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Tuesday, August 22, 2017 Vol. 12 No. 313

Health groups want TRAIN to include tobacco-tax hike 15.5M By Rea Cu

The estimated number of smokers in the country by 2022 sans a new round of tax hikes on tobacco products

The Sin Tax Coalition, an organization of about 100 health-care professionals’ associations and civil-society entities, made the appeal to President Duterte as they were alarmed by reports that there will be an additional 1 million smokers in the country by the end of his term in 2022. See “Train,” A2

‘LIMIT BAN ON BMReports PHL POULTRY TO AREAS HIT Can 13-year-old manual save PHL from bird flu? BY BIRD FLU’

Continued on A5

By Jasper Emmanuel Y. Arcalas @jearcalas

Part Two

T took only one word to make a 13-year-old white manual gathering dust in a shelf into the government’s “bible” against avian influenza (AI): confirmed. This word also managed to turn an office of at least 10 government veterinarians into a “ghost town”. “On the Saturday after the AI outbreak in San Luis, Pampanga, was announced, people here were immediately deployed,” government-employed animal physician Joy Lagayan said. “We used to be noisy here. Now, all of them are in the field. We are now like a ghost town,” added Lagayan, who is with the Bureau of Animal Industry’s (BAI) Animal Health and Welfare Division office, staring at the empty cubicles in the 30-square meter office.

Armed WHEN Lagayan’s colleagues were deployed in the town of San Luis—ground zero of the outbreak—they were armed with their bible: the “Avian Influenza Protection Program [AIPP] Manual of Procedures”. “All of us have this. Even those in

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ealth organizations in the country are seeking further hikes in the taxes on tobacco products as early as next year by including such measure in the first tranche of the Duterte administration’s Comprehensive Tax Reform Program (CTRP), now known as the Tax Reform for Acceleration and Inclusion (TRAIN).

he government is appealing to Japan and South Korea to reconsider the total ban it has imposed on Philippine poultry products, after Manila confirmed to the World Organisation for Animal Health (OIE) the outbreak of bird flu in Pampanga. Agriculture Secretary Emmanuel F. Piñol told the BusinessMirror that the government would ask Seoul and Tokyo to limit the ban on poultry products from areas affected by bird flu. “We assure our trade partners that our poultry products are safe. We have already contained the outbreak in San Luis, Pampanga, because we have instituted stringent quarantine measures,” Piñol said. “We are very strict in controlling the bird-flu incident. We are not allowing poultry products from San Luis to exit the area,” he added. Documents obtained by the BusinessMirror indicated that Philippine Ambassador to Seoul Raul S. Hernandez has appealed to South Korea’s Ministry of Agriculture, Food and Rural Affairs (Mafra) to

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A man sells chickens via a bicycle’s sidecar in Jaen, Nueva Ecija, on August 16. The Department of Agriculture has named Nueva Ecija as one of the areas with a reported outbreak of the bird-flu virus. The government is now applying protocols based on the “Avian Influenza Protection Program [AIPP] Manual of Procedures,” formulated 13 years ago, to address the outbreak that began in San Luis, Pampanga. NONIE REYES the field at the moment,” she told the B usiness M irror in an interview. “It made things a little bit easier for us. What are written here are the things we are following now.” The contents of AIPP trace back more

than a decade ago when the Philippine government was keen in protecting its borders from the intrusion of the dreaded bird-flu virus that resurfaced in Asia in 2003.

Compliance is good business sense By Henry J. Schumacher

am often asked by companies why they must create and implement anticorruption policies and procedures. The answer is easy: to meet the legal compliance obligations and mitigate corruption risks. Corruption creates potential criminal, civil and business consequences. Implementing adequate procedures can help manage these risks while creating a competitive business advantage. Gan Integrity Inc. has developed a Compliance Program Guide and I have taken the liberty to quote on some of their arguments for risk management: Liability—criminal and civil penalties for corruption offences can cost your company millions and result in tough prison sentences. Some pieces of anticorruption legislation have near global jurisdiction and can hold almost any company liable for corruption. Continued on A14

Continued on A2

n japan 0.4682 n UK 66.0449 n HK 6.5576 n CHINA 7.6872 n singapore 37.5474 n australia 40.4457 n EU 60.1504 n SAUDI arabia 13.6799

Source: BSP (18 August 2017 )

A2 Tuesday, August 22, 2017

BMReports BusinessMirror

Can 13-year-old manual save PHL from bird flu? Continued from A1

It was adopted on April 20, 2005 through the Joint Department of Agriculture (DA) and Department of Health (DOH) Administrative Order 1. This order also established the National Avian Influenza Task Force (NAITF), according to Arlene Asteria V. Vytiaco, the government’s focal person for AI. “The AIPP Manual of Procedures has become one of the primary references for information on the government’s AI prevention program and preparedness plan,” Vytiaco said in the foreword of the AIPP 2016 updated version. “The courses of action mainly address HPAI [highly pathogenic Avian Influenza] incursion.”

Stages UNDER the government’s “Preparedness and Response Plan for Avian and Pandemic Influenza” (PRPAPI) there are four possible stages the Philippines could encounter with bird flu: 1) an AI-free nation; 2) AI outbreak in poultry; 3) AI transmission from poultry to humans; and 4) AI transmission among humans. “The pandemic clock is ticking. It cannot be predicted when the pandemic will occur, but it is always best to be prepared all the time,” then-Health Secretary Francisco T. Duque III said in the preface of the document. “After all, it wasn’t raining when Noah built the ark.” The AIPP only outlines procedures to undertake for Stage 1 and Stage 2 of a bird-flu scenario as outlined by PRPAPI.

Prevention THE imposition of import bans is one of the most important preventive measures that the Philippines implements to avert intrusion of bird-flu virus.

DOT. . .

Continued from A14

Panga said there was an “experiential zone” outside the main tube station, where visitors could have their photos taken with Philippine backdrops, and use interactive gadgets that virtually brought the users to the country. Samples of well-loved Filipino delicacies, like lumpia, turon and ice cream in ube, mango and macapuno flavors, were offered to visitors. Dennis Barela, a multiawarded flair bartending champion, wowed the crowd with tricks and turns with bottles of alcoholic beverages, the DOT said. Young London professionals were, likewise, attracted to the Filipino cultural dances, with a few even braving the Tinikling, with their leather shoes on, the agency added. “The Canary Wharf Station has a 1.2-million footfall a week. There are also more than 100,000 working professionals who hold office in the area. The consumer

Fintq. . .

Continued from A14

and services of formal institutions, such as banks, cooperatives, insurance and micro, small and

Under the AIPP, the Agriculture Secretary is authorized to issue a memorandum order that would temporarily ban the importation of poultry and poultry products from AI-affected countries. These products include: live poultry, wild birds, day-old chicks, semen, eggs and other poultry products and by-products. Section 1.1.1. of the AIPP states that the DA can impose a temporary ban on these products based on the information provided by the affected countries to the World Organization for Animal Health (OIE) or notification from a Notifiable Avian Influenza (NAI) Affected Countries/Zones. Upon the imposition of a ban, the Philippines stops the processing of and issuance and giving import permits to NAI-affected countries. Furthermore, products that are in-transit to the Philippines prior to the declaration by the OIE of its source country as NAI-affected shall be denied entry into Manila. “The DA-BAI shall advise the exporting country or zone of the decision to have cargo entry discontinued and the courses of action to be taken by the Philippines,” Section 1.4.2. of the AIPP said. “Live poultry and bird importation shall be humanely destroyed upon arrival in the Philippines and buried in a designated area. Poultry and bird product, including hatching-egg importation, will be destroyed and disinfected prior to burying in designated area,” it added. “Processed poultryproduct importation will be rendered and buried in designated area.” The DA has been strict in imposing this measure for the past years. In fact, whether a NAI-affected country reports an outbreak in a specific region or in the entirety of it, the DA imposes automatically a blanket ban on imports from it.

Biosecurity

UNDER the AIPP, the government shall also conduct a biannual surveillance on identified “poultry critical areas” in the Philippines. These areas are considered the most vulnerable parts of the country that could be infiltrated by the birdflu virus. These “critical” areas are identified based on the following: presence of waterfowl and migratory birds, hotspots for illegal trade and wildlife and live-bird markets. “For every critical area, six barangays shall be identified for sample collection. Thirty blood samples, 30 oropharyngeal [throat] and 30 cloacal [body cavity into which the intestinal, urinary and genital canals empty in birds] swabs shall be collected from target poultry in each of the six identified barangays,” AIPPS’s Section 4.1.3.2. reads. The samples shall be submitted to either the government’s regional laboratories or to the national laboratory in the BAI. At present there are at least 60 identified poultry critical areas across 13 regions in the country. The government also established NAI-free poultry-production zones that would allow easier micromanaging of areas in case of an outbreak. These zones are identified based on its natural geographic boundaries, such bodies of water, mountain ranges or controllable points of entry. Under the AIPP, the country’s 17 administrative regions have been divided into 25 NAI-free zones. The establishment of these zones aims to recognize defined territories with existing administrative jurisdictions that can prevent the entry or control the spread of NAI, according to the document. Another objective is to facilitate a more efficient surveillance and detection of the disease

and to ensure availability of distinct and disease-free production areas both for export and local markets.

Surveillance UNDER the AIPP, the local government units, particularly those in the identified zones, shall serve as “frontliners” in the surveillance of AI. The surveillance shall be conducted based on a sampling frame. This “sampling frame” includes the list of all farm or poultry owners in a locality, as well as other supporting units or industries that handle poultry and poultry products, according to the AIPP. The list shall also contain information on the poultry demographics in the area, including the names of farm owners, farm location, species of poultry, disease profile, biosecurity practices and even marketing practice. “The BAI shall identify the areas to be sampled and the number of samples needed per area. The DA-Regional Field Offices shall be responsible for the collection of samples in the identified areas,” it added, saying the sampling shall be conducted at least twice a year. The government has made it known that two farms in San Luis, Pampanga, have been struck by the AI subtype A-H5 virus. However, the question how it got there remains unanswered. Government officials are ruling out the probability that it was caused by migratory birds. Some, like Agriculture Secretary Emmanuel F. Piñol, considers smuggling of fowls from China as the culprit. Whatever the cause may be, the outbreak in these towns shows that despite preventive measures, the Philippines—like any other Southeast Asian region—remains vulnerable to the dreaded bird-flu virus. To be concluded

activation is meant to engage the British consumers for a deeper understanding and appreciation of the Philippines not only as a leisure destination but business, as well,” Panga explained. Partners of PDOT London, such as Premier Holidays, Hayes and Jarvis, Crystal Travel and Selective Asia, created holiday packages to encourage the public to consider the Philippines for their holidays. Pioneering flag carrier Philippine Airlines (PAL) also participated in the event to provide special fares to the Philippines. Selective Asia, for one, prepared a nine-night holiday to the Philippines, in cooperation with PDOT London and PAL, which was raffled off to visitors. The Philippine booth was constantly engaged with guests wanting to enter the competition to get a chance to win the luxury holiday for two persons to the Palawan, dubbed by Travel + Leisure magazine as the “best island in the world”, with stays at Sheridan Beach Resort & Spa in Sabang and Kalaw, and Balai Adlao in El Nido, plus Henry

Hotel and Manila Hotel in the city capital. Meanwhile, almost 200 bloggers and influencers from the UK attended the PDOT London’s second pub night at Smollensky’s, Panga said. Guests also included the agency’s travel trade partners and friends in the local tourism industry. Philippine Ambassador to the Court of Saint James Antonio M. Lagdameo welcomed the guests and toasted to a “fun” evening as Panga talked about the Canary Wharf takeover project. The PDOT London official said “digital marketing partnerships” have been forged with Expedia, Secret Escapes, Amazon and Singapore Airlines, and cited a forthcoming Bloggers Famtrip to the Philippines, as another initiative to promote the country. He also announced a tieup with adventure travel organizer Large Minority (LM) for the Philippine Sailing Challenge, scheduled from November 18 to 26 in Boracay Island, as well as the launch of the agency’s new destination app— Visit Philippines—which is now available to download both in iOS and Android versions.

