 families. These families are forced to live in tents and share common bathrooms, with several others in the evacuation center they are in. This not only causes major discomfort on people, but also diseases that

Balai Filipino The 10-year master plan for the housing sector now undergoing finishing touches could spread like wildfire in any given congested evacuation facility. A side from the hor rors of war, natural disasters, like typhoons, can be as equally expensive for the government and Filipinos, in general.

Dream homes

So for the HUDCC, the difficult task of fulfilling the dream of Filipino families of having their own homes is made doubly harder by both wars and disasters. Now estimated at 6.5 million units, the country’s housing backlog balloons further every time a war or disaster takes place due to the displacement of affected families. This is why the HUDCC is now in the process of crafting a mediumterm program with the support of the private sector to bridge the housing gap. The master plan is called Balai Filipino, or Building a Legacy for the Advancement and Integrity of Filipinos. See “Balai Filipino,” A2

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farms—whether backyard or commercial ones—are compliant with biosecurity measures. “I will ask the BAI [Bureau of Animal Industry] to impose this in all

PIñOL: “This order takes effect immediately. The team will inspect the cleanliness of all farms producing chicken, duck eggs and hogs.”

farms, not only in Central Luzon, but all over the country. If you have a poultry farm, for example, you are automatically part of the investigation,” Piñol said in a news briefing on Monday. “We are talking about biosecurity

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Observations, surveys, changes in the past 12 months

Manny Villar

THE ENTREPRENEUR

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wo things come to mind when I look back at the past 12 months, specifically the first year in office of President Duterte. First, the proof of how people think of him shows not only on his public approval ratings, but on the changes they see in their own lives. Second, the unorthodox Chief Executive is likely to break the so-called postelection jinx, or the slowdown in economic growth following an election year. On my first observation, I cite the recent surveys conducted by independent polling firm Social Weather Stations (SWS). The Second Quarter 2017 SWS, which was conducted from June 23 to 26, found 9.5 percent, or an estimated 2.2 million families, experiencing involuntary hunger at least once in the past three months. Continued on A10

Continued on A14

BMReports

Tax on sugar-sweetened beverages stirs bittersweet flavor for industry By Jasper Emmanuel Y. Arcalas @jearcalas

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Part Two

HILE some government officials are fast-tracking the course of the Tax Reform for Acceleration and Inclusion (Train) bill, some are wary of its final destination. W hile government officials boast the Train bill would cascade positive changes on people’s lives some say the proposed tax-reform law runs on track to perdition. So Louie C. Montemar believes. “[The Tr ain] impacts most of the basic consumers who are already taxed income-wise and then you have value-added tax also. And now you are adding another one,” Montemar, coconvenor of consumer group Bantay Konsyumer, Kuryente, Kalsada (BK3), told the BusinessMirror. “It’s like the government is doing some magic: On one hand they are offering free education, but on the other hand babawiin nila sa ibang paraan [take it back through other means],” Montemar added.

Workers arrange cases of carbonated drinks at a warehouse in Manila on August 14. The Tax Reform for Acceleration and Inclusion bill, which includes the proposed excise tax on sugar-sweetened beverages, is expected to affect sweetened carbonated drinks. NONIE REYES

Confusing

MONTEMAR, a political-science professor, argues the Train bill runs contrarian to the government’s goal of a tax system that’s easier to administer. “If the government is saying [it]

wants a simplified tax system, then we also want that, too. Who doesn’t want that?” he said. “But if you add many kinds and layers of taxes it will confuse the people. To simplify it, we want this excise tax on sugar-sweetened beverages [SSBs]

to be removed as much as possible. Let’s just scrap this proposal,” he added. Industry stakeholders estimate a Train law would lead to higher prices in products with a wide consumer base. Continued on A2

n japan 0.4673 n UK 66.3321 n HK 6.5239 n CHINA 7.6515 n singapore 37.4928 n australia 40.2563 n EU 60.3130 n SAUDI arabia 13.6021

Source: BSP (14 August 2017 )

BMReports BusinessMirror

A2 Tuesday, August 15, 2017

Tax on sugar-sweetened beverages stirs bittersweet flavor for industry Continued from A1

Once the proposed additional tax is applied, a 3-in-1 coffee sachet, currently priced at P5, will be P8; a 1-liter bottle of juice concentrate, currently priced at P9, will have a retail price of P30; a 1-liter bottle of tea, currently priced at P20, will be sold at P30; and carbonated drinks and tetra-pack of ready-to-drink juice, currently being sold for P15 per liter, will cost P25. The products covered by the TRAIN, or House Bill 5636, will include all sweetened-juice drinks, sweetened tea, sweetened coffee, all carbonated beverages with sugar, including those with caloric and noncaloric sweeteners, flavored water, energy drinks, sports drinks, powdered drinks not classified as milk, juice, tea and coffee, cereal and grain beverages and even nonalcoholic beverages with sugar.

Burdensome

THE official pointed out that the brunt of the price increase in the above-mentioned commodities will be shouldered by the Filipinos in the lower classes of the society. “Let’s take the very important item being consumed by most of poor Filipinos, which is 3-in-1. This is the only thing that our poor drink to survive the day,” Montemar said. “I have worked with urban-poor families, and some of them sinasabaw lang nila ito [3-in-1] sa kanin at iyon na ang ulam nila [They mix the water-diluted 3-in-1 beverage with rice for viand].” “And now you want to increase these commodities; then that’s really burdensome to the ordinary people,” he added. Montemar said the price increments would result in lower demand for these commodities, thus, affecting those selling them. “This is not good. It’s not a good sign that this government is taking care of consumers,” he said. Members of the Philippine Association of Stores and Carinderia Owners (Pasco) echoed BK3’s position, adding

Bird-flu. . .

Continued from A14

million to provide assistance to growers affected by the bird-flu outbreak. The bulk of the amount will be extended to farmers in the form of loans. “I have asked the Agricultural Credit Policy Council to prepare a P25,000 loan assistance under the Survival and Recovery loan package. We will offer this to the farmers of Pampanga within the 1-kilometer contained area and 7-km controlled area,” Piñol said. “Farmers will get P25,000, P5,000 of which is government grant, while the remaining P20,000 will be a no-collateral, no-interest loan, payable in two years. This is

the proposed tax measure would cause them to lose more than half of what they earn daily. “What would be taxed would be products that form the lifeline of microretailers,” Pasco President Victoria Aguinaldo told the BusinessMirror. According to Aguinaldo, the increase in the prices of these products would lead to fewer buyers and, hence, lower sales, lower earnings and inability to buy products for sale at the microretailer level. She said a 3-in-1 powdered beverage needs only hot water, which a poor family can cheaply produce. A P3-increase in the price of the powdered beverage would be burdensome for people like them who profit from selling these products.

need to help government but with this increase and an additional increase in fuel prices, it would be difficult for us],” she added. Aguinaldo is cognizant the proposed excise tax on SSBs is something just being passed on within the market value chain. “Manufacturer naman po magdadala at ipapasa sa amin ang produkto. Kaya naman po sa consumer din babagsak,” she said. “Sana isaalang-alang dito ‘yung mga pamilyang nakasasalay sa tindahang maliliit [It would be manufacturers who will pass on the products to us and eventually to consumers. We just hope government would give consideration to families relying on small stores].”

Reduce

GOVERNMENT officials pushing for the enactment of Train into law pointed out that passing the excise tax on SSBs would generate at least P47 billion. However, Aguinaldo believes the state should not generate this amount at the expense of poor Filipinos: “Huwag din po sana sa mahihirap kunin yung perang gusto nilang maabot.” She said Pasco and its members, composed of 6,000 sari-sari store owners nationwide, are willing to compromise with the government to ease the effects of the proposed tax measure. The Pasco chief added they could endure only an excise tax of P0.50 cents and as much as P1 on SSBs. Aguinaldo said the amount are the only ones their members can afford to pass on to their customers. “Iyon po ang kaya namin siguro. Kasi kung hindi po mapipigilan ang sampung piso, maraming magsasarang tindahan [Those are the price levels we can afford. But if the P10 tax couldn’t be avoided, let us brace for closure of many store],” she said. “Kailangan din namin tumulong sa gobyerno pero dito sa pagtaas na ito at mayroon pa po sa fuel na pagtaas, mahihirapan na po talaga kami [We also

MEMBERS of the Philippine Sugar Millers Association (PSMA) are appealing to lawmakers to reduce the excise tax proposed to be imposed on locally produced sugar in sweetened beverages to P5 to minimize its detrimental effects to the industry. “The P10 should be lowered to P5,” PSMA Executive Director Francisco D. Varua told the B usiness M ir ror. “Because at P10 we are going to lose a big market; the ordinary consumers may not be able to buy our products anymore because they will find it expensive. People will just be drinking coffee or tea without the sugar anymore because of the high price of sugar.” Varua’s remark comes as the Duterte administration’s Train bill has reached its next station: the Senate Committee on Ways and Means (CWM). However, Varua said lawmakers should maintain the P20 tax on imported high-fructose corn syrup (HFCS) so as to avoid aggravating the effects of the tax on sugar on the local industry and for its negative effects on human health. “At the same time, we would like the tax of P20 on HFCS to be maintained; not only to support the sugar industry but also for health reasons.” To be concluded

on top of the calamity assistance we will give them,” he added. Piñol also said the DA and the farmers affected by the AI outbreak in San Luis, Pampanga has agreed on a compensation of P80 for every bird culled in the process of containing the disease. “Pampanga Gov. Lilia B. Pineda and San Luis Mayor Venancio Macapagal are also okay with the compensation. So if you’re talking about 200,000 birds, that’s about P16 million,” he added. The DA chief said no new birdflu outbreaks have been recorded outside of San Luis. Malacañang also vowed to throw in all efforts to support poultry farmers as they weather for the first time an outbreak of the AI virus. In a news briefing on Monday,

Presidential Spokesman Ernesto C. Abella said that, while the government’s primary concern is the safety of consumers, its long-term concern is the livelihood of affected farmers. “Our long-term concern is to sustain and support our local poultry industry, as it weathers this first-time crisis,” Abella said. Abella added the government, headed by the DA, is working closely with poultry farmers and producers “to eliminate the problem soonest”. He said the end goal is to restore the country’s chicken exports to their premium position in international markets. San Miguel Purefoods Co. Inc. has postponed the shipment of around 200 metric tons of chicken products to Japan due to the avianflu outbreak in San Luis, Pampanga.

Revenue

Balai Filipino. . . Based on the Post Disaster Needs Assessment report released by the National Disaster Risk Reduction and Management Council, the impact of the Supertyphoon Yolanda (international code name Haiyan) reached P132.4 billion. Around 68 percent of the amount, or P89.598 billion, was due to damages and 32 percent, or P42.76 billion, was due to losses. Four years after, the typhoon that devastated thousands of homes and displaced thousands of families, continue to haunt them, given that the housing units for the displaced residents in the Yolanda corridor have yet to be completed. As of the first quarter of the year, data from the National Economic and Development Authority (Neda) showed only 50,791 houses have been completed, from the 205,128 units that need to be built. “Our main concern in the housing sector is to alleviate and immediately provide assistance to displaced families. Our primordial consideration is to make them feel comfortable at the soonest possible time,” del Rosario said.

Marawi evacuees

In his recent trip to Marawi and Iligan cities, del Rosario, Cabinet Secretary Leoncio B. Evasco Jr. and most of the heads of the key shelter agencies (KSAs), met with local officials from the office of the governor of the Autonomous Region in Muslim Mindanao (ARMM) to barangay officials. Del Rosario said the priority for the government was to find suitable land that is not prone to flooding or erosion, which can be used for temporary housing facilities for the evacuees of Marawi City. He said the local government allowed the HUDCC and the KSAs to use 11 hectares of land to build some 1,100 temporary shelters for evacuees in Barangay Sagonsongan in Marawi City. If more temporary housing facilities will be needed, the local government has also allowed the use of another 16 hectares in Lanao del Sur that can also be used for this purpose. The HUDCC chairman said the 1,100 temporary single-detached units to be built will be 40 square meters in size with a lot area of 22 square meters each. The units are prefabricated shelters with their own comfort rooms. The National Housing Authority (NHA) is still in the process of selecting the supplier of the prefabricated homes and intends to choose one within the month since the Department of Public Works and Highways (DPWH) targets to start construction in the second week of September. In its latest report to the subcommittee on housing, the HUDCC said the DPWH intends to complete the construction of the temporary housing units in a month or two. Del Rosario said the units, which will be available to evacuees who want them, will be free of charge. These units have a lifespan of two to three years and can accommodate displaced residents who have no place to stay while their homes are being rebuilt, or those whose homes have been completely destroyed.

Ironman. . .

Continued from A14

said: “This event commences 2017 as the banner year for sports tourism in our country. Such events rake in tourism earnings for our people, as well as become excellent participative sports and fitness venue for all, as there are some local and international celebrities who participate. One benefit is that each participant spends about $3,000 [P153,000] and brings in three more companions, as this is a lifestyle activity.” Teo said the Depar tment of Tourism (DOT) will be cohosting the triathlon event again in 2018, as foreign participants in this year’s competition, held in Cebu on August 6, said they were looking forward to returning to the Philippines, not only to conquer the challenging triathlon competition, but also to enjoy again the Filipino’s unique brand of hospitality. Over 2,700 triathletes from 52 countries participated in the 10th anniversary of the sports event this year, which was organized by Sunrise Events Inc. in cooperation with the DOT. “Nine years ago, we didn’t even imagine having Ironman 70.3 here in the Philippines, and here we are holding our 10th anniversary in Cebu, in partnership with the DOT,” said Wilfred Steven Uytengsu, Sunrise Events founder and chief executive. Uytengsu is also president and CEO of Alaska Milk Corp.

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The long line of administrations that took the reins of the government have faced countless challenges when it comes to providing adequate and decent housing for Filipinos. There were many successes but also many failures. This has clearly been seen in the results of the AmBisyon 2040 study conducted by the Neda. The study, which involved the conduct of 42 focus-group discussions and surveyed 10,000 Filipinos nationwide, showed owning a home remains one of the dreams and goals of Filipinos for themselves and their families. Based on the AmBisyon 2040 data presented by the Neda, around 61 percent of Filipinos still dream of owning a mediumsized home. Around 73 percent of them prefer to live in houses with big lots. Around 30 percent prefer to live in cities, like Manila, and 30 percent prefer to live in the town center in the province. “Everything boils down to resources in any program. You need resources to make it move. I do not like to criticize previous administrations, but it boils down to one thing—availability of resources,” del Rosario said. Chapter 12 of Building Safe and Secure Communities included in the draft version of the 2017 to 2022 Public Investment Program (PIP) showed the national government intends to spend some P351.9 billion for various housing projects in the medium term. The largest investment will be for the High Density Housing Program of the HUDCC and the Social Housing Finance Corp. (SHFC), which amounts to P54.65 billion from 2017 to 2022. The program intends to provide shelter security to some 134,934 informal-settler families (ISFs) in Metro Manila. Another big-ticket item is the Resettlement for ISFs Affected by the North-South Railway Project, which will require a total investment of P48.15 billion between 2017 and 2022. The project will build a total of 100,000 homes for the ISFs to be displaced by the project. However, despite this need and the goal of addressing the 6.5-million unit housing backlog, del Rosario lamented that the

Department of Budget and Management (DBM) only approved a budget of P4.7 billion for the HUDCC and its six KSAs for 2018. Del Rosario said they initially proposed a budget of P68.7 billion. This includes all the budget needed to address ISF requirement, disaster-relocation needs, and other pertinent items that the housing sector will need. In 2016 the housing agencies were granted a collective budget of P33.38 billion. However, due to low absorptive capacity, the government only used P16.38 billion. With this, the housing agencies had a carry over P17-billion budget, which was added to the approved housing allocation of P15.3 billion this year. This means the total budget for 2017 of the HUDCC and the KSAs is pegged at P32.3 billion. The low budget granted to the housing sector may be due to the low budget utilization rates for the NHA and SHFC. The Philippine Development Plan 2017 to 2022 showed that NHA’s budget-utilization rate was only 71 percent and 67 percent for SHFC between 2013 and 2015. But del Rosario vowed this will change since the NHA is ramping up its spending for housing projects nationwide, including those in the Yolanda corridor. He added that the government is also keen on cutting red tape encountered by developers in undertaking socialized-housing projects. These are bound to speed up not only the use of government funds but also private-sector spending for housing. They will also make socialized-housing projects, which normally have a profit margin of 10 percent to 20 percent, more lucrative for developers. “In socialized housing, before these are approved, it will take three to five years on the average. Some of them say it takes them even 10 years. This is where we will focus our efforts so that we can fast-track the processing time,” del Rosario said. The HUDCC chairman added these reforms will also be accompanied by efforts of the government to provide utilities in all government housing sites, particularly for displaced families in Marawi City and other areas affected by disaster and conflict. The ultimate goal for these housing projects, del Rosario said, is to create “townships” that do not only have adequate housing facilities, but also basic facilities, such as health centers, police or law enforcement and other social services. He said if there is a need for a school, the government will also be open to include that in the development. These efforts will all be part of the 10year master plan that the housing sector will be drafting. The draft will be completed and presented to the HUDCC in two weeks. The plan will be under the banner of the Balai Filipino. To many of the world’s rich and famous, homes are mere investments that can be monetized later on. It serves as a piggy bank that they can draw from on a rainy day. It is a status symbol of sort. But this is not the case for Filipinos. While it is a recognized right, owning a home has a deeper emotional and aspirational symbol for Filipinos. Having their own property that they can build their life on is important for them to have a decent life and to have dignity.

