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Friday, August 18, 2017 Vol. 12 No. 309
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he Duterte administration should further accelerate spending on public infrastructure projects, particularly those under the “Build, Build, Build” program, if it wants to reach its economic targets, according to local economists.
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‘Govt must ramp up infra drive to hit growth goals’ By Cai U. Ordinario @cuo_bm & Jasper Emmanuel Y. Arcalas @jearcalas
2016 ejap journalism awards
Is DepEd arrogating an FDA/FNRI function and curtailing freedom of choice?
6.5%
Dr. Jesus Lim Arranza
Make Sense
The GDP growth in the second quarter
Econom ist s sa id GDP wou ld expand faster if the government would increase its public infrastructure spending. They made the pronouncement after the National Economic and Development Authority (Neda) announced on Thursday that GDP grew 6.5 percent in the
O
n March 14 Education Secretary Leonor M. Briones issued Department of Education (DepEd) Order 13 (s. 2017), setting the guidelines for the serving of foods and drinks in health school canteens and DepEd offices based on their nutritional values. Named “ Policy and Guidelines on Health Foods and Beverage Choices in School and DepEd Offices”, the order classified the foods to be served and/or banned in health school canteens and DepEd offices into three main color categories. The green category are foods and drinks that should always be available in
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2 YEARS AFTER KENTEX TRAGEDY
Valenzuela factory workers still risking life and limb for below-minimum wages By Rosabell C. Toledo Correspondent
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INDONESIA INDEPENDENCE DAY A huge Indonesian flag was installed for the flag-raising ceremony during the celebration of the 72nd anniversary of independence of the Republic of Indonesia at the Indonesian Embassy in Makati City.
ALYSA SALEN
Govt seeks ‘fastest and best’ LNG option
By Lenie Lectura
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@llectura
HE government is now searching for “the fastest and best” option to build the country’s first liquefied natural gas (LNG) facility before the term of President Duterte ends in 2022. “We are restudying [our options] to achieve our goals,” Philippine National Oil Co. (PNOC) President Reuben S. Lista said in an interview. This was his reply when asked how the state firm will move forward following unsuccessful discussions with six countries for a possible governmentto-government (G2G) partnership for such an ambitious project. “There are plenty of options,” he said. “But we have to find the fastest and the best one.” Initially, there were 26 interested countries, but only six have submitted proposals: China, Indonesia, Japan, Singapore, South Korea and the United Arab Emirates (UAE). However, discussions did not prosper before the July 30 deadline because there was no ac-
ceptable proposal put on the table. PNOC was planning to utilize the banked gas from the Malampaya gas field. It was eyeing to utilize $640 million worth of banked gas and land as forward equity. Lista said the state firm continues to “reevaluate their offers”, though there is no commitment if PNOC was still in pursuit of a G2G arrangement. One option being seriously considered is to start accepting proposals from the private sector, which was reluctant, at first, to build one because of the huge investment cost and uncertainty in policy direction. Energy Secretary Alfonso G. Cusi said the plan to build the country’s first LNG facility is now open to unsolicited proposals. “Yes, so we can get what is really beneficial for the country,” Cusi replied, when asked if the government is now considering this approach. The agency has tasked PNOC to develop an integrated LNG hub with storage, liquefaction, regassification and distribution facility, as well as a reserve initial power-plant
PESO exchange rates n US 51.4380
capacity of 200 megawatts (MW). The plan is to make this happen under the current administration.
Interested or not?
A top official of First Gen Corp. recently said the Lopez-led firm is interested in discussing anew its LNG plans with PNOC. “We would be interested,” First Gen President Francis Giles Puno said, when asked to comment on Cusi’s pronouncement that PNOC would be open to unsolicited proposals. However, Puno added there is no discussion yet with PNOC on this new development. He only said that First Gen is “excited” on its LNG plans and “will continue to pursue it”. Shell Philippines also held exploratory discussions with the government. “We talked to them, with Admiral Lista…. We are very open to partnerships with various groups, including PNOC,” Shell President Cesar Romero said. See “Govt,” A12
HE couldn’t let the doctor cut any of her fingers off so, now, her right hand is stitched inside her belly. As a manual laborer, 24-year-old Cristina Olvinar knew that being an amputee would make it 100 times more difficult for her to earn a decent living. So when doctors from the Philippine Orthopedic Center advised that cutting parts of her hand would be the best way to go, she apparently begged them to find a different way to wholly save her burnt hand. In a skin-grafting procedure, her right hand was then sewn inside her abdomen in an effort to keep tissues and tendons from rotting. It will take weeks before Olvinar even finds out if her hand will fully recover, but she has already been discharged from the hospital last Saturday. The procedure cost P55,000, an amount
64% The percentage of contractual workers in Valenzuela factories that work 12 hours a day, according to a study of the Center for Trade Union and Human Rights
that translates to roughly six m o n t h s’ w o r t h o f s a l a r y f r o m the same factor y in Valenzuela where she purportedly suffered the horrific accident, an incident that trapped her hand in a large metal mold and severely burned skin and flesh off of her hand. She has allegedly received only P10,000 from the factory management. Two of her sisters who work for the
same company told the BusinessM irror they will continue demanding full financial reparation both from their principal employing company and its subcontracting manpower agency. “The problem is the company owners won’t talk to us. From the time of her accident up until she was released from the hospital, we heard nothing from them. They don’t even ask updates about her condition. They even have the gall to say it’s my sister’s fault that her hand got stuck in the machine. They say it’s because she was not focused on her work,” Olvinar’s 22-year-old sister said.
A long list of blunders
WORKERS from the same factory claimed that the unfortunate accident is only a manifestation of the dire and “slave-like” conditions they all experience on a daily basis. They decry contractualization, large salary cuts and below-minimum wages, among others. See “Factory workers,” A2
DOT asserts mandate to accredit tourist buses By Ma. Stella F. Arnaldo
@akosistellaBM Special to the BusinessMirror
T
HE Department of Tourism (DOT) said it is the only agency that should be accrediting tourist buses, in light of apparent moves by the Department of the Interior and Local Government (DILG) to reestablish the authority of local governments to accredit such transport services. DOT Spokesman and Assistant Secretary for Public Affairs, Communications and Special Projects Frederick M. Alegre told the BusinessMirror that they were apprised of plans by the DILG to issue a circular that would return the accreditation of tourist buses to
the DILG. The plans were revealed in a recent meeting between DOT officials, led by Tourism Secretary Wanda Corazon T. Teo, and representatives of the tourism transport services sector. “As you know, the DOT has been accrediting tourist buses as part of its mandate, with the LTFRB [Land Transportation Franchising and Regulatory Board] performing a ministerial function,” Alegre explained. DOT officials, he added, will be meeting with their counterparts in the DILG to clarify the matter. The task of accrediting tourist buses or other transportation vehicles used for tourism purposes was transferred to the DOT with the devolution of powers by the DILG when new the Local Government
Code was implemented. Under DOT accreditation guidelines issued in 2015, “a tourist land transport operator shall only be allowed to apply for accreditation for the number of units covered by its franchise from the LTFRB.” The DOT will send a team to inspect said vehicles to check their “roadworthiness”. Requirements a lso include t he vehic les to be lef t-ha nd drive, properly air-conditioned, equipped with fire extinguishers and first-aid kits, clear imprint of company name and logo, have a public address, clean and comfortable seats, adequate storage space and legroom, as well as proper garage.
n japan 0.4669 n UK 66.3139 n HK 6.5763 n CHINA 7.6876 n singapore 37.7554 n australia 40.7492 n EU 60.5528 n SAUDI arabia 13.7165
See “DOT,” A2
Source: BSP (17 August 2017 )
A2 Friday, August 18, 2017
BMReports BusinessMirror
‘Govt must ramp up infra drive to hit growth goals’ Continued from A1
second quarter, slower than the 7.1 percent recorded a year ago. In the January-to-June period, Philippine economy expanded by 6.4 percent, which is also slower than the 7 percent posted in the same period in 2016. “Relative to the previous administration, it is spending faster. Relative to its plan, it is spending slower because of bureaucratic and technical procedures, such as fund releases, bidding and the like,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror on Thursday. Eagle Watch senior research fellow Alvin P. Ang said the government should ramp up its expenditure in the remaining quarters of the year if it still intends to reach even the lower limit of its 6.5 percent to 7.5 percent GDP-growth target. “The GDP growth in the second quarter is within expectations, but the government will now have a hard time achieving its full-year target of 7 percent if it will not hike its spending in the third and fourth quarters”, Ang, who is also the director of Ateneo Center for Economic Research and Development, told the BusinessMirror. Ang said the government must find a way to identify and eliminate bottlenecks that delay public infrastructure projects. He added the government must resolve the Marawi City crisis soon as this has affected the tourism sector and is discouraging foreigners from visiting the Philippines. The Ateneo economist said the crisis in Marawi has forced the government to reallocate funds for its rehabilitation, instead of spending
DOT. . .
Continued from A1
Once accredited, the vehicles have to display DOT-accreditation stickers on their windshields. Another issue that tourism transport sector representatives brought up was the immediate need for a new or large cruise terminal in Manila. “The present docking facilities at the Manila Harbor are not large enough to accommodate the larger cruise ships,” Alegre noted.
it on other programs. “The problem is, do they have the funds? The rehabilitation of Marawi is not part of our budget this year, that is a supplemental budget,” he added. “So that would result in a wider budget deficit.” Data released by the Philippine Statistics Authority showed public construction posting a measly 12-percent growth in the second quarter of 2017. This was slower than the 33.5-percent hike recorded last year. In the first semester, public construction slowed to only 9 percent this year from 34.9 percent in the same period last year. Further, government final consumption expenditure (GFCE) expanded by 7.1 percent, slower than the 13.5 percent hike recorded last year. Former Neda Secretary Romulo V. Neri said spending the entire budget this year will lead to higher GFCE and, ultimately, GDP growth. “[There is a] need to compare budget vs actual spending. It’s about roughly 85 percent spending budget during the Aquino years. The World Bank said we would have exceeded 8-percent growth if we spent 95 percent of the budget,” Neri added. Earlier, University of Asia and the Pacific economist Victor Abola said the government does not have enough absorptive capacity right now for the kind of infrastructure spending it envisions. Abola added the government needs to improve its recruitment of a sufficient number of competent government employees who will be able to help implement publicly funded projects. In April the Asian Development Bank (ADB) said it does not assume
that all the government’s projects will be implemented as planned. It only assumes that at least 70 percent to 80 percent of the government’s projects in 2017 and 2018 will be rolled out. But if the government will be able to meet its goals of ramping up infrastructure spending to 7.4 percent of GDP by 2022, the ADB said this will pave the way for sustained high economic growth. Socioeconomic Planning Secretary Ernesto M. Pernia said the government is not worried about slower public spending this year because it’s “Build, Build, Build” infrastructure program is already picking up. Pernia added these “game-changing projects” are already under way, and more will come in 2018. He said these will allow GFCE to return to its double-digit growth pace. “There will be a flurry of construction, public construction, next year,” Pernia said. “It is already picking up, and this will continue to pick up. Further boost will be [seen] next year because many projects will already be breaking ground by that time.” The government has a list of 75 flagship projects, which is estimated to cost at least P1.58 trillion. Of the 75 projects, only 53 have cost estimates. The 22 other projects still do not have cost estimates as of news time. In a statement, Presidential Spokesman Ernesto C. Abella said the Palace finds the growth on track with the targets of the government. “This figure, which falls within the full-year target growth of our economic managers, puts us as one of the fastest-growing economies in Asia,” Abella added.
He said a few local conglomerates with tourism interests have been mulling over the possibility of building a separate cruise-terminal facility in Manila, but no plans have been finalized or submitted to the government so far. In the same meeting with Teo, aviation representatives also raised the need for more personnel to run immigration counters at certain peak hours of the day, according to Alegre. “While they said the queues at the immigration counters have eased somewhat, they said at certain hours, there are a deluge of arrivals from abroad, thus needing
more immigration staff,” he said. The DOT spokesman said Teo will meet with Justice Secretary Vitaliano N. Aguirre II, whose office oversees the Bureau of Immigration, to explore any possible solutions to ease the long lines at the airport immigration counters. Present in the meeting with Teo were representatives from Maynilad Tours and Educational Services Inc., the Board of Airline Representatives, Haft Transport Inc., Bel-Air Bus Charter Corp., Philippine Inter-island Shipping Association, Wallem Philippines and Sharp Port Services Inc.
Factory workers. . .
www.businessmirror.com.ph
Continued from A1
These narratives have even reached the United Nations Commission on the Status of Women (UNCSW), since Arlyn Duhaylungsod, a machine operator, presented her story alongside representatives from nongovernmental labor group Defend Job Philippines (Defend Job) on the commission’s 61st session on March 24. This was her testimony on the conference, as it also appears on Defend Job’s web site: “I work 12 hours every day, 72 hours a week without any rest day. My official salary is only $5.6 [roughly P280] a day, which is very far from the already very low minimum wage of about $10 [P481] per day. My salary is also lower compared to men machine operators doing the same work as me. I do not receive a 13th-month pay, overtime pay or maternity leave. I am not covered by any government-mandated benefits, such as social insurance, health and housing. My work is a necessary position in the factory. I am a contractual worker hired and controlled by a manpower agency, which has no role other than collecting our salary from our principal employer, deducting fees, such as agency fees, cash bond, ID, uniform and insurance fee. I can be dismissed whenever they want. In a week, I only take home as net income the amount of $14 [roughly P700] or $2 [around P100] per day.” Tonette and Tanoy (not their real names), 21 and 20 years old, respectively, cited similar experiences working in the plastic factory. “There were no electric fans and no emergency lights in our workplace. We have to bring our own flashlights to cope with frequent brown outs. Furthermore, the ground is almost always wet from water leaks, and we are not provided safety boots. They won’t even replace our worn-out gloves, even when there are already holes in them. For six days a week, we suffer like this for 12 hours straight—we are not even allowed to leave our stations, even just to get water or go to the restroom outside the onehour break time. It is very difficult, but I need the salary, so I stay,” Tonette said. Indeed, the workers would have accepted anything—from 12-hour working days, to being in constant contact with smoldering chemicals and gigantic machines without appropriate safety gear, to extra services asked by their superiors, like laundry, barracks maintenance and the like, if only they are paid right. “My daily pay is P300. If I am late even for a minute, they deduct P20. If I am late for an hour, they deduct P50. If I am late for more than 30 minutes, I only get half-day pay. It’s really cruel, what they do to the workers. We leave our provinces and part with our families to earn better living in Manila—we didn’t know we’d end up like this,” Tanoy said.