According to its web site, LM offers adventurous, team-based competitive group travel experiences that give back to flagship charity projects in the countries visited. Julian Carnall of LM, who was at the pub night, said the Philippines Sailing Challenge is a “sailing adventure for nonsailors”. Participants will be ferried around Boracay and its uninhabited islands aboard a locally skippered paraw, with challenges, such as fishing for dinner and climbing coconut trees, among others. The available travel packages are at $1,840 per person (for a three-man team), and $2,750 per person (two-man team), at the company web site http://bit.ly/2xinCVw. Guests were treated to Filipino food and cocktails, live music and “bandaoke” jamming, a newspaper dance challenge, a San Miguel beer-drinking competition and flair bartending stylings of Barela. A 10-night holiday to the Philippines was also raffled off at the end of the night, courtesy of Huma Island, Makati Shangri-La, Dusit Thani Manila, Sheridan Resort and Spa, Asia Grand View and Malaysia Airlines.

medium (MSME) lenders. Through their own efforts and Fintq’s financial incentives, we also promote a culture of self-help and entrepreneurship and sustainable growth,” Villanueva said. Fintq has a network of 50 global

partners, which also include government agencies, development organizations and multimedia firms, and a market coverage of 100 percent of the country’s provinces with 20 partner-rural banks, 93 percent of cities and 14 percent

of municipalities. With its business model anchored on the firm’s mission to engage and empower people to experience innovative financial services, Fintq has received 35 local and international business and social development awards. Thus, another primary objective of the movement is to promote awareness of innovative, accessible, easy and cheaper tools of acquiring financial ser v ices among lower socioeconomic groups, who are part of the unbanked and financially underserved sector. With Kasama Ka, Fintq aims to emphasizes the firm is not a bank but an enabling agent for banks and other financial institutions to reach all segments of the market needing additional money for their various needs and endeavors. The effort to strengthen this objective was a response to some individuals who visited the firm’s office to ask for loans. “Kasama Ka is an extension of Fintq’s contributions to and collaborative steps toward financial inclusion nationwide and across all sectors. Fintq will continue to make systems more efficient because sustainable growth is not solely and simply reacting in opposite ways to the current system but building new ones,” Villanueva said.

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TRAIN. . .

Continued from A1

Duterte, who is also known for banning smoking in his home province of Davao City aside from his tough stance on illegal drugs, has already implemented a nationwide smoking ban in public places. The Sin Tax Coalition has proposed for excise taxes imposed on tobacco products to increase to as much as 60 percent in 2018, and an annual hike of 9 percent for the succeeding years. According to Action for Economic Reforms (AER) senior economist JoAnn L. Diosana, the proposal is based on the target of reducing the number of smokers in the country by at least 1 million. “The proposal is based on our target to have 1 million less smokers [by 2022]. Other proposals that will achieve 1 million less smokers by 2022 include: an 80-percent increase followed by an annual 6-percent increase; or a 100-percent increase followed by an annual 4-percent increase,” Diosana told the BusinessMirror. The increase in tobacco taxes, the group said, will help also prevent the prevalence of 45 life-threatening illnesses caused by smoking, which inlude lung cancer, chronic lung diseases and stroke.

Current law loses effect

University of the Philippines (UP) College of Medicine Prof. Dr. Antonio Dans noted that inspite of the implementation of Republic Act (RA) 10351, more and more Filipinos are still joining the ranks of smokers. “The effect of the current sin-tax law on smoking is gone. If we don’t do anything, there will be 1 million new smokers in the country by the end of [the President’s] term in 2022. We propose to reverse this to 1 million less smokers by 2022. Our calculations show this can be achieved by a 60-percent initial increase, and a 9-percent annual increase thereafter,” Dans told the BusinessM irror. The coalition added that an estimated P210 billion in government revenues is spent on smoking-related diseases, adding that 1 million less smokers would mean 10,000 less premature deaths annually. AER, a fiscal-policy reform organization, said at present, the sin-tax system of the Philippines employs a unitary rate of P30 per cigarette pack with a 4-percent increase in prices thereafter, as mandated by RA 10351, or the Sin Tax Law of 2012. Since the implementation of RA 10351 in 2012, the smoking prevalence in the country has decreased to 27.06 percent, from the 28.7 percent in the previous year, which also generated revenues for the government amounting to P23.4 billion on its first year of implementation. When asked if this will trigger an inflation uptick in the country, Diosana pointed out that the increase in excise taxes for tobacco products will be negligible, since the generated revenues from the measure will be used to reduce prices of healthy commodities that will benefit poor households. “Its impact on inflation will be negligible, similar to how the higher taxes on tobacco and alcohol had no impact on inflation. Moreover, if the funds that will be generated will be solely used to bring down the prices of fruits and vegetables, especially for the poor households, then the price of healthy food will go down,” she added.

DOF action sought

The AER bared that the proposal was already submitted to the Department of Finance (DOF) for review, but no feedback has been received from the department, yet. “We have yet to receive an official response from the DOF regarding our proposal. But we are hoping that they will look at this new evidence and be open to including our proposals in TRAIN,” she said. The TRAIN is the first tranche of Duterte’s CTRP consist of five tax-reform packages. Under the DOF’s CTRP, measures to address health concerns in the country are contained in its fifth package, which includes offsetting measures, from taxing fatty foods, luxury items, mining operations, lottery and casinos, revisiting the

taxes on tobacco and alcohol, and creating a carbon tax. From its initial proposal, an estimated revenue gain of P129.4 billion will be coming from the fifth package. The coalition said there are now around 14.5 million Filipino smokers, mostly coming from the lowest two quintiles of wealth, resulting in 150,000 deaths a year. In addition, tobacco predisposes to a major health problem, which leads to illicit-drug use. About 1.5 million Filipinos who tried illegal drugs used tobacco as the gateway. It added that 14 million Filipinos experienced involuntary hunger in the last quarter of 2016, while 1 2 . 5 m i l l i o n m o re s u f fe r f ro m chronic undernutrition.

Sugary-drinks tax

With this, the AER—like the coalition—also supports the imposition of an excise tax on sugar-sweetened beverages (SSBs), as it is seen to drastically reduce demand for the unhealthy commodity. “The tax on SSBs is a new tax, so a P10 tax per liter will significantly reduce demand for SSBs. A necessary condition for the tax to be effective in encouraging consumers to shift to healthier alternatives is if the proceeds from the tax will be significantly earmarked for programs that will improve people’s access to healthier foods, say by decreasing the effective prices of fruits and vegetables,” Diosana said. The proposal to impose a P10 per liter tax on SSBs is contained in House bill 5363, or the House of Representatives’s version of the first package of the CTRP. The P10-perliter tax is estimated to raise revenues of about P47 billion in the first year of implementation. Dans added that the health organizations’ proposal also pushes for revenus coming from the taxing of the SSBs to go to the lowering the prices of healthy foods that can aid in the consumers shift to eat healtheir options. “We actually didn’t support a specific amount. What we did propose is that all revenue in whatever amount, should go to programs that reduce the price of healthy foods, such as fruits and vegetables,” Dans said. The government could consider imposing a differential-subsidization scheme as a tax measure on SBs to reduce the risks of Filipinos’ becoming diabetic, according to renowned endocrinologist. In an earlier interview with the BusinessM irror, Dr. Robert Lustig, pediatrics professor at University of California San Francisco (UCSF), also proposed a higher levy on SSBs, with the collection from the sales of sugary drinks to be channeled to subsidies for drinking water. In this tax scheme, Lustig said, the government places a “win-win” situation for both Filipinos and the beverage makers. “Therefore, people will be able to pay less for water and move toward water, which is good for them as opposed to sugar-based soda, which is bad for them. People will nudge toward water and away from soda because it is expensive,” Lustig told the B usiness M irror on the sidelines of a forum organized by the Philippine Society of Endocrinology and Metabolism and the United Laboratories Inc. recently. “The beverage makers wouldn’t care because they are the one also making the water. So, they will sell more water and the grocery stores will still make money. Because what do they care? Sales,” Lustig added. Lustig, who is also an affiliate faculty of UCSF’s Institute for Health Policy Studies, said differential subsidization is a policy that they recommend to countries and governments that are in the midst of imposing tax measures on sugarbased products and other healthrisking commodities. “I think it would be a good idea, so that would be my suggestion,” he said. “I think it could [work] for [the Philippines] if the government supports it. I think it is very doable.” Lustig said Nordic countries, including Sweden, Denmark and Norway, have imposed a differentialsubsidization scheme to curb the increasing number of alcoholics in their respective countries.

Economy

A4 Tuesday, August 22, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Villafuerte calls for quick OK of work-from-home bill By Jovee Marie N. dela Cruz

@joveemarie

vice chairman of the House Committee on Appropriations is pushing for a measure directing the Department of Labor and Employment (DOLE) to establish a three-year pilot program for telecommuting, or work from home, arrangements in select local industries.

In House Bill (HB) 5630, Rep. Luis Raymund Villafuerte of Camarines Sur said institutionalizing telecommuting, or the work-from-home policy, will help solve the ever-worsening traffic congestion in Metro Manila and other urban centers. The proposal also seeks to reduce business costs, raise workers’ efficiency and increase the chances for employment of circumstantially marginalized individuals, such as stay-at-home parents, persons with disabilities, retirees and those living in far-flung areas. Under the bill, the DOLE shall “set up and maintain a telecommuting pilot program, which will be used to monitor and evaluate the work-fromhome scheme”. The measure also said the DOLE shall be responsible for baselining, scoping and profiling research work prior to implementation, regular quarterly monitoring and evaluation. The bill directed the DOLE to submit a report to Congress at the end of the period of the program. According to the lawmaker, telecommuting will enhance productivity among employees and improve public health in light of studies pointing to long commutes as one cause of chronic stress and other health disorders, such as higher blood-pressure

HB 5630 The proposed House measure that seeks to institutionalize the work from home policy

levels that lead to cardiac attacks, diabetes and other killer diseases. A counterpart bill filed by Sens. Cynthia A. Villar and Joel Villanueva was approved by the Senate on third and final reading on May 22. In the lower chamber, the bill is still pending before the House Committee on Labor and Employment. “We hope that our colleagues in the House would be able to act fast in approving this bill when the 17th Congress opens for its second regular session in July as this would, on top of its many advantages, benefit employees who have mobility restrictions, such as those with physical disabilities,” Villafuerte said. As with the Senate version, Villafuerte’s bill also ensures that work-from-home employees get fair treatment, by compelling employers to provide them the same workload

and performance standards, regular and overtime pay rates, extra monetary benefits, access to training and career growth opportunities and collective rights being received by others working in their respective employers’ premises. Villafuerte said telecommuting should now be an available option for workers, given the detrimental effects on health of spending long hours in traffic jams. “Thus, institutionalizing new and alternative modes of working made possible through the use of modern technology is very timely in light of the worsening traffic situation in Metro Manila and the increasingly unpredictable weather,” Villafuerte said. He added that adopting the telecommuting arrangement in the workplace will, likewise, “offer fuller employment by increasing the employability of circumstantially marginalized groups, such as work-athome parents, the disabled, retirees and people living in remote areas.” “A results-oriented management technique proved to be effective in managing employees. On the side of the employees, increase in the effectiveness of workers is expected. It allows them to manage the boundaries between work and family better, as well as maximize the use of freed-up time from commuting,” Villafuerte added.