Teo added that since the Philippines started hosting the Ironman 70.3 challenge in 2003, the event “has branded our country as a crown jewel of sports tourism in Asia. Such events mark the Philippines as a go-to destination for sports tourism in Southeast Asia.” Australian Tim Reed, who posted his best time (three hours, 15 minutes and seven seconds) in his third straight victory, said, “I’ll definitely be back next year as Cebu is a special place for me.” Female champion Amelia Watkinson of New Zealand said she was excited to return, not only to compete in Ironman 70.3, but also to meet the local people. “I find people in Cebu very supportive and exciting with the crowd on the side of the streets smiling, waving little colorful banners, marching bands playing, cheering for us, go-go-go,” she added. Watkinson is no stranger to the Philippines having triumphed in last year’s 5150 triathlon in Subic, Zambales. Runner-up and fan favorite Mauricio Mendez of Mexico said he was amazed at the beautiful sunrise of Mactan. “It is so beautifully spectacular amid one of the tightest races I’ve ever run. I like how the race was professionally put together. I’m happy here in Cebu and will be back.” Cebu has been hosting the Ironman 70.3 challenge since 2012. Other major competitors in the Pro elite category include Caroline Steffen (Switzerland) and Filipino-Australian Kim Kilgroe, along with locals champs, such as August Benedicto and Leanne

Szeto. Also spotted were celebrity actors and TV personalities, like Matteo Guidicelli, Kim Atienza, Bubbles Paraiso, Dyan Castillejo, Paul Jake Castillo, Ivan Carapiet, Piolo Pascual, Jake Cuenca, Kim Chui, Gerald Anderson, Enchong Dee and Xander Angeles. The DOT chief invited all participants to return to Cebu for the Ironman 70.3 Asia-Pacific Championship next year. “The Department of Tourism and its marketing arm, the Tourism Promotions Board, will host the Ironman Asia-Pacific Championship 2018,” Teo announced. The Ironman triathlon course started in the Mactan Channel off Shangri-La Mactan Resort where the athletes battled it out in a swimming competition (1.9 km). The next challenge was a bike race (90 km), which traversed four cities of Cebu province forming the M-Loop in urban Cebu. Finally, the running portion (21 km) along Punta Engaño had thousands of townsfolk cheering up to the last competitor of the race. Recognized since 2004 by international tourism and lifestyle publications, such as Conde Nast Traveler and Travel and Leisure Magazine, Cebu’s distinct attractions fit any triathlete’s requirements for a meaningful and memorable travel experience. The province has fine-sand beaches, picturesque islands, appetizing native cuisine, local handicrafts, relaxing spas, diverse shopping venues, an exciting nightlife and topped by the talents and natural warmth of the Cebuanos.

Continued from A1

The local governments are now in the process of identifying which of the evacuees will require only temporary housing or permanent housing units. The identification of these residents will not only include their names, but also their previous address to ensure that the government is giving free transitional housing to those who were affected by the Marawi siege only. “We do not expect all the displaced families to avail themselves of the temporary housing units. Some of them want to go back to their homes and just renovate them. More or less, those who will avail themselves of these units are those whose homes have been totally destroyed or burned down, that is one. Second, those who need to rebuild homes their homes but need a place to stay temporarily. But those who have totally no place to go, that is going to be the problem because they will need more time and we have to support them,” del Rosario said.

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House panel OKs postponement of barangay, SK polls to May 2018

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he House Committee on Suffrage and Electoral Reforms on Tuesday approved the proposal to postpone the October 2017 barangay and Sangguniang Kabataan (SK) elections. Voting 19-2, Party-list Rep. and Committee Chairman Sherwin Tugna of Cibac said members of the committee have agreed to postpone anew the barangay elections to May 14, 2018. Tugna said lawmakers have also decided to retain the incumbent barangay officials in a holdover capacity. The last barangay elections was conducted in October 2013. “I think if the Lower House will put the bill for second reading in the plenary it [approval] wouldn’t reach the end of August,” the lawmaker said. Commission on Elections Chairman Andres D. Bautista, meanwhile, was absent during the approval of the proposal resetting village elections due to “a prior engagement in Davao City”. Moreover, lawyer Edmund Abesamis, national president of Liga ng mga Barangay sa Pilipinas, expressed support to the postponement of the barangay polls, saying there is a valid concern that drug

I think if the Lower House will put the bill for second reading in the plenary it’s [approval] wouldn’t reach the end of August.”—Tugna

sy ndicates and personalities w ill use drug money to infiltrate and inf luence the elections. “The postponement of barangay election will facilitate the clearing of drug-affected barangay officials who have already been identified to be involved in illegal drugs. It will boost and strengthen the nation’s war against illegal drugs. It will not only to get rid of ‘narco-politicians’ at the grassroots level but will [also] expedite the attainment of [a] drug-clear Philippines. It is easier to deal with persons who are already identified to be involved in illegal drugs than with those who are unidentified, and yet, could win elections,” Abesamis said in a position paper. Earlier, Majority Leader Rodolfo C. Fariñas of Ilocos Norte said the lower chamber is eyeing to synchronize the barangay elections with the plebiscite for Charter change and the proposed Bangsamoro basic law in May next year. Spea ker Panta leon D. A lvarez has backed the call of President Duterte for the postponement of the barangay elections, saying the government is concerned that if the elections were held in October as originally scheduled, the candidates backed by money from drug lords would likely win. He said it would help Congress act on the proposed measures for the postponement of the October elections if the President would certify the as urgent. Alvarez added that, aside from allowing the government to thwart the growing inf luence of drug lords over the barangays, postponing the October barangay will save the government money. Jovee Marie N. dela Cruz

Editor: Vittorio V. Vitug • Tuesday, August 15, 2017 A3

Resignation is now an option, says Comelec chief Bautista

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By Joel R. San Juan

@jrsanjuan1573

eleaguered Commission on Elections (Comelec) Chairman Andres D. Bautista has admitted that resigning from his position now remains an option, amid the still-raging squabble with his wife, who accused him of amassing at least P1 billion in ill-gotten wealth. Speaking during the Monday-morning flag ceremony at the Comelec headquarters in Intramuros, Manila, Bautista bared to Comelec officials and employees that he has sought “guidance” from different individuals “on what path to take”. He added that, even Manila Archbishop Cardinal Luis Antonio G. Tagle called him up and he took the opportunity to seek spiritual guidance. “Even Cardinal Tagle called me…so I would have a correct discernment on what I am supposed to do,” Bautista said. When asked if he is considering resigning from his post, Bautista answered,“As I said, all options are open.” It can be recalled that some stakeholders have urged Bautista to step down after his wife Patricia filed a complaint against him for violation of Republic Act 9262, or the Anti- Violence Against

Women and Children Act. Patricia has also asked the National Bureau of Investigation (NBI) to investigate her husband for alleged illgotten wealth, money laundering and other irregularities. Justice Secretary Vitaliano N. Aguirre II has directed the NBI to conduct a case buildup on Patricia’s revelations and also into Bautista’s alleged irregularities during his stint as chairman of the the Presidential Commission on Good Governance (PCGG). Aguirre also bared that the Bureau of Internal Revenue has also joined the probe to determine if there are tax liabilities based on the affidavit and documents that have been given to the NBI. During the flag-raising ceremony, Bautista turned emotional over thesupport shown by poll officials and employees on him.

“It’s not difficult to turn over or leave this post. It’s not a problem actually. What is difficult is leaving my Comelec family behind,” he said. Bautista added it is not easy for him to let go of the Comelec family that has embraced him for the more than two years since he assumed the post of poll chief. “Over the years, you have really shown sincere, genuine care and affection. And, perhaps, that is what is also making my thought process difficult,” he said. Bautista also asked for more prayers for him and his family. Prior to his speech, Comelec employees performed a song and dance numbers for Bautista, including one where the latter asked those around him to hold hands while the popular “If We Hold On Together” song was being sung.

Over the years, you have really shown sincere, genuine care and affection. And, perhaps, that is what is also making my thought process difficult.”—Bautista

Economy

A4 Tuesday, August 15, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

Palace told: Don’t expect full passage of tax-hike bills

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enate leaders pleaded with Palace officials on Monday to desist from insisting that senators pass in full the Palaceendorsed revenue-raising package under the so-called Tax Reform for Acceleration and Inclusion (TRAIN) bill. Senate President Aquilino L. Pimentel III said the chairman of the Senate Ways and Means Committee, chaired by Sen. Juan Edgardo M. Angara, had already conducted 12 public hearings on the tax bills, which, Pimentel said, “means the senators are seriously scrutinizing” the money measure. “The appeal of the Senate: Do not pin us down on adopting the Executive version of the tax bills,” the Senate leader told reporters, adding, “We are also giving the senators a chance or opportunity to study them carefully and come up with their own amendments.” Still, the Senate President assured that “definitely, we will have this tax-reform law.” He also clarified that the taxreform bills being considered in

the Senate consists of two parts, the first of which is tax relief providing downward adjustments in tax rates of compensation of income earners. “That is why we need to pass this tax- reform law,” he said. On the other hand, the Senate leader confirmed that senators are also considering upward adjustments on revenue-rich industry, like mining. “That is in the plan, but we are still in the first tax package. The Duterte administration, he said, submitted five tax packages and they are still deliberating on the first package. “We will eventually tackle the corporation income tax, but mining tax will require a special law that we will also focus on.” Pimentel noted that tax legislation is “a plus-minus” issue. “When it comes to tax relief, that is the minus side, because it means foregone revenue, but the government cannot recover all of that by simply raising tax on one segment of society. So the Executive branch came up with the tax-reform bills.”

Do not pin us down on adopting the Executive version of the tax bills. We are also giving the senators a chance or opportunity to study them carefully and come up with their own amendments.”—Pimentel

BusinessMirror

Duterte admin needs ₧10.66T to finance medium-term goals

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By Cai U. Ordinario

@cuo_bm

he Philippine government estimates that it needs to invest around P10 trillion to finance its medium-term goals under the Duterte administration.

Based on the draft 2017-2022 Public Investment Program (PIP) released by the National Economic and Development Authority (Neda), the initial estimates showed that the entire PIP will cost the government some P10.66 trillion. The PIP contains a list of priority programs and projects to be implemented by the national government, government-owned and -controlled corporations (GOCCs), government financial institutions and other national government offices. “These programs and projects may be financed using national government funds, including internal cash generated by GOCCs, in partnership with the private sector or through official development assistance [ODA],” the Neda stated in a document. Similar to the 2017 to 2022 Philippine Development Plan (PDP), the PIP is divided according to selected themes. Based on this, the bulk of

the funds, around P7.76 trillion, will go to government's efforts to accelerate infrastructure development nationwide. The projects to be funded under this theme include those that seek to pave roads, build wharves and seaports, construct water-supply facilities and create ecotourism destinations, such as the Manila West Corridor, among others. The theme on “Attaining Just and Lasting Peace” had the least public investment, which is estimated at P8.73 billion. Under this theme are two programs of the Office of the Presidential Adviser on the Peace Process. The bulk of the amount will be invested in the 2018 Payapa at Masaganang Pamayanan program worth P8.61 billion and the remaining P114.04 million will be allocated for the program on the Implementation of the Normalization Program in the Bangsamoro.

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the infrastructure gap in paved city roads was at 38.2 percent and barangays covered by solid-waste management facilities is at 36.1 percent. Double-digit infrastructure gaps were also observed in Mindanao's household electrification level at 27.6 percent; access to broadband in cities and municipalities, 23.6 percent; and access to irrigation service, 13.6 percent. Planta told the BusinessMirror, however, that the assessment does not include the gap in the number of health facilities, classrooms, housing and other similar infrastructure needs. He said apart from implementation delays and changes in project scope, these gaps are also due to challenges, such as institutional issues that pertain to weak regulation and poor project planning. The challenges also include operational issues, such as unsynchronized planning, investment programming and budgeting.

These programs and projects may be financed using national government funds, including internal cash generated by GOCCs, in partnership with the private sector or through ODA.”—Neda

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Creative recycling

A lady stall owner puts up an eye-catching display of assorted handicrafts made from waste-paper materials and drinking straw by the Quezon City-based Barangay Holy Spirit Livelihood Center, highlighting the recent Integrated Ecological Waste Management Expo held at SMX Aura in Taguig City. ROY DOMINGO

Contingency plans for Filipinos in Japan, Guam, S. Korea in place, DFA reassures ust in case they haven’t heard of it, Filipino citizens in South Korea, Japan and Guam were reassured on Monday by the Department of Foreign Affairs (DFA) that there are contingency plans in place for them just in case the tension between the US and North Korea worsens. “I’ll be speaking to the different heads of mission, whether ambassadors and consul generals, there are contingency plans in place,” Foreign Secretary Alan Peter S. Cayetano assured. “Just stay calm, keep in touch with our embassy, we will ask them to give updates through social media since most people have mobile and cellular phone so they are updated,” he added. Last Sunday the DFA assured the public that contingency measures are in place in case the People Democratic Republic of Korea makes good its threat to fire missiles toward Guam. Cayetano was on the phone with Ambassador Raul Hernandez in Seoul and Consul General Marciano

Only one theme, “Ensuring Sound Macroeconomic Policy,” does not yet contain a list of programs and projects as of the latest update of the draft PIP. The goal of increasing public investments in infrastructure will not only boost GDP but also address the infrastructure gaps nationwide. “The PIP serves as a mechanism to improve resource mobilization by ensuring the linkage of the planning and budgeting processes toward the achievement of our goals,” Socioeconomic Planning Secretary Ernesto M. Pernia earlier said. Recently, Neda Infrastructure Staff Director Roderick M. Planta said in a presentation that the infrastructure gap in paved provincial roads in terms of kilometers is 71.4 percent. T he inf rast r uct ure gap in barangays covered by municipal recycling facilities was also significant at 46.2 percent. The Neda data also showed that

Govt sets launch of OFW agri investment program this year

Gas up by P0.45, diesel down P0.10 il companies are expected to implement an upward adjustment in gasoline pump price, but will reduce the price of diesel and kerosene on Tuesday, August 15. According to Phoenix Petroleum, Eastern Petroleum and Seaoil Philippines, the price of gasoline per liter will increase by P0.45. They will reduce, meanwhile, the price of diesel by P0.10 per liter. Seaoil said it would also implement a price rollback of kerosene by P0.10 per liter. The price adjustment, they said, will take effect at 6 a.m. of Tuesday. “This is to reflect movements in the international petroleum market,” the oil companies added. Other oil firms are expected to follow suit. Last week oil firms implemented a big fuel price hike. Gasoline price went up by P1 per liter, diesel increased by P0.80 per liter and kerosene by P0.85 per liter. Lenie Lectura

news@businessmirror.com.ph

de Borja in Agana to request updates on the situation in their respective areas of jurisdiction. Both ambassadors have given their assurances that their respective contingency plans for the Filipino community are in place, in case the situation in the Korean Peninsula escalates further. T h e r e a r e a p p r o x i m at e l y 65,000 Filipinos in Seoul and 42,835 in Guam. Cayetano echoed President Duterte’s calls for both the US and North Korea to exercise restraint and to take the necessary steps to avoid a further escalation of the situation. Both US President Donald J. Trump and North Korean leader Kim Jong-Un have engaged in brinkmanship, threatening each other with nuclear annihilation in a never-ending tit-for-tat show. Kim has threatened to send four ballistic missiles over Japan and into the Pacific Ocean just short of Guam last week, in reply to Trump’s “fire and fury” that will befall on Pyongyang. Recto Mercene

DTI eyes bigger MSME budget share for 2018

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he Department of Trade and Industry (DTI) is eyeing to allocate P1.4 billion this year to bolster the growth of the country’s micro, small and medium enterprises (MSMEs). The DTI’s budget proposal for fiscal year 2018 showed that P1.38 billion will be set aside for the broad aim of MSME development, representing 27-percent share of the total budget for DTI programs of P5.1 billion. The MSME development budget can be further broken down into the following: setting up of Negosyo Centers being eyed for the biggest chunk, or P514.58 million; the implementation of the MSME Development Plan and other initiatives for MSME growth follows, with P450.90 million; and the shared services facilities (SSF), with a budget of P200 million. Last year the budget for Negosyo Centers was higher at P530 million, while the SSF budget was mostly carried over from the 2016 with a

minimal addition of P70 million. The MSME Development Fund was also replenished with P21 million in the 2017 budget. A total of 562 Negosyo Centers have been established since its inception in 2014. Some 297 centers were launched under the current administration. DTI Regional Operations Group Undersecretary Zenaida C. Maglaya, who is spearheading the program, is targeting at least 200 centers to be established in 2017. For the SSF program—essentially an infrastructure and equipmentlease arrangement in key industries with cooperatives and small businesses—some 935 SSFs have been turned over to community-based cooperatives since 2013. Since the assumption of the Duterte administration in July of 2016, some 195 SSF were established. The DTI is seeking for total new appropriations this year to the tune of P6.57 billion, from P 4.6 billion in 2017. Catherine N. Pillas

he Department of Agriculture-Agribusiness and Marketing Assistance Service (DA-Amas), Philippine Cacao Industry Council and the Department of Labor and Employment (DOLE) will launch this year the OFW Agriculture Business Investment Program that will serve as platform where Overseas Filipino Workers (OFW) can invest. The program, which will be piloted with OFWs working in Hong Kong, offers advantages in cacao farming. Philippine Cacao Industry Council Chairman Valentino D. Turtur said the program will enable OFWs invest their money and let it grow through farming. “Our OFWs in Hongkong are eager to invest in the Philippines’s cacao industry. The program will be like a crowd funding and our OFWs will serve as the investors,” he said. Turtur added the program was created after he attended an Investment Forum for OFWs dubbed as “Investment Agri-Negosyo at Serbisyo” on July 23 in Hong Kong. At present, the organizers are set to finalize a model for this program. “We are trying to draft a modern

model for this program. We already talked with Hong Kong’s labor attaché and he already committed to support the program,” Turtur said. He stressed that the program will be more of a corporate farm with a minimum of 50 hectares. The OFW investments will be used for the development of the farm. “I already briefed the OFWs in Hong Kong that in cacao farming, you will wait three years for the harvest, but after that, you will get 5-percent raise from your investment, monthly. It will be better in banking. But cacao is a permanent crop, so no worries,” he said. Turtur added they initially plan to have a diversified the farm in Laak, Compostella Valley and Magpet, Cotabato. “It’s a cacao farm intercropped with abaca, bananas and vegetables,” he said, adding that the program will give farmers and other workers job opportunities. After the launching Hong Kong, the program will be replicated in Singapore, Korea and Dubai. Turtur is confident that Agriculture Secretary Emmanuel F. Pinol will support the program. PNA

Cusi reshuffles DOE directors By Lenie Lectura

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@llectura

he energy department has implemented a reshuffle of its top directors, a move meant to make the agency more effective. Department of Energy (DOE) Special Order 2017-07-0045 directs Melita V. Obillo to head the Energy Resource Development Bureau (ERDB); Director Myleen C. Capongcol to lead the Renewable Energy Management Bureau (REMB); Director Jesus T. Tamang to take charge of the Energy Utilization and Management Bureau (EUMB); Director Rino E. Abad to be at the helm of the Oil Industry Management Bureau (OIMB); Director Patrick T. Aquino to head the Energy Policy and Planning Bureau (EPPB); and Director Mario C. Marasigan to be in charge of the Electric

Power Industry Management Bureau (EPIMB). “In the exigency of the service and to ensure the effective and efficient performance and delivery of services, the following reassignment of responsibilities as officer in charge of the herein bureau directors in the department is hereby adopted,” the agency’s special order stated. The DOE order, which took effect on August 1, shall remain in full force and effect unless revoked by Energy Secretary Alfonso G. Cusi. Obillo used to head the OIMB, while Capongcol was formerly assigned to EPIMB. Marasigan, meanwhile, used to lead the REMB, while Abad was formerly in charge of the ERDB. Tamang was formerly assigned in EPPB, while Aquino led the EUMB.