‘Another Kentex tragedy waiting to happen’ Following the massive Kentex tragedy of May 2015 that resulted in the death of 74 workers, one could be forgiven for thinking that a tremendous backlash would ensue, leading to better working conditions in other Valenzuela-based factories. Nothing of the sort happened, according to the workers. “In our workplace, the sole fire exit is perpetually locked, aside from being so small that only a single thin person could fit at any given time,” one of the workers claims. “If you’re fat, you’re fried,” Tonette said in jest, describing the factory where they are currently employed. Ammied Rada, 33, said these conditions mirror exactly the situation in the Kentex slipper factory, where he lost two siblings in a raging fire. “The windows in Kentex had grills and the fire exit was locked, that’s why they were trapped inside and were unable to flee the burning factory. They could have lived if the fire exit was accessible,” Rada said. The Kentex tragedy is considered as the largest industrial accident in the Philippines in decades. More than two years later, justice is still elusive for the victims’ kin and for survivors. Not one person is in jail, despite fact-finding missions confirming the factory’s violations of occupational health and safety standards as identified in Rule 1943.03 of the Philippine Occupational Health and Standards. “We’re taking the case to the Supreme Court on Thursday. We will not
Kentex fire victim Cristina Olvinar shows her burnt right hand that was sewn inside her abdomen in a skin-grafting procedure. OLVINAR FAMILY
stop until we get justice,” Rada said. For some of the current workers in various Valenzuela factories, this means the future is bleak for them. “If 74 dead people can’t get justice, what are our chances?”
Not an isolated case
Incredibly horrifying as they may, the situation in Kentex and the factory where Duhaylungsod, Olvinar, Alex, Tonette and Tanoy currently works do not constitute an outlying minority, according to labor groups Defend Job and the Center for Trade Union and Human Rights (CTUHR). In 2016, with the help of students of the University of the Philippines Manila, CTUHR culled data from 120 respondent-workers from various factories in Valenzuela. The study revealed that five of six workers are contractual employees, and two of three workers in Valenzuela work 12 hours a day and still earn below the prescribed P481 per eight hours of minimum wage. Furthermore, 85 percent of respondents said they are contractual workers, and 64 percent work 12 hours daily. The study also revealed that “roughly 40 percent of the respondents work seven days a week, meaning they do not enjoy days off or holidays. To work or not to work overtime is not an option. Rather, overtime has become mandatory as 12-hour work becomes a ‘normal shift.‘ About 48 percent said they are unsure about health and safety. Intense heat inside the factories, poor quality of machines operated and lack of personal protective equipment are some of their complaints. Hand wounds, cut fingers, overfatigue, allergies and respiratory ailments are also common health issues that the respondents reported. Defend Job laments all these concerns and calls on workers to fight for what is just. “How many workers, women and children shall fall victims of sweatshops and will die because of the government’s neglect to implement labor standards and to truly safeguard the rights of workers and women?”asked Melona Daclan, executive director of Defend Job. Nikkie Abilar of Defend Job explains that factory workers in the country are made to believe that the ‘slave-like’ condition they experience is just ‘normal.’ “I hear people say that factory work is really difficult—that you will really be treated cruelly. I ask myself, does it really have to be like that?” one worker asked. “When will enough be enough?”
Is DepEd arrogating an FDA/FNRI function and curtailing freedom of choice? school canteens and DepEd offices. These are foods and drinks which the DepEd find healthy for their wide range of nutrients and generally low saturated and trans fat, sugar and salt. The yellow-category foods and drinks, according to the DepEd order, are foods that should be ser ved caref u l ly. W hi le t hey also contain nutrients, they, too,
have large amounts of saturated or trans fat and/or sugar and/or salt. These foods and drinks can only be served in small servings in health school canteens and DepEd offices once or twice a week,t and should not be permanent in the menu. And the red-category foods and drinks are those not recommended by the DepEd in the menu of health school canteens and DepEd
offices for their high amounts of saturated fat and/or sugar and/or salt. These foods and drinks, according to the order, should not be served in health school canteens and DepEd offices.
Is the DepEd arrogaring an FDA and FNRI function?
While I respect Briones’s issuance of DepEd Order 13 (s. 2017),
as chairman of the Federation of Philippine Industries (FPI), I am, however, concerned if the DepEd order is arrogating or not, a function of the Food and Drug Admnistration (FDA) and/or the Department of Science and Technology’s (DOST) Food and Nutrition Research Institute (FNRI). The FDA is the government agency tasked to develop plans, policies and programs pertaining to the regulation of processed foods and drugs and other related products in the country. While the FNRI is the agency tasked to develop the Philippine Dietary Reference Intake (PDRI), the collective term comprising the reference value for energy and nutrient levels of intakes. The components of the PDRI include the Estimated Average R equ i rement ( E A R) of d a i ly nutrient-intake level that meets the median or average requirement of healthy individuals in a particular life stage and sex group, the Recommended Energy/Nutrient Intake (REI/RNI) level of consumption of energy or nutrient, which is considered adequate for the maintenance of health and well-being of healthy persons; the Adequate Intake (AI) of daily nutrient level, and last, the Tolerable Upper Intake Level or Upper Limit (UL), or the highest average daily nutrienintake level likely to pose no adverse health effects to almost all individuals. Clearly, while the DepEd takes care of the nourishment of the
minds of schoolchildren, it is, however, the responsibility of the FNRI and FDA to take care of the nourishment of the body and physical being of individuals. Children are so active that they need sugar for energy. And whatever amount of sugar they consume are easily burned as calories because of their active lives. Unlike the senior citizens and those in their 50s, where their physical activities may have already waned, thus, the need for them to be watchful of their sugar intake to avoid serious ailments, children should not be deprived of chocolates, candies and sweet beverages, among other sweetened foods, for their energy needs. After all, it will help compensate energy loss in their bodies because of their active lives.
DepEd Order 13 (s. 2017) curtails freedom of choice
Among the key tenets of a worldrenowned child learning school are freedom and choice, where freedom is defined as the opportunity to have choice. And under the same doctrine, it’s been found that children’s emotional, social and academic development improve when they are empowered through choice. In DepEd Order 13 (s. 2017), schoolchildren are curtailed of their freedom to choose their food and drink as only those classif ied under the g reen category shall be available at school canteens at all times, while those under the yellow
Continued from a1
category shall be available occ a s s ion a l l y. You n g c h i l d re n have t he tong ue for cand ies and softdrinks. But with these types of foods and drinks banned f rom sc hool c a nteens, m a ny sc hoolc hi ld ren wou ld be de prived of their food choices.
DepEd order will limit competition and affect an industry
Children a nd you ng teens are among the major markets of the Philippine confectionery industry. Already threatened by the impending full implementation of the excise tax on sugarsweetened foods and beverages, the DepEd order banning the serving of foods and drinks with high amounts of sugar in school canteens and DepEd offices will further exacerbate the plight of the country’s confectionery industry. Hundreds of thousands of jobs would be at risk if the excise tax on sugar-sweetened beverages is fully implemented and DepEd Order 13 (s. 2017) fully enforced. Perhaps, Briones could consider taking a second look at her DepEd Order 13 (s. 2017) and contemplate on its bigger impact to the economy and an industry. Children, after all, are hyperactive individuals. They easily burn the calories generated in their bodies by their intake of sweetened beverages and candies, among others. And, most of all, candies and sweetened beverages could also be the cheap snacks for many poor schoolchildren.
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The Nation BusinessMirror
HRW slams Duterte threat against activists By Jonathan L. Mayuga @jonlmayuga
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he Human Rights Watch (HRW) on Thursday warned President Duterte against instigating or inciting violence against human-rights advocates. The international human-rights watchdog issued the statement following Duterte’s reported call for police to shoot human-rights activists who are “obstructing justice”. The presidential statement, the HRW said, places all members of the country’s human-rights community in grave danger.
President Duterte’s threats against human-rights activists is like painting a target on the backs of courageous people working to protect the rights and upholding the dignity of all Filipinos.”—Kine
On Wednesday the President instructed the National Police (PNP) to “shoot those who are part of [drug activity]. If they [members of humanrights organizations] are obstructing justice, you shoot them.” “Duterte’s threats against human-rights activists is like painting a target on the backs of courageous people working to protect the rights and upholding the dignity of all Filipinos,” said Phelim Kine, deputy Asia director at HRW. “Duterte should retract his reprehensible remarks immediately before there is more blood on his hands,” he added. The President has described as “unfair” criticism of his war on drugs while “protecting” alleged criminals. Since he took over as the highest official of the land in June 2016, at least 7,000 Filipinos were killed. Duterte also warned that human- rights organizations may face criminal investigations for criticizing his antidrug campaign. “One of these days, you human-rights groups, I will also investigate you. That’s the truth. For conspiracy,” the President said. He previously threatened to kill human-rights defenders in December 2016, allegedly for fostering drug use in the country, according to HRW. Duterte followed up that threat a month later by warning that he would extend his antidrug campaign to the lawyers of alleged drug users and dealers.
Editor: Vittorio V. Vitug • Friday, August 18, 2017 A3
Palace vows probe into bloody Bulacan raids
M
alacañang on Thursday vowed that investigations into the simultaneous Bulacan raids that killed 32 alleged drug offenders would be impartial, even as it downplayed skepticisms over a large number of suspects killed in the police operations. “There will be a fair and impartial investigation on the recent Bulacan raids,” Presidential Spokes-
man Ernesto C. Abella assured. The Bulacan raids, as it is popularly known, were a series of simul-
taneous police anti-illegal drug operations that were conducted in a 24-hour period, from 12:01 a.m. on Tuesday (August 15) to 12 a.m. on Wednesday (August 16). A large number of deaths were met with criticisms and several sectors have called out for an investigation on the matter. However, Abella attributed the number of deaths to the wide scope of the operations and to the violent response of the suspects. “The Bulacan raids, we have to underscore, are not the result of a single action, but a wide-ranging simultaneous police operations
against illegal-drug offenders conducted in the whole province of Bulacan,” he said. “Local authorities were met with violent resistance as evidenced by the recovery of firearms, grenades and live ammunitions,” Abella said. According to the Philippine National Police, the Bulacan raids consisted of 66 antidrug operations, where 20 armed encounters were reported. Besides the death of 32 suspects, the raids resulted in 109 arrests and the recovery of about P1 million worth of illegal drugs and 34 firearms. PNA
Senators set Bautista ‘hidden wealth’ inquiry on Wednesday By Butch Fernandez @butchfBM
S
enate probers are poised to summon officials of the Bangko Sentral ng Pilipinas, AntiMoney Laundering Council (AMLC), the National Bureau of Investigation and the Luzon Development Bank in an upcoming inquiry into Commission on Elections (Comelec) Chairman Andres D. Bautista’s alleged hidden wealth that his wife estimated to add up to P1 billion. Tentatively set for Wednesday, the Senate Committee on Banks, chaired by Sen. Francis G. Escudero, was tasked to open an investigation following the filing of Resolution
468 by Senate Majority Leader Vicente C. Sotto III and Sen. Panfilo M. Lacson Sr. Sotto and Lacson had asked the Committee on Banks, Financial Institutions and Currencies to conduct an inquiry in aid of crafting remedial legislation in the wake of possible violation of Republic Act (RA) 9160, also known as the AntiMoney Laundering Act (Amla) by some “covered institutions.” Sotto and Lacson said they expect the hearings to come up with recommendations to install further measures to promote efficient compliance with Amla.” Bautista’s wife Patricia earlier divulged bank records and other finan-
SR 468
The resolution filed by Sens. Vicente C. Sotto III and Panfilo M. Lacson Sr. that paved the way for a Senate inquiry into the reported “illgotten wealth” of Comelec Chairman Andres D. Bautista cial documents showing the Comelec chief’s alleged hidden wealth way above his declared assets.
The two senators, however, affirmed in their resolution the policy of the State to protect the integrity and confidentiality of bank accounts, as well as ensure “that the Philippines shall not be used as a moneylaundering site for the proceeds of any unlawful activity.” They said the amended RA 9160, enacted into law in September 29, 2001, lowered the amount of covered transactions, defined suspicious transactions and provided additional functions to the AMLC. Amended by Congress in 2012, the law expanded the list of institutions covered by RA9160, as well as the list of unlawful activities or predicate offenses.
Economy
A4 Friday, August 18, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
BusinessMirror
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DOE seeks Duterte, Congress’s okay to spend Malampaya funds for interconnection projects By Jovee Marie N. dela Cruz
T
@joveemarie
he Department of Energy (DOE) on Thursday said it would ask President Duterte to endorse to Congress the passage of a measure allowing the use of Malampaya funds to finance several interconnections projects.
During the 2018 budget deliberations of the DOE, Energy Undersecretary and Spokesman Felix William B. Fuentebella said congressional approval is needed to expand the use of Malampaya funds for the construction of interconnectivity and rural electrification projects. “We will seek clearance from the President to endorse for congressional approval for use of Malampaya Fund. This will be [a] subject of legislation,” he said. Currently, Fuentebella noted the total collection from Malampaya gas facility is at P241.37 billion. Of this fund, P47.74 billion have been disbursed.
₧25B The total “missing” amount from the Malampaya Fund that has to be accounted for by the BTr following COA audit, according to Occidental Mindoro Rep. Josephine Ramirez-Sato
In November 2013 the Supreme Court ruled that the fund should be reserved for financing “energy
resource development and exploitation” activities. If approved by Congress, the energy official said the fund could be used to bankroll the following projects: the Visayas-Mindanao Interconnection Project, BoholCebu Interconnection Project and the Antique-Mindoro Interconnection Project. The National Grid Corp. of the Philippines said the VisayasMindanao Interconnection Project seeks to connect power from Cebu to Dipolog. Meanwhile, the five-year Regional Development Plan outlined the completion of the Bohol-Cebu Interconnection Project by 2020. The Antique-Mindoro Interconnection Project is included in the three-phase project plan to interconnect Mindoro and other islands to a proposed minemouth power plant in Antique, which has an initial aggregate capacity of 50 megawatts. Also, Fuentebella said the gas fund could back rural electrification projects of the agency, which is currently at 90.5 percent.