Compressed workweek

Meanwhile, the House has approved on second reading HB 6152, seeking to raise the normal work hours per day under a compressed workweek schedule scheme. The bill seeks the amendment of Articles 83, 87 and 91 of Presidential Decree (PD) 442, as amended, or the Labor Code of the Philippines. The amendment to Article 83 of PD 442, titled “Normal hours of work”, provides that the normal hours of work of any employee shall not exceed eight hours a day, except in cases where the enterprise adopts

a compressed workweek scheme, but shall not exceed 48 hours a week. This is without prejudice to firms whose normal workweek is five days, or a total of 40 hours based on the normal workday of eight hours, the bill said. The amendment also said employees shall be permitted to complete their working hours on a compressed-workweek scheme, whereby the normal workweek is reduced to less than six days but the total number of normal work hours per week shall remain at 48 hours. Also, the amendment to Article 87 of PD 442, titled “Overtime work”, provides that work may be performed beyond eight hours a day, or 48 hours a week, provided that the employee is paid for the overtime work, an additional compensation equivalent to the regular wage plus at least 25 percent thereof. The bill said work performed beyond eight hours, or the number of hours under a compressed workweek scheme on a holiday or rest day shall be paid an additional compensation equivalent to the rate of the first eight hours or number of hours under a compressed workweek scheme on a holiday or rest day, plus at least 30 percent thereof. The amendment to Article 91 of PD 442, titled “Right to weekly rest day”, said it shall be the duty of every employer, whether operating for profit or not, to provide each of the employees a rest period of not less than 24 consecutive hours after every six consecutive normal work days. In the case of a compressedworkweek scheme, the bill said a rest period of not less than 48 hours but not more than 72 hours, as the case may be, shall be provided to the employees.a The bill said the DOLE secretary shall promulgate the necessary implementing rules and regulations within 90 days from the effectivity of the act.

House panel mulls over criminal raps vs Faeldon

In an interview, Party-list Rep. Robert Ace Barbers of Surigao del Norte, the panel chairman, said his committee will release its report on its investigation on the alleged drug smuggling on Thursday. “Aside from gross negligence and incompetence, the committee is now studying the possible recommendation to prosecute Commissioner Faeldon and others for their apparent disregard

By Cai U. Ordinario

@cuo_bm

estrictions on university professors could be removed from the Philippines’s negative list, according to the National Economic and Development Authority (Neda). Socioeconomic Planning Secretary Ernesto M. Pernia said the updated Regular Foreign Investment Negative List (RFINL) will be up for approval by the Neda Board, which is chaired by the President, in early September. The Neda is tasked to review and revise the country’s RFINL, which contains restrictions on foreign investments and the practice of professions based on the constitution and Philippine laws. “According to Neda Undersecretary Rosemarie G. Edillon, the list is being finalized now, for approval in the next Neda Board meeting,” Pernia said. Pernia added these are apart from the plan to allow increased foreign equity in telecommunication and the proposal to remove public utilities from the RFINL. He said the focus of the review is on the parts of the list that can be removed through executive orders (EOs) to be issued by the President. Once the Neda Board approves the new list, the President can already issue the needed EOs to allow more foreigners to practice their professions and investors to do business in the country. These include allowing foreign professors to teach in various universities in the Philippines. Currently, private and public universities cannot hire foreign faculty members. This becomes a problem, especially in the case of Filipino-American professors, who, based on their credentials, are qualified to teach in the Philippines. Before they can teach, they have to renounce their American citizenship. “We have so many scientists in the US who have done groundbreaking scientific research and have patents, but they have dual citizenship and they cannot be given an item in the university because of this. They have to renounce their American citizenship to get an item,” Pernia said. Apart from this, Edillon added the removal of foreign-invest-

By Lenie Lectura

The volume of shabu that reportedly entered the country via the Bureau of Customs’s express lane

Govt to allow foreigners to teach in PHL schools

ment houses from the negative list will allow them to operate 100-percent foreign-owned businesses in the Philippines. Edillon said there is no law or any provision in the Constitution that prevents them from operating in the Philippines. The RFINL only limits foreign investments based on the law and/or Constitution. “We already liberalized the banking sector so as not to restrict their movements; we want to include their other activities,” Edillon added. In terms of easing restrictions on foreign equity in marketing and advertising through the Internet, Edillon said the Neda is still seeking a Department of Justice opinion on the matter. However, Edillon said the proposed negative list will see the inclusion of marine deck engineers as among the professions that foreigners cannot practice in the Philippines. This is based on Article IV, Section 6(a) of the Republic Act (RA) 8544, or the Philippine Merchant Marine Officers Act of 1998, which provides that a marine deck engineer must be a “citizen and resident of the Philippines”. “[Based on the] Constitution, all practice of professions is restricted to Filipino citizens, except if provided by law. In some professions, the law that governs the practice of their profession by non-Filipinos allow foreigners or is subject to reciprocity,” Edillon said. The RFINL contains investment areas/activities where foreign equity participation is limited by mandate of the Constitution and specific laws. It also consists of investment areas/activities where foreign-equit y participation is limited for reasons of defense, security, risk to public health and morals, and protection of small- and medium-sized domestic market enterprises. The amendment of the list is headed by the Neda secretariat, as provided for under Section 8 of RA 7042, or the Foreign Investments Act of 1991, which states that amendments may be made upon the recommendation of the secretary of national defense or the secretary of health, or the secretary of education, endorsed by the Neda, approved by the President, and promulgated by a Presidential Proclamation.

Still no decision from DOE on MTPP privatization plan

he House Committee on Dangerous Drugs is now studying the possibility of filing criminal charges with a maximum penalty of life imprisonment against Customs Commissioner Nicanor E. Faeldon, after 604 kilograms of methamphetamine hydrochloride, or shabu, valued at P6.4 billion, allegedly breezed through undetected in the express lane of the Bureau of Customs (BOC).

604 kilos

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KATIPUNAN EXTENSION

Mark A. Villar (left), secretary of the Department of Public Works and Highways (DPWH), present the vicinity map of the Katipunan Avenue Extension Project with Metropolitan Waterworks and Sewerage System Administrator Reynaldo Velasco (second from left) and DPWH-National Capital Region Director Mervin V. Navarro during its groundbreaking ceremony. NONOY LACZA

of the strict provisions of the law [Comprehensive Dangerous Drugs Act of 2002] on the chain in the custody of drug evidence,” Barbers said. According to Barbers, the committee is now looking into the accountability of Faeldon and other BOC officials for “raiding the Valenzuela warehouse without a proper [search] warrant”. The House of Representatives and the Senate are conducting separate investigations on the smuggling of P6.4 billion worth of shabu shipment, which was coursed

through the green lane of the BOC without inspection. The 604 kilograms of shabu were shipped from Xiamen in China. Earlier, House Speaker Pantaleon D. Alvarez said Faeldon should resign from his post “to spare President Duterte from further embarrassment”. In the hearing of the House Ways and Means Committee on August 7, broker Mark Taguba named several customs officials who allegedly received bribes. Among those who were named by Taguba were Customs Intel-

ligence chief Neil Estrella; Milo Maestrecampo, director of the BOC Import and Assessment Service; Deputy Commissioner Teddy Raval; District Collector Vincent Philip Maronilla; and a certain “Teddy Sagaran”. They all denied Taguba’s accusation. Taguba also named a certain “Jason” and “Maita” from the Formal Entry Division of the bureau, a “Major Gut ier rez”, whom the witness said is already deceased; a “Jojo”, a “Jake”, a “Sandra” and an “Alfred ”. Jovee Marie N. dela Cruz

@llectura

he Department of Energy (DOE) is expected to inform the Power Sector Assets and Liabilities Management (PSALM) Board of its preference on how best to privatize the 650-megawatt (MW) Malaya Thermal Power Plant Complex (MTPP). “We are waiting for final wording of the final transaction documents. Our arrangement within the Board is to wait for the DOE until next month,” PSALM Officer in Charge Lourdes Alzona said. She added the privatization of the power asset could still take place within the year. “We can start this year but the closing would take place next year. It will take months, probably up to six months, to finish the bidding,” Alzona said. Energy Secretary Alfonso G. Cusi has been vocal of his intention to require the winning bidder of the power asset to convert it to an liquefied natural-gas (LNG) facility. “The direction of the DOE is geared toward LNG, to require it to transform into base-load plant to augment the country’s capacity,” Alzona added. A base-load power plant provides continuous supply of elec-

tricity throughout the year with some minimum power-generation requirement. Cusi, when sought for comment, said the DOE wants to make sure that the power facility would be maximized after the sale. “What the DOE wants is to make sure there is really energy production. What we don’t want to happen is to bid it out, then the winning bidder would not operate it. We will be short of power. That is 600 MW,” Cusi added. PSALM manages the assets and liabilities of the National Power Corp. as mandated by the Electric Power Industry Reform Act of 2001. PSALM has postponed the auction for the plant, which was supposed to be sold on March 30 to four interested bidders who earlier submitted letters of interest. The four bidders are APT Global Inc., Phinma Energy Corp., Riverbend Consolidated Mining Corp. and the AC Energy Holdings Inc. The Malaya plant was rehabilitated in 1995 by the Korea Electric Power Corp. under a 15-year rehabilitate-operate-manage-maintain agreement. It consists of a 300-MW unit with a once-through type boiler and a 350-MW unit fitted with a conventional boiler.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Tuesday, August 22, 2017

PHL mango output down 10% in H1 By Jasper Emmanuel Y. Arcalas

@jearcalas

ango production in the first half of the year declined by nearly 10 percent to 654,100 metric tons (MT), from 724,870 MT posted a year ago, according to data from the Philippine Statistics Authority (PSA).

The PSA said in its report, titled “Performance of Philippine Agriculture”, the infestation of cecid flies in some regions and rains during the fruit-development stage slashed the country’s mango output in the January-toJune period. “In Zamboanga del Nor te, the early onset of rainshowers during the crop’s flowering and fruit setting [also] caused the decrease in mango production,” the report read. The PSA said total mango output in the first half was valued at P11.97 billion at constant prices. The figure was 9.76 percent lower than the P13.265 billion recorded a year ago. Earnings from mango production accounted for 5.55 percent of the P215.28 billion in revenues posted by the crops subsector during the six-month period.

The report also revealed that the country’s banana output in the first half grew 2.58 percent to 4.373 million MT (MMT), from 4.263 MMT produced in the same period last year. “This was due to the increases in areas and the higher number of bearing hills harvested, particularly, for the Cavendish type from the corporate farms in Sultan Kudarat, Bukidnon, Davao City and Davao Oriental,” it read. The PSA added that “bigger bunches of banana harvested in South Cotabato and North Cotabato because of sufficient rainfall during the crop’s development stage” contributed to the hike in total banana output during the period. Banana out put in the si xmont h per iod was va lued at P18.98 billion at constant prices, slightly higher than the P18.53

Zambales mangoes

File photo

billion recorded a year ago. Revenues from banana production contributed 8.8 percent to the earnings of the crops subsector during the period. Pineapple output in the January-to-June period reached 1.288

MMT, 2.29 percent higher than the 1.259 MMT produced a year ago. The increase was attributed to the expansion in the harvest of corporate farms in Bukidnon, Misamis Oriental and South Cotabato, according to the PSA.

BFAR to accredit 3 VMS service providers By Jonathan L. Mayuga

@jonlmayuga

he Bureau of Fisheries and Aquatic Resources (BFAR) will accredit three providers of satellite-based and radio frequency-based vessel monitoring systems (VMS), as part of government preparations to implement vessel monitoring measures (VMMs) starting next year. “So far, three technology developers have expressed interest to get accreditation,” said Zaldy P. Perez, officer in charge of the BFAR’s Fisheries Information Management Center. Perez made the statement after owners and operators of commercial fishing vessels ranted about the cost of installing vessel monitoring devices and the monthly subscription during a consultation meeting held in General Santos City last Friday. Owners and operators of commercial

fishing vessels have expressed fear that service providers will have a monopoly over the price of the transponder, and the monthly subscription rates to be charged for their service. Under the proposed rules for VMMs, owners or operators of commercial fishing vessels can pick service providers accredited by the BFAR. So far, however, only three companies have expressed interest to seek accreditation. In General Santos City alone, there are over 3,000 commercial fishing vessels, mostly tuna catchers, which land their catch at the city’s fish port. During the forum, three companies presented a complete package of VMMs and VMS, which include transponders, platform and application, designed to track commercial fishing vessels. T he t h ree f i r ms a re Fut u r ist ic Av i at ion a nd Ma r it i me Enter pr i se Inc., SOG Philippines Inc. and Smart

Telecommunications. The Philippines is a signatory to the Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean and is a party to various regional fisheries management organizations (RFMOs), such as the Western Central Pacific Fisheries Commission and other Tuna RFMOs As such, the Philippines is compelled to implement measures such as VMS in accordance with the Convention and resolutions of RFMOs. Also, section 2 of Republic Act 10654 states that no commercial vessel will engage in a fishing activity without the VMMs. VMMs, which may be telecom or rad iof requenc y ba sed , apply to l icensed Philippine-flagged fishing vessels and operating within and outside Philippine waters.