Agriculture/Commodities BusinessMirror

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Editor: Jennifer A. Ng • Tuesday, August 15, 2017 A5

PHL imported more food in 2016–PSA DENR rolls out measures to prevent spread of bird flu By Jonathan L. Mayuga @jonlmayuga

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o prevent the spread of the avian influenza virus that affected poultry farms in Pampanga, the Department of Environment and Natural Resources (DENR) has ordered regional offices to suspend the issuance of permit for transport of any wild-bird species from Pampanga and nearby provinces. A memorandum signed by Undersecretary for Planning, Policy and International Affairs Jonas R. Leones was circulated to the DENR’s regional offices on Monday morning. Aside from suspending the issuance of transport permits, the DENR official also ordered to “strengthen enforcement measures, including strict surveillance in checkpoints, airports and seaports.” They were, likewise, “enjoined to undertake regular monitoring of migratory bird sites to detect any incidence of wild-bird die offs.” Should they encounter dead wild birds, DENR field personnel were advised to immediately hand them over to the nearest Department of Agriculture (DA) regional office for the “collection and analysis of samples to detect avian flu”. The samples will be added to those that will be sent by the DA’s Bureau of Animal Industry to the Australian Animal Health Laboratory, which is a reference laboratory certified by the World Organization for Animal Health, an intergovernmental organization responsible for improving animal health worldwide. Regional offices of the DENR were also ordered to conduct awareness and education campaign to protect the migratory birds and their habitats. As soon as the news of the outbreak came out, the DENR’s Biodiversity Management Bureau (BMB) immediately cautioned the public against approaching migratory birds. “We discourage the killing or poaching of migratory birds because this could only worsen the situation,” BMB Director Theresa S. Mundita Lim said. As a licensed veterinarian, Lim cited a 2011 administrative order creating an interagency committee on zoonosis, which is defined as “a disease that can be transmitted to humans from animals”. Lim said there should be “proper epidemiological assessments” together with the DA and the Department of Health before making recommendations to manage the disease. “The annual bird-migration season in the Philippines is expected to start around September for their southward migration, and return to their breeding grounds by March in the following year for the northward migration,” Lim said. The Philippines is a part of the East Asian-Australasian Flyway, which is essential in providing areas for the temporary refuge of migratory birds.

By Cai U. Ordinario @cuo_bm

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he Philippines continued to purchase more food from abroad last year, as agricultural imports rose 10.6 percent to $12.52 billion in 2016, from $11.32 billion in 2015, according to the Philippine Statistics Authority (PSA).

Data from the PSA showed that the increase in food imports widened the country’s agricultural trade deficit to $7.24 billion in 2016, from $6.17 billion in 2015. The country’s top 5 imports included wheat, soya bean oil/cake meal, milk and cream products, coffee and frozen meat of bovine animals with a share of 9.8 percent, 8.4 percent, 5.1 percent, 3.9 percent and 2.8 percent, respectively. However, rice imports declined by 54.71 percent to $278.87 million in 2016. In terms of volume, shipments fell by 58.87 percent to 609,360 metric tons. Rice is included in the list of the country’s top 10 imports in 2016. The country’s top rice sources were Vietnam, Thailand, India, China, and Singapore, with a share of 52.83

percent, 32.3 percent, 7.25 percent, 6.95 percent and 0.63 percent, respectively. PSA data showed that total agriculture trade increased 8 percent to $17.8 billion in 2016, from $16.48 billion in 2015. Among the major trading partners, the Philippines’s trade surplus with Japan reached $417.07 million last year. The figure is 12.9 percent lower than the $478.89 million recorded in 2015. The country, however, posted agricultural trade deficits with its other major trading partners. The deficit with Australia stood at $486.37 million; the US, $1.21 billion; Asean, $3.31 billion; and the European Union (EU), $296.83 million. Among the Asean member-countries, Malaysia emerged as the top

Wheat was one of the top agricultural imports of the Philippines in 2016, according to the Philippine Statistics Authority. DANIEL ACKER/BLOOMBERG

destination for agricultural exports. Receipts reached $168.52 million, or 30 percent of the total. Indonesia was the country’s largest supplier of agricultural commodities, accounting for nearly 26 percent of payments. Imports from

Indonesia amounted to $995.04 million last year. Among the EU member-countries, PSA data showed that the Netherlands was the top destination of Philippine farm goods. Export receipts reached $524.18 million, or 51.3

percent of the total shipments to EU member-countries. Germany was the top source of food imports for the Philippines among EU member-countries. Payments amounted to $324.1 million, or 24.6 percent of the total.

DA allots ₧200M to expand onion, garlic production in Iloilo By Jasper Emmanuel Y. Arcalas @jearcalas

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he Department of Agriculture (DA) will expand areas planted with onion and garlic in Iloilo by 1,000 hectares in line with its goal of reducing the country’s reliance on imports. Agriculture Secretary Emmanuel F. Piñol said the DA has committed to extend P200 million worth of support to the onion and garlic farmers of the towns of Miagao, Tigbauan and Igbaras in Iloilo province. “Judging by the quality of the

onion and garlic displayed during the forum, the farmers of Iloilo could produce quality onion and garlic which could compete in the market,” Piñol said in his Facebook page on August 14. “The forum for onion and garlic farmers in Iloilo was the second, such gathering aimed at encouragingfarmers to plant more of the commodities needed by the market,” he added. Piñol said half of the proposed P200 million, which will be coursed through a local bank, will be spent for the expansion of plantations. “During the forum attended by

Iloilo Gov. Arthur Defenson, Miagao Mayor Macario Napulan, Tigbauan Mayor Suzette Alquisada, Maasin Mayor Mariano Malones and officials of the agriculture department, a financing of P100,000 per hectare was committed to the farmers through the Agricultural Credit Policy Council (ACPC),” he said. The DA also committed P50 million for the construction of a coldstorage facility in Miag-ao, while the remaining P50 million will be a “revolving” capital for the farmers operating the facility, according to Piñol. An additional P50 million in

revolving capital will also be extended to a farmers’ group which will operate the cold storage so they could buy their members’ produce during peak harvest season and sell these during off season. The DA chief has earlier announced that the government would slash imports and boost garlic and onion production. This, he said, would prevent traders from manipulating prices. “After years of neglect by government, garlic farmers could only produce 6 percent of the national requirement, while onion farmers could

only fill up 30 percent of the demand in the country,” Piñol said. “In the five-year road map for onion and garlic development, the DA aims to help farmers produce 50 percent of the garlic requirements and 80 percent of the onion needs of the country by 2022,” he added. In 2016 Iloilo’s garlic production declined by 11.73 percent to 78.75 metric tons (MT), from 89.22 MT in 2015, according to data from the Philippine Statistics Authority. Iloilo’s onion output also went down by 6.3 percent to 278 MT last year, from 296.72 MT in 2015.

Food insecurity soars in conflict-ridden Democratic Republic of Congo

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inshasa—Amid rising violence and displacement in the Democratic Republic of Congo (DRC), 7.7 million people face acute hunger—a 30-percent increase over the last year, the Food and Agriculture Organization of the UN (FAO) and the World Food Programme (WFP) warned on Monday. According to the Integrated Food Security Phase Classification (IPC) analysis released on August 14, between June 2016 and June 2017, the number of people in “emergency” and “crisis” levels of food insecurity (IPC Phase 4 and 3)—which precede “famine” levels on the IPC scale—and requiring urgent humanitarian food assistance rose by 1.8 million, from 5.9 million to 7.7 million. This means that more than one in 10 people living in rural areas suffer from acute hunger. Hunger is on the rise due to escalating and prolonged conflict and displacement in central and eastern DRC, mainly in the Kasaï and Tanganyika regions, where there has been widespread violence. Some 1.4 million people have been forced to flee their homes over the past year. The report noted that the humanitarian situation has been exacerbated by the spread of fall armyworm infestations and cholera and measles outbreaks. In conflict-ridden areas, over 1.5 million people are facing “emergency” levels of food insecurity (IPC Phase 4) according to the IPC report, which means people are forced to sell everything they have and skip or reduce their meals. “In conflict-ridden areas, farmers have seen their villages and fields pillaged. They have not been able to plant for the last two seasons. There is a lack of local markets providing for their food needs. Conflict toppled with armyworm infestations, destroying crops in over a quarter of the country’s vast territories are devastating for rural communities. The situation is set to get worse if urgent support does not come in time,” said Alexis Bonte, FAO

The Food and Agriculture Organization is providing vegetable seeds and tools to displaced and host families in Tshikapa (Kasaï District), where some 70,000 people found refuge after fleeing fighting. FAO Photo

Representative ad interim in DRC. “Farmers, especially those displaced—majority women and children—desperately need urgent food aid but also means to sustain themselves, such as tools and seeds so that they can resume farming. Many of the displaced women lost their husbands. Farming, for them, is a way to get back on their feet, and face the future with dignity and hope,” Bonte added.

Coping with acute hunger

Between 50 percent to 80 percent of people in some of the areas affected by hunger struggle to make ends meet and to have something to eat. In several areas, people only eat once a

day, and their meals—based on corn, cassava or potatoes—do not meet their daily nutritional and calorie needs. Food prices have been rising for the last three months. In some cases, diets are limited to starches and leaves. Others have to resort to reducing or skipping meals, selling assets, borrowing money and sending family members to beg or eat elsewhere. Chronic malnutrition affects 43 percent of children under 5—more than 7 million children—in DRC. Widespread displacement—some 3.7 million people are displaced in DRC—and a steady flow of refugees from neighboring countries putting a strain on already stretched resources, as well as the alarming spread of fall armyworm

infestations, which affects 50 out of DRC’s 145 territories, have been exacerbating food insecurity. This particularly in areas with high levels of poverty and malnutrition and chronic food insecurity. Much of the recent deterioration is down to the worsening plight of people in Kasaï. “WFP is extremely concerned about food security and nutrition, which are deteriorating in many parts of DRC,” WFP DRC Country Director Claude Jibidar says. “But nowhere is the situation more alarming than in Kasaï. We call on all parties to allow passage for life-saving assistance, and on the international community to help meet pressing needs.” FAO

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BusinessMirror

Tuesday, August 15, 2017 • Editor: Jun B. Vallecera

First-half insurer premium income up 11 percent

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Banking&Finance

he Insurance Commission (IC) reported an 11.15-percent increase in premium income in the first six months to P117.29 billion, due to the strong performance of the life, nonlife and mutual benefit associations (MBAs). According to Insurance Commissioner Dennis B. Funa, momentum allowed the industry to post strong premium-income growth averaging 11.15 percent. “Based on the unaudited financial statements submitted to the IC, the insurance industry reported total premium income of P117.29 billion for the first half of 2017, an increase of 11.15 percent from the P105.52 billion during the same period last year,” Funa said. He said all the sectors posted positive growth in terms of premium income for the period, reverting the flat performance of the life-insurance industry in 2016. It was recalled that in the first half of 2016, the insurance sector reported a 9.11-percent decline in premium income to P105.52 billion, from P116.11 billion in the same period in 2015. “This year, however, the insurance industry posted positive growth in terms of premium generated as early as the first half of the year,” Funa said. Life-insurance premium income expanded by 10.46 percent, totaling P90.79 billion from only P82.20 billion in the first half last year. The increase was traced to the sale of traditional and variable life-insurance products posting growth of 3.05 percent and 13.69 percent, respectively. “The increase in premium generated from the sale of traditional life products was brought about by the remarkable increase in its single premium and first-year premium. For variable life-insurance, products, on the other hand, while there is a slight decrease in single premium, there were significant increases in its first year and renewal premia,” he said. The nonlife aggregate net premium written from January to June this year increased by 12.78 percent to P22.20 billion, from the P19.69 billion of the same comparable period last year. “Similar to the performance in the first quarter this year, the nonlife insurance sector continues to post significant increases in terms of net premium written in the motor car and fire lines comprising the majority of the total net premium written,” Funa added. The MBAs sector reported total contributions of P4.29 billion in the first six months, up 18.03 percent from P3.64 billion in 2016. The insurance industry’s total assets expanded by 14.78 percent in the first half to P1.48 trillion, from P1.29 trillion last year. Total liabilities stood at P1.17 trillion as of end-June, or 13.86 percent higher than the P1.03 trillion in 2016. The insurance industry’s total net worth stood P310.74 billion in the first six months this year, up 18.37 percent from P262.51 billion in 2016. As consequence of increases in the paid-up capital of several companies, the insurance industry reported a 15.42-percent increase in total paidup capital to P49.10 billion this year from the P42.55 billion as of end-June 2016. Rea Cu

T-bill rates post marginal declines

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By Rea Cu

by 1.5 basis points to 2.161 percent, from 2.176 percent in the previous auction. The 364-day T-bill was also awarded in the full aggregate amount of P4 billion and was met by offers amounting to P9.917 billion that forced the BTr to reject P5.917 billion. The average rate for the IOU also contracted by 2.6 basis points to only 2.946 percent from 2.972 percent. De Leon also noted the increasing tension between South Korea and North Korea that, in the end, failed to dampen “the very high liquid tone of the market”. According to her, the Central Bank governor ruled out a freefalling peso whose value at the local currencies market weakened to an 11-year low. “The free fall of the peso is

A DE LEON

really more a knee-jerk reaction given the geopolitical tensions between North Korea and the US,” she said. The 182-day T-bill posted a 4.8 basis point increase to 2.577 percent, from only 2.529 percent, when it was last sold weeks earlier. Bids for the six-month tenor aggregated P6.179 billion and the market’s appetite for it allowed the auction committee to sell all P5 billion. De Leon said inf lation continues to be very benign across the Philippines and that its macroeconomic base remains one of the strongest in this part of the region. Recently, Secretary [Ernesto] Pernia announced that the GDP would be on the higher end of the range. I think these are really very solid fundamentals coming out of the Philippines so we still enjoy strong investor confidence in the economy,” she said. Bids aggregated P32.3 billion, or twice oversubscribed compared to the P15 billion, on offer, of which P16.2 billion or 50 percent, were for the 91-day security alone.

BIR, BOC told to catch another ‘big fish’

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lawmaker has called on revenue-generating agencies to persist in the campaign against tax evaders and catching more “big fish”, like Mighty Corp., whose tax liabilities of P25 billion was the largest ever paid the government by anyone, according to the Department of Finance (DOF). Camarines Sur Rep. Luis Raymund F. Villafuerte Jr. lauded the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC) for exposing Mighty Corp.’s massive tax fraud, the accomplishment underscoring the Duter te administration’s political will and commitment to enforce tax laws and run after big-time tax dodgers. “The BIR and BOC have shown that they can do their jobs effectively if the President and the secretary of finance are hell-bent on enforcing tax laws to the letter. They should be able to catch more big fish like Mighty [Corp.] to send a clear signal that the government means business in its war against corruption and tax fraud,” said Villafuerte, who is also vice chairman of the House

Committee on Appropriations. He sa id t he gover n ment ’s strong stance against tax evasion and initiatives to improve tax administration should all the more convince the Senate to pass the first package of the Comprehensive Tax Reform Program (CTRP) that the House of Representatives already approved in the previous Legislative session. “Effective tax administration, complemented by tax policy reforms to be carried out via the CTRP will provide the government the funds it needs to push through with its massive infrastructure buildup and maintain or surpass its economic growth targets of 7 percent to 8 percent starting next year,” he added. Mighty Corp., a Bulacan-based cigarette manufacturer, was caught using fake internal-revenue stamps in three separate raids conducted on its warehouses earlier this year by both the BIR and the BOC. It was then forced to sell its assets to Japan Tobacco International (JTI), offer a settlement of its tax liabilities with the government amounting to P25 billion that Finance Secretary Carlos G.