Missing fund
Meanwhile, Rep. Josephine Ramirez-Sato of the Lone District of Oc-
cidental Mindoro has urged the Bureau of the Treasury (BTr) to account for the alleged P25 billion “missing” Malampaya Fund uncovered by the Commission on Audit (COA). “The BTr should explain the discrepancy in the current balance of the Malampaya Fund. What happened to this P25 billon?” RamirezSato asked. According to Ramirez-Sato, the P21 billion in cash releases and P4 billion in remittances as of December 2016 should be looked into, noting that no less than the COA itself had cast doubt on the reliability of the balance of the Malampaya Fund. According to Ramirez-Sato, the P25 billion, if properly used, will go a long way in jump-starting renewable-energy (RE) projects that would boost power supply and energize off-the-grid island provinces like those that lie within the Mimaropa region. Ramirez-Sato, a vice chairman of the House Committee on Economic Affairs and a member of the House Committee on Energy, said the Malampaya funds should be used to “energize” remote islands with no access to, or short in supply of, power and electricity. She added it is high time that
a portion of the fund goes to projects that promote RE, particularly in remote islands that are “off the grid” or not yet connected to the main power grid, to promote inclusive growth. “People in island provinces, towns or even barangays suffer from fluctuating electricity because of power shortage. We need to energize our remote islands to lure investors and spur economic activities,” she said. For his part, Party-list Rep. Carlos Isagani Zarate of Bayan Muna questioned the DOE for the unrecorded P21 billion in cash releases through special allotment release orders. “Where did the funds go and who authorized these disbursements?” asked the progressive solon. “The Supreme Court has already ruled that the Malampaya funds should only be used for energy exploitation and development, but what happened to the P21 billion Malampaya funds and why is it only now that this has surfaced?” he said. During the budget hearing, Energy Secretary Alfonso G. Cusi said the agency is not accountable for the missing Malampaya Fund since the DOE immediately remits the collected funds to the BTr.
PCC told: Speed up review of Mighty Corp. sale to JTI By Rea Cu
@ReaCuBM
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lawmaker on Thursday pressed the Philippine Competition Commission (PCC) to speed up its review of the acquisition of Japan Tobacco International Inc. (JTI) of tobacco firm Mighty Corp. Rep. Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur has appealed to the government’s antitrust regulator to hasten its approval of the acquisition by JTI of Mighty Corp. so as to enable the national government to get the rest of the P26.5 billion that it expects as full settlement of the latter’s tax liabilities, inclusive of the value-added tax (VAT) charges. Villafuerte said PCC’s approval and the expected settlement from Mighty will aid the government in its efforts to consolidate available public funds to finance the reconstruction of war-torn Marawi City and disaster-hit areas in the country. The PCC is mandated to review mergers and acquisitions valued at P1 billion and above. The lawmaker added the transfer of Mighty Corp.’s assets and distribution network to JTI, valued at P45 billion, will enable Mighty Corp. to make the full payment of its tax settlement offer to the government of P25 billion. “A favorable and swift PCC decision on the sale will not only be advantageous to the government in terms of additional revenues, but would also lead to the shutdown of Mighty Corp.’s cigarette manufacturing and sales operations. The PCC would, indirectly, help the government
clean up the private sector and beef up the government drive against tax dodgers,” Villafuerte said. In July Mighty Corp., through JTI, had deposited P3.44 billion with the Land Bank of the Philippines representing the initial payment of its tax deficiencies, with the balance of P21.5 billion to be turned over to the government once the sale to JTI pushes through and is approved by the PCC. According to PCC Chairman Arsenio M. Balisacan, the commission has already started the review of the deal, which could take up to 30 days, at the least. Should there be issues or additional concerns regarding the data submitted, the commission has 90 days to evaluate all the submissions. Finance Secretary Carlos G. Dominguez III has said that another P5 billion in VAT on the JTI-Mighty transaction would also be collected by the government, bringing the total tax haul from the settlement to P30 billion. Villafuerte added the Duterte administration’s strong stance against tax evasion and ongoing initiatives to improve tax administration should all the more convince senators to pass Package 1 of the Comprehensive Tax Reform Package that the House already approved on May 31. During the President’s second State of the Nation Address, Duterte directed the Department of Finance and the Bureau of Internal Revenue to accept Mighty Corp.’s offer to avoid a protracted legal battle with the firm that could take years to resolve.
Bring in the fish Fishermen and fish-port workers rush the delivery of fish to the Navotas Fish Port, as chicken prices and supply fluctuate in Metro Manila due to an avian-flu outbreak in a Pampanga town. Fish dealers and traders are expecting better sales, amid the expected drop in the demand for poultry. Nonie Reyes
Senate panel delays OK of DOJ budget for 2018
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Senate panel on Thursday postponed the approval of the proposed budget of the Department of Justice (DOJ) amounting to P17.276 billion. This postponement came after Senate Minority Leader Franklin M. Drilon requested for a second hearing to further discuss the preliminary report of the National Bureau of Investigation (NBI) on drug-related killings. “We have to postpone the approval to have another hearing because he’s [Drilon] waiting for the documents,” Sen. Loren B. Legarda, chairman of the Senate
Committee on Finance, said. Legarda added the NBI report will be given to the Committee on Finance and will be transmitted to Drilon’s office on or before the next hearing on August 31. During the hearing, Drilon, a former justice secretary, asked Justice Secretary Vitaliano N. Aguirre II to provide him with an update on drug-related killings. However, Aguirre said it will take a few more days to provide him with a copy of the report. After Drilon expressed the desire to hold the DOJ’s budget in abeyance until the data is provided, Aguirre
assured that the report could be provided in 20 minutes. When the report finally came, Drilon had already left to attend another Senate hearing. NBI Director Dante Gierran said it took some time to provide the information since the bureau wanted to be “accurate”. Justice Undersecretary Reynante Orceo, for his part, revealed that approximately 3,050 were killed in legitimate police operations related to the drug war from July 1, 2016 to May 30, 2017. Of that number, over 1,000 are considered vigilante killings. PNA
PCIA backs DTI campaign vs ‘substandard’ imported cement
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e m e n t i mp or t e r s o n Thursday threw their support behind the Department of Trade and Industry’s (DTI) campaign against the entry of substandard imported cement into the country. In a news statement, Col. Dani Enriquez (Ret.), also the executive director of the Philippine Cement Importers Association (PCIA), stated that cement importers are one with the DTI in its drive to restrict the entrance of substandard cement in the country. “We are categorically against importation of substandard cement. We do not want substandard cement coming in the country. It is not only bad for business, it is also bad for the infrastructure programs of President Duterte. That is why the PCIA strongly proposes that imported cement be tested at the port of loading or origin so that we know whether it is of good quality or not before it is shipped to the Philippines,” Enriquez said. He added the PCIA had also issued its stand against substandard cement during a meeting with industry stakeholders and DTI officials earlier this month. Under international rules, the country receiving the imported cement can either choose to test the product from its country of origin or when it arrives at the recipient country. The PCIA said the cement should be tested in the country of origin as proof that the impor ted cement is of quality. “Although international rules allow the option to have cement tested here in the countr y, I prefer not to have them brought into the country until there is sufficient proof that the cement passed testing at the point of origin,” he added. During the same consultation meeting, the Bureau of Philippine Standards (BPS), headed by Assistant Secretary Ernesto V. Perez, presented a draft department administrative order (DAO) that proposes options in accordance with International Standards 17067. The draft DAO contains a provision repealing DAO 17-05, with the latter being a cause of dispute in the sector as it allows chances for big players to monopolize the industry. DAO 17-5 requires pure-cement importers to obtain an Import Commodity Clearance (ICC) on top of the Product Safety mark, but exempts big cement manufacturers and importers from doing so. “The BPS draft DAO is a welcome development. It is compliant with the key principles and obligations in the Agreement on Technical Barriers to Trade of the World Trade Organization [WTO],” he said Enriquez added the PCIA is studying ways to extend assistance to the DTI in monitoring substandard cement products in the domestic market. “Well, we have to wait until this new DAO, which repeals DAO1705, is signed and approved by DTI Secretary Ramon M. Lopez. Until then, we have no choice but to comply with the rules,” Enriquez said. Rea Cu
Mondelēz execs propose ‘more equitable’ tax on sugar-sweetened beverages By Catherine N. Pillas @c_pillas29
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he market leader in powdered beverages and snacks giant Mondelēz Philippines is proposing a more equitable tax base for the Department of Finance’s controversial sugar-sweetened beverage (SSB) tax,
suggesting lawmakers and finance officials to base it on sugar content instead of a per-volume basis. Mondelēz Philippines, maker of powdered-juice drink Tang, is airing reservations not just on the timing of the tax on SSBs, but on the structure of the proposal itself. “We’re looking for a midpoint in the
discussion. We want to be responsible taxpayers, but how do we do it? We feel the tax is premature in the sense that not enough discussion, and dialogue has happened to implement it in the timeline proposed. We feel it’s regressive, as well,” Mondelēz Philippines Country Manager Ashish Pisharodi told reporters at a news briefing on Thursday.
Underlining the price impact, Pisharodi said on a consumer buying the 25-milligram sachet of Tang at P9 currently will be buying the same product at P30 if the SSB proposal is taken in its current form. Shanahan Chua, Mondelez head for Corporate and Government Affairs, said a more equitable solution
is changing the tax base from a pervolume basis. “We have serious concerns on the bill that the Senate is reviewing right now on the structure and the rate proposed—the per-volume liter. We want the government to take a step back and continue the dialogue with us to have a fairer taxation system,” Chua added.
“What we are looking at as an industry is what Sen. Sonny Angara was saying in previous hearing—look at sugar content instead of literage because we are taxing the sweeteners in the product instead of the volume of the beverage. That has a disproportionate effect on the whole beverage category in the bill,” the company executive said.
Agriculture/ Commodities
Editor: Jennifer A. Ng
BusinessMirror Friday, August 18, 2017
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Govt told to end fixation with rice By Jasper Emmanuel Y. Arcalas
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@jearcalas
he Duterte administration must stop focusing on rice and allocate more funds to other agriculture subsectors if it wants to sustain the increase in farm output, economists from the Ateneo de Manila University said on Thursday.
File photo
Eagle Watch senior research fellow Alvin P. Ang said Philippine agriculture production remains “too erratic” despite growing by 6.18 percent in the second quarter and by 5.71 percent in the first half. “Agriculture is still important but [government resources] should not be focused on rice alone”, Ang, who is also the director of Ateneo Center for Economic Research and Development, told the BusinessMirror. “We are now seeing the effect of the fixation with rice. Concentrating resources on just one commodity would make it difficult for the government to immediately assist other subsectors that would encounter problems,” he added. Ang said the government should see to it that all subsectors would get a slice of the agriculture budget. “What’s happening right now is that there is a commodity being favored. Let’s not forget we still have coconut, we have cassava and other high-value commercial crops that could give farmers bigger
value added,” he said. “The government should distribute [the budget]. That’s why growth is erratic because only one sector is being assisted; the government should distribute that assistance,” Ang added. The Ateneo economist also said the “Build, Build, Build” Program of the government should also benefit the farm sector. “The government must roll out a similar program for agriculture. It will not only focus on constructing farm-to-market roads, but will also target the provision of modern equipment,” he said. “Of the current labor force, 26 percent is in the agriculture sector. A lot of people are still in agriculture so you cannot leave the sector behind, especially when you are growing by 6 percent,” Ang added. Cielito A. Habito, former director general of the National Economic and Development Authority and senior fellow of Eagle Watch, said the government should put more emphasis on making local
farmers competitive against their Asean counterparts. Habito also agreed with Ang that the government should forego its rice-centric policies and programs to allow the farm sector to grow faster. “We have lagged behind other Asean countries, like Vietnam, which chose to go into growing coffee and high-value crops. This strategy is now contributing to their national income and feeding their own people,” he told the BusinessMirror. “We have been too focused on rice that we have neglected coconut and fisheries. This fixation with rice is something that we should get out of,” Habito added. Data released by the Philippine Statistics Authority (PSA) on Tuesday showed that agricultural output in the second quarter recovered and grew by 6.18 percent year-on-year. The PSA said the crops subsector remained as the main driver of farm growth in the April-toJune period. “The crops subsector registered an 11.72-percent increase in output. It shared 50.75 percent of the total agricultural production,” the PSA said in its report, titled “Performance of Philippine Agriculture”. Palay production in the second quarter rose by 11.72 percent to 4.15 million metric tons (MMT), from 3.71 MMT a year ago. The PSA attributed this to the expansion in areas planted with rice and the availability of irrigation water. Favorable planting conditions also encouraged more farmers to plant corn. Output rose by nearly 46 percent to 1.3 MMT, from 911,000 metric tons recorded in the same period last year. In the first half of the year, PSA data showed that farm-production growth averaged 5.71 percent. Data provided to the BusinessMirror by the PSA showed the second-quarter growth was the highest since 2011, when the agriculture sector expanded by 6.68 percent. In ter ms of first-semester growth, farm output this year was the highest since 1999, when it expanded by 9.82 percent. Between 1999 and 2017, agriculture production was the lowest last year, when it contracted by 3.39 percent. The PSA said the agriculture sector’s contribution to the country’s GDP has been declining since 2006. Sans agriculture services and forestry, the sector’s output contributed only 8.2 percent to GDP in the past 10 years.
Suppliers missed chance to cash in on increasing pre-bird flu chicken demand D
ema n d for d re s s e d chicken in the Philippines was on the rise just days before the Department of Agriculture (DA) confirmed the outbreak of bird flu in San Luis, Pampanga. Data from the National Meat Inspection Service (NMIS) indicated a brisk demand for chicken, as inventory in local cold storages as of August 7 dropped by 15.5 percent to 17,306.32 metric tons (MT), from 20,483.32 MT recorded on July 31. On an annual basis, the volume was slightly higher than the 17,289.65 MT recorded in the same period last year. The bulk of the chicken inventory, or about 51.46 percent, consisted of imports. Imported chicken reached 8,906.48 MT, 15.45 percent lower than the 10,534.68
MT recorded a year ago. L oca l ly produced chic ken reached 8,399.85 MT, 25.64 percent lower than the 11,296.94 MT posted a week ago. The figure, however, was 24.35 percent higher than last year’s record of 6,754.98 MT NMIS data showed that 42.56 percent of loca l ly produced dressed-chicken volume was in cold storages in Central Luzon. The region’s inventory of locally produced chicken was pegged at 3,574.94 MT, 6.06 percent higher than the 3,370.66 MT recorded a week ago. Earlier, the United Broiler Raisers Association (Ubra) said sales fell by as much as 50 percent after the DA announced the outbreak of bird flu in Pampanga. Ubra President Elias Jose Inciong told the BusinessMirror
that some of their members have seen lower sales, even as the AI outbreak is confined to just one town in Pampanga. Because of lower demand, Inciong said the farm-gate price of broiler fell to as much P62 per kilogram. T he production cost of s m a l l a nd me d iu m broi le r growers ranges from P70 to P75 per kilogram. Ubra appealed to the DA to lift the ban on the shipment of poultry products from Luzon to other parts of the country, as this could cause growers to incur more losses. Inciong also said the ban has “sown confusion” among consumers, as this made them believe that the AI outbreak i s w id e s p re a d a nd a f fe c t s broilers. Jasper Emmanuel Y. Arcalas
PhilRice urges Central Luzon seed growers to boost hybrid-rice output
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he Phi lippine R ice Re search Institute (PhilRice) is encouraging seed growers from Central Luzon to engage in hybrid rice-seed production to increase the availability of hybrid rice-seeds in the region. PhilRice said in a statement that it recently conducted its first consultative meeting and planning workshop with seed growers and other stakeholders from Central Luzon’s rice sector. During the meeting Richard Romani l los, science research specialist, told participants that farmers in the region are in need of public hybrid seeds, such as Mestiso 19 and 20 that have av-
erage seed yields of 1 tons per hectare to 2 tons per hectare and 1.5 tons per hectare to 1.8 tons per hectare, respectively. PhilRice said the meeting and planning workshop is in support to its Public Hybrid Rice Commercialization Program. Leylani Juliano, program lead, said the aim of the agency attached to the Department of Agriculture is to increase the use of hybrids for higher grain yield and produce labor opportunities in the rural
rice-growing communities. According to studies, every hectare of commercial hybridrice production needs more workers, roughly 270 man-days of farm labor. Henry Lim, chairman of the Seed to Rice Cooperative, shared that hybrid-rice seed production today is better because the solutions are now available to cope with production-related problems. On marketing , Ber nadette Centiles, vice chairman of Davao Oriental Seed Producers Cooperative, said, “It is a must that quality seeds should be readily available in every area to ensure high-production output.”