Rhino-horn auction by world’s biggest breeder to go ahead

n auction of rhino horns from the stockpiles of the world’s biggest private breeder will go ahead on Monday after a South African court ordered that the government release permits for them. The sale of about 500 kilograms (1,102 pounds) of horns by John Hume, who has more than 1,500 rhinos, will run from August 21 to 24 after he successfully challenged the Department of Environmental Affairs’ refusal to hand over the permits that it had granted to him, enabling the sale. The court ruled in his favor last Sunday. The Constitutional Court in South Africa, which has the world’s biggest population of the endangered pachyderms, lifted a local ban on trade in April, which means auctions can take place provided buyers and sellers hold permits, and the horns stay in the country after the sale. More than 1,000 of the animals have been slaughtered each year since 2013 in South Africa, according to Save the Rhino International, a Londonbased charity. Demand has climbed in nations including China and Vietnam because of a belief that the horns can cure diseases such as cancer. Environmental groups, such as International Fund for Animal Welfare, say legal horn sales create more incentive for poaching. International trade remains banned under the Convention on International Trade in Endangered Species (Cites). Harvesting rhino horns isn’t harm-

A group of rare black rhinos take shelter from the sun beneath a cluster of trees on a ranch belonging to John Hume in South Africa on December 4, 2015. Waldo Swiegers/Bloomberg

ful to the animals, and international trade is needed to adequately control poaching, said Hume. “It is the only solution that will save our rhino, but, unfortunately, the world is apparently determined not to see this,” he said in an e-mailed response to questions. The proceeds of the auction will go toward protecting the herd, which costs him in excess of $170,000 monthly to defend from poachers.

The horns fetch as much as $95,000 per kilogram in Asia, more than gold. They mainly comprise keratin, the same substance as a human fingernail, and there’s no evidence of any medical benefit. While no commercial international trade of horns is allowed, international noncommercial export is legal subject to the issuing of permits by the Cites, the International Fund for Animal Welfare said in an August 16 statement. Bloomberg News

“Moreover, there were increases in plantings in Cavite and Laguna due to reported higher returns on investments from pineapple production. In addition, higher yield was noted in these provinces due to the use of foliar fertilizer in

pineapple farms,” the report read. Revenues from pineapple output during the six-month period reached P10.129 billion at constant prices, 2.2 percent higher than the P9.902 billion recorded a year ago.

‘Limit ban on phl poultry to areas hit by bird flu’

Continued from A1

impose a “selective temporary ban” on Philippine poultry products from Pampanga instead of a blanket ban. “The embassy wishes to appeal to the Korean government to reconsider its decision to prohibit the importation of Philippine chicken meat on the following grounds,” Hernandez said in his letter to Mafra Minister Kim Yung-rok dated August 16. “The only area affected by the H5 strain of the avian-influenza virus is the town of San Luis in Pampanga province as attested to by the OIE. Due to strict quarantine measures, movement control, zoning and disinfection being conducted by the competent Philippine government authorities, other areas in Luzon, as well as the Visayas and Mindanao regions, have not been affected by the H5 strain of the avian influenza virus,” he added. Hernandez also said the two accredited Philippine chicken exporters to South Korea are not located in Pampanga. LDP Farms Food Corp. is in La Union, while Johanna’s Chicken Processing Center is in Quezon. The two are affiliated with San Miguel Purefoods Co. Inc. (SMPCI). “The Philippine government fully respects Mafra’s adherence to the implementation of Korean regulations for imported food but would like to appeal to Mafra to reconsider its decision to ban the importation of Philippine chicken meat from the Philippines as a selective temporary ban,” Hernandez said. He noted that in 2014, the Philippines only imposed a “selective” temporary ban on the importation of poultry and poultry products from Jellabuk-Do and Jeollanam-Do, South Korea, which were hit by bird flu. “In view of the aforecited reasons, the embassy looks forward to Mafra’s reconsideration of its earlier decision to impose a total ban on imported Philippine chicken meat,” he said. Hernandez made the appeal to Mafra just a few days before the Department of Agriculture (DA) confirmed that bird flu has also affected two towns in Nueva Ecija. “If that is the appeal of our ambassador then we support that,” Piñol said. “I agree that the established firms exporting to South Korea are following serious and strict biosecurity protocols.” The government had been banking on its bird flu-free status to expand its shipments of chicken products to South Korea. The DA chief also said he will make a formal appeal to Tokyo to impose a selective temporary ban instead of a total ban on Philippine poultry exports. Japan is the Philippines’s biggest market for chicken products, particularly Yakitori chicken. SMPCI, the country’s top chicken exporter, told the BusinessMirror earlier that it has decided to postpone its shipment of about 200 metric tons (MT) of chicken products to Japan. The food unit of San Miguel Corp. has been exporting chicken products to Japan for more than a decade. In an official communication dated August 14, Mafra informed the Philippine Agriculture Office (PAO) in Seoul that it has “prohibited the importation of Philippine fresh, chilled, frozen chicken meat and pet birds” effective August 12.

“The Philippine government is requested to stop issuing Korean export quarantine certificate and export shipment of chicken meat and pet birds from August 12,” read the official communication, which was translated by the PAO office. “Please note that chicken meat and pet birds shipped from August 12 will be treated as importprohibited items,” it added. However, the Mafra clarified that any poultry shipments from Manila that are scheduled to arrive before the effectivity of the temporary ban will be allowed to enter South Korea only if these pass the additional quarantine requirements. “Philippine pet birds, which are in the process of import quarantine or scheduled to arrive [except for the shipment from August 12], will undergo additional clinical examination and HPAI [highly pathogenic avian influenza] medical examination [antigen examination],” the Mafra said. “Philippine chicken meat, which is in the process of import quarantine or scheduled to arrive [except for the shipment from August 1], will undergo strengthened examination,” the Mafra added. Tokyo also informed Manila of its decision to prohibit Philippine poultry products from entering Japan via an official communication dated August 14. Japan’s Chief Veterinary Officer Norio Kumagai addressed his letter to Agriculture Assistant Secretary for Livestock Enrico P. Garzon Jr. “This is to inform you that we have suspended the import of poultry products [other than feather and down] from the Philippines as of August 12, based on the information on the detection of HPAI [virus serotype H5] at a poultry farm in the Philippines, which was notified to the OIE by your authority,” the letter read, a copy of which was obtained by the BusinessMirror. However, Kumagai said poultry products produced before July 2 will be allowed to enter Tokyo. “According to the information provided to the OIE, the date of start of the event is the July 24. Based on this date and the maximum incubation period of avian influenza [21 days], we have estimated the earliest date of exposure as the 3rd of July,” he added. “Poultry products attached with health certificates certifying that the products were produced in the Philippines on and before July 2 and were stored and handled in a way to prevent exposure of pathogens of any animal infectious diseases prior to shipment will be the exception from the suspension,” Kumagai said. Piñol said the government has finished culling 200,000 birds within the 1-kilometer contain area of ground zero farms in San Luis, Pampanga. The government will observe a 21-day rest period before deploying sentinel birds in the ground zero area. Should the sentinel birds show no signs of bird flu after 35 days, then the area will be declared free from the virus, according to Piñol. The DA announced last Friday that bird flu has also struck Jaen and San Isidro in Nueva Ecija. The government is targeting to finish the culling of 246,510 birds in Jaen and 105,000 birds in San Isidro by August 25. Jasper Emmanuel Y. Arcalas

Banking&Finance BusinessMirror

Tuesday, August 22, 2017 • Editor: Jun B. Vallecera

news@businessmirror.com.ph

Peso seen regaining stability vs US dollar

By Bianca Cuaresma

@BcuaresmaBM

fter bouts of record lows hitting the P51 territory in its value against the US dollar in previous weeks, the local currency is seen stabilizing in the weeks ahead, Bangko Sentral ng Pilipinas (BSP) chief Nestor A. Espenilla Jr. said. “We think the peso has now sufficiently adjusted and can be expected to regain relative stability going forward,” the governor told reporters in a statement on Monday. The statement came after the local

currency was cast in “unfavorable light” against seemingly stronger regional currencies. “Some commentators of late would have us judge negatively the state of the Philippine economy merely on the basis of

the depreciating trend of the peso against the US dollar,” Espenilla said. “That’s a rather simplistic way to look at it. Rather, the better way to gauge the economy is to evaluate its progress toward delivering on things that ultimately matter to the people—low inflation, growth and jobs,” he added. Last week the government announced the country’s GDP growth that accelerated to 6.5 percent in the second quarter, up from 6.4 percent in the previous quarter. Espenilla said letting the peso weaken “to a more appropriate level” is part of the government’s way of steering the local economy to growth. “Each economy faces its own unique challenges and should, therefore, be deliberately implementing policies that suit its circumstances and needs. The Philippines is doing the correct thing in prioritizing a more investmentled economic growth,” Espenilla said. “A l low i ng t he peso to de prec i-

ate gradually to a more appropriate level is fully consistent with that strategy,” he added. The BSP chief said such adjustment may create market uncertainty if not well explained. He also said speculators may want to take advantage by exaggerating for financial gain an otherwise “healthy price correction” to recover some of their price competitiveness. “The BSP will not tolerate such speculative behavior and stands ready to use its very ample international reserves and deploy its full policy and regulatory arsenal if necessary,” Espenilla said. “Pursuing a f lexible and adaptive exchange-rate policy enables the BSP to keep its interest-rate policy settings squarely focused on achieving the inflation target while dampening consumption and supporting a more investmentand export-led growth that the economy needs to sustain its strong momentum over the long haul,” he added.

Senators set to quiz bank regulators LandBank wants to acquire on Comelec chief’s ₧1-billion wealth Postal Bank at zero value By Butch Fernandez @butchfBM

enate probers, focusing on money-laundering angle, are poised to g r i l l bank ing reg u lators on Wednesday on the reported P1-billion hidden wealth of Commission on Elections (Comelec) Chairman Andres D. Bautista allegedly stashed in secret bank accounts. Sen. Francis G. Escudero, chairman of the Committee on Banks, Financial Institutions and Currencies, confirmed among those called to testify at the initial hearing are officials of the Bangko Sentral ng Pilipinas, Anti-Money Laundering Council, Securities and Exchange Commission, the National Bureau of Investigation and the Luzon Development Bank. “The committee is open for anyone to attend whose name will be mentioned, including Chairman Bautista,” Escudero said over the weekend. He added: “I am confident that should he have the time to come he would voluntary do so. Because I’ve heard him speak on certain occasion...that he would be willing to face any probe, face any forum, defend his name and I think he will do that.” At the same, Escudero ex pressed

readiness to promptly abort the Senate inquiry into Bautista’s alleged hidden wealth if a formal impeachment complaint is filed against the Comelec chief at the House of Representatives. “At that point, we have to suspend our hearing,” Escudero said, acknowledging the Senate’s role as judges in an impeachment trial where House members sit as prosecutors.

Case clippings

By Justice S J Ranada Jr. RECONVEYANCE–action for reconveyance imprescriptible

Where land is registered through fraud, an implied or constructive trust is created under Article 1456 of the New Civil Code. An action for reconveyance based on an implied trust generally prescribes in 10 years. However, if the plaintiff remains in possession of the property, the prescriptive period to recover title or possession does not run against him, as his action is deemed in the nature of a quieting of title, an action that is imprescriptible. Ocampo v. Ocampo 05 Jul 2017

The need to invest

side from death and taxes, another thing that is certain is change. Change is constant. Nothing is the same forever. One powerful proof is we all get old and there is no stopping time from moving forward. The song “Some Good Things Never Last” show that even in the field of romance, nothing is permanent. As per my personal experience in my former job, I have seen changes in my tenure. From day one, I told myself that I will serve my employer until I reach the age of 60. How would I have known that my retirement at age 46 is dependent on the company’s change of direction? Luckily, I was able to do something earlier that most employees fail to do: I took the risk and decided to invest. As Facebook founder Mark Zuckerberg said, “The biggest risk is not taking any risk. In a world that changes really quickly, the only strategy that is guaranteed to fail is not taking risks”.