Dominguez III said could rise to P30 billion once the value-added tax (VAT) on the sale is paid. In his second State of the Nation Address (Sona) on July 24, President Duterte directed the DOF and the BIR to accept Mighty Corp.’s offer to avoid a protracted legal battle with the firm that could take years to resolve. “The President made the right decision in accepting the settlement sum. Thirty billion pesos will help cover the costs of its ongoing effort to rehabilitate areas, like Marawi and other places hit by natural calamities,” Villafuerte said. Earlier, Doming uez issued marching orders to the BIR and BOC to work together and catch more “big fish” who deny the government billions of pesos in taxes. “You better line up another big one. Next year, if possible, catch another big fish,” Dominguez told Commissioners Caesar R. Dulay and Nicanor E. Faeldon at a recent DOF executive committee meeting. Dominguez said another P20 billion or P30 billion would be a good target for the BIR and the BOC by running after tax cheats. Rea Cu

AUB consolidated income up 7 percent in H1

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sia United Bank Corp. (AUB) and its subsidiaries raised consolidated net income by 7 percent to P1.3 billion in the first half of the year, from P1.2 billion in the previous year. The lender also reported double-digit growth in loans and deposits. AUB, along with Rural Bank of Angeles, Cavite United Rural Bank and Asia United Leasing and Finance Corp., posted a 17.7-percent growth in loans and receivables from P91 billion to P107 billion. Consumer loans, which include auto, mortgage and salary loans, surged by 35 percent. Deposits, on the otherhand, climbed by

The FIRE trend: Retiring before 40

@ReaCuBM

he Bureau of the Treasury (BTr) got everything it wanted from the market on Monday, when it sold all P15 billion worth of Treasury bills (T-bills) at the auction of government securities where, except for the six-month tenor, the rates showed marginal declines. According to National Treasurer Rosalia V. de Leon, market appetite for the 91- and 364day T-bills proved strong even as banks and trust entities were willing to cede the usual premium and bid rates at a discount to earlier exercises. “We made a full award on the three short-term tenor buckets [and] we see healthy demand on the short end of the [yield] curve. Except for the 182-day, we’ve also seen marginal declines in rates the banks offered. So these really indicate there is still demand on the short end,” de Leon told financial reporters. The 91-day T-bills were sold in full at P6 billion, with tenders reaching P16.196 billion that forced the auction committee to reject P10.196 billion. Its rate fell

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25.5 percent to P151 billion, from P121 billion in 2016. Cash inflow from trading and investment securities in the form of stocks and bonds showed double-digit decline, as AUB focused on recurring income. “With lessening reliance on nonrecurring revenues, the group saw a 13-percent decline in income from trading and investment securities to P595 million versus P685 million a year ago,” the universal lender said on Monday. In June AUB said it would strengthen consumer banking in its 239 branches, of which 112 are in Metro Manila and 127 in the provinces.

“Our consumer banking grew to P14 billion today from P8 billion two years ago. It accounts for 14 percent of our assets, but we plan to increase that to 30 percent while we want to sustain our 70-percent corporate loans,” AUB President Abraham T. Co said. AUB believes it will sustain growth in net income as it strives to fulfill its targets. “We remain on track with our aspiration to become one of the top 10 leading banks in the Philippines,” Co said. AUB is one of the top 20 banks in the Philippines, with an asset size of P190 billion, which is 22 percent higher than the level in June 2016. Kathryn Jose

dmit it. If you could just have things your way, you’d rather spend Monday relaxing than reporting for work. Trust me, I know how that feels. Now, before you feel bad about wanting to give yourself a break from your hectic work schedule, let me tell you that you’re not the only millennial who feels that way. Just think about that! Wouldn’t it be nice to retire long before you reach retirement age? Yes, wouldn’t it be wonderful to enjoy retirement even before you turn 40? Granted, Livingston’s circumstances may be different from yours in many ways. But, and here’s the thing, the formula she used toward achieving financial independence and retiring early (a process known as FIRE) is something that you definitely can benefit from, regardless of your present income level. Excited to learn how? Here’s what you could do on your journey toward FIRE.

Step 1: Boost your income

The first step towards financial independence is, of course, boosting your income. Most of those who plan to retire early think that the easiest way to go about things is just moving to a place where the cost of living is relatively low. While cutting back on expenses is definitely one way to achieve financial freedom, relocating may not always be the wisest course of action. Before making the final decision, consider the job opportunities available to you in the area you plan to relocate to. Often, the benefit of living in places where living costs are relatively high is having the best job opportunities within your reach. So instead of opting to relocate, why not assess your present job? Look for ways to boost your income to the maximum level and speed up your progress toward financial independence.

Step 2: Save more than what you spend

Once you’ve already done what you could to boost your income level, it’s time that you start saving up. Don’t fall into the trap of spending as much as you can earn. Sure, it’s not bad to treat yourself to something nice once in a while as a reward for your hard work, but it would be wise to make sure that your savings—not your expenses—take a larger chunk off your budget. Livingston, mentioned earlier, did just that. She revved up her saving rate sky-high, pushing her budget to the limits so that she saved up 70 percent of what she earned. While you do not have to have the same saving rate for yourself, you definitely could see to it that you save more than you spend.

Step 3: Grow your money

Now let’s say you already have enough saved up in your bank account—enough to last you for several years without you having to work. What next? Well, if the only thing you do with the amount you save up is spend, sooner or later your funds will dry up. And then you’ll be back right where you started—in the need for regular employment. So what you need to do is make sure that you do not run out of funds. Remember, financial independence and early retirement do not equate to not working altogether. It simply means having the luxury of time—time to earn at your own pace and to pursue other life goals. What, then, can you do to make your money grow? Invest. If you are no expert in handling investments, have someone professional to help you out. Investing in the right businesses and financial securities will ensure that you do not run out of finances despite your decision to quit the workplace.

Enjoy life at your own terms

Yes, by boosting your income, saving more than you spend, and growing your money, you can achieve what others only get to enjoy when they’re already 40 years old or older. Really, why settle for traditional retirement when you could speed up the process and get more time to enjoy your hard-earned financial rewards? And believe me, if Livingston made it, so can you! Start early on your goal toward FIRE. Start today. Richard Thaddeus Carvajal is registered financial planner of RFP Philippines. He is also CEO and president of Philgems Realty Corp. To learn more about personal-financial planning, attend the 64th RFP program this September 2017. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

Case clippings

By Justice S J Ranada Jr. SHERIFFS—purely ministerial duties The duty of a sheriff to execute a writ is purely ministerial, and he has no discretion to delay the execution thereof. Absent any instruction by the court to the contrary, he is mandated to proceed with reasonable celerity and promptness in implementing the writ. If, for any reason, he cannot do so in full or in part, his duty is outlined in Section 14, Rule 39. Geronilla v. Montemayor 05 Jun 2017

AM P-17-3676 Perlas-Bernabe, J

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China’s Xi grapples with rising cost of supporting North’s Kim

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t’s getting harder for Chinese President Xi Jinping to maintain support for wayward ally North Korea. For weeks, Xi has been caught in the middle as leader Kim Jong Un lobbed intercontinental ballistic missiles into the Sea of Japan and US President Donald J. Trump vented his frustration with warnings of “fire and fury.” China has urged calm while backing tighter sanctions against North Korea to ward off US threats of punitive tariffs and military strikes. The prospect of nuclear war has sparked a debate in Beijing about maintaining support for the Kim dynasty, which dates back to the Korean War in the 1950s. The two countries have grown apart over the decades, with China opening up to become the world’s second-biggest economy while North Korea has become more isolated and impoverished. While China officially wants a nuclear-free Korean Peninsula, Beijing has long tolerated North Korea’s weapons program because it sees the collapse of Kim’s regime as a greater strategic threat. That could lead to US troops on its border aligned with a unified Korea, eliminating the buffer that North Korea now provides—along with its regular threats against common enemies. Yet, China’s rise on the world stage has given it a bigger stake in maintaining global stability, not least to keep up economic growth rates that underpin the Communist Party’s grip on power. China is also concerned that new missile-defense systems in South Korea and Japan could counter its own military capabilities, and that those countries may one day seek their own nuclear weapons to deter North Korea. “I don’t know where the breaking point for Beijing is yet, but my view is that China is gradually, but clearly, moving toward a tipping point,” said Zhu Feng, dean of the Institute of International Studies at Nanjing University, without elaborating on what that would entail. “Every provocative move by the Kim regime pushes China a little further from North Korea, and the distance between two countries has become great.” The Communist Party-affiliated Global Times has provided a glimpse into what a Chinese shift might look like. During heightened tensions in April, it said China should consider cutting off oil imports. An editorial last Friday said China should stay neutral if North Korea starts a war with a missile attack, but intervene if the US and South Korea seek to topple Kim’s regime. “China opposes both nuclear proliferation and war in the Korean Peninsula,” the editorial said. “It will not encourage any side to stir up military conflict, and will firmly resist any side which wants to change the status quo of the areas where China’s interests are concerned.” The editorial was an exception in China’s tightly controlled media, where the tensions had been buried under reports about an earthquake in Sichuan and a US Navy challenge to Chinese territorial claims. North Korea didn’t make the top 50 trending topics on the Twitter-like Weibo, even as the situation dragged down markets around the world. Shortly after Trump tweeted that

military solutions were “locked and loaded,” Xi told him in a call that all sides should avoid inflammatory comments while agreeing the Korean Peninsula should be denuclearized. The White House said Trump looked forward to visiting China this year, and called his relationship with Xi “extremely close.” China and Russia both backed harsher UN sanctions earlier this month that cut North Korea’s roughly $3 billion in exports by about onethird. The deal excluded oil imports— the biggest economic lifeline for Kim’s regime—and it stopped the US from leveling penalties on Chinese banks that handle North Korean cash, at least for now. “US-China frictions will rise again when UN sanctions fail to change North Korean behavior,” said Andrew Gilholm, director of North Asia analysis at Control Risks Group. “Kim seems determined to get to the point where it’s impossible for the US to deny it’s a nuclear state. He may be in a hurry to get there before tighter sanctions kicks in, and he wants to force US acceptance of his regime.” China, which fought alongside its neighbor in the Korean War, provides most of the isolated country’s food and fuel imports. North Korea has increasingly rebelled against its longtime benefactor, criticizing its cooperation with the US and rebuffing diplomatic overtures from Beijing. Xi hasn’t held a summit with Kim since taking power in late-2012. Chinese Foreign Minister Wang Yi has argued that the sanctions would help get North Korea to the negotiating table. For months, China has pushed a “suspension-forsuspension” proposal, in which North Korea would halt further nuclear and missile tests in return for the US and South Korea stopping joint military exercises in the region. North Korea has expressed an openness to talks only if the US first gives up its “hostile” policies. The US wants Kim to be prepared to give up his nuclear weapons—a prospect that many analysts view as unlikely since Kim sees them as essential to his survival. China is frustrated because it sees its freeze proposal as the best way forward, according to Yang Xiyu, a former negotiator for China in the six-party talks on North Korea’s nuclear program that collapsed in 2009. “It’s relatively easy to carry out because it only needs both sides to make a political decision,” he said. “If the Americans & Co. don’t accept it, they can come up with a better proposal and we will be all ears. But do they have one?” For China, North Korea is just one of several strategic concerns in its relationship with the US, in addition to arms sales to Taiwan and territorial disputes in the South China Sea. Even if Beijing has grown weary of Kim’s brinkmanship, it hasn’t shown that it’s ready to surrender the larger geopolitical game to the US. “North Korea is a burden to China, but it doesn’t mean China would go against Kim Jong Un,” said Song Guoyou, director of Center for American Studies at Fudan University in Shanghai. “The two parties and nations have a deep and intertwined relationship and that can’t be changed overnight.”

Bloomberg News

In S. Korea, it’s K-pop for peace

The K-pop band B1A4 performs at the annual DMZ Peace Concert at Nuri Peace Park in Munsan, South Korea, on August 12. Despite heightening tensions between North Korea and the US, an estimated 25,000 young people turned out to the K-pop concert near the demilitarized zone. Jean Chung/The New York Times

South Korean protesters hold banners with illustrations of US President Donald J. Trump during a rally to oppose his war rhetoric on North Korea, in front of Yongsan Garrison, a US military base, in Seoul, South Korea, on Monday. The signs read “Stop, the joint military exercises between the US and South Korea, and the deployment of an advanced US missile defense system.” AP/Ahn Young-Joon

No looming nuclear war with N. Korea–US officials

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wo top US national security officials sought to tamp down fears of imminent nuclear war with North Korea, following days of heightened rhetoric by President Donald J. Trump, as America’s top general prepares to meet with South Korea’s leader. There’s no indication war will break out, Central Intelligence Agency (CIA) Director Mike Pompeo and National Security Adviser H.R. McMaster said in separate Sunday talk-show appearances. They both walked a fine line of backing the tough talk directed at Pyongyang, but not wanting to raise the alarm at home. “I’ve heard folks talking about that we’re on the cusp of a nuclear war,” Pompeo said on Fox News Sunday. “I’ve seen no intelligence that would indicate that we’re in that place today.” The comments helped ease worries emanating from an escalation of tensions between the US and North Korea. Shares in Asia outside Japan on Monday climbed together with US equityindex futures, with South Korea’s benchmark index rising as much as 1 percent. Pompeo said that US intelligence has a “pretty good idea” about North Korea’s near-term intentions after monitoring recent intercontinental missile tests and the country’s improved ability to manufacture nuclear weapons. McMaster, appearing on ABC’s

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UNSAN, South Korea—“We can’t have another Korean War. Do you agree with me?” Jung Ki-youl, chairman of the local government here, asked an estimated 25,000 mostly young South Koreans at Nuri Peace Park, only 5 miles from the Demilitarized Zone (DMZ) that separates the two Koreas. The crowd was eagerly awaiting a two-hour concert last Saturday night featuring some of the biggest stars of K-pop, a popular genre of music in South Korea. “That is why this peace concert is so meaningful,” Jung said. “Let’s shout ‘no’ to missiles and ‘no’ to nuclear weapons development and ‘we want peace.’ Maybe North Korea can hear us,” he added. A roar rose up from the crowd in response.

This Week, said “we’re not closer to war than a week ago, but we are closer to war than we were a decade ago.” Just days ago Trump said military options against North Korea were “locked and loaded.” That stoked fears that a miscalculation between the nations would spark an actual military conflict. Some analysts expect further escalation in the coming days as both North and South Korea celebrate the August 15 anniversary of the end of Japan’s occupation of the Korean Peninsula, and the latter conducts joint military exercises with the US starting August 21. Japan is also holding annual military drills with the US over the next few weeks. Gen. Joseph Dunford, chairman of the US Joint Chiefs of Staff, plans to meet with South Korean

President Moon Jae-in on Monday ahead of a trip to China. North Korea’s state-run media last Sunday condemned the planned military drills and said the US is “letting out dangerous war rhetoric.” The Korean Central News Agency added Trump’s “wild remarks” are causing concern and anger in South Korea. The US hasn’t taken any public steps to prepare for hostilities, including evacuating Americans from Seoul, which is within range of North Korean artillery, or moving ships, aircraft or troops into position for an imminent response. The US has about 28,500 troops stationed in South Korea. Following Trump’s vow to unleash “fire and fury” on North Korea, Kim’s regime threatened to fire four Hwasong-12 missiles over Japan into waters near Guam, home to US military bases in the region. The US and its allies warned Kim against such a move, and Japan deployed four Patriot missile interceptors into the western part of the country. Pompeo and McMaster defended Trump’s sometimes personal message aimed at Kim. Trump “made clear that the United States will not tolerate our citizens or our allies being threatened by this rogue regime,” McMaster said. “Our response is we are prepared militarily to deal with this if necessary.” Pompeo said Trump’s comments were designed to send an unambiguous message to the country that it needs to disarm its nuclear weapons and that the US won’t tolerate a first strike. When asked whether he was confident

Kim would heed that message, he said: “It’s a very difficult situation in North Korea.” Some former military and intelligence officials questioned whether the harsh rhetoric from the Trump administration is the right approach. Retired Adm.Mike Mullen, who served as chairman of the Joint Chiefs of Staff under Democrat and Republican presidents, said on NBC’s Meet the Press that Trump’s rhetoric “eliminates maneuver space” in how the US might respond to North Korea. “ I ’m re a l ly concer ne d b e cause I don’t know where this goes in ter ms of a peacef u l solution,” Mu l len said. Stil l, he said that K im knows if Nor th Korea were ever to use nuclear weapons, “that basica l ly is an act of suicide from him, because we would eliminate him and his reg ime immediately.” James Clapper, director of national intelligence under President Barack Obama, said “we don’t understand exactly what the decision-making mechanisms are, processes, surrounding Kim Jong Un in North Korea or what would set him off.” “That’s why I think many people, myself included, would argue for more temperate language than the fire and fury,” he said on CNN’s State of the Union. While Trump’s goal of North Korea abandoning its nuclear weapons may be appealing, it’s unrealistic, Clapper said. “That is their ticket to survival, and I don’t see any way that they’re going to give it up,” he added. “Our thought process here ought to be on accepting it and trying to cap it or control it.” Bloomberg News

But the volume of these shouts was nothing compared with the shrieks of young men and women that filled the park after the performances of their favorite K-pop stars, including Girls’ Generation, BTOB, Cosmic Girls, Mamamoo and GFriend, who performed at the seventh annual summer DMZ Peace Concert. Nam Hyung-jin, 18, a college freshman studying Chinese language, had traveled 70 miles north from Osan City. He felt apprehensive about attending, knowing how close the concert was to North Korea. He was unsettled by the bellicose remarks exchanged between the leaders of the US and North Korea last week. But after cheering the Cosmic Girls

as that 13-piece group bounced up and down in unison singing their syrupy hit “Happy,” Nam said he hoped that North Korea could hear “the sound of freedom” from the south. “If enjoying K-pop right near the border with the aggressive North Korea is not freedom, what is?” he said. “I hope North Korea, too, understands how much happiness freedom can bring and chooses a path toward peace.” Another Cosmic Girls fan, Kim Jihyun, 12, a sixth-grader from Paju City, a few miles away, also felt some trepidation at first. “I live close to the border so I am used to seeing soldiers around, but there are soldiers here at a peaceful culture event. The security situation in our country must

be serious,” he said. “But Cosmic Girls’s act totally distracted me away from feeling scared.” This is the seventh time that the local government and the Korean national television network MBC have hosted the annual DMZ Peace Concert. The event commemorates National Liberation Day, a holiday common to both Koreas, that remembers the end of the 35-year Japanese colonial occupation in 1945. This year’s concert, which had the slogan, “Again, Peace!,” was organized with the participation of the South Korean Ministry of Unification. The ministry is mandated to prepare for the reintegration of the two Koreas into a single nation.