Zinc breaks through $3,000 barrier as metals rally gathers pace
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inc surged above $3,000 a metric ton for the first time in almost a decade, while aluminum approached a threeyear high, adding momentum to a metals rally fueled by bets on tightening supplies and robust demand. Zinc jumped as much as 5.8 percent to $3,132.50 a ton on the London Metal Exchange, the highest since 2007, before settling at $3,119 at 5:51 p.m. in London on August 16. Aluminum rose as much as 2.7 percent to the highest since September 2014, while nickel, copper and lead also advanced. The rally boosted mining shares, w ith Freeport-McMoR an Inc.
among the biggest gainers. An index of base metals has climbed to a more than two-year high, amid better-than-expected demand in China and a weakening dollar. The Asian nation is stepping up efforts to shut illegal aluminum and steel plants to cut emissions and excess capacity. A push to promote economic growth in China ahead of a leadership reshuffle later this year is also lifting industrial-metals use, said Bernard Dahdah, an analyst at Natixis SA in London. “Earlier this year, a lot of the rally was supply related, but recently we’ve seen demand starting to support, as well,” Dahdah said by phone.
of 181,000 tons, according to the World Bureau of Metal Statistics. The metal is also gaining from a favorable import arbitrage for Chinese buyers, and rising premiums in the physical market, analysts at Macquarie Group Ltd. said in a note on August 15.
Mining rally
Bloomberg
Zinc rallied 60 percent last year as worldwide demand topped supply after producers, including
Glencore Plc. suspended some output. In the first five months of 2017, there was a global deficit
The rally in metals helped push up the BI Global Large Base Metals Competitive Peers, a gauge of 18 producers. Freeport, the largest publicly traded-copper producer, climbed 5.5 percent, while Glencore, Alcoa Corp. and Teck Resources Ltd. advanced more than 4 percent. Supply disruptions at major
mines have also helped to lift copper to the highest in nearly three years, while aluminum is the best performer this year on the Bloomberg Commodity Index after the Chinese government ordered output curbs. China Hongqiao Group Ltd., the nation’s top aluminum smelter, confirmed on Tuesday it cut 2.68 million tons, or 29 percent, of annual capacity. UBS Group AG raised its aluminum forecast to 95 cents a pound, or $2,094 a ton, for the fourth quarter of 2017 and first quarter of 2018, according to a note received on Wednesday. The metal closed on Wednesday at $2,094. Bloomberg News
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Friday, August 18, 2017
The World BusinessMirror
www.businessmirror.com.ph
US: War would be ‘horrific’ but N. Korea nukes ‘unimaginable’
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A man waves a union flag during a march to protest the renegotiation of the North American Free Trade Agreement (Nafta) in Mexico City on August 16. Thousands of workers from the National Autonomous University of Mexico shut down Reforma Avenue to demand Mexico step out of the Nafta renegotiations that began on Wednesday in Washington, D.C. AP/Gustavo Martinez Contreras
Nafta negotiation starts with harsh words from US
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ASHINGTON—The renegotiation of the North American Free Trade Agreement (Nafta) is off to a rocky start. T he Trump administration lectured Canad a and Me x ico on the failures of the current agreement at an opening news con fe re nce on We d ne s d ay morning, while behind closed doors negotiators began to seek sig nif icant concessions f rom the United States’ neighbors. “ We feel that Nafta has f undamenta l ly failed many, many Americans and needs major improvement,” said Rober t Lighthizer, the US trade representative, who is leading the US team aiming to overhau l the 25 -year-old agreement. The Canadian and Mexican representatives were publicly pleasant, emphasizing their commitment to regional trade and the benefits resulting from a regional alliance. But both nations also say the current agreement is not tilted against the United States. T he t a l k s t h at b e g a n on Wednesday are the first of several scheduled rounds between now and the end of the year, when the three nations hope to conclude a deal. It is a very fast timetable in the world of international negotiations, reflecting political imperatives in all three nations more than the practical realities of an immensely complex negotiation. Both Mexico and the US have nat iona l elect ions sc hedu led next year. The overarching issue is the importance of trade deficits. Americans buy more goods and services from Mexico than Mexicans buy from the US. Last year the difference was $55.6 billion. The Trump administration regards this number as an indictment of the current trade deal—evidence that Mexico is taking advantage of the US. While trade with Canada has been more balanced in recent years, Lighthizer said on Wednesday that over time the US has run a significant trade deficit with Canada, too.
$55.6B
The value of US deficit in its trade with Mexico in 2016
Such trade deficits, Lighthizer said, “can’t continue.” President Donald J. Trump has made it clear that he regards trade deficits as a primary measure of the nation’s economic health. Mexico and Canada, however, are united in discounting the importance of trade deficits. Many economists agree that the focus on bilateral trade is misplaced. A nation may run a deficit with one trading partner and a surplus with another. What matters is the totality. “Canada doesn’t view trade surpluses or deficits as a primary measure of whether trade works,” Chrystia Freeland, Canada’s minister of foreign affairs, said on Wednesday. Mexico has been even more pointed in resisting the assertion that there is a problem. The economy minister, Ildefonso Guajardo Villarreal, told a Mexican Senate commission last week that he was “delighted to analyze the situation that we call ‘trade rebalancing’ if and when we manage to improve that through expanding trade, not restricting it.” A key question looming over t he negot i at ions is how t he Tr ump administration’s pub lic bombast will translate into the details of the negotiations. The administration in its early months has repeatedly talked tough and then sought to conciliate trading partners. The administration, for example, insists that it wants to do away with a system of independent arbitration that allows companies to seek the elimination of tariffs.
The system has been used primarily by Mexican and Canadian companies to force the US to abandon protectionist measures found to be in violation of the agreement. A not her a rea of potent i a l conf lict concerns the automobile industry. The US wants to discourage importation of auto parts from countries outside the Nafta region. Under the current agreement, a car assembled in Mexico can be imported into the US without paying an import tax if at least 62.5 percent of the car, measured by value, was made in North America. The Trump administration wants to raise that bar, and to require that a significant portion of those parts come from the US. The United Automobile Workers union has long sought such a change. But car makers are wary. The importation of some cheap parts helps to hold down the cost of the final product. In general, a higher share of Nafta components, and a higher share of US components, means a more expensive car. “Many in the business community feel that the Nafta is working quite well and they don’t want disruption in existing supply chains,” said Jeffrey J. Schott, a Nafta expert at the Peterson Institute for International Economics in Washington. Both Canada and Mexico said on Wednesday that they opposed specific standards for the share of car parts coming from any of the three nations. There is general agreement among the three nations that Nafta needs to be modernized. It was written before the advent of Internet-based commerce, for example, and there is broad support for stronger enforcement of workplace and environmental protections. Indeed, the three nations already renegotiated Nafta once as part of the discarded Trans-Pacific Partnership agreement. Some issues appear relatively straightforward. The Trump administration is eager to insert provisions addressing currency manipulation. Canada and Mexico f loat their currencies, and are unlikely to resist the symbolic gesture.
But on more substantive issues, both Canada and Mexico have shown a growing willingness to resist US demands. Luis de la Calle, a former Nafta trade negotiator for Mexico, said the shock value of Trump’s bluster and threats had diminished since the presidential election. “Most people thought back then that he had powers to impose duties, close the border, prevent investment,” de la Calle said. “Now people have learned what trade experts knew all along, that he doesn’t have those powers.” Trump also will need to win congressional support for a revised agreement. Democrats, who have long sought changes to Nafta, share many of his stated goals, but Trump’s political problems could complicate any alliance. There is also little if any congressional support for the administration’s threat to withdraw from the trade agreement if Canada and Mexico resist improvements. Rep. Tim Ryan, Democrat-Ohio, said on Tuesday that “being bombastic” was not “the mature way” to seek changes. “Ultimately you can have huge disruptions in the economy if you don’t handle this like an adult,” he said. Freeland spoke first on Wednesday, and began by holding up pictures of US and Canadian firefighters working together, images that she said “illustrate the deep friendship that our countries share.” Guajardo Villarreal struck a similar tone. “Nafta has been more than a trade agreement,” he said. “It has made us think of ourselves as a region.” Light hi zer bega n by ack nowledg ing t hat Na f t a had benefited groups including US farmers and communities along the Mexican border. Then he insisted that the agreement was broad ly damag ing to the US, causing the loss of hundreds of thousands of jobs. “The views of the president about Nafta, which I completely share, are well known,” Lighthizer said. “I want to be clear that he is not interested in a mere tweaking of a few provisions and a couple of updated chapters.” He concluded, “And now, we will get down to work.” New York Times News Service
EIJING—The top US military officer said on Thursday a military solution to the North Korean missile threat would be “horrific” but allowing Pyongyang to develop the capability to launch a nuclear attack on the United States is “unimaginable.” The chairman of the US Joint Chiefs of Staff, Marine Corps Gen. Joseph Dunford, told reporters in Beijing that US President Donald J. Trump directly has “told us to develop credible viable military options and that’s exactly what we’re doing.” At the same time, South Korean President Moon Jae-in said Trump had agreed to ask for consent before taking any action, such as a military strike on North Korea, as he sought to ease concerns over a potential war on the Korean peninsula. “Military action on the Korean peninsula can only be decided by the Republic of Korea,” Moon told reporters in Seoul, referring to his country’s formal name. “The US and President Trump promised no matter what options they use, they will sufficiently consult with South Korea and get consent. This is a firm agreement between South Korea and the US People can be assured and trust that there will be no war.” Moon’s comments come as the situation on the Korean peninsula appears to be cooling. Trump said on Wednesday that North Korea made a “very wise” decision after Pyongyang opted to hold off on a threatened missile strike near Guam. Dunford was responding to questions about Trump’s chief strategist Steve Bannon’s comments in an interview published on Wednesday. Bannon was quoted as saying there’s no military solution to the threat posed by North Korea and its nuclear ambitions, despite the president’s recent pledge to answer further aggression with “fire and fury.” “There’s no military solution [to North Korea’s nuclear threats], forget it,” Bannon said in the interview. “Until somebody solves the part of the equation that shows me that 10 million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.” In Beijing Dunford said it’s “absolutely horrific if there would be a military solution to this problem, there’s no question about it.” But, he added, “what’s unimaginable is allowing KJU [North Korean leader Kim Jong Un] to develop ballistic missiles with a nuclear warhead that can threaten the United States and continue to threaten the region,” he said. Dunford has been in Asia this week, visiting South Korea, Japan and China. In China he has met with his Chinese counterpart Fang Fenghui, chief of the People’s Liberation Army’s joint staff department. On Thursday he also met with Fan Changlong, vice chairman of the ruling Communist Par t y ’s Central Militar y Commission, and Yang Jiechi, China’s top diplomat. In Seoul, Moon said he would consider sending a special envoy to North Korea for talks if the North stops its missile and nuclear tests, in an effort to jump-start diplomacy. He also declared, amid fears in South Korea that threats from Trump to
unleash “fire and fury” on Pyongyang could lead to real fighting, that there would be no second war on the Korean Peninsula. “The people worked together to rebuild the country from the Korean War, and we cannot lose everything again because of a war,” Moon said in a nationally televised news conference. “I can confidently say there will not be a war again on the Korean Peninsula.” Moon’s comments follow a spike in animosity generated by North Korea’s warning that it might send missiles into waters near the US territory of Guam, and by Trump’s warlike language. Both Koreas and the US have signaled in recent days, however, a willingness to avert a deepening crisis, with each suggesting a path toward negotiations. Trump tweeted early on Wednesday that Kim had “made a very wise and well-reasoned decision,” amid indications North Korea doesn’t immediately plan to fire multiple missiles toward Guam. “The alternative would have been both catastrophic and unacceptable!”Trump wrote. Next week’s start of annual US-South Korean military exercises that enrage the North each year could make diplomacy even more difficult. Marking 100 days in office with his first news conference as president, Moon said Kim Jong Un’s regime is approaching South Korea’s “red line.” “If North Korea completes development of intercontinental ballistic missiles and weaponizes it with nuclear warheads, I will consider that a red line,” Moon said. “North Korea is nearing the red line,” he said without expounding on what crossing the line would mean. In a meeting with Moon on Monday, Dunford reiterated America’s commitment to protect South Korea. “The priority for the US military is to support the US government’s diplomatic and economic efforts for denuclearization of Korean Peninsula and a military option is prepared just in case these efforts fail,” Dunford told Moon, according to the presidential Blue House. “Everybody expects to resolve this situation without a war.” Moon said he would be ready for dialogue once the isolated nation stops its provocations, but added there was no rush. “Dialogue between South and North Korea should be resumed, but we don’t need to hurry up on that,” he said. “Dialogue should not be aimed at dialogue itself. Conditions should be prepared for talks. At least North Korea must stop further provocations before it can be ready for dialogue.” Earlier this month, Trump threatened to unleash “fire and fury” on North Korea if it continues to advance his nuclear program. This prompted Kim to announce a plan to test fire four intermediate-range missiles into waters near Guam—a US territory in the Pacific that is home to American military bases. Moon has long wished to ease tensions on the peninsula through negotiations, and last month called for talks with North Korea. That said, Pyongyang’s recent intercontinental missile launches have prompted him to take a harder stance on the isolated regime. AP and Bloomberg News
Qatar’s growth prospects dim as Saudi-led boycott takes toll
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atar’s economy will expand this year at the slowest pace since 1995, according to economists surveyed by Bloomberg this month, as the impact of a Saudi Arabia-led boycott is felt on trade and investor confidence. GDP will grow 2.5 percent in 2017 and 3.2 percent next year, compared with 3.1 percent, and 3.2 percent respectively, in the previous survey conducted in June. Economists now expect a budget deficit of 5.1 percent of GDP this year, up from 4.6 percent, while the forecast for inflation dropped to 2.2 percent, from 2.5 percent. Saudi Arabia, the United Arab Emirates (UAE), Bahrain and Egypt cut ties with Qatar on June 5, accusing the nation of 2.7 million people of destabilizing the region through its ties to Islamist extremists—a charge Qatar has repeatedly denied. Imports and foreign deposits have plummeted and interest rates soared, exacerbating a broader slowdown due to lower global energy prices. After almost two decades of rapid growth driven by a sevenfold increase in the production of oil and gas, Qatar’s energy boom has waned this decade as
projects were completed and focus shifted to promoting nonoil growth as crude prices fell. The world’s biggest producer of liquefied natural gas is spending $200 billion to upgrade infrastructure ahead of the 2022 soccer World Cup, and has aspirations to be a regional tourism and services hub. “Even before the diplomatic crisis with regional powers, it looked like Qatar’s non-energy economy would slow,” said William Jackson, senior economist for emerging markets at Capital Economics. “The early signs are that the sanctions dealt a damaging blow to Qatar’s economy in June. The impact appears to be temporary, but it will still result in weaker growth.” Amid the Saudi-led boycott, officials have been trying to inspire confidence in the economy, including plans to build foodprocessing facilities near a new port and immigration rules introducing permanent residency to attract investors and some skilled workers. In his only public address since the diplomatic spat began, ruler Sheikh Tamim bin Hamad Al Thani said Qatar would open up its economy and diversify income sources. Blomberg News
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The World BusinessMirror
Friday, August 18, 2017
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Trump comments on race open breach with CEOs, military, GOP W