What is investing?

Investing is an act of buying assets with the hope that it will generate income or will appreciate in the future. Most of the time, the investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit. Investing also can be in the form of time you put into the study of a prospective business. It must be noted that time is also money. Facebook was the result of investing time to create a program from which Zuckerberg is

Escudero ex plained that, under the Constitution, the Senate and the House are empowered to conduct investigations prior to removal of erring impeachable officials. “Once an impeachment case is filed, we can suspend the proceedings so that we will give enough leeway for the House to do their job,” the senator added.

GR 227894 Velasco, J

Types of investment

Edmund Lao

personal finance now reaping tons of benefits. His idea benefited us all by making us virtually connected, and it made him one of the richest people in the world.

Why invest?

Investing wisely is the key to building wealth. But remember that investing comes with a risk. The return is not guaranteed so it is very important to make a research first. To build wealth, the investment value must outpace inf lation. As prices of goods keep going up, our money should grow at a faster rate.

How to invest

Depending on the knowledge acquired, you can make an investment through a bank, a broker, or even via an insurance company. In most cases, these organizations pool the investment money to make more large-scale investments, and each individual investor has a share of the larger investment. You can also make an investment with a broker, who will handle the order in exchange for a fee or commission.

There are two major kinds of investment: Fixed income and variable income. Fixed-income investment refers to an investment instrument that brings in a regular amount of interest income on a regular basis, such as bonds or time deposits. Variable-income investment refers to business or property ownership, such as mutual funds or stock shares. In the variable-income investment, the income that results can come in many forms, including profit and appreciation, especially in the long term. Another kind of income can come from trading/speculating, which are short term in nature and often deal with heavy turnover and, consequently, a higher amount of risk. Before investing, make sure you have done the following: Paid off-debts. Nothing beats being debt-free. Without the burden of debt, you are free from bondage. Emergency funds. Emergency fund strikes anytime so it makes sense to have a buffer fund so that you do not have to “bother” your money to make more money for you. Insurance. You need to cover life’s risks as the occurrence of the risks can easily wipe out your investments and might put you in debt. Edmund Lao, is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 64th RFP program this September 2017. To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

By Rea Cu

@ReaCuBM

he Land Bank of the Philippines (LandBank) board of directors have agreed to acquire the Philippine Postal Savings Bank (Postal Bank) at zero value and turn it into a bank for overseas Filipino workers (OFWs), with the proposal to be presented to the Governance Commission for Government-owned and -Controlled Corporations (GCG) for approval on Tuesday. In June this year Finance Secretary Carlos G. Dominguez III said the Postal Bank was valued by the LandBank board at a negative P580 million, with total assets at the end of 2016 at P11.66 million. The Postal Bank is the thrift bank unit of the governmentowned Philippine Postal Corp. According to LandBank President Alex V. Buenaventura, the LandBank board will be presenting its position on the acquisition of Postal Bank on Tuesday before the GCG. The submission will also be simultaneous with that of the Monetary Board. Once approved, it will then be forwarded to the Office of the President. “We are going to present the position to the GCG on Tuesday for approval. The proposal is for LandBank to acquire Postal Bank at zero value. If GCG endorses it, it will be forwarded to Malacañang for approval by the President, simultaneously, we will have to get approval from the Monetary Board,” Buenaventura told financial reporters. The Postal Bank will then be renamed as the Overseas Filipino Bank, which will be the remittance-marketing arm of the LandBank, according to Buenaventura. “It will just be a remittance marketing subsidiary of LandBank to service OFWs.

We will have to book premium to cover the negative amount, then we will have to infuse maybe a billion pesos to capitalize it,” he added. In line with the President’s promise to provide a bank to service the financial requirements of OFWs, the overseas Filipino bank will be pilot-tested in Dubai, with January 2018 being eyed as the target date. “We will pilot this in Dubai, we hope to launch it in January [2018]. We will be holding office in the Dubai consular office, so that is one advantage of being a government bank,” he said. He added that, after Dubai, the government is planning to create an OFW bank in Bahrain. The target date for the Bahrain branch is April 2018. In terms of remittance rates, the OFW bank will strive to offer cheaper rates than the private banks in the area, according to Buenaventura. Dubai average rates were at 12 Bahrain dollars per transaction coming from the sender’s side. “Well, in marketing, the rate is always the most important factor. We want to be cheaper. It will be cheaper than all our competitors. I spoke with OFWs there, and they said that, if LandBank will price it at 10 Bahrain dollars, they would shift to LandBank, so that is what we are studying,” he said.

GSIS can’t insure SSS liabilities

he Government Service Insurance System (GSIS) has declined the proposal to insure a number of liabilities under the Social Security System (SSS) because its mandate does not include covering private assets and non-governmental employees. According to SSS President and CEO Emmanuel F. Dooc, the GSIS has turned down the SSS proposal for the former to provide insurance coverage to some of the latter’s liabilities or risks. “They [GSIS] answered us formally, they declined. It’s not within their mandate to cover private assets and non-governmental employees or workers, unless they amend their charter. And they expressed concern why a social-security entity will take on the risk of another social security,” Dooc told financial reporters. Under the GSIS mandate, the entity is tasked to provide insurance coverage to government assets, as well as its employees and members. It said: “GSIS is a social insurance institution that provides a defined benefit scheme under the law. It insures its members against the occurrence of certain contingencies in exchange for their monthly premium contributions.” Dooc said he is currently in discussions

with the Actuarial Society of the Philippines (ASP) and some of the private insurers in the country regarding the proposal to insure the state-run pension fund. “The ASP is studying it, we had one informal and one formal meeting. The insurance provider should come up with a special product to meet the current benefit cover,” he added. Some of the concerns raised by the ASP was whether insuring the SSS would be a viable business, and which of the risks it covers would it insure. At present, pension coverage under the SSS incurs a monthly payout of around P9 billion, with the coverage bearing a survivorship benefit, which incurs a bigger liability for the insurer. “Their concern is whether it will be a viable business. While in terms of private insurers, my concern is which among our risk are they willing to cover,” he said. He said the SSS charter is up for amendments, to allow the state-run pension fund to have insurance coverage from private companies. “I asked for it to be amended, maybe it will be approved this year. So far it’s okay with the senators, no one is opposing it, but you can never tell,” he added. Rea Cu

news@businessmirror.com.ph • Editor: Lyn Resurreccion

The World BusinessMirror

South Korea and US begin drills as North warns of rising tensions

EOUL, South—The United States and South Korea kicked off their annual joint military exercises on Monday, while North Korea warned that the drills would deepen tensions on the Korean Peninsula by “throwing fuel onto fire.” Both the US and South Korea insist that the drills are defensive in nature, but North Korea has long condemned the joint exercises as rehearsals for invasion. During such drills, North Korea has often escalated its warlike rhetoric and lashed out with missile and other weapons tests. It tested a submarine-launched ballistic missile during the drills in August last year, following it up with a nuclear test, its fifth, the next month. The exercises this week, known as Ulchi-Freedom Guardian, follow a North Korean threat this month to launch four ballistic missiles into waters near Guam, home to major US military bases in the Western Pacific. That warning, combined with another by President Donald J. Trump to bring “fire and fury” to the North unless it stood down, has escalated tensions in the region, even setting off fears of possible war. The tensions appear to have eased somewhat since the North Korean leader, Kim Jong Un, said last week that he would “watch a little more the foolish and stupid conduct of the Yankees” before deciding whether to approve his military’s plan to fire missiles near Guam. Kim said the US needed to “make a proper option first and show it through action” to reduce tensions. If North Korea uses the drills this week as a reason to launch missiles around Guam or elsewhere, it could set off a new cycle of escalation. South Korean President Moon Jae-in warned North Korea not to use his nation’s latest round of annual military drills with the US as an

excuse for any further provocations. The drills “are not aimed at raising military tensions on the Korean peninsula at all,” Moon said in a Cabinet meeting on Monday. “North Korea should never distort our efforts to maintain peace and use them to justify any provocative action to worsen the situation.” “We have no intention of raising military tensions on the Korean Peninsula,” Moon said. “North Korea should not use this as a pretext for provocation.” Pyongyang’s state media last Sunday called this year’s drills a “reckless” move that could trigger the “uncontrollable phase of a nuclear war.” Last Sunday the North’s main state-run newspaper, Rodong Sinmun, likened the drills to an act of “throwing fuel onto fire” that would “worsen the situation.” “No one can guarantee that this will not escalate into a real war,” it said, calling the annual drills a “rehearsal for nuclear war” and the “most naked expression of hostility” toward the North. The war games, which last 11 days, involve some 17,500 US service members, including about 3,000 from outside the peninsula, and 50,000 South Korean troops. The exercises include computer simulations carried out in a large bunker south of Seoul intended to check the allies’ readiness to repel aggressions by the North. No field training, like live-fire exercise or tank maneuvering, is involved in the Ulchi drills, in which alliance soldiers, mostly senior officers, sit at computers to practice how they engage in battles and hone their

A member of a civic group holds a sign before a rally against the South Korea-US joint military drills near the presidential Blue House in Seoul, South Korea, on August 21. US and South Korean troops have begun annual drills that come after tensions rose over North Korea‘s two intercontinental ballistic missile tests last month. AP/Lee Jin-man

decision-making capabilities. The drills this year are the second Ulchi-Freedom Guardian exercises since the US and South Korea reportedly revised their war plans in 2015 to reflect the North’s advances in its nuclear capabilities. Adm. Harry B. Harris, commander of the US Pacific Command, and Gen. John E. Hyten, chief of the US Strategic Command, arrived in South Korea over the weekend to observe the exercises. Their unusual presence was meant to reaffirm the US’s commitment to defend its ally, officials in South Korea said. It remained unclear whether the drills would involve nuclear-capable long-range bombers and other strategic weapons from the US. They were not deployed in the exercises last year. The number of US troops participating decreased by 7,500 this year, but the overall scale of the drills remained the same, South Korean defense officials said. North Korea has long accused the Ulchi-Freedom Guardian drills and larger springtime joint exercises of

70,500

The total number of US and South Korean troops involved in the 11-day war games

raising tensions and has offered to freeze its nuclear and missile tests if they are suspended. China backs that proposal. But Seoul and Washington have rejected the offer, calling the drills legitimate defense exercises that they have conducted for decades. On Guam, tourists lined up at popular restaurants on Monday morning and went for lazy swims in Tumon Bay. Officials there said the threat level remained normal despite the war games. “Our office has not received official statement warranting any concern for imminent threat to

Guam or the Marianas,” said George Charfauros, the Homeland Security adviser, referring also to a neighboring island chain. “The rhetoric out of North Korea regarding the exercise is similar to what they have done in the past and continue to do with each joint exercise between South Korea, the United States and its allies,” according to a statement from the Offices of Guam Homeland Security and Civil Defense on Monday. B-1 bombers based at Andersen Air Force Base on Guam fly regular missions to the Korean Peninsula, which provokes outrage from the North. The “air pirates of Guam again appeared in the sky above South Korea to stage a madcap drill simulating an actual war,” the command of the Strategic Force of North Korea’s military, which controls its missile program, said this month in warning that it was drawing up plans to launch four intermediaterange ballistic missiles toward the territory. New York Times News Service,

Bloomberg News and AP

S. Korea’s ‘red line’ threatens bottom line for some firms

nnual military drills between the United States and South Korea this week could reignite tensions after Kim Jong Un and President Donald J. Trump traded barbs. For foreign firms that count on South Korea for significant revenue, any escalation that curbs commerce could leave them vulnerable. As the world braces for another round of accusations, here are some of the companies with the most business at stake in South Korea, according to their financial statements. South Korean President Moon Jae-in said last week North Korea was approaching his nation’s “ red line.” Tens of thousands of troops from the US, South Korea and several other countries will conduct drills over the next few weeks to prepare for a possible war with Kim’s regime. The exercises routinely spark condemnation from North Korea, which said last Sunday it was “reckless behavior” that would lead to the brink of an “uncontrollable nuclear war,” according to news agency Yonhap. A serious f lare-up between North and South Korea would cause a huge disruption to commerce. It would create ripple effects for corporations and the global economy because of South Korea’s importance in the supply chain on everything from smartphones and cars