28,500 The number of US troops stationed in South Korea

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N. Korea’s missile success linked to Ukrainian plant, investigators say

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orth Korea’s success in testing a intercontinental missile (ICBM) that appears able to reach the US was made possible by black-market purchases of powerful rocket engines probably from a Ukrainian factory with historical ties to Russia’s missile program, according to an expert analysis being published on Monday and classified assessments by US intelligence agencies. The studies may solve the mystery of how North Korea began succeeding so suddenly after a string of fiery missile failures, some of which may have been caused by US sabotage of its supply chains and cyberattacks on its launches. After those failures, the North changed designs and suppliers in the past two years, according to a new study by Michael Elleman, a missile expert at the International Institute for Strategic Studies. Such a degree of aid to North Korea from afar would be notable because President Donald J. Trump has singled out only China as the North’s main source of economic and technological support. He has never blamed Ukraine or Russia, though his secretary of state, Rex W. Tillerson, made an oblique reference to both China and Russia as the nation’s “principal economic enablers” after the North’s most recent ICBM launch last month. Analysts who studied photographs of the North ’s leader, Kim Jong Un, inspecting the new rocket motors concluded that they derive from designs that once powered the Soviet Union’s missile f leet. The engines were so powerful that a single missile could hurl 10 thermonuclear warheads between continents. Those engines were linked to only a few former Soviet sites. Government investigators and experts have focused their inquiries on a

10 The number of thermonuclear warheads that a single missile could hurl between countries

missile factory in Dnipro, Ukraine, on the edge of the territory where Russia is fighting a low-level war to break off part of Ukraine. During the Cold War, the factory made the deadliest missiles in the Soviet arsenal, including the giant SS-18. It remained one of Russia’s primary producers of missiles even after Ukraine gained independence. But since Ukraine’s pro-Russian President Viktor Yanukovych was removed from power in 2014, the state-owned factory, known as Yuzhmash, has fallen on hard times. The Russians canceled upgrades of their nuclear fleet. The factory is underused, awash in unpaid bills and low morale. Experts believe it is the most

Oil nears $49 a barrel

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il traded near $49 a barrel as Libyan output and exports declined amid security threats and tension among port workers. Futures were little changed in New York after last Friday’s 0.5-percent gain. Libya’s biggest oil field cut output by more than 30 percent, a person familiar with the matter said last Sunday, while the head of a union said loadings at Zueitina port ceased after employees demanded better working conditions. US drillers added three crude rigs last week, according to Baker Hughes Inc. Oil fluctuated below $50 a barrel last week as investors weighed rising global supply against output curbs from members of the Organization of the Petroleum Exporting Countries (Opec) and its allies. The International Energy Agency reduced estimates for the amount of crude needed from the Opec through 2018 after lowering its assessments of consumption in some emerging nations. “It looks as though the market has a watching brief on the situation in Libya, given there is no significant rally,” said Ric Spooner, an analyst at CMC Markets in Sydney. “This may be something that can be resolved quickly. Oil seems to have found an equilibrium point and as long as we continue to see US inventories decline, it may be content to hold around here.” West Texas Intermediate ( WTI) for September delivery

was at $48.78 a barrel on the New York Mercantile Exchange, down 4 cents, at 2:09 p.m. in Hong Kong. Total volume traded was about 39 percent below the 100-day average. Prices rose 23 cents to $48.82 last Friday, trimming the weekly loss to 1.5 percent. Brent for October settlement fell 9 cents to $52.01 a barrel on the Londonbased ICE Futures Europe exchange. Prices slid by 0.6 percent last week. The global benchmark crude traded at a premium of $3.08 to October WTI. The Opec last month pumped the most crude this year as supply from Libya, which is exempt from an output-cut deal aimed at shrinking a market glut, rebounded to about 1 million barrels a day. Production from the nation’s Sharara field was down to 200,000 barrels a day last Sunday, compared with 300,000 barrels a day about a week ago, according to the person familiar. China’s oil refining dropped the most in three years for the month of July, while crude output retreated from the highest this year, as the world’s largest consumer showed signs of losing momentum. US drillers increased the rig count to 768, the highest level since April 2015, according to data Friday from Baker Hughes. Norway’s oil industry says it has some major investments in store if the government can just come through with some tax incentives. Bloomberg News

likely source of the engines that in July powered the two ICBM tests, which were the first to suggest that North Korea has the range, if not necessarily the accuracy or warhead technology, to threaten American cities. “It’s likely that these engines came from Ukraine—probably illicitly,” Elleman said in an interview. “The big question is how many they have and whether the Ukrainians are helping them now. I’m very worried.” Bolstering his conclusion, he added, was a finding by United Nations investigators that North Korea tried six years ago to steal missile secrets from the Ukrainian complex. Two North Koreans were caught, and a UN report said the information they tried to steal was focused on advanced “missile systems, liquid-propellant engines, spacecraft and missile fuel supply systems.” I nvest igators now be l ie ve that, amid the chaos of postrevolutionary Ukraine, Pyongyang tried again. Elleman’s detailed analysis is a public confirmation of what intelligence officials have been saying privately for some time: The new missiles are based on a technology so complex that it would have been impossible for the North

Koreans to have switched gears so quickly themselves. They apparently fired up the new engine for the first time in September 2016—meaning it took only 10 months to go from that basic milestone to firing an ICBM, a short time unless they were able to buy designs, hardware and expertise on the black market. The White House had no comment when asked about the intelligence assessments. Last month Yuzhmash denied reports that the factory complex was struggling for survival and selling its technologies abroad, in particular to China. Its web site says the company does not, has not and will not participate in “the transfer of potentially dangerous technologies outside Ukraine.” US investigators do not believe that denial, though they say there is no evidence that the government of President Petro Poroshenko, who recently visited the White House, had any knowledge or control over what was happening inside the facility. How the Russian-designed engines, called the RD-250, got to North Korea is still a mystery. Elleman was unable to rule out the possibility that a large Russian missile enterprise, Energomash, which has strong ties

to the Ukrainian complex, had a role in the transfer of the RD250 engine technology to North Korea. He said leftover RD-250 engines might also be stored in Russian warehouses. But the fact that the powerful engines did get to North Korea, despite a raft of UN sanctions, suggests a broad intelligence failure involving the many nations that monitor Pyongyang. Since President Barack Obama ordered an increase in sabotage against the North’s missile systems in 2014, US officials have closely monitored their success. They appeared to have won a major victory last fall, when Kim ordered an end to flight tests of the Musudan, an intermediate-range missile that was a focus of the American sabotage effort. But no sooner had Kim ordered a stand-down of that system than the North rolled out engines of a different design. And those tests were more successful. US officials will not say when they caught on to the North ’s change of direction. But there is considerable evidence they came to it late. Leon Panetta, the former Image result for CI A Central Intelligence Agency director, said on CBS’s Face the Nation last Sunday that the North Korean

drive to get workable ICBMs that could be integrated with nuclear weapons moved more quickly than the intelligence community had expected. “The rapid nature of how they’ve been able to come to that capability is something, frankly, that has surprised both the United States and the world,” he said. It is unclear who is responsible for selling the rockets and the design knowledge, and intelligence officials have differing theories about the details. But Elleman makes a strong circumstantial case that would implicate the deteriorating factory complex and its underemployed engineers. “I feel for those guys,” said Elleman, who visited the factory repeatedly a decade ago while working on federal projects to curb weapon threats. “They don’t want to do bad things.” Dnipro has been called the world ’s fastest-shrinking city. The sprawling factory, southeast of Kiev and once a dynamo of the Cold War, is having a hard time finding customers. US intelligence officials note that North Korea has exploited the black market in missile technology for decades, and built an infrastructure of universities, design centers and factories of their own. New York Times News Service

White House statement on Virginia found wanting

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RIDGEWATER, New Jersey—White House officials, under siege over President Donald J. Trump’s reluctance to condemn white supremacists for the weekend’s bloody rallies in Charlottesville, Virginia, tried to clarify his comments last Sunday, as critics in both parties intensified demands that he adopt a stronger, more unifying message. A statement last Sunday—issued more than 36 hours after the protests began—condemned “white supremacists” for the violence that led to one death. It came in an e-mail sent to reporters in the president’s traveling press pool, and was attributed to an unnamed representative. It was not attributed directly to Trump, who often uses Twitter to communicate directly on controversial topics. It also did not single out “white supremacists” alone but instead included criticism of “all extremist groups.” The e-mail was sent “in res p on s e ” to q ue s t ion s a b out Trump’s remarks, in which he blamed the unrest “on many sides” while speaking last Saturday before an event for military veterans at his golf resort in Bedminster, New Jersey, where the president is on vacation.

“The president said very strongly in his statement yesterday [Sunday] that he condemns all forms of violence, bigotry and hatred,” the statement said. “Of course that includes white supremacists, KKK neo-Nazi and all extremist groups. He called for national unity and bringing all Americans together.” Trump’s high-volume outbursts on issues petty and profound have become a defining feature of his presidency. But his quiescence on the violence in Charlottesville has had, in many ways, a more profound and unsettling effect. The president’s reluctance to speak out with force and moral indignation against the white nationalists who incited the most serious racial episode of his presidency elicited deep feelings of disappointment spanning the ideological spectrum, and a spreading sense that he had squandered a critical opportunity to empathize, unite and move beyond the acrimony that has engulfed the White House and country. “I think what you saw here was a real moment in our nation for our leaders to deal with this moral issue as one countr y, as people a l l over the world watched,” Gov. Terr y Mc Auliffe of Virginia said, speaking on a

cellphone outside the home of one of the two state troopers killed in a helicopter crash monitoring the melee last Saturday. Trump’s “words were not— not—what this nation needs,” McAuliffe, a Democrat, said, his voice breaking with emotion. “He needs to call out the white supremacists, he needs to call out the neo-Nazis to say these people should not be in our country. I do think it’s the president’s responsibility to take leadership on this. It’s what any American would do. Now is the time to step up.” Gov. John Kasich of Ohio, a Republican and a frequent critic of Trump, cautioned against reading too much into the president’s initial response but called for the White House to use the episode as an opportunity to convene “a national discussion” on race, prejudice and community policing. “There are a lot of people who are just not comfortable with the issue; perhaps they are afraid it would aggravate their base,” Kasich said, adding, “I think a president can always provide some leadership on a subject like this.” The criticism of Trump intensified last Sunday, with lawmakers from both parties calling on him to explicitly condemn the role of

white racists and agitators affiliated with the fringe movement known as the alt-right, some of whom brandished pro-Tr ump banners and campaign placards during violent protests over the removal of a Robert E. Lee statue from a Charlottesville park. Trump will continue to receive regular updates from his team, according to the official to whom the statement was attributed, and Thomas P. Bossert, W hite House Homeland Security adviser, was in Bedminster monitoring the situation. As the White House shifted its message, the Justice Department opened a hate crimes inquiry into the violence, which included the death of a 32-year-old woman. James Alex Fields Jr. of Ohio was charged with second-degree murder, accused of running down her and others in a car. Nineteen other people were injured in the episode, which McAuliffe called “murder, plain and simple.” Attorney General Jeff Sessions was pressed during his confirmation hearings early this year about how he might handle such a case, and many last Sunday said they saw the Charlottesville investigation as a test for him. New York Times News Service

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China’s products at the port of Los Angeles Bloomberg

Trump trade push on China faces test as IP takes spotlight

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resident Donald J. Trump may be finding out that taking on China over trade is harder than it looks.

The White House is stepping up pressure over perceived intellectual-property (IP) abuses, and the administration has, in recent days, proposed fresh duties on imports of China’s aluminum-foil products. But gaining real leverage is proving elusive, as deep trade links mean that bold sanctions risk backfiring, and targeted ones may end up yielding little. The bid to use trade probes as a weapon may turn out to be less effective than using the tools of the World Trade Organization (WTO). Landing a blow against China would also be more complicated if the US chooses to target sectors where the countries are connected along global supply chains, which make up a most of their bilateral trade. “Trump really doesn’t have many cards in his hand,” said Tu Xinquan, dean of the China Institute for WTO studies at the University of International Business and Economics in Beijing. He said the two economies are so closely linked that it’s difficult for the US to find a specific industry to assail without triggering repercussions from China. Last Saturday administration officials said Trump would direct US Trade Representative (USTR) Robert Lighthizer on Monday to consider investigating China’s IP policies, especially the practice of forcing US companies operating in China to transfer technological know-how. If China is found to be flouting rules, the administration’s options include imposing import tariffs, officials said. If USTR moves forward, the investigation could take as long as a year. The latest move, opening a new front of trade friction even as the countries try to work together to contain North Korea’s nuclear threat, would possibly end up as just another example to show how trade policy isn’t as simple as it sounds. Chinese media poured cold water on

the Trump administration tactics. Economic Daily, a state-run newspaper under China’s State Council, the Cabinet, said in a Monday editorial that the IP probe will do more harm than good, whether it is being used as a new policy approach or negotiation tactic. It argued the two sides should explore new trade territor y through negotiations to address the imbalance. Trump’s move to link trade with the North Korea issue will only “exacerbate the country’s economic woes and poison the overall China-US relationship,” the state-run English newspaper China Daily wrote in a commentary, titled “Trump asking too much from Beijing on peninsula issue,” on Monday. The timing of the IP probe announcement was interesting, as it came after the phone call between Xi and Trump on North Korea, Jiang Shan, a former US trade official at the Ministry of Commerce said by WeChat. “Trump is, again, waving the stick to push for his ‘deal,’ testing how China would respond. In the end, the two sides would go back to the negotiation table as always, both stepping back a little, and finding a way to pass this phase.” Liu Li-gang , chief China economist at Citigroup Inc. in Hong Kong, said the countries are complementar y in many sectors, especially those related to technology. Trade rest r ic t ions i n suc h a rea s, whether higher tariffs or IP probes, would, therefore, hurt American companies and the country’s economy, he added. Meanwhile, the Trump administration blames China’s excess capacity of the metals for a global glut that’s undermining US producers. Yet, steel and aluminum industries are hardly weak points for China, where most production is sold at home. Steel and aluminum shipments make up only 3.5 percent

of total exports and account for just 0.7 percent of GDP, according to Fielding Chen, an economist at Bloomberg Intelligence in Hong Kong. Even if the Trump administration “does decide to impose tariffs on steel and aluminum, the most widely discussed measures, the impact on China’s growth would likely be limited because they make up only a sliver of China’s exports and GDP,” Chen wrote in a recent note. The US aluminum foil-production industry accounts for $6.8 billion in economic activity annually, according to a statement from the Aluminum A ssociation, a trade group. That works out to less than 0.0004 percent of GDP. The US said last week it would seek to impose duties on aluminum-foil imports from China, arguing that subsidies for the domestic industry unfairly disadvantage American producers. China can turn to the WTO after Commerce delivers its final ruling on the case in October. A bigger risk for Trump might be that after the rhetoric and potential sanctions, China’s economic momentum continues chugging along undisturbed. In a worst-case scenario of full trade war, China’s exports to the US would drop, but that would shave off just 0.1 percentage point from China’s economic-growth rate, according to China International Capital Corp. (CICC). The shock would be even smaller should China redirect trading to other nations, CICC analyst Liu Liu in Beijing wrote in a report last Wednesday. Instead of trade war, leaders of the two largest economies should instead solve problems by increasing trade and investment, according to the Institute of International Finance (IIF) in Washington. Like China, the US benefits more from bilateral trade ties. Growth of US exports to China has been twice as fast as imports from there, and triple the growth of total exports, IIF chief China economist Gene Ma wrote in a recent report. “The US could be the biggest beneficiary of China’s consumption rise,” Citigroup’s Liu said. “If you think long term from this angle, there’s no need to have a trade war at all.” Bloomberg News

A10 Tuesday, August 15, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Trail of destruction

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here is no doubt the mining sector can be a huge boost to economic growth if managed properly. Because of our country’s huge reserves of natural resources, sustainable mining could be one of the top recipients of foreign investment and a main job generator. However, safe and responsible mining is something that has yet to become the norm here in the Philippines, which has seen some of the worst mining disasters. The Marcopper mining disaster in 1996, for instance, killed the Boac River in Marinduque and left a trail of destruction so devastating that a United Nations assessment mission declared it one of the worst environmental disasters ever, one that still poses problems today. A recent story in this paper, written by our correspondent Claudeth Mocon-Ciriaco, described how people living near the Marcopper Mining Co. site in Marinduque are still suffering from the mine tailings that polluted their land and water, and how the Department of Health in Mimaropa is still studying the extent of the heavy-metal poisoning (HMP) among the residents. Mimaropa is composed of the provinces of Oriental Mindoro, Occidental Mindoro, Marinduque, Romblon and Palawan. “Because of the effects of mine tailings brought about by the 1996 Marcopper incident in Marinduque, the health and well-being of residents have been greatly affected, especially those residing near the mining area. We have to know how serious their condition is, if they really are contaminated or not,” Regional Director Eduardo C. Janairo said. “They have been neglected for decades now and yet we still don’t know who are the affected individuals needing immediate treatment. That is why we have initiated this training [called ‘Training on Identification Management and Referral of Patients with HMP for Medical Doctors and Public Health Nurses on HMP’], so that we can properly identify and monitor these individuals and establish a surveillance and referral system that will provide them the health care they need,” he said. HMP is caused by the accumulation of certain metals in the body due to exposure through food, water, industrial chemicals or other sources. Undue amounts of zinc, copper, chromium, iron and manganese are harmful to the body. Marinduque and Palawan are among the provinces in Mimaropa where heavy copper- and mercury-mine tailings are found. “It is time we provide a solution to this health concern not only in Marinduque and Palawan but in all areas of the country where mining activities exist so that we can prevent HMP contamination and protect the health of our countrymen,” Janairo said. There is clearly a need not only to boost government revenues from mining but also to improve environmental standards in the industry. There is a wide gap existing between the enforcement of environmental laws and the reality of fixing our environmental problems, as the Marcopper mining disaster has shown 21 years after. To ensure more environmental protection, government mining policies must be supported by a law on environmental remediation. Environmental remediation is the process of removing contaminants, pollutants or toxins from adversely affected environments, to minimize risks to the surrounding ecology and human population. There have been several environmental accidents to date but the process of restoring the contaminated area, facility or community and preserving natural resources has pretty much relied on the responsibility of the companies that were involved in the accidents. But how many companies are responsible enough? For instance, not a single centavo had been paid as compensation for the Marcopper disaster, not by Marcopper or its parent company, Barrick Gold Corp., and it is the worst mining disaster this country has ever known. Environmental remediation is very costly. Many mining companies, not just here but all over the world, try everything, including bribing government officials, to escape financial liability for the damage they cause to the environment; or they just pack up and run, catch them if you can. While we do have a number of environmental laws and regulations, a law on environmental remediation would be crucial for making sure that work and living environments are safe for people, and that contaminants are dealt with properly after mining companies have left the communities where they operated. Good practices must be followed not just for the opening of the mine but until the final closure and restoration of the site.