ASHINGTON—President Donald J. Trump found himself increasingly isolated in a racial crisis of his own making on Wednesday, abandoned by the nation’s top business executives, contradicted by military leaders and shunned by Republicans outraged by his defense of white nationalist protesters in Charlottesville, Virginia. The breach with the business community was the most striking. Titans of American industry and finance revolted against a man they had seen as one of their own, concluding on Wednesday morning they could no longer serve on two of Trump’s advisory panels. But before Stephen A. Schwarzman, the chief executive of the Blackstone Group and one of Trump’s closest business confidants, could announce a decision to disband Trump’s Strategic and Policy Forum—in a prepared statement calling “intolerance, racism and violence” an “affront to core American values”—the president undercut him and did it himself, in a tweet. “Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both,” Trump wrote. “Thank you all!” The condemnation descended on the president a day after he told reporters in a defiant news conference at Trump Tower in Manhattan that “alt-left” demonstrators were just as responsible for the violence in Charlottesville last weekend as the neo-Nazis and white supremacists who instigated protests that led to the death of a 32-year-old woman, struck down by a car driven by a right-wing activist. All five armed services chiefs—of the Army, the Air Force, the Navy, the Marines and the National Guard Bureau— posted statements on social media condemning neo-Nazis and racism in uncompromising terms. They did not mention Trump by name, but their messages were a highly unusual counter to the commander in chief. Republicans, too, issued new denunciations of the hatred on display in Charlottesville, although some remained vague about Trump’s remarks. Vice President Mike Pence abruptly cut short a trip in South America as his aides announced he would return home early to attend meetings on Friday and through the weekend at Camp David. The White House insisted that the topic of the meetings would be South Asia. During his travels, Pence stood by the president but declined to defend Trump’s comments at Trump Tower on Tuesday that “both sides” in Charlottesville were to blame. In a tweet on Wednesday night, Trump urged supporters to “ join me” at a campaign rally scheduled for August 22 in Phoenix. But the Phoenix mayor, Greg Stanton, said in his own tweet that he was “disappointed” that the president would hold a political event “as our nation is still healing from the tragic events in Charlottesville.” He urged Trump to delay the visit. The president’s top advisers described themselves as stunned, despondent and numb. Several said they were unable to see how Trump’s presidency recovered, and others expressed doubts about his capacity to do the job. In contrast, the president told close aides that he felt liberated by his news conference. Aides said he seemed to bask afterward in his remarks, and viewed them as the latest retort to the political establishment that he sees as trying to tame his impulses. Trump’s venting on Tuesday came despite pleas from his staff, including his daughter Ivanka Trump and her husband Jared Kushner. Instead of taking their advice to stop talking about the protest, the president eagerly unburdened himself of what he viewed as political correctness in favor of a take-no-prisoners attack on the “alt-left”. On Wednesday even Fox News, a favorite of the president’s, repeatedly carried criticism of Trump. One Fox host, Shepard Smith, said he had been unable to find a single Republican to come on-air to defend Trump’s remarks. No one from the president’s team has yet to resign in protest, but some spoke candidly on Wednesday about whether they could continue to work much longer for a man who has expressed such sentiments. Most incensed among Trump’s top advisers, according to three people familiar with the situation, was Gary D. Cohn, the director of the National Economic Council, who told people around him that he was offended, as a Jew and as an American, by the president’s reaction to the violence in Charlottesville. The relationship between the president and Cohn, who stood next to Trump during the news conference, seems to have suffered a serious blow. Although White House aides denied that he was planning to quit, they acknowledged that Cohn, a former Goldman Sachs executive, was upset with the president’s lack of discipline. One aide who felt energized by the president’s actions was the embattled White House chief strategist, Stephen K. Bannon, who shares Trump’s anger at the efforts of local governments to remove monuments honoring prominent Confederate figures, like Robert E. Lee. The proposed removal of a Lee statue on the University of Virginia campus in Charlottesville spurred the demonstrations last weekend. Bannon, whose future in the White House remains uncertain, has been encouraging Trump to remain defiant. Two White House officials who have been trying to moderate the president’s position suggested that Bannon was using the crisis as a way to get back in the good graces of the president, who has soured on Bannon’s internal machinations and reputation for leaking stories about West Wing rivals to conservative news media outlets. Many in the White House said they still held on to the hope, however slim, that the new White House chief of staff, John F. Kelly, could impose order on the disarray even as Trump hopscotches from one selfdestructive episode to the next. New York Times News Service
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Friday, August 18, 2017
The World BusinessMirror
Confederate symbols face new resistance after violent protest
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ALTIMORE—It happened in the dead of night. Around midnight, as Tuesday turned into Wednesday, a crew of police officers and workers wielding a large crane began making rounds of the city’s parks and public squares, hauling away monuments to Confederate heroes.
When they were through, before sunrise, four statues that had stood for decades were gone, one chapter in a searing drama that is roiling cities across the country, particularly in the South. “I thought that there’s enough grandstanding, enough speeches being made,” Mayor Catherine E. Pugh of Baltimore said at a news conference on Wednesday. “Get it done.” Elsewhere, it was not so simple. From Birmingham, Alabama, to Gainesville, Florida, to Durham, North Carolina, to Lexington, Kentucky, local and state officials this week faced bitter divisions over Confederate statues. Many of the issues had been building for years but were now freshly volatile in the wake of the violence that exploded last Saturday in Charlottesville, Virginia. Suddenly, it seemed, the questions of what to do with the roughly 700 remaining statues a nd monu ments to t he L ost Cause had come in for perhaps their hardest reckoning. At stake are not just the controversial pieces of public art but civic, political and racial issues now inextricably tied to them. In Charlottesville, the violence left a 32-year-old woman dead after far-right protesters gathered
to protest plans to move a statue of Confederate Gen. Robert E. Lee from a local park. A nd on Tuesday, President Dona ld J. Tr ump, in remarks defending some of the far-right protesters, asked whether the remova l of Confederate statues wou ld prompt the erasure of monuments to slaveholders l i ke George Washing ton and T homas Jefferson. Now local and state officials in states like North Carolina, Texas and Tennessee are facing the outrage of liberal and African-A merican constituencies, who say the statues should have never gone up in the first place, and the fury of some whites who fear their history is being erased. On Wednesday night, Gov. Ter r y Mc Au l i f fe of V i rg i n i a said that Confederate monuments in the state should be taken down, and he urged local and state leaders to move them into museums. Two years ago, Mc Auliffe argued in support of keeping the statues in public spaces, saying that “these are all parts of our heritage.” In some cases, conservative Southern legislatures have passed laws preventing the statues’ removal or destruction. In Birmingham, officials on
Tuesday erected a black plywood barrier to block any view of the base of a Confederate obelisk that has loomed over a city park since 1905. Mayor William A. Bell Sr. said it was an attempt to respond to valid concerns while obeying a state law that effectively bans taking down Confederate monuments. “What Charlottesville represented was an open defiance by hate groups of the tradition of this country to bring social and racial harmony,” Bell said in an interview at City Hall on Wednesday. “The condonement by the president of the actions of the alt-right, the white supremacists and the neoNazis gave a greater urgency to take some kind of action.” The number of controversies has been remarkable: In Tennessee, Gov. Bill Haslam reiterated his opposition to a bust of Nathan Bedford Forrest, a founder of the Ku Klux Klan, that is housed at the state Capitol. In Richmond, Virginia, the former capital of the Confederacy, Mayor Levar M. Stoney said he believed the enormous Confederate statues on the city’s Monument Avenue should be removed, after saying as recently as Monday that they should stay up with additional context. In Texas, Houston officials opened a review of the city’s public art collection as part of an effort to decide whether Confederate statues should remain on public property. The issue was not contained to the South: In Brooklyn, crews on Wednesday took down a plaque noting a place where Lee had once planted a tree. In Montreal, a downtown department store, Hudson’s Bay, removed a plaque commemorating an 1867 visit by Jefferson Davis, who had been the president of the Confederacy.
The sense of urgency mirrors the reaction to the 2015 murders of nine black churchgoers in Charleston, South Carolina, by a white supremacist, Dylann S. Roof. But around the South in recent years, many others bristled at the idea that Confederate history was being erased. Some flew Confederate battle flags out the back of their trucks, while others filed lawsuits to stop the removal of statues in places like New Orleans, where four statues were removed in May. A suit challenging Charlottesville’s planned removal of the Lee statue is pending.Here in Baltimore, there was little open protest: The city is politically liberal and 63 percent black. But there was nonetheless an abundance of caution. The four statues, which included a double equestrian statue of Lee and Stonewall Jackson, came down by 5:30 a.m. Pugh, at a news conference on Wednesday, said that given the nation’s political climate, it was best to move “quickly and quietly” as a matter of public safety. “ The mayor has the right to protect her city,” Pugh said later in an interview. “For me, the statues represented pain, and not only did I want to protect my city from any more of that pain, I also wanted to protect my city from any of the violence that was occurring around the nation.” Birmingham, like Baltimore, is a majority-black city, but the issue was more complicated. On Wednesday Alabama Attorney General Steven T. Marshall sued the city and asked a judge to impose a fine of $25,000 a day. Marshall said the city’s plywood obstruction was in “violation of the letter and spirit of the Alabama Memorial Preservation Act.” New York Times News Service
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Kabul catwalk: Afghan models show off traditional clothing
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A BUL , A fghanistan— Amid tight security, over two dozen young models, including six women, strutted down the catwalk in the garden of a private Kabul villa, proudly displaying the traditional clothing and costumes of Afghanistan’s many ethnic groups. The audience, about 100 men and women, tightly packed the small space on a recent afternoon, but the mood was as bright as the models’ embroidered tunics and scarves—a scene that would have been unimaginable under Taliban rule. For the organizer, 22-year-old model and fashion designer Ajmal Haqiqi, putting on the show was worth the risk—despite daily threats of militant attacks in this war-weary capital. Haqiqi said he was motivated by the desire to show off Afghan culture through the nation’s dazzling abundance of traditional garments and regional costumes. If Afghans regain an awareness of their rich heritage, this could help unite them, he added. “I told myself, if a suicide bomber attacks us, even if I lose my hands and feet, I will continue on the way that I have chosen,” an exuberant Haqiqi told The Associated Press after the event. Kabul has seen few fashion shows over the past years, mostly catering to international audiences. Haqiqi’s show was the first allAfghan enterprise: Afghan models showing Afghan traditional clothing to an all-Afghan audience. However, the idea of women on display remains mostly taboo in Afghanistan, more than 16 years after the 2001 US assault that ousted the Taliban from power after a repressive five-year reign. Some women still don’t go outside without wearing blue burqas that cover them from head to toe, leaving only mesh over the eyes. Violence against women is still common, and there are reports of women being stoned, executed in public or imprisoned for having affairs with men. Women have even set themselves on fire to escape domestic violence. Haqiqi ’s group, the Haqiqi Modeling Agency, is a relative newcomer on the country’s small fashion scene, but he has appeared on national television on various occasions, such as Independence Day, the Persian New Year, known
as Nowruz, and the Muslim holidays of Eid al-Adha and Eid al-Fitr. The agency sells the designs under its own “Haqiqi Brand,” with about 70 percent of the sales going to foreigners and Afghans living aboard. Atefa Fasihi, 21, joined Haqiqi’s team two years ago, and the show was her debut before a live audience. She acknowledged feeling uneasy as heavily armed security guards protected the villa in a western Kabul neighborhood. “Everybody is scared, but...we are working to promote our Afghan culture, so I foresee a good future,” Fasihi said. Husna Sadat, who was in the audience, said the prospect of more such shows is exciting. “If we can change the mentality of our people from all these years of fighting, then I am sure the people can be ready for a better future,” she said. Kabul has been battered by attacks over recent months, most claimed by the Taliban but some also by an Islamic State affiliate. Last month a Taliban suicide bomber rammed his car packed with explosives into a bus carrying government employees in the same western Kabul neighborhood where Haqiqi’s show took place, an area that is home to several private schools and where many politicians reside. The rush-hour attack killed 24 people and wounded 42 others. And on May 31 the city saw its worst suicide bombing since the Taliban collapse—an attack that killed 150 people and wounded scores.But it was all smiles at the fashion show. The male models showed off Afghan variants of the shalwar kameez, the men’s long shirt and pants, also known as perahan tunban, with turban, pakul or karakul hats. The women wore colorful gand-e-Afghanis, made from softly f lowing and intricately embroidered materials, some with matching scarves. For A m ina Sherzad, a lso in t he aud ience at Haqiqi ’s show l ast week , t he m i x of t he et hnic ga r ments held a message of accept a nce. “It shows that we can accept each other, a model can be a Tajik or a Hazara but can wear the other’s ethnic clothing,” she said, referring to two prominent ethnic minorities. “We are the same.” AP
HK activist Wong braces for possible prison sentence
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O N G K O N G — Yo u n g Hong Kong activist Joshua Wong and two other student leaders of huge pro-democracy protests in 2014 braced for a court decision on Thursday that could send them to prison. The three-judge panel is due to issue its ruling on a prosecution request for stiffer sentences following a lower court decision that let them avoid prison. T he t hree were found g u i lt y of lead i ng or encou ra g i ng a n i l lega l ra l ly in September 2014 t hat k ic ked of f t he demonstrat ion s k now n a s t he “ Umbre l l a Movement.” “People united will never be defeated,” Wong told the media outside the courthouse before the hearing flanked by his coconvicted. He vowed they would continue “this long battle” for freedom and democracy. “Time is on our side, and, one day, Hong Kong will be a place we can determine our own future. We long [for] Hong Kong,” he said into a microphone as a rival proBeijing protester chanted, also on a microphone, nearby. Won g b e c a me f a mou s for his role in the protests because he was just 17 and still in high
school at the time. Youthf u l activists brought major thoroughfares to a standstill for 11 weeks to protest Beijing’s plan to restrict elections in the Chineseruled former British colony. Wong and Nathan Law, a student leader who was elected last year to the legislature, were sentenced to community service last year while a third activist, Alex Chow, was given a suspended three-week prison sentence. But t he appea l judges at t he High Cou r t were e x pected to send them to pr ison, fol low ing their decision in a simi lar case t h is week involv ing 13 act ivists g iven eight to 13 mont hs’ ja i l t ime a f ter t heir or ig ina l commu nit y-ser v ice sentences were over t u r ned. Wong was g irding for such a possibilit y. He said on a loca l radio show this week that he expected a similar punishment and t weeted to his fol lowers that they shou ldn’t abandon the movement. “W hen those of us who face jail time have yet to give up, how can the rest of you give up? ” he wrote, and also tweeted that he promised to keep up with his studies. AP
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Banking&Finance BusinessMirror
Editor: Jun B. Vallecera • Friday, August 18, 2017
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DOF traces Q2 growth to infrastructure spending
Investments boost LandBank earnings to P7.43 billion
According to Finance Secretary Carlos G. Dominguez III, the second-quarter expansion to 6.5 percent in terms of the GDP, from only 6.4 percent in the first quarter, only proves that the multiyear buildup program is beginning to gain traction. He expressed the hope acceleration to 6.5 percent puts the $305-billion economy on an expansion path ranging from 6.5 percent to as much as 7.5 percent this year. The second-quarter performance represents a slowdown from local output expansion averaging 7 percent last year. “ With the uptur n in state
and Bank of the Philippines (LandBank) raised its net income by 8 percent to P7.43 billion in the first six months, or more than its P6.88-billion target for the period, as income from investments grew the fastest by 9 percent, from P8.4 billion to P9.2 billion. Along with the long-term capital resource, loan revenues from the core banking services increased by 7 percent, from expanded loan portfolio of P490.6 billion to P597.1 billion. The government-owned bank, which mainly caters to farmers, fisherfolk and micro, small and medium entrepreneurs as part of the financially unbanked and underserved sectors, posted doubledigit growth in deposits that rose by 17 percent, from P1.13 trillion P1.32 trillion. Additional investment resource from shareholders capital generated profits or a return on equity of 14.55 percent. Thus, equity and liabilities amounted to total assets of P1.5 trillion, or an increase by 15 percent, from P1.3 trillion a year ago. Equity and debt, on the other
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he Department of Finance (DOF) on Thursday traced the country’s continued expansion in the second quarter to the massive trillion-peso infrastructure buildup program that the economic managers quickly dubbed as the “Build, Build, Build” (BBB) program
spending beginning in the year’s second quarter, President Duterte’s unparalleled investment strategy anchored on the BBB program has started to pick up steam,” Dominguez said in the wake of a Philippines Statistics Authority (PSA) announcement that the economy picked up speed during the period. As a result, he likewise expressed hope that the Senate would help the government meet its high growth target of up to 7.5 percent this year by adopting the DOF-endorsed Comprehensive Tax Reform Package, also known as the Tax Reform for Acceleration and Inclusion Act (TRAIN).