A scene at Seoul, South Korea, at night Bloomberg

to flat-screen televisions. Companies with manufacturing plants and employees in the country, within range of Kim’s missiles, would bear the brunt of a conflict. Not surprisingly, technology features prominently on the list of foreign companies that get more than $1 billion from South Korea. San Diego-based Qualcomm Inc., the biggest maker of chips used in mobile phones, and Silicon Valley semiconductor maker Applied Materials Inc. both get about 17 percent of their global sales from the Asian nation. Europe’s largest semiconductorequipment maker, ASML Holding NV, derived about a quarter of its worldwide revenue from the country. “South Korea is a big exporter of intermediate goods, so it’s a huge part of the global electronics supply chain,” said John Davies, Londonbased global commodities strategist at BMI Research. “If operations in the

country were suspended or set back for a long time due to destruction of facilities, that would disrupt the supply chain of companies around the world.” Many other companies are also vulnerable, either through direct investment in the world’s 11th-largest economy or as part of the international supply chain. Some, such as US defense contractors, may have substantial sales in the country, but don’t show up on the list because they don’t break out revenue from South Korea. A conflict would also affect companies that rely on consumers in South Korea. BMW and MercedezBenz vehicles were the top sellers among the 225,000 imported cars sold. Starbucks Corp., which doesn’t break out sales for Korea, was forecast to break 1 trillion won ($876 million) in sales last year, according to the Korea Herald. Korea is only the

fifth country with more than 1,000 Starbucks outlets. Among those that disclose South Korean revenue, Fairhaven, Massachusetts-based Acushnet Holdings Corp. benefits from the popularity of golf. The maker of Titleist products has seen growth in South Korea “from across the board,” COO David Maher said in an August earnings call with analysts, in which he acknowledged the geopolitical tensions. “It’s certainly something that the world is paying very close attention to,” he said in the call. “Historically, Korea has been resilient over time.” Ministop Co. shows the highest proportion in the consumer group because the Japanese convenience store chain, which is owned by Aeon Co., has about 2,400 stores in Korea—more than it has in its home market. Apparel producer Guess? Inc. and Samsonite International SA, whose shares trade in Hong Kong and which

added Tumi bags to its portfolio in 2016, have seen revenue contributions from the Asian nation shrinking over the past two years. “We are not doing anything special under the current North Korea tension,” said Kimikazu Sugawara, spokesman of Ministop. “The company has always been prepared to try the best to continue its service even under tough times.” Acushnet declined to comment further when contacted over the weekend. Guess did not respond to a request for a comment. Some of the biggest multinationals don’t make the list because Korea contributes a smaller portion of their huge global business. While fashion giant Hennes and Mauritz AB’s gross revenue from South Korea exceeds that of Guess, it’s still less than 1 percent of the Swedish company’s overall sales. The nation of 51 million is also headquarters to some of the world’s best-known brands, many of which get a majority of revenue from overseas. Samsung Electronics Co., by far South Korea’s largest company, may get only 10 percent of its $174 billion in sales from its domestic market, but many of its advanced factories are within range of Kim’s artillery. LG Electronics Inc., another choice for home entertainment and appliance buyers, derived a quarter of its revenue from South Korea. Bloomberg News

Tuesday, August 22, 2017

Brent oil steals show as hedge funds leave US crude aside

hile enthusiasm in the US oil market dwindles, things are looking a little brighter across the pond. For a second week, hedge funds refrained from making big bets on West Texas Intermediate prices stuck below $50 a barrel in New York as American output keeps rising. Meanwhile in London, Brent surged to a 12-week high as global physical markets tighten. The gap between the two benchmarks hasn’t been so wide in almost two years. “You still have fairly strong and resilient production in the shale sector, so there is a lot of light oil around in the US,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. Crude output at major shale fields like the Permian in Texas and the Bakken in North Dakota is set to reach a record next month. Despite seven straight weeks of US stockpile declines, the latest weekly report from the government showed supplies at Cushing, Oklahoma, the delivery point for WTI, expanded by the most since March. That has kept the US oil benchmark trading at a discount to its longer-dated futures. This market structure, known as contango, is typical of a glut because some buyers are willing to pay more for future deliveries to avoid storage and insurance costs for barrels they don’t immediately need. Those who are able to hoard the crude at low costs, on the other hand, seek to buy it at a cheaper price now to sell it for a profit later. With Brent, the opposite is happening. Demand for delivery sooner is increasing, so the benchmark that’s most used around the world is selling at a premium to its longerterm contracts—a situation know as backwardation, which signals a shortage. The last time Brent’s second-month contract was this much more expensive than its third month was about three years ago, when prices were above $100. The North Sea oil market is being supported by traders booking shipments to rare destinations, such as Chile, Uruguay and Thailand. The volume of oil being stored there in floating tankers is falling.

Divergent paths

Brent crude on Monday was trading little changed at $52.66 a barrel as of 12:45 p.m. in Singapore, holding last week’s 1.2-percent gain. WTI last week fell 0.6 percent. Brent for October delivery ended last Friday at a $4.06 premium to WTI for the same month, the widest gap since September 2015. The spread narrowed to $4.02 on Monday. Hedge funds decreased their WTI net-long position—the difference between bets on a price increase and wagers on a drop—by 2 percent to 274,441 futures and options in the week ended August 15, data from the US Commodity Futures Trading Commission show. Longs slipped 2.2 percent and shorts fell 2.6 percent. Whatever position investors have “the uncertainty has increased, so they are losing some of their conviction,” Brian Kessens, a managing director and portfolio manager at Tortoise Capital Advisors Llc., who helps manage $16 billion in energyrelated assets, said by telephone. As for Brent, the net-long position on the global benchmark doubled over the six weeks through August 8, according to data from ICE Futures Europe. A report on the latest change will be released on Monday.

Fuel bets

In fuel markets, the net-long position on the benchmark US gasoline contract declined 16 percent. The net-long position on diesel jumped by 31 percent, with longs rising to the highest level in more than four years. Bloomberg News

Tuesday, August 22, 2017

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US warship collides with tanker near Singapore; 10 missing

An armed police officer watches as fans walk toward the stadium before a La Liga soccer match between Barcelona and Betis at the Camp Nou stadium in Barcelona, Spain, on August 20. Security was stepped up for the match after a terror attack that killed 14 people and wounded over 120 in Barcelona, and the police put up scores of roadblocks across northeast Spain last Sunday in hopes of capturing a fugitive suspect at large following the vehicle attack. AP/Santi Palacios

Spain maintains terrorism alert level as police break up group

pain kept the terrorist alert unchanged at the second-highest level after police broke up the group that carried out two attacks this week that killed 14 civilians and injured scores of others. Other developments: n An official in Spain confirms on Catalunya Radio that 22-yearold Moroccan Younes Abouyaaquoub is the attacker at large; and n Spanish police are continuing the search for Abouyaaquoub, who they consider to be the final member of a cell that carried out vehicle attacks in Barcelona and a nearby town that killed 14 and injured more than 120 others. The police are searching on Monday throughout the northeastern region bordering France. They later identified that he is Abouyaaquoub. He is suspected of driving the van that plowed down the Las Ramblas promenade last Thursday. Another attack hours later killed one person and injured others in Cambrils, a seaside town south of the city. Police say the cell consisted of 12 men, all with connections to the northern town of Ripoll. Government experts found no “imminent terrorism attack threat” and recommended maintaining the alert at level 4, the

second-highest in the five-step scale, Interior Minister Juan Ignacio Zoido said last Saturday at a news conference. Pol ice brok e up t he g a n g that staged the attacks in the C at a l a n c it ie s of B a rc e l o n a and Cambr ils, Zoido said after a meeting of the ter ror ism threat-assessment group. The police will reinforce its presence in certain key parts of the country, including crowded areas and popular tourist spots, he said. Spain has been at level 4 since mid-2015, following attacks in France. The terrorists had planned a devastating assault with explosives and may have rammed pedestrians with vehicles after their initial plan failed, Catalan police chief Josep Lluis Trapero said last Friday. Fi v e s u s p e c t e d t e r ror i s t s were k il led by cops, and four h ave b e e n a r reste d . A large explosion in the early hours of Thursday brought down a building in the town of Alcanar, about

200 kilometers from Barcelona, where the police think a group of terrorists had been plotting an attack for some time, Trapero told reporters. Deprived of bomb -ma k ing mater ia l, t hey then carried out the twin strikes “ in a more rudimentary way.” “ T he ex plosion in A lcanar stopped larger attacks from happening because they no longer had some of the material they needed,” Trapero said.

Ties to imam linked to ISIS

Until Thursday, just hours before the Barcelona attack, many of the young men seemed to be living completely normal lives. One had slept late, his mother said. Another had worked as a waiter serving wine in a mountaintop restaurant days before. By Fr id ay mor ning , seven were dead, an eighth was critically wounded and one was on the run. Three others were detained by police. They had grown up together, and among them were four sets of brothers. Most of them were not even 25. All 12 are now suspected by investigators of having played a part in the attacks that killed 14 and wounded more than 80. Most of the victims died after being run over on Las Ramblas, the main pedestrian boulevard in Barcelona. “These guys were normal, they said ‘ hello, goodbye,’ they all worked, they had cars, they had

parents,” said Habiba al Loquiat, a resident of Ripoll, the small town where many of them lived and where Loquiat attended a gathering last Saturday of Moroccans in solidarity with the victims. There is much that investigators have yet to learn, but based on interviews with the men’s friends, neighbors, religious figures and police, the answer appears to lie at least in part with a shadowy figure linked to the Islamic State, Abdelbaki Essati, who is believed to have been killed last Wednesday, a day before the attack, when explosives that the group was manufacturing accidentally detonated. Essati, who was in his 40s and who is reported to have had links to Islamic extremists going back at least a decade, somehow brought t he young men under his inf luence after establishing himself as an imam in their mountain town of R ipoll, even though few of the young men had a histor y of regularly attending mosque. Investigators and terrorism experts believe that the planning for the plot may have begun not long after Essati’s arrival a year ago at the second of two mosques where he worked in Ripoll. They now say that at least some of the suspected participants traveled abroad before the attack, either to Morocco or elsewhere in Europe, as did Essati. AP and New York Times News Service

INGAPORE—The USS John S. McCain has docked at Singapore’s naval base with “significant damage” to its hull after an early-morning collision with an oil tanker as vessels from several nations searched on Monday for 10 missing US sailors. The collision east of Singapore between the guided-missile destroyer and the 183-meter Alnic MC was the second involving a ship from the Navy’s 7th fleet in the Pacific in two months. Vessels and aircraft from the US, Indonesia, Singapore and Malaysia are searching for the missing sailors. Four sailors were evacuated by a Singaporean navy helicopter to a hospital in the city-state for treatment of nonlife threatening injuries, the Navy said. A fifth injured sailor did not require further medical attention. The McCain had been heading to Singapore on a routine port visit after conducting a sensitive freedom-of-navigation operation last week by sailing near one of China’s man-made islands in the South China Sea. The Navy’s 7th Fleet said in a statement that damage to the McCain’s hull flooded adjacent compartments including crew berths, machinery and communications rooms. A damage control response prevented further flooding, it said. The destroyer was damaged on its port side aft, or left rear, from the collision that happened at 5:24 a.m. but headed to port under its own power. A photo tweeted by Malaysia’s navy chief Ahmad Kamarulzaman Ahmad Badaruddin showed a gaping hole in the McCain’s side near the waterline. Janes, a defense industry publication, estimated the hull rupture was 3 meters wide. One of the injured sailors, Operations Specialist 2nd Class Navin Ramdhun, posted a Facebook message telling family and friends he was OK and awaiting surgery for an arm injury. He told The Associated Press in a message that he couldn’t say what happened: “I was actually sleeping at that time. Not entirely sure.” The Singapore government said no crew were injured on the Liberian-flagged Alnic, which sustained damage to a compartment at the front of the ship some 7 meters above its waterline. There were no reports of a chemical or oil spill. Singapore sent tugboats and naval and coast guard vessels to search for the missing sailors, and