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Manny B. Villar

THE Entrepreneur Continued from A1

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he Second Quarter 2017 Social Weather Survey (SWS), which was conducted from June 23 to 26, found 9.5 percent, or an estimated 2.2 million families, experiencing involuntary hunger at least once in the past three months. This is 2.4 points below the 11.9percent (estimated at 2.7 million families) quarterly hunger rate in March 2017, and is the lowest figure recorded since the 7.4 percent 13 years ago, in March 2004. In another survey, the SWS found that self-rated poverty in the second quarter of 2017 fell for the first time in three quarters. According to the Second Quarter 2017 SWS, which was conducted on June 23 to 26, 44 percent of respondents, or an estimated 10.1 million families, consider themselves poor, six points below the 50 percent, or an estimated 11.5 million, in March 2017. That means 1.4 million families no longer consider themselves poor during the second quarter of this year. The SWS notes that the decline in self-rated poverty in the three months ending June broke two successive quarters of increases. The polling firm recalls that when President Duterte assumed the presidency in June 2016, self-rated poverty was 45 percent. It fell to 42 percent by the end of the third

quarter, then rose for two consecutive quarters—44 percent by the end of the fourth quarter and 50 percent in the first quarter of this year. Based on the results of the two surveys, it’s no wonder that the President continues to receive high-satisfaction ratings. According to the Second Quarter 2017 SWS, Duterte received a new personal record-high rating of “very good” at +66 points. The survey, conducted from June 23 to 26, 2017, found 78 percent of adult Filipinos satisfied, 10 percent undecided and 12 percent dissatisfied with Duterte’s performance. Compared to March 2017, gross satisfaction with Duterte rose by three points from 75 percent, gross undecided fell by two points from 12 percent and gross dissatisfaction stayed at 12 percent. The President’s latest net satisfaction rating is three points above the “very good” +63 he received in December 2016 and March 2017, and is a new personal record-high, surpassing

the previous personal record of +64 recorded in September 2016. On my second observation, the Philippine economy grew by 7.3 percent in terms of GDP in 2010, when the country held general elections, which saw former President Benigno S. Aquino III winning the presidency. In 2011 his first full year in office, GDP growth plunged to 3.7 percent. The economy also showed the same trend during former President Gloria Macapagal-Arroyo’s first elective term (she first became Chief Executive when she assumed the remainder of the term of President Joseph E. Estrada in 2001). In 2004 when Arroyo won the presidential election, the economy grew by 6.2 percent. In the following year, GDP growth slowed down to 5.0 percent. The decline in GDP growth in the first year after Aquino’s election was sharper than during his predecessor’s term. Economists, including the National Statistical Coordination Board, blamed the Aquino administration’s underspending on infrastructure as a major reason for the feeble growth in 2011. It missed the government’s official 12-month target of 4.5 percent to 5.5 percent. Aquino restricted state spending as part of his high-profile anticorruption campaign. In 2016 when Duterte won the presidency, GDP grew by 6.8 percent, and the consensus is that the country would likely hit the target range of 6.5 percent to 7.5 percent in 2017, despite the absence of a boost from election as in 2017. In a report following the annual visit of its representatives, the conservative International Monetary Fund

There are no stock-market ‘rules’ John Mangun

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Observations, surveys, changes in the past 12 months

OUTSIDE THE BOX

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his is not about unpunished “insider trading”, “fake transactions”, or “pump and dump” price manipulation that happens in every stock exchange. This is about what should be included in the as yet unwritten book Everything You Know About the Stock Market Is Wrong. One definition of the word “rule” is, “One of a set of explicit or understood principles governing conduct within a particular activity or sphere.” For example, the law of gravity says: “A particle attracts every other particle using a force that is directly proportional to the product of their masses and inversely proportional to the square of the distance between their centers.” The rule from that “law” becomes “what goes up, must come down”. We might say that about an individual stock price but we also know that is not always true or at least not true for a very long time.

We explain that fact by saying that the limited numbers of exceptions actually prove the rule is true for at least the majority of cases. But we want the rule to be true and, therefore, try to ignore the exceptions or consider that these are one-off and totally unusual. When it comes to the stock market—and because the modern stock market has been around for more than a century—we think that “as it was in the beginning is now and ever shall be”. But this is 2017 and it is not your great grandfather’s stock market. In fact, it is not even your older brother’s stock

market from 10 years ago. Forget about the fact that when I started trading the market professionally some 40 years ago, a client did not have a guaranteed confirmation of a trade until three or four days later when the paperwork came in the mail. The fact that confirmation of transactions is virtually instantaneous today is not the difference from way back then. Maybe the best example of how the stock-market rules have changed is to compare to retailing giants Amazon and WalMart, which also happen to be two of the largest companies in the world. Amazon is the fourth largest in terms of stock-market capitalization orworth. Wal-Mart is the largest in terms of revenue. Wal-Mart went public and started trading in 1972; Amazon was listed in 1997. You might think these two huge household name companies might share some stock market similarities. Nothing could be farther from the truth as they follow different “rules”. Wal-Mart’s stock price is about $80, while Amazon trades at $968 per share. By every financial matrix, Wal-Mart crushes Amazon from revenues and revenue growth, earnings and growth,

(IMF) said GDP growth would likely hit 6.6 percent this year, slightly lower than its earlier forecast of 6.8 percent. The IMF also expects the Philippines to sustain GDP growth at 6.8 percent during the medium term, strengthening the country’s position as a growth leader in Asia. The Duterte administration is showing that it can pursue the campaign against corruption without sacrificing economic growth. For instance, the Department of Public Works and Highways (DPWH), which was perceived in the past as one of the most corrupt government agencies, has adopted measures to enforce the President’s policy of zero tolerance for corruption. The DPWH is maximizing technology to constantly monitor the implementation of projects, and has established standards to eliminate opportunities for corruption among employees and contractors. This is significant because the DPWH is the lead agency that is implementing the government’s “Build, Build, Build” Program, a massive infrastructure program involving P8 trillion to P9 trillion up to 2022. There is still much to be done, but the improving statistics on hunger and poverty, as well as the massive infrastructure program and other reforms being adopted by the Duterte administration reflect the realization of the promise made by the former Davao City mayor when he ran for the presidency: To improve the lives of the Filipino people.

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

and even net profit margins. Wal-Mart makes more profit each quarter than Amazon has made in total over 20 years of business. Even Amazon’s 2016 annual revenue is less than Wal-Mart’s 2016 quarterly numbers. But if you had purchased Wal-Mart stock 10 years ago, not including cash dividends, you would be about break even. Amazon would have given you a 1,200 percent profit. Wal-Mart trades at a Price Earnings Ratio (PER) of 19; Amazon’s PER is 244. Maybe investors are betting that someday Amazon will make as much money as Wal-Mart. That’s reasonable. But if by some miracle Amazon did equal Wal-Mart’s $14.7-billion annual profit next year, the stock would still have a PER nearly double of Wal-Mart’s just for the price to remain the same as today at about $970. Amazon and Wal-Mart are trading under two different rules of what a reasonable stock price valuation should be.

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.com.ph

Opinion

‘Res ipsa loquitur’

A bold step in the right direction

BusinessMirror

Atty. Lorna Patajo-Kapunan

Ernesto M. Hilario

legally speaking Conclusion

7

. Similar to the BDO account, I also found RCBC checkbooks, which also indicate substantial deposits to LDB accounts, which I again assume are the same LDB bank accounts indicated above.

D. Hong Kong and Shanghai Banking Corporation (HSBC) 8. Andy, likewise, has an HSBC Bank Account in Hong Kong with the following details: HSBC Account No.

Denomination

611-355967-888

HK Dollars

Amount in HK$ 948,358.97 Total–HK$948,358.97

9. A mathematical computation of all these amounts would lead to the conclusion that Andy did not declare in his 2016 Statement of Assets, Liabilities and Net Worth (SALN) all of these stated amount and actually left out a substantial amount. For his latest 2016 SALN, Andy only declared a total of P176.3 million, which amount already comprises both his personal and real properties. 10. Based on these bank accounts, counsel advised me of the following: (a) The substantial deposits and withdrawals on each of these bank accounts were made within the last two years, and coincidentally, while Andy was already the Comelec chairman and when the 2016 national and local elections were conducted. (b) Most of the deposits were made below the P500,000 threshold, most probably to avoid any Anti-Money Laundering Act detection. (c) The deposits and/or withdrawals were made almost every day and as if in a distinct order. 11. I find these highly questionable, given his stature as a high-ranking government official and the sensitive nature of his work in overseeing the country’s elections. Real Properties 12. Beside Andy’s bank accounts, I also discovered several properties that are under Andy’s name or purchased by him; and which properties were not declared in his SALN, as well. These real properties are as follows: a. Phase 1, Block 10, Lot 81, Pili Road, Ayala Westgrove Heights, Silang, Cavite; b. Units 3A/B South of Pacific Plaza Towers; c. Unit 17A, The Suite at One Bonifacio High Street; d. Unit 4503, Two Maridien; e. Ayala Greenfield Estates, Phase II, Block 8, Lot 1; f. Ayala Greenfield Estates, Phase III, Block 2, Lot 8; g. Unit 11L, North Tower, One Shangri-La Place; h. Unit 12L, North Tower, One Shangri-La Place ; i. Unit 38D, North Tower, One Shangri-La Place; and j. Parking Slot 91 and 92, One Shangri-La Place. 13. Based on my own assessment, the cumulative value of these properties at their acquisition costs is easily between P250,000,000 to P300,000,000, more or less, and definitely more than P158.5 million, the total amount Andy declared for real property in his 2016 SALN. 14. Except for the Pacific Plaza units, which are our residential homes, I have no idea of the other mentioned real properties above. Foreign Investments and Properties 15. Apart from Andy’s local properties, both personal and real, I also discovered investments abroad in the form of his interests in corporations and loan agreements as follows: a. Bauman Enterprises Ltd.—a company established in the British Virgin Islands September 29, 2010; b. Mantova International Ltd.—a company established in Brunei Darussalam on April 26, 2011; and c. Mega Achieve Inc.—a company established in Anguilla on July 15, 2014 16. I previously confronted Andy about these companies, and he bluntly denied that he is involved in any way with any of them. However, it is highly suspicious why he would have copies of pertinent documents relative to such companies when he claims that he does not have any involvement with any of those. Again, these were not declared in his SALN. There is more evidence involving other parties (sadly, some law firms) but for now: Res ipsa loquitur! Let the evidence speak for itself.

ABOUT TOWN

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E welcome the signing of the the bill granting full government subsidy for tuition in state universities and colleges (SUCs).

The universal access to quality tertiary education bill was passed by Congress in May. It will subsidize the education of students in SUCs, local tertiary schools and Technical Education and Skills Development Authority (Tesda)-accredited institutions. The Duterte administration’s economic managers have expressed opposition to the bill. Budget Secretary Benjamin E. Diokno had said the government could not afford to spend P100 billion for free tuition in SUCs. Neda Director General Ernesto M. Pernia also opposed it, saying it would put private schools at a disadvantage. President Duterte overruled them, even as he admitted later that he knew there would not be enough money for it, apparently thinking that the long-term benefits of education should outweigh any budgetary problems. The signing of the bill into law has understandably elated its authors. Sen. Bam Aquino, the principal sponsor and coauthor of the law in

database Part Five

PCGG in the energy sector

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RESIDENT Corazon Cojuangco Aquino, through the Presidential Commission on Good Government (PCGG), subsequently charged the late Energy Secretary Geronimo Zamora Velasco with having allegedly committed corruption, only to be declared later on innocent by the Supreme Court. Velasco died in 2007, but left behind a solid reputation of honesty and certitude, as well as his own personal files made into a book that exposed the unforgivable sins of the Aquino regime in the energy sector. Here’s an extract of Velasco’s 209page book Trailblazing: The Quest for Energy Self-Reliance, published by Anvil

(Manila) in 2006: “…It appears that Mrs. Aquino abolished the ministry upon the advice of Cesar Buenaventura, who had claimed that the Ministry of Energy was ‘the most corrupt’ among the Marcos-era agencies.” (Joker Arroyo, President Aquino’s executive secretary, who had witnessed how hard Buenaventura lobbied to

be treated as a human-resource investment, and that there should be no trouble finding funds for the law based on how much savings are generated every year. The Commission on Higher Education (CHED) also believes there is still money in the P8-billion allocation for free tuition this year. The agency prefers a staggered implementation of the law, with the initial phase requiring only a core cost of around P16.8 billion. It also wants to come up with a well-designed program to implement the studentloan provision in coordination with financial institutions. The Senate minority bloc has emphasized that the new law “will only become a reality if the government allocates enough and accessible funding for SUCs nationwide. The Executive branch and Congress must work closely to make tertiary education accessible to all through tuition subsidies and financial assistance.” Free tertiary education is a bold step in the right direction. We believe this will allow young Filipinos, no matter their status or condition in life, to finish their studies and improve their lives.

Customs corruption

What will it take to clean up the Bureau of Customs (BOC), one of the top 2 revenue-collection agencies of the national government, which appears to be deeply mired in systemic corruption? Amid the latest scandal where the bureau now finds itself under close scrutiny for allowing P6.4

billion worth of shabu smuggled from China to slip through an express lane, Senate Minority Leader Franklin M. Drilon believes that “heads must roll” at the graft-tainted agency. He asserts that with its “high level of corruption”, the BOC isn’t likely to meet its full-year collection target. Its reported collection of P210.64 billion for the first half of the year is already short of its P218.71-billion goal for the period. In all likelihood, therefore, the agency may not be able to meet its P468-billion collection target for this year. Customs, aside from the Bureau of Internal Revenue, is expected to deliver the lion’s share of funds that’s needed to finance the Duterte administration’s “Build, Build, Build” infrastructure program, as well as the prompt and timely delivery of vital social services, including education and health, to our people. If the BOC as it is currently constituted cannot improve its tax-collection effort due to massive corruption, then the current leadership should tender their resignations and allow the President to bring in new blood to the agency. A top-to-bottom revamp of the BOC should be undertaken by the Duterte administration for a more compelling reason: the latest scandal to hit Customs involves the entry of a big shipment of illegal drugs, against which the President has launched a bloody and ruthless campaign since he took office last year. E-mail: ernhil@yahoo.com.

Will recessions be less recessionary in the future?

their suppliers to replace stock sold, plus a bit more in the hope of better future demand. In the global financial crisis, around 70 percent of the loss of real US GDP was due to companies reducing stocks. Stocks or inventories make economic cycles more volatile—the economic highs are higher and the lows are lower because of stocks. It is also vital to note that most stock is held by small businesses. The large listed companies of the equity market hold, perhaps, 30 percent of the stocks in an economy. There are three reasons stock

control may be less volatile in the future. The first reason is that stock has ceased to exist for some products. Ten years ago most music was bought in the real world, as compact discs. Shops had to hold stocks of unsold CDs in case there was future demand. Now most music is virtual—downloaded or streamed. Music sellers do not need to hold any stock at all. The uncertainties of the inventory cycle have largely disappeared from the music industry. Second, the amount of cheap credit that was used to fund small businesses’ stock holdings was reduced a lot during the global financial crisis. Small companies had relied on their suppliers giving them a grace period to pay for goods bought—something known as invoice credit. Small companies could buy now, pay later. This made holding stocks almost costless. As soon as suppliers started wanting cash up front, the cost of holding stocks rose. Small businesses had a powerful reason to be more efficient. Third, technology has changed company cost control in recent years. Managing stock is cheaper to do with barcodes and online ordering systems. Software allows small businesses to predict demand patterns with greater

company operating in the Philippines? On the mere say-so of Buenaventura, Mrs. Aquino dismantled the whole energy complex that took 12 years to build and which, in government annals, was unique for the successes it achieved considering the constraints that faced by the country. “Incidentally, the Queen of England knighted Buenaventura thereafter. Did that have anything to do with the ministry’s fate? “Joker revealed that other advisers had already been eyeing Petron’s privatization early on in Mrs. Aquino’s term; they were lobbying for British Petroleum and for a Kuwaiti oil company. Other groups close to Mrs. Aquino’s advisers were interested in PNOC’s privatization because this would enable them to get their hands on Petron. “From a policy perspective, there was no reason to privatize PNOC/Petron even at the time. Why would a government in dire need of cash be willing to let go of a good source of income? PNOC was the biggest government corporation in terms of revenue. “Much of it was due to Petron, which

commanded about 40 percent of the local oil market and occupied the top spot in the industry. More important, as Joker himself acknowledged, PNOC’s involvement in oil importation, refining and marketing took away the foreign oil companies’ advantage of being the only ones who knew how to play the game. It is not surprising then that Petron threatened the interest of multinational oil companies. “Joker’s point about PNOC’s impact on the oil companies is significant, if only because it affirms the fact that foreign oil companies have always invited suspicion that they act as a cartel and dictate the local price of oil regardless of international prices. This issue has hounded the local oil industry since the Ramos administration deregulated the sector, and has intensified in times of unabated oil-price increases, such as what we are experiencing now. “To my mind, however, there is one important question that we should confront—a question that has so far evaded a real answer: As a matter of policy, what should we expect from the foreign oil companies in the Philippines?