Fed starts to wonder if cornerstone inflation model still works
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ederal Reserve (the Fed) officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong. Minutes from the July 25 and 26 Federal Open Market Committee (FOMC) meeting showed a revealing debate over why the economy isn’t producing more inflation in a time of easy financial conditions, tight labor markets and solid economic growth. The central bank has missed its 2-percent price goal for most of the past five years. Still, a majority of FOMC participants favor further rate increases. The July minutes showed an intensifying debate over whether that is the right policy response. “These minutes to me were troubling,” said Ward McCarthy, chief financial economist at Jefferies Llc. in New York. “They don’t have their confidence in their policy decisions; and they don’t have confidence that they can provide the right kind of guidance.” The FOMC tried hard to avoid that kind of message. In several passages, the minutes asserted that “most” officials were sticking with a forecast that higher inflation would eventually
show up. However, the debate over resources lack models and whether standard data sources were telling them the whole story also showed convictions about their forecast are fraying. Price indexes have shown unusual inertia, even as the US unemployment rate has fallen, matching a 16-year low of 4.3 percent in July. The US consumer-price index rose 1.7 percent for the 12 months ending July, while the Fed’s preferred measure, which is tied to consumption, rose 1.4 percent in June. Another gauge calculated by the Dallas Fed, which trims index outliers to highlight the underlying price trend, rose 1.7 percent for the 12 months ending June. That was the same as May, which was down from 1.74 percent in April. The minutes said “a few” officials described resource slack models as “not particularly useful” while “most” thought the framework was valid. The committee also pondered a number of theories as to why inflation wasn’t responding to tightening labor resources, such as “the possibility that slack may be better measured by labor-market indicators other than unemployment.” Bloomberg News
The proposed reforms in this piece of legislation were to help underwrite the government’s accelerated spending on infrastructure, as well as on human-capital formation and social protection for the poor and other vulnerable sectors. “Hence, we are hoping that our senators share our confidence in the robust growth prospects of our economy and would pass soon enough and in full its version of Package 1 of the TRAIN, which the House of Representatives already passed in May this year,” Dominguez added. He added the DOF endorsement of the TRAIN to both houses of Congress has boosted investor confidence in the economy, as shown by forecasts on the country’s growth by foreign and local business groups, as well as financial institutions here and overseas. The TRAIN was seen helping raise revenues for the government to sustain aggressive spending on infrastructure and on social services, such as education and health care. According to the PSA, the Philippines’s second-quarter growth was faster than Vietnam’s 6.2 percent and Indonesia’s 5 percent during
the same three-month period. Dominguez also said the ambitious buildup program would help induce the multiplier impact on the domestic economy of more jobs, greater investments and improved connectivity across the regions. “We are optimistic that the accelerated state spending and project implementation would keep the Philippines in the club of Asia’s fastest-growing economies, as it sustains the momentum for the government-set expansion rate of 6.5 percent to 7.5 percent this year and a higher 7 percent to 8 percent in 2018 and onward,” he added. Under this expansionary fiscal policy, the government looks to lift infrastructure spending from an equivalent of only 5.4 percent of GDP this year to 7.3 percent of GDP by 2022. The government set aside P1.097 trillion in 2018 to support the BBB program from the adjusted level of P858.1 billion this year. “This is solid proof that the yea r - old ad m i n ist rat ion h a s been making the right moves at the right time in pursuit of Duterte’s socioeconomic agenda on high and inclusive growth,” Dominguez said. Rea Cu
Infra buildup cut in half sans TRAIN
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ess than half of the massive public infrastructures buildup program costing hundreds of trillions of pesos will be funded unless the Tax Reform Acceleration and Inclusion (TRAIN) program, endorsed by the Department of Finance (DOF), is passed. At the Development Budget Coordination Council (DBCC) budget hearing and presentation
before the Senate Committee on Finance on Wednesday, Finance Secretary Carlos G. Dominguez III reiterated that without the TRAIN to support the program, the massive buildup program will fail. “It’s very important [that] without the TRAIN we will probably not be able to fund half, maybe not even half,” Dominguez told the senators. Under the program, some P1.097 trillion, or 6.3 percent of the
Case clippings
By Justice S J Ranada Jr. LACHES–liberal application of doctrine There is no laches where a plaintiff, aside from filing a complaint for partition, also filed three criminal complaints, on separate occasions, for falsification of public document, for estafa thru falsification of public documents and for forgery; the filing of such cases negates laches. Courts, under the principle of equity, will not be guided or bound strictly by the statute of limitations or the doctrine of laches, when doing so would result in injustice. Ocampo v. Ocampo 05 Jul 2017
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provide services helping prevent and control diseases caused by tobacco use. In his second State of the Nation Address (Sona), President Duterte ordered the DOF and the Bureau of Internal Revenue (BIR) to accept Mighty Corp.’s settlement offer of P25 billion, excluding some P5 billion in value-added tax (VAT) charges arising from the sale of the company to JTI. “This will be the largest sum of taxes collected ever from a single taxpayer in Philippine history. It brings windfall revenues for the government during a time when calamities inf licted unexpected spending burdens for the government,” Dominguez said at the briefing of the Development Budget Coordination Committee (DBCC) for the Senate committee on finance on Wednesday. Duterte also said the windfall will help the government in
rehabilitation efforts for conflict-hit Marawi City and the quake-devastated Ormoc City. On July 20 the BIR collected P3.4 billion from this cigarette company as settlement of its tax liabilities with the date of the full collection of the remaining P21.5 billion and the other P5 billion for the VAT depending on how swift the Philippine Competition Commission approves the sale of Mighty Corp. to JTI. At the DBCC briefing for senators, Dominguez said government revenues as percent of the GDP beginning this year up to 2022 should improve to 17.7 percent, from the current 15 percent, through reforms in tax policy and administration. “Tax revenues-to-GDP will increase from 13.7 percent in 2016 to 17 percent in 2022. This will bring our tax effort to about the regional average,” he added. The national government aims to
country’s GDP, is needed in 2018 alone. This comprises a third of the budget proposed by President Duterte for 2018 amounting to P3.77 trillion. Dominguez also said the continued expansion of the local economy would be stymied without the tax and policy reforms embodied in the TRAIN proposal. “Of course not. It will not continue [expanding] as projected. [Growth may even be reduced to] less than half,” he said. Dominguez added funding the infrastructure projects under the “Build, Build, Build” program will be from a mix of revenues from the TRAIN, from the budget, from official development assistance (ODA) loans, and from hybrid financing. “The balance will come from loans from multilateral agencies. The Chinese financing will be paired with the Asian Infrastructure In-
GR 227894 Velasco, J
Mighty Corp. windfall to underwrite nonbudget items he Department of Finance (DOF) said the P30-billion windfall from Mighty Corp. as payment for its tax liabilities would help the government finance unplanned expenses as consequence of calamities visiting the country every so often. According to Finance Secretary Carlos G. Dominguez III, the windfall will significantly boost the national coffers at a time when the government has to find the resources to meet the unexpected cost arising from such calamities. Aside from adding to the calamity fund, the settlement money will also keep the company out of the cigarette business and be taken over by the Japan Tobacco International (JTI). The JTI takeover would increase the “sin” tax collection by P1 billion a month, help improve healthcare facilities, fund the procurement of additional medicines and
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hand, resulted in total capital of P97.4 billion, which was 9 percent higher than previous in the same period. The growth contributed to a healthy net interest margin of 3.03 percent as LandBank continued to manage its expenses and gains from interest-incurring investments. “We continue to double our efforts in strengthening our financial position, as we are determined to keep contributing significantly to improving the lives of our priority sectors, especially small farmers and fishers,” LandBank President and CEO Alex V. Buenaventura said. “We are confident about meeting our full-year target of P13.75 billion, as income from loans and investments remain strong,” he added. Thus, the bank said it would strengthen its Financial Inclusion Caravan program among over 4,000 unbanked and underserved Filipinos in fourth- and fifth-class municipalities nationwide this year. The program was launched in 2016 to educate Filipinos on basic banking services and encourage the opening of savings accounts. Kathryn Jose
generate revenues totaling P2.8 trillion, or 16.3 percent of GDP in 2018. “We benefited tremendously from the prudent financial management of the last decade. The prudence paid off in the form of decreasing national government debt-to-GDP ratio. Even with the programmed increase in the deficit-to-GDP ratio to pump-prime the economy, we [still] expect the debt-to-GDP ratio to be even more benign by 2022,” Dominguez said. As a fraction of government revenues, interest payments fell from 36.9 percent in 2005 to only 13.8 percent in 2016. As a fraction of expenditures, this also fell from a high of 31.1 percent in 2005 to only 12 percent in 2016. “We project that by 2022, the national debt should have climbed down to only 37.7 percent of GDP. National government debt has become more manageable by the day,” he said. Rea Cu
vestment Bank (AIIB) and Japanese financing will be paired with the Development Bank of the Philippines,” he said. Budget Secretary Benjamin E. Diokno said an estimated P1 trillion is needed by 2018 to fund the rolling infrastructure projects of the government. He said some P1 trillion is needed in 2018 alone to fund the very ambitious Build, Build, Build program under Duterte and some P8 trillion to P9 trillion over the next five years would be needed, according to Diokno. The projects under the Build, Build, Build program include the Metro Manila subway; the Mindanao’s mass transit railway; the commuter railway linking Tutuban in Manila to Clark, Pampanga; the Bonifacio Global City to Ortigas Road Link Project; and the Cebu Bus Rapid Transit, among others. Rea Cu
A10 Friday, August 18, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Q2 economic data: What does it mean?