Indonesia said it sent two warships. Malaysia said two ships, as well as aircraft from its navy and air force, were helping with the search, and the USS America deployed Osprey aircraft and Seahawk helicopters. There was no immediate explanation for the collision, and the Navy said an investigation would be conducted. Singapore, at the southernmost tip of the Malay Peninsula, is one of the world’s busiest ports and a US ally, with its naval base regularly visited by American warships. The collision was the second involving a ship from the Navy’s 7th Fleet in the Pacific in two months. Seven sailors died in June when the USS Fitzgerald and a container ship collided in waters off Japan. The Fitzgerald ’s captain was relieved of command, and other sailors were being punished after the Navy found that poor seamanship and flaws in keeping watch contributed to the collision, the Navy announced last week. An investigation into how and why the Fitzgerald collided with the other ship was not finished, but enough details were known to take those actions, the Navy said. President Donald J. Trump has expressed concern for the McCain’s crew. Trump returned to Washington on Sunday night from his New Jersey golf club. When reporters shouted questions to him about the McCain, he responded, “That’s too bad.” About two hours later, Trump t weeted t h at “t hought s a nd prayers” are with the McCain’s sailors as search and rescue efforts continue. The 154-meter destroyer is named after US Sen. John McCain’s father and grandfather, who were both US admirals. It is based at the 7th Fleet’s homeport of Yokosuka, Japan. It was commissioned in 1994 and has a crew of 23 officers, 24 chief petty officers and 291 enlisted sailors, according the Navy’s web site. McCain said on Twitter that he and his wife, Cindy, are “keeping America’s sailors aboard the USS John S. McCain in our prayers tonight—appreciate the work of search & rescue crews.” Though Liberian flagged, the Alnic is owned by a Greece-based shipping company Stealth Maritime Corp. S.A. through a subsidiary registered in the Marshall Islands. AP

In this photo released by the Royal Malaysian Navy, the US guided-missile destroyer, USS John S. McCain, is seen after a collision, off Johor, Malaysia, on August 21. A number of US sailors were missing after a collision between the USS John S. McCain and a tanker east of Singapore, the second accident involving a ship from the Navy’s 7th Fleet in the Pacific in two months. Royal Malaysian Navy via AP

Nafta nations say quick deal on table as inaugural talks end T

he US, Mexico and Canada ended the first round of talks on a new North American Free Trade Agreement (Nafta) saying they’re committed to wrapping up the negotiations quickly with a far-reaching deal. “While a great deal of effort and negotiation will be required in the coming months, Canada, Mexico and the US are committed to an accelerated and comprehensive negotiation process that will upgrade our agreement and establish 21st-century standards to the benefit of our citizens,” the countries said in a statement last Sunday, after five days of discussions in Washington.

The next round of negotiations is scheduled from September 1 to 5 in Mexico, with talks moving to Canada in late-September and back to the US in October. Additional rounds are being planned “for the remainder of the year,” the countries said. They did not offer details on the five-day talks. The joint statement reinforces the notion that the three nations are seeking a quick deal before politics overtakes the agenda next year. Mexico will hold a general election next July, while US Congressional mid-terms are scheduled for November 2018. The opening round got off to a tense

start last week, when US Trade Representative Robert Lighthizer served notice the US wouldn’t accept a modest “tweaking” of a trade deal that President Donald J. Trump believes has failed Americans. Trump has calledthe Nafta the worst trade deal in history. While US trade with its Nafta partners has more than tripled since the agreement took effect in 1994, Trump blames the pact for gutting US manufacturing and sending factory jobs to Mexico. Trade experts weren’t surprised by the cautious sense of optimism in the joint statement. “Despite good intentions, this Nafta renegotiation may be more

akin to a lengthy process of couples therapy than a quick exercise in speed dating,” said Chad Bown, a senior fellow at the Washingtonbased Peterson Institute of International Economics. The vagueness and positive tone of the concluding statement has left open the possibility of the US settling its differences with Mexico and Canada, said Inu Manak, a visiting scholar at the Cato Institute in Washington. The challenging part of the negotiations will come later, when the negotiators turn to sensitive issues, such as dispute-resolution systems and the rules of origin that dictate local-content

requirements in products, she added. Negotiating groups agreed to provide additional text, comments or counterproposals in the next two weeks, according to the joint statement. “The scope and volume of proposals during the first round of the negotiation reflects a commitment from all three countries to an ambitious outcome and reaffirms the importance of updating the rules governing the world’s largest free trade area,” according to the statement. Lighthizer said last week the US will seek improvements in a number of areas, including tighter rules of origin, stronger labor standards

and protections against currency manipulation. Trump has threatened to scrap the pact if he can’t get the change he favors. The Nafta did away with most barriers, including tariffs, on trade between the US, Canada and Mexico. The Canadian and Mexican negotiators agree that Nafta needs to be updated, but they have defended it as an economic success story for expanding trade between the three countries. Mexican Economy Minister Ildefonso Guajardo said at the start of the Washington talks that he hoped differences could be narrowed in the next round of negotiations. Bloomberg News and AP

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Tuesday, August 22, 2017

Syria’s Assad rejects security cooperation with the West

AMASCUS, Syria—Syrian President Bashar al-Assad last Sunday refused any security cooperation with Western nations or the reopening of their embassies, until they cut ties with opposition and insurgent groups. Colton Hammer tries out his new eclipse glasses he just bought from the Clark Planetarium in Salt Lake City in preparation for the August 21 eclipse. Eye doctors urge strict adult supervision for eclipse watchers under 16 years old. Scott G Winterton/The Deseret News via AP

Eclipse eve: Millions converge across US to see sun go dark

mericans w it h te le scopes, cameras and protective glasses staked out viewing spots along a narrow corridor from Oregon to South Carolina to watch the moon blot out the midday sun on Monday in what promised to be the most observed and photographed eclipse in history. Eclipse-watchers everywhere— and millions were expected to peer at the sun—fretted about the weather and hoped for clear skies for the first total solar eclipse to sweep coast-to-coast across the US in practically a century. As he set up telescopes, Ray Cooper, a volunteer with the Oregon Museum of Science and Industry in Salem, worried offshore clouds might roll in and spoil the less than two-minute show. “If it stays like this, it will be perfect,” Cooper said on the eve of the big day. He has seen full solar eclipses before, but never so close to home, making this one extra special. With 200 million people within a day’s drive of Monday’s path of totality, towns and parks braced for monumental crowds. In Salem, a field outside the state fairgrounds was transformed into a campground in advance of an eclipse-watching party for 8,500, courtesy of the Oregon Museum of Science and Industry. “It’s one of those ‘check the box’ kind of things in life,” said Hilary O’Hollaren, who drove 30 miles from Portland with her two teenagers and a tent, plus a couple friends. Astronomers consider a full solar eclipse the grandest of cosmic spectacles. The Earth, moon and sun line up perfectly every one to three years, briefly turning day into night for a sliver of the planet. But these sights, normally, are in no man’s land, like the vast Pacific or Earth’s poles. This will be the first eclipse of the socialmedia era to pass through such a heavily populated area. In a case of near-perfect celestial symmetry, the sun is 400 times the breadth of our moon and also 400 times farther away, so the two heavenly bodies look more or less the same size from our vantage point, and the moon can neatly cover up the sun. The moon hasn’t thrown this much shade at the US since 1918. That was the country’s last coastto-coast total eclipse. I n f ac t , t he US m a i n l a nd hasn’t seen a total solar eclipse since 1979—and even then, only five states in the Northwest experienced total darkness.

Monday’s total eclipse will cast a shadow that will race through 14 states, entering near Lincoln City, Oregon, at 1:16 p.m. EDT, moving diagonally across the heartland over Casper, Wyoming, Carbondale, Illinois, and Nashville, Tennessee, and then exiting near Charleston, South Carolina, at 2:47 p.m. EDT. The path will cut 4,200 kilometers across the land and will be just 96 km to 113 km wide. Shawnee National Forest in southern Illinois will see the longest stretch of darkness: two minutes and 44 seconds. Mostly clear skies beckoned along much of the route, according to the National Weather Service. All of North America will get at least a partial eclipse. Central America and the top of South America will also see the moon cover part of the sun. The National Aeronautics and Space Administration (Nasa) and other scientists will be watching and analyzing from telescopes on the ground and in orbit, the International Space Station, airplanes and scores of high-altitude balloons, which will beam back live video. Citizen-scientists will monitor animal and plant behavior as daylight turns into twilight and the temperature drops. The Nasa’s associate administrator for science missions, Thomas Zurbuchen, took to the skies for a dry run last Sunday. He planned to usher in the eclipse over the Pacific Coast from a Nasa plane. “Can’t wait for the cosmic moment MON morning,” he tweeted. Near Victoria, British Columbia, where 91 percent of the sun will be eclipsed, science and math teacher Clayton Uyeda was going to watch from a ferry along with his wife. He said he was “expecting to have a real sense of connection with the heavens.” He had similarly lofty hopes for his students if they could bring themselves to look up at the sky instead of down at their electronic devices. Scientists everywhere agree with Uyeda: Put the phones and cameras down and enjoy the greatest natural show on Earth with your own (protected) eyes. The only time it’s safe to look directly without protective eyewear is during totality, when the sun is 100 percent covered. Otherwise, to avoid eye damage, keep the solar specs on or use pinhole projectors that can cast an image of the eclipse into a box. The next total solar eclipse in the US will be in 2024. The next coast-to-coast one will not be until 2045. AP

Shortly after Assad gave his speech, a shell hit the first international fair in the country since the war began six years ago, killing and wounding several people. Assad’s defiant comments come at a time when his troops and proIranian militiamen are gaining ground across the country under the cover of Russian air strikes. Many countries have ceased calling for him to step down. Speaking before dozens of Sy r i a n d iplom ats i n Da m a s cus, Assad praised Russia, Iran, China and Lebanon’s Hezbollah for supporting his government during the conf lict. He said Syria will look east when it comes to political, economic and cultural relations. “ The direct support of our friends, politically, economically and militarily, made our advance on the ground greater and the losses of war less. Therefore, they are our partners in these achievements on the road to crush terrorism,” Assad added. “Let’s be c lear. T here w i l l be no security cooperation nor opening of embassies or even a role for some countries that say

400K The number of Syrians killed in the war that also displaced half the country’s estimated population of 18.4 million

that they want to play a role in ending the crisis in Syria before they clearly and frankly cut their relations with terrorism,” Assad said. “At that point, maybe we can speak about opening embassies.” Following months of steady military advances, Syria’s government has sought to portray itself as the victor in a war that is winding down and is looking ahead to reconstruction. The Syrian president said his country’s economy is turning to growth again “at a very slow pace, although we are under an almost complete embargo.” The government had billed the international trade fair, which

opened three days ago, as a “victory” and a sign of renewed confidence in the war-torn nation. T he Mo r t a r Ne w s i n D a mascus Facebook page, which tracks v iolence in the capita l, said the shel l hit the entrance of the fair, k il ling four people and wounding four others. The Britain-based Syrian Observatory for Human Rights, an opposition-run group that reports on both sides of the conflict, said the shell killed five people and wounded 11 but did not say who was behind the attack. T he state-r un news agenc y said the shel ling inf licted casua lties, but gave no f ur ther details. It blamed the rebels in the suburbs of the capita l, say ing they fired the shel l in violation of a truce reached earlier this month in the easter n suburbs of Damascus, know n as easter n Ghouta. The Syrian crisis began in Marc h 2011 w it h a peacef u l uprising against Assad ’s government, later escalating into a full-f ledged civil war after a brutal government crackdown and the rise of an armed insurgency. The conf lict has since k i l led an est imated 40 0,0 0 0 people and displaced half the country’s population. In the early years of the conf lict, many Western and Arab countr ies ca lled on A ssad to step down, and both the US and the European Union have imposed sanctions on his government. Several Arab and Western countries also withdrew their diplomats from Damascus. But after the Islamic State