Paul Donovan

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ecessions tend to be caused by policy error or by bubbles that burst. The damage when a central bank makes a mistake is fairly obvious. If bubbles are allowed to build, an economy is likely to experience strong growth then a sharp downturn. These things will still happen in the future. It is hard to see a global recession happening in the coming year, but, at some point, there will be a downturn. How bad a recession is, and how good a recovery is, is partly due to the inventory cycle. Companies hold inventory—stock in warehouses, in the back rooms of small shops, and on the shelves—to be able to satisfy customer demand. However, if demand falls then companies will cut back on stocks. As companies reduce the orders they give their suppliers so as to use up unsold stock, their suppliers will react by reducing their stocks. Thus the fall in demand moves up the supply chain. When a recovery comes, the reverse happens. Shops start to order from

President Corazon C. Aquino’s PCGG Cecilio T. Arillo

the Senate, thanked Duterte for finally signing the bill: “Congratulations to my fellow lawmakers and everyone who supported this.” Sen. JV Ejercito, one of the principal authors of the bill, also rejoiced over Duterte’s approval of the bill. “I am very, very happy for the poor but deserving students studying in the SUCs. This is an investment in our human resources.” For Sen. Juan Edgardo M. Angara, the law “is really for the students who dream of a better life which is now increasingly within reach”. The problematic part is where to get the money for the implementation of the landmark law. Sen. Francis G. Escudero, chairman of the Senate Committee on Education, while acknowledging that the new law would be one of the “lasting legacies” of the Duterte administration, asserted that there is no truth to the claim of Diokno that the law requires P100 billion to be implemented. He said the actual amount needed is just over P20 billion, which should

Tuesday, August 15, 2017 A11

have the ministry abolished, confirmed Velasco’s statement in his book). “…Cesar Buenaventura was one of Mrs. Aquino’s closest advisers, but he also happened to be the president of Pilipinas Shell at the time. I have no idea as to Buenaventura’s basis for claiming that the ministry was the ‘most corrupt’, but I also have no doubt that he had Shell’s interest in mind when he recommended the ministry’s abolition. I could sense that the foreign oil companies were never happy with PNOC [Philippine National Oil Co.], not only because Petron led the pricing structure in the oil market, but also because PNOC’s energy-development program, with its emphasis on tapping non-oil sources, threatened to erode the oil companies’ position in the energy market. “Riding on the wave of anti-Marcos sentiment was a good way to eliminate a rival. In my opinion, the abolition of the ministry showed Mrs. Aquino’s inexperience in proper governance. Buenaventura may have been a close friend of hers, but how could she, in conscience, consult someone like him whose interest was to protect his employer, a foreign oil

accuracy. All of this allows small businesses to manage their stock as efficiently as large businesses. Technology is also helping local production; goods are produced a lot closer to the consumer. An in-store, computer-controlled, robot-run bakery baking bread in a local village shop is a good example. Making things close to the shopper is almost “on demand” production, and on demand production requires little inventory. If stocks are less volatile, recessions will still happen. Stocks or inventories do not cause recessions. However, recessions are likely to be less recessionary. Similarly, economic recoveries are likely to be less booming. With stock control becoming more efficient, the recessions of the future may be less dramatic than the recessions of the past.

Paul Donovan is the managing director and deputy head of global economics of Zurich-headquartered UBS. He is responsible for formulating and presenting the UBS Investment Research global economic view, drawing on the bank’s worldwide resources. Donovan took up philosophy, politics and economics at Oxford University. He holds an MSc in financial economics from the University of London. In the Philippines his column will appear exclusively once a month in the BusinessMirror.

“It was not until we operated Petron that I started to realize how critical an oil company is to a country. The oil companies in the Philippines have been with us for almost a century. In fact, the phrase ‘old China hand’ emanated from the oil companies because some of those people assigned to the Philippines were ‘old China hands’ who had been previously employed in the oil companies’ pioneering ventures in China.” Even the National Power Corp., whose income between 1977 and 1985 rose from P0.4 billion to P18 billion in sales revenue and had total assets of P107.2 billion, almost 10 times of what it had in 1977, was not spared by Cory’s rapacity. Her government broke it up, dissipated and privatized the majority of its operations, including power generation, transmission and distribution under the guise of breaking up government monopoly in the distribution of power. To be continued

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

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A12 Tuesday, August 15, 2017 • Editor: Angel Calso

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Draghi unfazed about the strength of the euro

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By Piotr Skolimowski | Bloomberg

F Mario Draghi is worried about the strength of the euro, he’s hiding it well for now.

The European Central Bank (ECB) president has shirked any invitation so far to bemoan the recent appreciation of the single currency in the style of his predecessor Jean-Claude Trichet, who used to complain about “brutal” moves that risk damping growth. Instead, Draghi has pointed to prospects for a stronger-thananticipated recovery, suggesting he might tolerate the euro’s gain as proof that his campaign to revive the economy is returning results. “A lot of central bankers take the view that if the currency rises for good, solid, fundamental reasons then it’s not worth standing in the way,” said Steven Bell, chief economist at BMO Global Asset Management in London. “The reality is that the growth outlook in Europe has changed dramatically—the economy is growing strongly—so some currency strength is only to be expected.” That reality is founded on healthy domestic spending and investment, making the recovery less vulnerable to any damping impact of a stronger euro on exports. Inflation, which the ECB is struggling to return toward

2 percent, may be less well insulated against currency gains and their effect on the price of imports. Economists in Bloomberg’s latest monthly survey cut their forecast for 2017 inflation in Germany, the region’s largest economy, to 1.6 percent from 1.7 percent. They maintained their euro-area prediction at 1.5 percent. Policy-makers can assess the impact of the euro’s 12-percent jump this year when they start their discussion about the future path of quantitative easing in September. New economic forecasts will be published at that time. Draghi has limited his commentary on the euro to a few seemingly untroubled words after the Governing Council’s last meeting: “The repricing of the exchange rate has received some attention during the various exchanges of views, and in various ways.” But since that July 20 meeting, when he argued that financing conditions remain supportive of a pickup in price growth, they have deteriorated. The last leg in the euro’s ascent started on June 27, when Draghi said in a high-profile speech

that reflationary forces were at play, arguing that a continued recovery would allow the central bank to scale back stimulus. Since then, the currency has strengthened 4 percent against the dollar—reaching its highest since before quantitative easing (QE)— and more than 7 percent in tradeweighted terms. Similar gains in 2007 triggered a warning by thenECB President Trichet that “brutal moves” are never welcome. (The euro traded at just under $1.50 at the time, compared with less than $1.20 currently.) Draghi has previously attempted to talk down the euro, when he expressed “serious concern” about the currency’s appreciation in May 2014. He has an opportunity to alter his present assessment after his vacation, when he addresses a conference in Germany on August 23. He then heads to the Federal

Reserve’s Jackson Hole symposium—the venue where he put the ECB on course for large-scale asset purchases three years ago. “Back in 2014, there were concerns the ECB is not doing enough and inflation is low,” said Hetal Mehta, senior European economist at Legal & General Investment Management Ltd. in London. “This time around, what we are seeing is that everyone is expecting the ECB to start tapering next year and they haven’t really done a lot to push back against those expectations.” Economists predict the ECB will start phasing out asset purchases over nine months starting in January, and financial markets are pricing the first rate increase for late 2018. For Ken Wattret, an economist at TS Lombard in London, the current market moves are reminiscent of those observed in the run-up to QE. The euro tumbled in the second

Netanyahu loyalist who could end his patron’s career By David Wainer & Jonathan Ferziger Bloomberg

Leftist cabal

In making this damned-if-you-do, damned-if-you-don’t choice, Mandelblit finds himself in a similar bind as US. Attorney General Jeff Sessions, whose office is investigating allegations of Russian interference in the election that brought to power the man who appointed him: Donald J. Trump. (Sessions, in contrast to Mandelblit, has recused himself in the case.) Mandelblit will be taking his decision in a political climate in which Netanyahu’s camp has grown increasingly distrustful of institutions, such as the military, prosecutors and the Supreme Court, seeing them as trying to subvert the will of a right-wing majority. Netanyahu and his supporters appear to have taken a page out of Trump’s book, painting the investigations and their coverage as a political

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Benjamin Netanyahu and Avichai Mandelblit GALI TIBBON/AFP/Getty Images

witch hunt fueled by leftists and journalists spreading “fake news” to topple a conservative government. In a defiant speech last week to thousands of supporters, the embattled leader accused his adversaries of seeking his downfall in order to cede territory to the Palestinians, and vowed not to let that happen. Though the last several Israeli prime ministers have all been investigated—and Netanyahu’s predecessor, Ehud Olmert, was jailed for bribery after he stepped down —charges have never been brought against a sitting Israeli leader. Now, the crowds that have gathered outside Mandelblit’s house in Petah Tikvah every Saturday night for the past nine months are demanding indictments. They accuse the attorney general, an Orthodox Jew who grew up in a Likud home, of dragging his feet to protect his boss. Political considerations must not be allowed to intrude on his decision, said Tomer Naor, head of litigation at the Movement for Quality Government, which petitioned the Supreme Court to block Mandelblit’s appointment because he was the only candidate. “It’s a role that needs to be clean from politics and from the perception that it’s somehow influenced by other considerations beyond justice,” he said.

State’s witness After months of questioning witnesses, police investigators took a leap forward in early-August when they persuaded Netanyahu’s former chief of staff, Ari Harow, to sign a plea bargain allowing them to use his testimony against his onetime boss. Before joining Netanyahu’s coterie, Mandelbit was the military’s advocate-general, a role carrying the rank of general in which he sought to reconcile Israel’s occupation of the West Bank and Gaza Strip with international law. He was also chief military judge for Gaza and the Southern Command. Admirers call him an ethical and professional civil servant who hasn’t hesitated to challenge Netanyahu in the past. Most prominently, he’s broken with the prime minister over a law allowing Israel to annex private Palestinian land, saying he wouldn’t defend it against a challenge in the Supreme Court. Ayelet Shaked, Israel’s justice minister and Mandelblit’s direct superior, defended the attorney general as a man of integrity who won’t hesitate to do the right thing. “He’s a straight-shooting man who works in accordance with the truth and with the law,” she said in a phone interview. “If he thinks the prime minister broke the law, he won’t hesitate to act accordingly, even though he worked for him.

If he sees that there isn’t enough evidence to press charges, he won’t feel he must do so just because of public pressure.” With the investigations already dragging on for months, detractors want action. Former Prime Minister Ehud Barak, a Netanyahu foe weighing a political comeback, has asked why Mandelblit hasn’t sought to question former US Secretary of State John Kerry or former US Ambassador Daniel Shapiro on allegations Netanyahu asked them to help obtain a US visa for Arnon Milchan. According to Israeli media reports, the Israeli-born Hollywood producer is suspected of plying Netanyahu and his wife, Sara, with cigars and pink champagne worth thousands of dollars. “The attorney general is keeping investigators from finding the truth,” Barak tweeted. Shaked noted that past investigations of public figures also took many years, and estimated the Netanyahu probes could take another year at least. If Mandelblit does decide to indict Netanyahu, the prime minister can remain in office, resist the inevitable pressure to resign and instruct his lawyers to try to run out the clock. Throughout the investigations, polls have shown Netanyahu remaining the politician seen best suited to be prime minister.

sanguine attitude so far toward a potentially intricate problem suggests that they’re convinced that the euro’s strength reflects economic fundamentals, and that solid, broad-based growth will eventually deliver inflation below, but close to, 2 percent. “Silence on the currency at these levels is probably a good thing,” said BMO’s Bell. “Bear in mind that the euro zone has a current-account surplus, growth is improving, unemployment is falling and indeed you don’t want to precipitate any thermonuclear comment from Donald J. Trump to have a go at Europe.”

As Trump and Kim trade barbs, lenders predict gold to hit $1,400 By Swansy Afonso | Bloomberg

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nside Benjamin Netanyahu’s “aquarium,” the glassed-in suite of offices that houses Israel’s prime minister and his senior staff, Avichai Mandelblit, was a big fish. As Cabinet secretary, the retired military judge was charged with whipping unruly ministers into line and carrying out the Israeli leader’s political agenda. Mandelblit supported Netanyahu through parliamentary budget battles, missile wars against Hamas and a showdown with former US President Barack Obama over the Iran nuclear deal. Now, as attorney general, Mandelblit must decide whether his political patron should be indicted on corruption charges stemming from allegations he took champagne and cigars from billionaires and considered trading political favors for better media coverage. It’s a tough predicament for a Netanyahu loyalist who could go down in history as the man who toppled Israel’s longest-serving prime minister since founding father David Ben-Gurion. “It’s very hard to work with someone so closely for years and know that your decision could destroy his political, as well as his real, life,” said Yoaz Hendel, one of Netanyahu’s former media advisers. Netanyahu denies all wrongdoing in the cases against him.

half of 2014 in anticipation of largescale bond buying, only to stabilize and even strengthen once the central bank started the program.Under that theory, pressure on the euro— amplified by investor uncertainty about US politics—would ease once officials reveal their strategy to unwind stimulus. “They don’t want to push the currency up much further,” Wattret said. “But they are probably thinking that, as long as they manage the communication of tapering relatively well, probably the impact on the exchange rate from this point will be more limited.” Policy-makers’

old prices are set to jump to a four-year high of $1,400 an ounce by the end of the year over mounting tensions between North Korea and the US, and surging demand in the world’s biggest consumers, according to the head of precious metals at a Russian investment bank. Bullion could rise to $1,360 within three months before climbing higher, fueled by global political risks and buying from China and India, said Evgeny Ananiev at VTB Capital JSC, the investment-banking unit of Russia’s second-largest lender VTB Group. “We may see some correction, but I don’t think gold will drop below $1,200 as it’s well supported,” he said in a weekend interview in Goa. The metal traded at $1,285.73 on Monday. Prices have climbed 12 percent this year, driven by worries over a potential nuclear conflict between the US and North Korea, and subdued inflation in the US, which is cooling chances of a further increase in interest rates. President Donald J. Trump has intensified warnings to North Korea, promising a massive response to any strike against the US or its allies. Hedge-fund billionaire Ray Dalio recommends investors place 5 percent to 10 percent of their assets in gold. Other participants at the conference shared the upbeat sentiment. “Fundamentally, we have been very bullish on the market,” said Chirag Sheth, an analyst at Metals Focus Ltd., an independent precious-

metals research firm based in London. “What North Korea has done is given gold the legs to go above the $1,300 level and sustain above that level,” he said in an interview. Sheth expects prices to advance to $1,400 in six to nine months as the situation in North Korea sees investors coming back to the market in search of a haven. The US Federal Reserve, which was hawkish on interest rates, has now softened its stance, providing further support to bullion, he said.

‘Hellacious war’

AS Trump and Kim Jong Un traded barbs, Dalio wrote in a LinkedIn post last week that “the world is watching to see which one will be caught bluffing, or if there will be a hellacious war.” Dalio, who manages Bridgewater Associates, also said he sees rising odds of Congress failing to increase the US debt ceiling, leading to a technical default. The US consumer-price index rose 1.7 percent in July from year earlier, a report showed last Friday, trailing the 1.8-percent median estimate of economists surveyed by Bloomberg. Cooling price pressures could make it tougher for the US central bank to raise interest rates again this year. Indian demand has also recovered after a poor performance in 2016 and jewelry consumption may climb by about 6 percent this year, said Sheth, who provides supply and demand data to the World Gold Council. Imports may jump about 30 percent to as high as 800 metric tons in 2017, he said.

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Japan’s econ grows again, in longest streak in 11 yrs

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OKYO—Japan’s economy grew more strongly than expected in the second quarter, extending the longest streak of uninterrupted growth in 11 years, government data showed on Monday. And the really good news: Much of the growth was local. Japan’s government has been trying to spur the economy with a stimulus program known as Abenomics, after Prime Minister Shinzo Abe. The strategy has helped Japan’s exporters but has done little to increase domestic income or spending. That may be changing. Spending by Japanese consumers and businesses contributed more to the latest expansion than trade with the rest of the world did, the data showed, in a positive sign for the outlook of the world’s third-largest economy, after the US and China. n What happened? Japanese GDP increased 4 percent in annualized terms in the three months through June, the government’s Cabinet Office said in a preliminary estimate on Monday. The economy has now expanded for six consecutive quarters, the first time it has gone that long without a contraction since the 2005-2006 period. The pace of expansion also accelerated from the previous quarter, and was stronger than economists had expected. Analysts surveyed by Reuters had forecast a growth rate of 2.5 percent. n Where did the growth come from? From Japan, unusually. Foreign trade had done most of the heavy lifting since the start of the expansion, aided by a broadly recovering

global economy and the weak yen. Abenomics calls for Japan’s central bank to inject more money into the financial system. That weakens the country’s currency, which makes Japanese cars, electronics and other products more competitive when sold abroad. Multinationals, like Toyota, have profited, but the tactic has failed to significantly bolster consumer spending at home. Exports are still crucial to the economy. But Japanese are buying even more goods from abroad: A surge in imports last quarter meant that trade was a net drag on GDP. By contrast, the domestic side of the economy jolted to life. Consumer spending grew by 3.7 percent in annualized terms, the data showed, while business investment expanded by nearly 10 percent—a sign that companies are becoming more optimistic that the good times will last. n Is the government helping? Not all of the domestic growth came from private citizens and businesses. Abe announced a major government spending program a year ago, and the data suggest the money is beginning to find its way from account books to the real economy. Public investment grew at a 22percent pace. Japan has the largest public debt in the world, relative to the size of its economy, but ultralow interest rates let the government borrow cheaply. The central bank is, in effect, underwriting public spending by buying up government bonds—an arrangement criticized as reckless by fiscal conservatives, but welcomed by others who say Japan needs the pump-priming. Bloomberg News