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here are different ways to calculate the value of a nation’s domestic economy and its growth. The total income of the government, companies and individuals can be measured. Alternatively, the total amount of public and private spending can be used, or the value of all production of goods and services can be counted. Most governments use some sort of combination of these to arrive at a number. However, that data can never be completely accurate and, of course, misses a large portion of the underground economy, which is off the official books. Some nations, including the UK and Italy, even estimate the amount spent on illegal prostitution and illegal drugs as part of their economic output. The key, though, is for the government to be consistent in what figures they use to estimate the GDP so as to have a reasonable comparison between time periods. The Philippine Statistics Authority reported on Wednesday that the Philippine economy grew by 6.5 percent year-on-year from the second quarter ending on June 30, 2016. This growth was in line with estimates by most economists although below the 7-percent growth that the Department of Finance was shooting for. For the past three quarters, growth has averaged 6.5 percent, so there were no surprises here. When you consider the weakness of the Philippine peso, which raised import costs, higher crude-oil prices than one year ago, and a new administration, the numbers are good even if not great or as high as everyone wishes they could be. The other factor to consider is that in the second quarter of 2016 election-campaign spending boosted the economy. Growth last year at this time was 7.1 percent over 2015. But media company ABS-CBN just reported a decline of 43 percent in net income in the first half of 2017 due to the absence of election-related advertising, which lifted profits in the comparable period in 2016. Any economic data is subject to great “interpretation” by the government and media. Further, economic growth in early 2015 was dismal, so, naturally, 2016 looked strong. But bias in all reporting of even simple numbers is expected in this time of “political hell”. While the agricultural sector was comparatively strong in the second quarter (up 6.3 percent) and the industrial sector continued its 7-pluspercent growth in the past two years, government and household spending saw a substantial drop from 2016’s growth. In 2016 government spending grew by 13.5 percent versus 7.1 percent this year, and household final spending was up only 5.9 percent, from 2016’s 7.5 percent. Again, the election was a factor in both. Interestingly, export expenditure grew by 19.7 percent this year, against 10.6 percent last year. And the Philippines experienced very strong postelection year economic growth as compared to 2005 and 2011. What do all those boring numbers really mean? Looking at the first half of 2017, we can say with cautious optimism that the Philippine economy is becoming much better at surviving and thriving with our contentious and often nasty political climate, and global economic situations that are often chaotic and unpredictable. We sincerely hope that this trend will continue through the rest of the year. The Filipino people deserve it considering all the nonsense that they have to put up with. Since 2005
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Do nothing
D
As a result of the abject failure of “against-postponement” advocates to emerge from the comfortable confines of the Internet in order to engage the “for-postponement” crowd, in the statutorily mandated forum for doing so, it now seems that the postponement of the 2017 barangay and Sangguniang Kabataan elections in Mindanao, by the Comelec, is that much closer to being a certainty.
The other postponement initiative comes from the Commission on Elections (Comelec) itself. Acting on the possibility that no law will be passed postponing the barangay and SK elections, the Comelec is now looking to exercise its authority— given under the Omnibus Election Law—to suspend the holding of an electoral exercise when (and I’m paraphrasing here) the conditions for free and fair elections don’t exist. For the most part, this power is activated to suspend elections in areas hit by natural disasters, although, sometimes, it’s the shenanigans of men that make it necessary—for example: Marawi City. These two postponement initiatives are currently going through what I can only call preparatory phases. The first one needs a law to be passed; the other—the Comelec one—needs a definite ruling from the Comelec’s governing body, the Commission en banc; a decision that can only be reached after holding a public hearing on the matter. And that’s what the Comelec
election should become impossible in any political subdivision”. As it turned out—rather disappointingly—the manifestations made by those in attendance tended only to be affirmations of a desire to postpone the elections. Eight people representing various groups from all over Mindanao didn’t really speak to the necessity for suspension; they merely voiced their agreement to the oft-repeated line about suspension being necessary for winning the “war on the drugs”—the rationalization being used in that other postponement initiative. To say that these manifestations missed the point of the hearing is to belabor the obvious. Fortunately, the three who did speak up against postponement did address the issue head-on. One, most memorably, declared that the situation was not so dire as to outweigh the need to replace lackluster incumbents. This was potentially a powerful argument that, properly supported and substantiated, could have influenced the outcome. But, then again, it was neither properly supported nor even remotely substantiated in the Comelec’s hearing. In fact, that statement was not
James Jimenez
spox
AVAO—There are two postponement initiatives taking aim at the 2017 barangay and Sangguniang Kabataan (SK)elections. The first originated with President Duterte and was subsequently taken up by the House of Representatives. This is the initiative that says the 2017 barangay and SK elections ought to be postponed because, well, drugs. Right now, the House of Representatives is proposing that the barangay and SK elections be moved to May 2018, while the Senate has yet to weigh in on the issue. did in Davao earlier this week. The Commission en banc flew off to Davao and conducted a public hearing on the fate of the 2017 barangay and SK elections. The Commission en banc—represented by Chairman Andres D. Bautista and commissioners Christian Lim, Luie Guia and Al Parreño—started the proceedings by clearly setting out why the hearing was called to begin with: to solicit both information and opinion that would aid the Commission en banc in determining whether elections should be held in Mindanao, in view of the conditions and circumstances that gave rise to the declaration of martial law. Ideally, the responses should have contributed to the proving or disproving of the notion that there exists (as provided for in the Omnibus Election Code) “cause, such as violence, terrorism, loss or destruction of election paraphernalia or records, force majeure and other analogous causes of such a nature that the holding of a free, orderly and honest
too well received by the nearly 600 other people in attendance, most of whom were barangay incumbents themselves. Which begs the question: where were the ones who could have stood in opposition? Considering that a propostponement stance would predictably have many champions, it is probably fair to say that, at some unconscious level, this hearing was not meant to be a platform for the chorus but an opportunity for the dissenters to weigh in and possibly modify the outcome. Thus, precisely to make it easier for stakeholders to personally appear and make their case before the Comelec, this hearing was announced a week in advance; the call for the hearing—including when and where it would be held—was published in three newspapers of national circulation and echoed online; and the hearing itself was held in Davao, instead of Manila. And yet, after all of that, only two individuals speaking only on their own behalf, and one city council— represented by one council member—could be bothered to show up. As a result of the abject failure of “against-postponement” advocates to emerge from the comfortable confines of the Internet in order to engage the “for-postponement” crowd, in the statutorily mandated forum for doing so, it now seems that the postponement of the 2017 barangay and SK elections in Mindanao, by the Comelec, is that much closer to being a certainty. There is a lesson to be learned here, and I can only hope that voters start paying attention: Sometimes, all it really takes for something to happen is for some people to do nothing.
How do we move forward in the ‘new economy’? Abigail P. Dumalus
EAGLE WATCH
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ew laws on free public Internet access (Republic Act [RA] 10929) and free-education tuition (RA 10931) have been getting ample exposure, as the current administration seeks to advance its agenda for inclusive development. While these are notable steps toward efforts to boost prospects for economic growth through enhancing productivity and strengthening competitiveness, there are more significant technological shifts already reshaping our lives at breathtaking speed. In 2016 World Economic Forum (WEF) founder Professor Klaus Schwab has written the book entitled The Fourth Industrial Revolution about the fusion of new technologies in mainstream discussion. He asserts that “there has never been a time of greater promise or potential peril”, as
changes arising from this revolution would be irresistible. What Schwab is declaring seems extraordinary and detached from individuals’ everyday reality. People have lately been living in a world where artificial intelligence, computerized algorithms, medical
technologies, robots, 3-D printing, and unmanned vehicles, among others, have become plausible. The ability of these innovations to “disrupt” current personal and business relationships has been extensive in significance and scope. Indeed, technology’s complexity level is becoming ever tangible that it is considerably impacting labor markets. Technology is boosting productivity and improving efficiency, but doing so means slashing necessary work-force numbers to yield similar or even greater results. For instance, Amazon, the online retail giant, is tinkering with possibly having robots “autonomously remove items from shelves and place them in containers”. While it has employed tens of thousands people, Amazon wants to make its operations even more streamlined by adding more units to their 15,000 robots already performing the routine tasks. Economists are observing the trend that machines would soon
replace people for most of current economy jobs. In 2013 Carl Frey and Michael Osborne of Oxford University have studied 702 occupational categories in the US and found that 47 percent of workers, engaged in less-skilled activities, are most probably looking to lose their jobs to automation in the next couple of decades. In 2016 the International Labor Organization (ILO) has released a report on the “Future of Jobs at Risk of Automation”, covering five Southeast Asian countries in which 3-in-5 jobs have a high risk of automation over the same period. The same ILO report indicates that nearly half of employment in the Philippines has a high likelihood of automation. Salaried Filipinos working in retail trade, banking, hotel and business-process outsourcing (BPO) industries fall into the high-risk grouping of automation. Eighty nine percent of BPO/call-center workers’ jobs are See “Dumalus,” A11
Opinion BusinessMirror
opinion@businessmirror.com.ph
InsurTech and the future of insurance
Friday, August 18, 2017 A11
And the message of an angel Tito Genova Valiente
annotations
Atty. Dennis B. Funa
INSURANCE FORUM
I
nsurTech is a blending of the words “insurance” and “technology”. It refers to the digital revolution and technology innovations shaking up the insurance industry. This revolution has speeded up beginning 2016. It is still at its early stage. “Innovation” and “disruption” are by-words used to describe the innovations happening at break-neck speed. In the June 2016 Global FinTech Survey conducted by PwC, it was found that 74 percent or three in four insurance companies, believe that some part of their business is at risk of disruption within the next five years. At the background of this technological upheaval is the continued phenomenal growth of online retail sales. In China alone, online retail sales grew by 26.2 percent in 2016. Indeed, InsurTech has grown from a mere presence in the World Wide Web. InsurTech was brought about by the innovations in technology, such as gadgets, Internet speed and software. Gadgets that work in insurtech include GPS trackers, trackers worn on our wrist or other wearables, cell phones and tablets. In most cases, fusions of several technologies are involved. Indeed, an Internet of Things. It has been estimated that about 500 million smartphone users will be using a mobile medical app in 2017. It is projected to grow to 1.7 billion smartphone and tablet users by 2018. Technavio has predicted that the worldwide InsurTech market will grow at a compound annual growth rate of over 10 percent between 2016 and 2020. It seems that InsurTech is here to stay. According to Chris Skinner, managing partner of BB Fund, “Companies who think they can still wait a couple of years until they start to embrace digital innovation will cease to exist 10 to 15 years from now.” More important, it was brought about by the mind-set of millennials who are very much comfortable with digital technology. In a world driven by huge data, efficiency through technology would seem heaven sent. It also generates customer loyalty. The insurance industry is such a traditional industry that embracing technology expectedly should take more time. The rise of InsurTech is highly correlated with the rise of financial technology, or fintech in the banking industry. Indeed, InsurTech has been described as a subset of fintech. To say the least, these are game changers. Already, after fintech and InsurTech, we are seeing the birth and growth of healthtech. There are many facets to insurance. Every aspect of the industry is now being reformed by technology. InsurTech is multifaceted. We now have highly customized policies, personalized insurance solutions. The one-size fits all solution is being squeezed out. With InsurTech, buying an insurance policy can be done from the comfort of your home, your office and through your smartphone in less than 15 minutes. Today, sales of insurance is highly dependent on the call center. At least 78 percent of client contact is though the phone. But change is imminent with the rise of Web-based platform and mobile applications by which insurers can interact with customers.
Data from Internet-based devices
Insurance products and services will become more customer-centric, giving customers power like never before. On the other hand, for the insurers, big data and predicting risks will be digitally based. Indeed, many aspects of the insurance business are being remodelled. Start-ups are reinventing the way people buy insurance, how insurers manage risks, and other solutions to a host of disruptions.
Examples of InsurTech
Data about a driver can be automatically linked to his car insurance. Instead of computing premiums,
The insurance industry is such a traditional industry that embracing technology expectedly should take more time. The rise of InsurTech is highly correlated with the rise of financial technology, or fintech, in the banking industry. Indeed, InsurTech has been described as a subset of fintech. To say the least, these are game changers. data on the driver is immediately made available to the insurer. In case of a car accident, emergency services can be made available and insurance claim can be made on the spot using an app. This can be made possible through software. With respect to health insurance, biometric information is linked to the insurance policy. This can be done, for example, through the use of Apple Watch. On-demand insurance for specific events can be made available, such a car insurance while borrowing a friends’ car. This can be made possible through the use of telematics insurance or technology where a gadget called a telematics box is placed in the vehicle that measures various aspects of how one drives. Insurance premiums are, therefore, based on the current driving behavior of the driver rather than on historical performance. The premiums are, therefore, personalized. The technology in the telematics box uses a GPS system, a motion sensor, a SIM card—to compile the data and the software.
InsurTech start-ups
A secondary industry has been born, the InsurTech start-ups or the InsurTech companies. The year 2016 was, so far, the biggest year for InsurTech start-ups, with $1.7 billion worth of deals. According to Sam Evans, founder of Eos Venture Partners, “Insurtech established itself as a stand-alone investment sector last year and we expect the momentum to continue to build.” Annual investments in InsurTech start-ups have increased fivefold over the past three years, with cumulative funding reaching $3.4 billion since 2010. Friendsurance is a Berlin-based P2P insurance start-up. It is funded in part by Horizons Ventures, a private investment arm of Li Ka-Shing. P2P is a peer-to-peer insurance model that is causing disruption in the insurance market. Examples are Tongjubao in China, Friendsurance in Germany, and Guevara in the UK. It has been observed though by some that few are actually embracing InsurTech and few have actually embedded InsurTech as an integral part of the insurer’s strategy. It has been reported by the PwC Global FinTech Report 2016 that only 43 percent claims that they have fintech at the heart of their corporate strategies. Moreover, only 28 percent are exploring partnerships with fintechs. And less than 14 percent participate in fintech ventures or incubators. PwC concluded that many insurers “are missing the opportunity to become proactive”. CB Insights has stated that $4.7 billion has been invested from 2011 to 2016 in about 460 InsurTech start-ups. This is low compared to about $33 billion invested in banktech.
W
hat day is it today? In the old seminary where I have the privilege to be one of the lay persons allowed to teach, the students know what my question meant.
It was Tuesday, the 15th of August. The seminarian nearest to where I was standing said: Assumption. What does that mean? I could have volunteered the information but in that room I was not the expert about faith and theology. Teach me: I am the most illiterate here when it comes to the teachings of the Catholic Church and the Bible. Whereupon there came up loud chatterings. Everybody had an answer. I turned to my right and this bright open face responded to my upturned hand. He stood up, for they always stand up and spoke about the day when Mary, the Mother of God, after finishing her earthly life, was taken body and soul into Heaven. I looked around and I could sense a feeling of superiority about my students. This was not sociology or anthropology I was discussing. They knew I was venturing into their territory. My sweet preface about not really knowing the subject matter could bring out of his shell even the most timid of these future priests. Is this belief historicized? Slowly, I was gaining ground. Is the assumption of Virgin Mary a belief that had been there since time immemorial?
My cursory research showed that, as early as the 5th and 6th century, AD, the belief that Mary went up to Heaven had already been widespread. Fragments about the ancient teachings referring to this event exist and are preserved. There are traditions or belief systems that abound regarding this aspect of Mary‘s life. Did Mary die? A tradition has it pointing to Ephesus where Mary’s tomb could be found. This story supports a physical death. Somewhere, there is also the narrative about the tomb being opened to reveal only the shroud, without the body. This discovery supposedly founded the belief that she rose from the dead, for there was the tomb first, and went up to Heaven. As to the historicity, the material juncture, of the narrative, a student raised his hand, stood up, and proceeded with all the scholarship he could muster. It was Pope Pius who declared the Assumption as part fo the official teachings of the Church. It was in 1950. Ah, the Assumption has a history, I blurted out as if it was the most glorious epiphany for me.
It is a dogma then. The students looked back at me as if it was illegal for an anthropologist to use that word. Who was this Pope Pius XII? Was he the pope who entered into an agreement with Nazi Germany and was he the leader of the Church accused of being silent while Jews were being persecuted? I could touch the intense gaze from the students. This lecturer is digging his own grave, they must be telling themselves. The angels were present in the life of Mary, with Joseph and Jesus. The angels are missing in the story of her Assumption. The angels appear only in the artistic rendering of her ascend to Heaven. In the Italian Renaissance painter, Titian, the angels frame Mary while below her a large cloud is held and pushed by more angels. Above her, God the Father looms as a figure made dark by the splendor of gold sheen behind Him. His body appears to be cut by a cloud with very sharp lines. Below Mary are the disciples
in various positions of awe and surprise. God, Mary and the swarm of figures below her are situated close to each other, to dramatically realize the image of one who is going up to the Heaven as bod as a matter. The Flemish Baroque painter, Peter Paul Rubens, of the 16th century, painted Mary in divine swirling motion, with the cherubs around her defining the elongation of the figure in blue. The disciples and other female followers of Mary are left on the ground, inspecting the tomb of Mary. I never got to ask my students about the absence of angels. That Tuesday, a student was left behind attending to the sound system used in the lecture. I could feel him looking at me as I heaved my backpack and prepare to walk with my cane. Take care, Father. They are used to priests in the classrooms. Thank you, I answered without looking at him. He was the angel assigned to me that day.
E-mail: titovaliente@yahoo.com.
135 children to graduate from Caritas Manila’s Hapag-Asa Integrated Nutrition Program
households, especially mothers. Caritas Manila, through its Damayan program, works with the local government units (LGUs) and parishes in identifying families and children that need to be part of the program. For the first month, Operation Timbang was done with the help of the Barangay Health Office to assess the nutritional health of the children. As part of the program, once a week and usually during Saturday professional health volunteers and trained health staff from Caritas Manila provide seminars and modularized training through “Gabay sa Kalusugan”. Participants are usually the parents of the children undertaking relevant activities that emphasize the importance of
continuous nourishment, such as orientation on diet-management education, ex ploring planned based diet, proper food preparation, maintenance and sanitation of food production, different health hazards and other related activities to meet the needs of the participating communities. Volunteers from the community also extend their full support to the program by giving their time, particularly on food preparation using nutrient-enriched Manna Pack Food Supplements. MannaPack Fortified Rice is made of rice, soya and dehydrated vegetables, while MannaPack Fortified Potato is made of potatoes with sweet potato flavor. Malnourished children are fed five times a week for six months. At the end of each month, the children are weighed to measure the improvement in their nutritional status. Hapag-Asa Integrated Nutrition Program is the Church’s response to fight malnutrition in densely populated communities where circumstances of deficiency are palpable. It was launched by the Pondo ng Pinoy Community Foundation (PnPCFI), then headed by Cardinal Gaudencio B. Rosales and 13 other bishops in July 2005 in partnership with Assisi Development Foundation (ADFI) and Feed the Children Philippines
existing outside the labor force able to secure these “safety nets”? Serious questions for policymaking based on the surge of up-and-coming technologies, the shifting landscape of employment, and the variable effect on diverse groups in society need to be addressed. Society ought to navigate its way into this newly emerging economy by discerning how to maintain provision of social benefits to everyone. First, social policy may need to be strengthened in terms of universally providing benefits to individuals, including education, health care, housing assistance, insurance and pension, while jobs are growing to be less stable, less repetitive, and largely less rewarding. Second, the establishment of a “universal basic
income” may be explored, in that each citizen would certainly have access to basic subsistence goods and not be afraid of abject poverty. Third, education may be reexamined as ongoing pursuits for lifetime learning and job retraining through institution of financially funded “activity accounts”. Society must figure out how to support people to live satisfying lives amidst this technological revolution. First, volunteerism among citizens may be promoted by providing benefit credits (i.e., income add-ons, social benefit eligibility) for increased community involvement and participation in nonprofit or charitable work. Second, school curricular reforms may be considered, as new economy jobs
Rev. Fr. Antonio Cecilio T. Pascual
SERVANT LEADER
C
aritas Manila, the social services and development ministry of the Archdiocese of Manila, will see the graduation of 135 children ages 3 to 12 this August from malnourishment through its Integrated Nutrition Program.
The children are from Barangay 649, also known as Baseco compound. All of them are from lessfortunate families. They are of different religions, such as Catholics, Christians, Muslims and Iglesia ni Cristo, and have undergone the sixmonth integrated program to improve their health. The Hapag-Asa Integrated Nutrition Program aims to educate families in urban-poor communities in Metro Manila, most especially mothers and women, about dietary programs and nutritional continuity and improve the health condition of malnourished children. Its goal is to help families help their communities become free from malnourishment. We do this not only by feeding the children but also by educating
Dumalus. . .
continued from A10
threatened to give way to technology substitution. Particular individuals face more risks than others from new technologies and their consequences for the labor force. Differences based on age, ethnicity, gender, income and race result in varying consequences across demographic groups, but it is apparent that those without highskill training would be less equipped to adjust to the emerging economy. If automation is going to take over workplace processes, and health care, social security and other benefits are obtained through employment, how are displaced workers or those
(FTCPI). CBCP-NASSA Caritas Filipinas Foundation, Feed My Starving Children (FMSC) and Risen Savior Missions (RSM) also joined the efforts of Hapag-Asa in fighting malnutrition in the Philippines. Based from the records of Caritas Manila, more than 2,000 malnourished children from Tondo, Payatas and Baseco have graduated from the Hapag-Asa Integrated Nutrition Program in 2016. Interested parishes and organizations that want to bring the essence of Hapag-Asa Integrated Nutrition Program to their communities may contact +(632) 562-0020 to 25 or visit at Caritas Manila Inc., 2002 Jesus Street, Pandacan, Manila. To help Caritas Damayan and to get more information about the program, e-mail caritas_manila@ yahoo.com Caritas Damayan is the preventive health and disaster risk reduction and management program of Caritas Manila.
To know more about Caritas Manila, visit www. caritasmanila.org.ph. For your donations, call our DonorCare lines 563-9311, 564-0205, 09997943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph. For comments, e-mail veritas846pr@ gmail.com.
entail people to develop skills in complex problem solving, critical thinking, creativity, people management, emotional intelligence, decision-making, service orientation, negotiation and so on. Third, expansion of arts and culture for leisure time may be envisioned, as automation of traditional jobs could open the possibility of a new “creative economy” wherein people’s aspirations for self-expression and self-enrichment are nourished. Ultimately, we need to ask ourselves: “How do we move forward in the ‘new economy’?” Abigail P. Dumalus is a former faculty member of the Economics Department of Ateneo de Manila University. Dumalus is studying at the University of Aberdeen in Scotland.
2nd Front Page BusinessMirror
A12 Friday, August 18, 2017
www.businessmirror.com.ph
Chinese tourists to get visa upon arrival
T
By Joel R. San Juan
@jrsanjuan1573
HE Department of Justice (DOJ) has issued a department circular granting visa upon arrival (VUA) to Chinese nationals in a bid to encourage more tourists and investors from China.
Bureau of Immigration (BI) Commissioner Jaime H. Morente announced that in line with the DOJ circular signed by Justice Secretary Vitaliano N. Aguirre II, the agency will be issuing landed visas to Chinese nationals at the Ninoy Aquino International Airport (Naia) and three other international airports (Clark, Mactan and Kalibo) and five seaports (Manila, Puerto Princesa, Subic, Laoag and Caticlan) throughout the country.
Govt. . .
Morente said the program is open to Chinese nationals who are members of tour groups organized by tour operators accredited by the tourism department; businessmen endorsed by local and foreign chambers of commerce and other government agencies; and athletes and delegates to conventions and exhibitions. “ Through this scheme, we aim to facilitate the expeditious entry and admission of Chinese nationals
Continued from A1
“LNG, that’s one area we really want to successfully bring into the country. However, it’s a bit tricky because we have to form partnerships…but the key is to be able to understand how economics would work because it is a huge investment. An LNG facility is $600 million to $1billion, that’s why you need partners to be able to balance it off. Second, the economics must be carefully understood in terms of how the investment will be,” Romero explained. When Lista was asked if First Gen and Shell have signified interest anew, following Cusi’s pronouncements that private-sector proposals would be entertained, the PNOC official had this to say: “Are they interested? There are no official offer from Shell and Lopez Group.” Early on, First Gen said it was keen on taking in a, equity interest of 30 percent to 35 percent in an LNG project along with other partners, which could include the government. “On the equity front, we’ve always been flexible. Right now, we’re solely underwriting the risk. But the whole idea is to bring in partners and to cooperate with a number of partners for LNG to be able to make sure that the LNG terminal is built. What we’d like is to have a significant ownership. What that means is it can be as little as 30 percent and have others doing it depending on who will comprise the total consortium,” Puno had said. When further asked why settle for a minimum of 30 percent to 35 percent, Puno said First Gen “never envisions to be full owners of the LNG terminal…. Right now, we are 100 percent on our own, but we realized that this can’t be. So for us, from 100 percent, how low is low? If there’s a model 25, 25, 25, 25 among four players, and it’s feasible, then we are open.” First Gen is keen on building a $1-billion LNG facility in Batangas, where its four gas plants are, with the target completion date between 2022 and 2023. First Gen and Shell have been vocal in their intention to put up their respective LNG facilities. However, these plans couldn’t take off in the past because there was no clear policy direction from the government. One concern raised last year by First Gen was the absence of an energy-mix policy from the government. Early this year, the DOE formally declared that it would no longer pursue the previous administration’s energy mix in the form of 30 percent from coal, 30 percent from renewable energy, 30 percent from natural gas and 10 percent from oil-based power plants. Instead, it is now pursuing to develop technology-neutral energy sources in meeting the ideal proportion of 70-percent base load, 20-percent midmerit and 10-percent peaking requirements for power generation. A baseload power plant provides continuous supply of electricity throughout the year with some minimum power-generation requirement. These include coal, nuclear and possibly LNG. Midmerit plants supply the gap between baseload and peaking plants, which operate during peak hours when there is high demand for electricity. Natural-gas plants are common examples of midmerit plants.
LNG hub
Cusi said the government is aiming to turn the Philippines into a hub for LNG, amid a depletion of natural gas from the Malampaya gas field in Palawan in less than a decade. “Two objectives: One, is for our national energy strategy when the Malampaya is depleted. Two, we want to put the Philippines in the LNG hub for Asia to complement Japan, Singapore. We want to take that opportunity for our country’s economic development.” LNG is natural gas that has been converted into a liquid state for easier storage and transportation. Upon reaching its destination, LNG is regasified so it can be distributed through pipelines as natural gas. “The Philippines already failed in aviation becoming a hub despite our geographical advantage and location, and in maritime. So this would probably [be] an opportunity. It’s a dream,” the energy chief said. The Malampaya gas field is expected to be depleted by 2024. Currently, around 3,500 MW of power-plant capacity is dependent on the country’s sole natural-gas source. Groundbreaking for the LNG project was targeted to happen early next year, with project completion being eyed within the six-year term of President Duterte. “We will try to make it happen within the target schedule. The important thing is we do it properly to be sure that it can be completed,” Cusi stressed. Senate Energy Committee Chairman Sherwin T. Gatchalian said there is an urgent need for the power sector to put in place an LNG framework. “We would be tackling various legislative measures that will talk about LNG and to hasten the development of the LNG industry here in our country. We really need to put the framework in place,” he said. “We really need to speed up the industry itself…we need to give some development either through incentives and other frameworks—and that calls for legislation.”
MORENTE: “Through this scheme, we aim to facilitate the expeditious entry and admission of Chinese nationals into the country and thus attract more tourists and investors from China.”
into the country and thus attract more tourists and investors from China,” the BI chief said. Under the rules, interested Chinese nationals may, through their tour operator, apply for their landed visas at the BI for an initial authorized stay of 30 days. They may apply for extension of up to a maximum period of six months. The BI added that applicants should be holders of valid passports and return tickets, and they should not be in the BI’s blacklist, or subject of an Interpol red notice. Each of them shall be charged a visa fee of $25 and P10 legal research fee.
Applications for VUA should be filed at least 10 working days before their arrival. If the applicants are qualified, the BI commissioner shall issue an order approving the VUA, which will be presented by the Chinese passengers to immigration officers upon their arrival in the country. Copies of the order shall also be furnished to the BI port operations division, whose personnel (immigration officers) shall implement the visa on the travel documents of the Chinese passengers during the conduct of arrival formalities at the port of entry. Morente said a total of 106,036 foreigners have appeared at various field offices of the bureau in compliance with their annual reportorial obligation from last year up to March of this year. The annual report of aliens is implemented yearly by the BI pursuant to the 1950 Alien Registration Act that requires all foreigners reg-
istered with the bureau to appear in person at the nearest immigration field office and pay their annual report fees. Chinese nationals again topped the list of registrants totaling to 28,189, followed by 10,980 Americans, 8,799 Koreans, 6, 680 Taiwanese and 5,133 Japanese. Also in the top 10 are Britons (2,886), Germans (1,929), Australians (1,615) and Indonesians (1,332). Statistics also showed that the bulk of the registrants are holders of pre-arranged working visas, who numbered 24,514, a nd nat ive -bor n a l iens, who totaled 18,301. Earlier, the BI reported that a total of 2,717 foreigners were barred from entering the country during the first six months of the year as part of the agency’s bid to strengthen border security and thwart the entry of undesirable aliens. Of the total, 1,594 were Chinese nationals, followed by Indians, 127;
South Koreans, 117; Americans, 106; Vietnamese, 101; and Indonesians, 43. Morente said of the 2,717 aliens who were ordered to return to their countries from January to June, 2,421 were intercepted at the Naia, while the remaining 296 arrived in the airports of Cebu, Davao, Clark, Iloilo, Kalibo, Laoag and Puerto Princesa, and the Zamboanga seaport in Zamboanga City. The number of aliens denied entry during the first semester, according to Morente, was 39 percent higher compared to the 1,948 aliens who were turned back in the same period last year. “We shall continue to exercise utmost vigilance in screening arriving foreigners by seeing to it that they are properly documented and are not likely to become public charges while they are here,” the BI chief said. “It is our job as gatekeepers of the country.”