Production inside the Honda Motor Co. motorcycle factory Bloomberg

Tuesday, August 15, 2017 A13

More than spectacle: Eclipses create science and so can you

By Seth Borenstein | AP Science Writer

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ASHINGTON—The sun is about to spill some of its secrets, maybe even reveal a few hidden truths of the cosmos. And you can get in on the act next week if you are in the right place for the best solar eclipse in the US in nearly a century. Astronomers are going full blast to pry even more science from the mysterious ball of gas that’s vital to Earth. They’ll look from the ground, using telescopes, cameras, binoculars and whatever else works. They’ll look from the International Space Station and a fleet of 11 satellites in space. And in between, they’ll fly three planes and launch more than 70 high-altitude balloons. “We expect a boatload of science from this one,” said Jay Pasachoff, a Williams College astronomer who has traveled to 65 eclipses of all kinds. Scientists will focus on the sun, but they will also examine what hap-

pens to Earth’s weather, to space weather, and to animals and plants on Earth as the moon totally blocks out the sun. The moon’s shadow will sweep along a narrow path, from Oregon to South Carolina. Between National Aeronautics and Space Administration (Nasa) and the National Science Foundation, the federal government is spending about $7.7 million on next Monday’s eclipse. One of the Nasa projects has students launching the high-altitude balloons to provide “live footage from the edge of space” during the eclipse. But it’s not just the professionals or students. The Nasa has a list of various experiments

everyday people can do. “Millions of people can walk out on their porch in their slippers and collect world-class data,” said Matt Penn, an astronomer at the National Solar Observatory in Tucson, Arizona. Penn is chief scientist for a National Science Foundation-funded movie project nicknamed Citizen CATE. More than 200 volunteers have been trained and given special small telescopes and tripods to observe the sun at 68 locations in the exact same way. The thousands of images from the citizen scientists will be combined for a movie of the usually hard-to-see sun’s edge. Mike Conley, a Salem, Oregon, stock trader whose backyard is studded with telescopes, jumped at the chance to be part of the science team. “Who knows? Maybe a great secret will come of this, the mysteries of the sun will be revealed, because we’re doing something that’s never been done before and we’re getting data that’s never been seen before,” he said. “A big discovery will come and everybody will say, ‘Hey, we were part of that!’” You don’t need to have telescopes to help out. You can use the iNaturalist app via the California Academy of Sciences and note the reaction of animals and plants around you. You

can go to a zoo, like the Nashville Zoo, where they are asking people to keep track of what the animals are doing. The University of California, Berkeley, is seeking photos and video for its Eclipse Megamovie 2017, hoping to get more than 1,000 volunteers. Even with all the high-tech, highflying instruments now available, when it comes to understanding much of the sun’s mysteries, nothing beats an eclipse, Williams College’s Pasachoff said. That’s because the sun is so bright that even satellites and special probes can’t gaze straight at the sun just to glimpse the outer crown, or corona. Satellites create artificial eclipses to blot out the sun, but they can’t do it, as well as the moon, he said. The corona is what astronomers really focus on during an eclipse. It’s the sun’s outer atmosphere where space weather originates, where jutting loops of red-glowing plasma lash out and where the magnetic field shows fluctuations. The temperature in the outer atmosphere is more than 1-million degrees hotter than it is on the surface of the sun and scientists want to figure out why. “It’s ironic that we’ve learned most about the sun when its disk is hidden from view,” said Fred “Mr. Eclipse “ Espenak, a retired Nasa astronomer who specialized in eclipses for the space agency. And they learn other things, too. Helium—the second most abundant element in the universe—wasn’t discovered on Earth until its chemical spectrum was spotted during an eclipse in 1868, Espenak added. But that discovery is eclipsed by what an eclipse did for Albert Einstein and physics. Einstein was a little known scientist in 1915 when he proposed his general theory of relativity, a milestone in physics that says what we perceive as the force of gravity is actually from the curvature of space and time. It explains the motion of planets, black holes and the bending of light from distant galaxies. Einstein couldn’t prove it but said one way to do so was to show that light from a distant star bends during an eclipse. During a 1919 eclipse, Arthur Eddington observed the right amount of bending, something that couldn’t be done without the moon’s shadow eclipsing the sun. “It marked a complete change in the understanding of the universe,” said Mark Littmann of the University of Tennessee, a former planetarium director. “Bang. Right there.” AP writer Gillian Flaccus in Oregon contributed to this report

With cable subscriptions in steep decline, ESPN surrenders to grim new reality By Joe Nocera | Bloomberg View

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he big news that came out of Disney’s earnings conference call earlier this week was that Disney was going “over the top”, an industry phrase that means that it plans to start a stand-alone streaming service untethered to a cable-television subscription. Two, in fact. One will stream Disney’s unparalleled library of movies, which are currently licensed to Netflix Inc., while the second will stream ESPN, the cable-sports behemoth that was once Disney’s cash cow and is now its Achilles’s heel, to mix a few metaphors. From one perspective, it is obviously the right move. Robert Iger, the company’s 66-year-old chairman and chief executive, has been talking for years about the need to “go where the customers are”. That’s the Internet, and now he’s finally made the move. There’s really no good reason for Disney to depend on Netflix to distribute its movies. As for ESPN, with its cable subscriptions in steep, seeming irreversible decline—falling between 2 percent

and 3 percent each quarter—Iger had to do something. The movie app has the potential to be a big money-maker, especially if Disney bundles everything into it—not just children’s fare, but the Star Wars films, its television catalog, its classic movies and so on—to keep churn to a minimum. (That’s the Netflix strategy.) ESPN, however, is a different story, for two reasons. First, there is zero possibility that a streaming service, no matter how good, will be able to make the kind of money that ESPN made as recently as three years ago. Second, the ESPN app, at least as it was outlined by Iger during the earnings call, simply isn’t going to be very good. The core economic issue is this: Cable companies pay the Walt Disney Co. an average of $7.21 per subscriber for ESPN, according to the media-news service SNL Kagan, triple that of other popular cable channels. And because of the way the cable bundle works, the operators end up passing the cost along to many customers who don’t watch sports and don’t want

The reality is that the glory days are over for ESPN. Gene Duncan/Disney Parks via Getty Images

ESPN. That’s why so many people hate the cable bundle, and why cable bills are so high. So it is hardly a surprise that as people began to have more options, including bundles without sports channels, they’ve been abandoning ESPN. Even many sports fans have concluded they can live without

ESPN. “ESPN is in secular decline,” says Rich Greenfield of the investment firm BTIG, who has had a “sell” on Disney’s stock since 2015. At the same time, ESPN is paying staggering sums for professionalsports rights, more than $7 billion in total, again according to SNL Kagan. Fewer subscribers, plus higher

rights fees equals profit squeeze. Which is exactly ESPN’s dilemma. But a streaming service, while it might attract sports fans who have cut the cord, won’t solve ESPN’s profit problems. Instead it will exacerbate them. Why? Because ESPN will continue to lose the millions upon millions of cable subscribers who pay for it but never watch it. Losing $7.21 from each nonwatcher is going to be a revenue killer. There is no possible way the universe of sports fans who want ESPN can make up that revenue, even if they’re charged more for a streaming service. To make matters worse, Disney appears to be planning a streaming service that even the most rabid sports fan will be reluctant to pay for. All the good stuff—big-time college football, professional basketball, the Monday night National Football League game—will remain exclusively on ESPN’s cable channels. The streaming service will get, well, other things. It’s pretty clear that Iger is still trying to protect Disney’s legacy cable business, and that his move to the Internet is not exactly a wholehearted embrace.

The reality is that the glory days are over for ESPN. Instead of making the $6.4 billion it earned in 2014, it’ll soon be earning $2 billion or less. Iger, or his successor, will have to decide whether to invest in it or to let it hobble along in its diminished shape. Disney will have to decide whether to keep paying megabucks for professionalsports rights—thinking of them as loss leaders, like the Olympics for NBC—or whether to give up those rights to save money. If it does the former, ESPN’s profits will dwindle even more. If it does the latter, fewer sports fans will want to subscribe. I’ve been in the magazine and newspaper business my whole working life. I’ve watched the same forces diminish my industry. My former employer, the New York Times, has millions more viewers and subscribers than it ever did when print reigned supreme. Yet, it is barely profitable, because the Internet destroys a media company’s advertising base and the Times can’t charge subscribers as much as it could charge when readers were buying the dead-tree version.

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A14 Tuesday, August 15, 2017

BMI: PHL to outperform peers in next 2 decades

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By Bianca Cuaresma

@BcuaresmaBM

he Philippine economy is expected to post strong growth in the long term, as an international think tank notes the country will be one of the most economically improved jurisdictions 20 years from now. Globa l resea rc h f i r m BMI Research noted the Philippine economy’s long-term potential in its most recent review of emerging-market economies across the world, saying the country’s performance will likely be supported by key characteristics in the economy that will stretch up until 2026. BMI named the Philippines as one of the “favorite” growth markets in the coming decade, citing positive demographic drivers, business-friendly reform

momentum and an attractive balance of risk and reward for investors in domestic industries as the main factors for its longterm attractiveness. The Philippine economy has been growing above 6 percent in recent years, cementing its name as one of the fastest-growing economies in the region. In the first quarter of the year, the country posted a 6.4-percent growth. BMI said countries with a fairly younger population, such as the Philippines, will have an edge over

other countries in the long term, as more citizens contribute to the economy’s growth and the share of the dependent’s population— or those aged below 15 and above 64—shrinks in comparison to the total population. This, BMI said, coupled with structural reforms, will be crucial to the sustainability of economic growth. “In addition to a growing work force and an improving business environment, emerging markets require tangible opportunities for both domestic and foreign participants to invest in and drive growth,” BMI Research said. “Our outperformers, such as Indonesia and [the] Philippines, will offer industry participants both strong growth and larger scale than frontier destinations,” it added.

Using their checklist of positive demographics, structural-reform momentum and industry opportunities, the Philippines joins the ranks of India, Mexico, Indonesia and Argentina as ones with the most enticing GDP prospects in the next decade. “On average, these countries will climb just over four places in the GDP rankings by 2026, compared to an average of 1.7 and -0.3 places for countries scoring two and one out of three, respectively,” BMI Research said. “The Philippines will be the standout climber in the rankings, gaining nine places by 2026 according to our forecasts,” it added. The Philippine Statistics Authority is expected to release the country’s GDP numbers this week.

The Philippines will be the standout climber in the [GDP] rankings, gaining nine places by 2026, according to our forecasts.” —BMI Research

Piñol places entire PHL under bird-flu monitoring Continued from A1

because we are dealing with food here. Nobody will be exempted in what we are going to do and we will institutionalize this,” he added. Piñol said he would release a memorandum circular or order formalizing the creation of the biosecurity team. “This order takes effect immediately. The team will inspect the cleanliness of all farms producing chicken, duck eggs and hogs,” he added. Piñol said a biosecurity team could have averted the spread of bird flu in two barangays in San Luis, Pampanga, where 37,000 fowls were killed by the virus. “We will be stricter now and learn from this incident. If we had a biosecurity team that inspects farms, then we could have discovered [AI] as early as May,” he added. Piñol said the Department of Agriculture (DA) is looking into the culpability of the regional directors and even veterinarians in Region 3. He added the DA is mulling over setting up of a hotline where farmers could ask experts about animal diseases. “It is one of our flaws that we didn’t have a hotline. The farmers want to report but do not know where and how.” Agriculture Undersecretary for Operations Ariel T. Cayanan said it

A man sells live chicken on a street in San Antonio, Nueva Ecija, for P90 each, amid reports that an outbreak of bird flu has hit the nearby province of Pampanga, causing prices of chicken to drop in some areas, including Balintawak Market, where vendors are selling at P120 per kilo from around P140 to P150 prior to the reported outbreak. NONIE REYES

is the responsibility of poultry owners and farmers to inform their respective regional veterinary offices if they observe an “unusual rate of mortality” among their animals. “Of course. They are not veterinarians, so if we ask for symptoms they will give different observations,” Cayanan said. “But the moment they observe the death of their animals is not normal or exceeds a certain mortality rate, then, automatically, they should report that,” he added. Cayanan said DA officials will

meet with all regional directors to standardize and institutionalize the manner of reporting the outbreak of animal diseases. “There’s no clear penalty for not reporting outbreaks, but you now see the repercussion of [hiding it],” he added. Earlier Piñol disclosed that symptoms of AI were observable as early as end-April but were reported to the DA only this month, after some farms recorded a high mortality rate. The DA said Barangay San Carlos and Barangay Santa

Rita in San Luis are considered as the ground zero of the outbreak. The DA will be culling and burying 200,000 more fowls around the 1-kilometer radius of ground zero to contain the disease to the area. As of Monday the DA has managed to cull only 18,685 fowls. “There was a bit delay because you know this is the first time we are experiencing this problem, and, obviously, a lot of people still do not understand what should be done and how these problems should be handled,” Piñol said. “It was reported to me that some workers, after being immunized, didn’t anymore show up for the burying of the dead chicken. They thought it was harmful to them,” he added. BAI’s National Avian Influenza Focal Person Arlene Asteria V. Vytiaco said they are now targeting to finish culling 181,315 birds by Thursday. “We had a problem with manpower. We lacked people who will do the culling,” Vytiaco added. “Also, due to misinformation on the risks, out of the 30 people we briefed, only five appeared and participated. They thought it is dangerous, and they will be quarantined,” she said.

Government assistance

Piñol said the DA will allot P50 See “Bird-flu,” A2

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IRONMAN CHALLENGE RAISES P413-M TOURISM RECEIPTS FOR PHL

Tourism Secretary Wanda T. Teo announces that the 2018 Ironman 70.3 in Mactan, Cebu, would be an Asia-Pacific Championship, with the Department of Tourism as one of the partners. Flanking the secretary are Sunrise Events Inc. CEO Fred Uytengsu (left) and DOT Assistant Secretary Frederick M. Alegre. PHOTO COURTESY OF D.O.T. By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

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OCAL tourism stakeholders were estimated to have earned at least $8.1 million (P413 million) in visitor receipts from the recent Cobra Energy Drink Ironman 70.3, one of largest and most competitive triathlon events in the Asia-Pacific region. In a news conference at the Shangri-La Mactan Resort and Spa, race central for the sports event, Tourism Secretary Wanda Corazon T. Teo See “Ironman,” A2

War in Marawi nearing end as Maute down to 40 fighters–Padilla By Elijah Felice E. Rosales

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@alyasjah

he Maute Group is not only losing ground, but also warm bodies, as it is now down to its last 40 fighters, the military said on Monday. However, there was no progress yet in regaining the last two barangays that remain to be pockets of resistance for the Islamist extremists. Armed Forces Spokesman Restituto F. Padilla Jr. said these areas are still the hardest to recapture due to ground complexities. “There are days that we are able to clear only a few facilities or installations or buildings because these are [towering, big] buildings. So, while we are infiltrating the commercial business district, we anticipate slower operations due to the buildings,” he said. On one hand, Padilla said the military made a significant advancement in its past operations, depleting the Maute Group to its last 40 fighters, maybe even 20. “ T heir number is bet ween 20 to 40, so the force is getting smaller,” the military’s spokesman said. In spite of this, government troops are still up in arms as the terrorists’ “capacity to inflict harm is still there because they still have arms and adequate ammunition”, Padilla added. The conflict in Marawi City has left 735 dead, of which 45 were civilians reportedly killed by terror-

ists and 128 were soldiers killed in action. Martial law continues to be in place in the whole of Mindanao, probably until December 31, due to Congress’s approval of extending military rule on the island. The end of the conflict in Marawi City, however, will not necessarily lead to the lifting of martial law, Padilla said, as Islamist extremists “have groups in other portions of Lanao, Maguindanao and in Sulu”. “It does not mean to say that just because we have been able to address the security issue in Marawi, there is going to be a preemptive lifting of martial law,” Padilla said. “We still have a lot of homework to do. We still have a lot of areas to address, and that is why we still need it [martial law in Mindanao],” the military’s spokesman added. Asked if there is a change in the military’s target, Padilla said martial law is aimed at addressing all the security issues in Mindanao. “If one is having a violent activity, it may spill over to other parts if we don’t control it,” Padilla said. In his visit to Marawi City, President Duterte told government troops to prepare for war against communist rebels after they have quelled the extremist threat. “Don’t be too complacent because there is a strong resurgence, [as] the NPA [New People’s Army] is coming back again. After this, we will reorient and target the NPA,” the President said.

How does Corruption hurt you? Continued from A1

Let’s be very clear that corruption impacts all of us in many ways. The pain corruption creates can be divided into four categories: political, economic, social and environmental. Politically, corruption is a major obstacle to democracy and the rule of law. Remember the formula I wrote about before: Corruption = monopoly + discretion – accountability? In a democratic system, offices and institutions should lose their legitimacy when they are misusing their influence for personal advantage. As we see on a

daily basis, it is extremely challenging to develop accountable political behavior in a corrupt environment. Economically, corruption depletes national wealth (that belongs to the people). Corrupt officials invest scarce public resources in projects that will line their pockets rather than benefit communities. In 60 LGUs, the Integrity for Jobs project has created Integrity Circles, which will see to it that infrastructure projects are benefiting less spectacular sectors, like schools, hospital and farmto-market road also. Corruption also hinders the development of fair market

structures and distorts competition. In this context, we wish the Philippine Competition Commission more than good luck in achieving their mandate in creating fair market conditions that will provide Juan de la Cruz with better products and services at better prices. Socially, corruption is exploitive. Inequality breeds corruption by: ■ leading ordinary citizens to see a system as stacked against them; ■ creating a sense of dependency among ordinary citizens and a sense of pessimism for the future, which, in turn, undermines the moral dictates of treating everybody

honestly; and ■ distorting the key institutions of fairness in society, the courts, which ordinary citizens see as their protectors against evildoers, especially those with more influence than they have. Corruption aggravates inequality: the well-off can afford bribes, but the poor often do without basic services. Inequality, trust and corruption form a vicious circle that is very difficult to break. There is one institutional factor that has a big impact on corruption: the fairness of the legal system. This is an institutional measure

of i nequ a l it y : whet her cou r t s a nd the police treat people of different backgrounds and incomes as equals before the law. This is the reason the Integrity Initiative is supporting the Judicial Reform Initiative started by Finex. Let me conclude by saying that working against corruption is everybody’s mandate. As we at the Integrity Initiative say: Integrity starts with I. Every person must make the decision: I am part of the solution! I will contribute to positive change! Because, if I don’t do it, I am part of the problem. If you agree with this, you must join us.