(IS) group declared a caliphate in large parts of Syria and Iraq, the international focus turned to crushing the extremists, who have planned attacks around the world that killed and wounded hundreds of people. Assad said that hardly a week passes without an attack in the West, referring to assaults carried out by IS supporters. “These facts are what forced them [the West] to change their stance,” Assad added. He welcomed recent deals to de-escalate violence in Syria, but vowed not to give the opposition in politics what it failed to gain through arms. The de-escalation zones in central, northern and southern Syria were proposed in a plan approved in May by Russia, Turkey and Iran in the Kazakh capital, Astana. The plan included a cessation of hostilities, a halt to Syrian government air raids over designated areas and provisions for humanitarian-aid access. Despite that deal, Assad said Syrians don’t trust Turkish President Recep Tayyip Erdogan and that the Syrian leader does not consider him to be a guarantor. Erdogan’s government is a main backer of Syrian rebels and sent troops into Syria a year ago to battle the IS and to halt the advance of Kurdish forces. Those troops, and allied Syrian forces, now control a stretch of Syrian territory along the border. “A ny Turk ish citizen who is in Sy r i a w it hout per m ission from the Sy r ian gover nment will be considered an occupier,” A ssad added. AP

Bannon was set for a graceful exit before the Charlottesville attack

ASHINGTON—John F. Kelly, the new White House chief of staff, told Stephen K. Bannon in late-July that he needed to go: No need for it to get messy, Kelly told Bannon, according to several people with firsthand knowledge of the exchange. The two worked out a mutually amicable departure date for mid-August, with President Donald J. Trump’s blessing. But as Trump struggled last week to contain a growing public furor over his response to a deadly, race-fueled melee in Virginia, Bannon clashed with Kelly over how the president should respond. Give no ground to your critics, Bannon urged the president, with characteristic truculence. At the same time, New York real-estate investor friends told Trump that the situation with Bannon was untenable: Steve Roth last Monday, Tom Barrack last Tuesday and Richard LeFrak last Wednesday. By Thursday, after Bannon undercut US policy toward North Korea in an interview published by a left-leaning magazine, Trump himself had concluded that Bannon was too much of a liability. By Friday, when he was forced from his job as Trump’s chief strategist, Bannon had found himself wholly isolated inside a White House where he once operated with such autonomy that he reported only to the president himself. This account is based on interviews with a dozen White House aides, associates of the president’s and friends of Bannon’s. A former naval officer, Bannon speaks often in the language of combat—of escalating conflict to “nuclear” levels and driving his enemies “ballistic.” But, in the end, he had lost the war against a list of enemies that included nearly everyone in the West Wing. They included not just the adversaries whose conflicts with Bannon were widely aired—Gary D. Cohn, the president’s chief economic adviser; Lt. Gen. H.R. McMaster, the national security adviser; Ivanka Trump, the president’s daughter; and Jared Kushner, his son-in-law. Also against him was Kelly, who was outraged by the indiscretion Bannon displayed in the inter view with The American Prospect, according to three senior administration officials. And Bannon could

Steve Bannon in the Oval Office of the White House in Washington on March 31. Eric Thayer/The New York Times

no longer turn to Trump, whose confidence in him had eroded over a period of months, to ask for a reprieve. Even the market tumbled on the prospect that Bannon could come out on top. Blue chip stocks slid last week after an erroneous report said that Cohn’s resignation was imminent bec ause of his disgust with Trump’s failure to more forcefully denounce the racist Charlottesville, Virginia, demonstrators. Friends and former colleagues of Cohn’s said the economic adviser criticized Trump in such strong terms that at least one wondered how he could possibly remain in his position. As soon as Bannon arrived at the White House on Inauguration Day, he seemed to realize that he would not be long for the job. He felt that Trump had treated him as a peer during the presidential campaign, but, he often complained to friends, “when I got to the White House, all of a sudden I was just a staffer.” The mythology around Bannon held that he was the evil genius who pushed the president to make some of his more audacious decisions. And Bannon’s political opponents believe his departure has removed one of the biggest impediments to stability inside the White House. But, more likely, Bannon’s exit will clarify that only one person, Trump, for better or worse, has always been his own chief strategist. While several administration officials

interviewed said they see Kelly as perhaps the last hope for fixing the fractured administration, they concede that only Trump can right his listing presidency. “My view is that the president has his own mind,” said Matt Schlapp, chairman of the American Conservative Union and a former White House political director under George W. Bush. “People make too much of the idea that he’s some kind of blank slate that advisers can push one way or the other.” Steve Schmidt, who helped manage Sen. John McCain’s presidential campaign in 2008 and is a critic of the president, said: “We are seeing all of the personal qualities and character of the president on a daily basis. It’s not restrainable or controllable because he is who he is.” Bannon’s opponents had long argued that he inflated his importance in White House debates and took more than his fair share of credit in plotting Trump’s victory. But he was someone with whom the president, for the most part, had long enjoyed spending time. The two men, whose friendship was cemented during the two-and-a-half months in which Bannon helped rescue Trump’s presidential campaign, reinforced each other’s rough-around-the-edges tendencies. Both could be gratuitously foul-mouthed, viciously cutting to their enemies and unapologetically politically incorrect. “Dude, he’s Archie Bunker,”

Bannon would say with fondness when talking about Trump. Bannon fed Trump’s paranoid streak and shared the president’s penchant for believing in conspiracies. He viewed not just intelligence agencies but most of government as stocked with a devious bureaucratic underbelly, the “deep state.” Trump, who has never worked in the government, eagerly adopted that view. Bannon was notorious for maintaining his own, shadowy presence within the White House. He would frequently skip meetings where policy was discussed, injecting his views into the process in other ways, according to two administration officials. He did not use a computer, preferring to have paper printed and handed to his assistant to stay outside the formal decision-making process. Bannon favored a culture similar to the one Trump brought with him from the business world to the White House—a flat structure with blurred lines of responsibility and competing power centers. And, early on, Bannon benefited from that structure, sitting at the top, free to slip unvetted materials to the president without a gatekeeper to get past. “Theoretically, a more coherent staff should produce a more coherent policy,” said David Axelrod, who was former President Barack Obama’s senior adviser and the person in a comparable role to Bannon’s in the White House. “But that presupposes a president who embraces the process and the policy.” New York Times News Service

A10 Tuesday, August 22, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Any and every which way you can

resident Duterte said Customs Commissioner Nicanor E. Faeldon had offered to quit his post three times for failing to rid the government bureau of corruption.

In the previous administration, former Customs Commissioner Ruffy B. Biazon had also offered his resignation, followed by his deputies then, Deputy Commissioner Danilo D. Lim (Intelligence Group) and Deputy Commissioner Juan Lorenzo Tañada (Internal Administration Group). Duterte said he will stand by Faeldon, even after his last boo-boo in the Bureau of Customs (BOC), when some P6.4 billion worth of shabu from China slipped past the port of Manila in May, through the express lane of the bureau no less. But Faeldon’s resignation is not a bad idea, actually, and the President might do well to just accept it. In the last Senate Blue Ribbon committee hearing on the shabu smuggling where Faeldon finally made an appearance, Duterte’s chosen man at the BOC practically waved the white flag of surrender, admitting he can’t really bust the smuggling syndicates there. Faeldon said he was aware of the tara (grease money) system at the BOC but he has no one to help him purge the bureau of such large-scale corruption. They say if you can’t stand the heat, get out of the kitchen. If Faeldon can’t do the work he was tasked to do, then he or the President should really just leave it to other people who can. Just let him resign. Indeed, Duterte should ask for everybody’s courtesy resignation in the Customs bureau. He won’t get it, for sure, but it’s worth a try. In 1992 former President Fidel V. Ramos convened a nine-member committee led by then-Interior Secretary Rafael Alunan to review the continued service of senior superintendents and high-ranking officers in the Philippine National Police (PNP). Alunan asked for the courtesy resignations of all PNP officers from senior superintendent to the next senior ranks—then Ramos promptly accepted all their resignations. If the corrupt Customs officials are not willing to resign then there are other ways to get them. Sure, we agree, corruption is well entrenched in the BOC. Sure, there are powerful people behind smuggling and on its frontlines. This is not news. Not to us or Faeldon or the President. The President is the most powerful person in the country, with an arsenal of government agencies that could go after grafters upon his orders and he has millions of intelligence funds at his disposal. If President Duterte really wants to, he has five more years left in his term to put the fear of God in these smugglers and their Customs cohorts. He can go after them any and every which way. While corruption may not leave a paper trail, wealth is always very hard to hide; and corrupt BOC officials are not exactly shy to flaunt their wealth. All income is taxable, including the illegally gotten kind. Tax evasion may not be as sensational as plunder but it is more prosecutable and easier to get a conviction from a court of law. Conducting a sweeping asset hunt on Customs officials will likely net more than a few high-profile arrests and convictions. Duterte can also just start firing people. Sure, this is easier said than done but it can be done nonetheless. Strictly implemented, the Civil Service Law and Rules provide several ways to suspend, remove and prosecute misbehaving public servants. For instance, falsifying Statements of Assets, Liabilities and Net Worth, a violation of Republic Act 6713, or the Code of Conduct and Ethical Standards for Public Officials and Employees, can get these corrupt BOC officials fired and land them in jail. If all else fails, then the President, with the help of his allies in Congress, could just abolish the BOC and create a new agency that could better serve the public, or privatize its functions altogether. Again, solutions are hard but Duterte already knew this at the start of his term when he pledged to end corruption in government—and where else should he start but with the most corrupt agency.

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Alleged cement cartel a test case for competition law Manny B. Villar

THE Entrepreneur

S a businessman, I have always considered free competition, together with level playing field, as the foremost guiding principle in a free market like the Philippines.

I pursued the same principle during my career of more than two decades as an elected official. In fact, I sponsored and pushed for the approval of a competition legislation during the 15th Congress, when I chaired the Senate Committee on Trade and Commerce. During the floor deliberation on Senate Bill 3098, or the Competition Act of 2011, I said free and open competition, which is the foundation of a vibrant economy, “gives the consumers the benefits of lower prices, high-quality products and services, adequate supply and a wider array of choices”. As an entrepreneur before I entered politics, I have not changed my position, which I presented during that deliberation on the Senate floor in 2012—monopolies and cartels pose undue advantage over our micro-, small and medium enterprises, which make it easier for them to drive out the small players

from the industry. A competition law was finally signed into law in 2015, Republic Act (RA) 10667, or the Philippine Competition Act. The two-year transitory period for companies to undo their anticompetitive practices ended on August 8, so the Philippine Competition Commission (PCC), which has been receiving complaints for anticompetitive practices, can now begin imposing penalties on violators, including fines of as much as P100 million and criminal prosecution. In a news briefing early this month, the PCC said it was conducting “full administrative investigation” on the complaint of cartel-like conduct against large cement manufacturers, which was filed last year. A PCC official explained that full administrative investigation meant the inquiry could cover the whole industry, instead of the peo-

ple or companies mentioned in the complaint. Investigation is elevated to this stage if the commission found reasonable grounds to believe that anticompetitive acts or practices had been committed, such as in the complaint against cement companies. Victorio Dimagiba, former undersecretary of the Department of Trade and Industry and currently president of consumer advocacy group Laban Konsyumer Inc., alleged in his complaint that the Cement Manufacturers Association of the Philippines, LaFarge Holcim Philippines Inc. and Republic Cement and Building Materials Inc. violated RA 10667 by engaging in anticompetitive agreements, including “restricting competition as to price or components thereof or other terms of trade, abusing their dominant position by engaging in conduct that substantially prevent, restrict or lessen competition, imposing barriers to entry, or committing acts that prevent competitors from growing within the market”. Companies engaged in cartel operations may not have formal agreements among themselves to manipulate the market, so the commission’s investigators are looking at their bidding patterns, pricing and other circumstantial evidence to establish culpability. I would add that conducting repairs on their manufacturing plants, at the same time, could also indicate price manipulation because it means

Where’s the PSE historic high? John Mangun

OUTSIDE THE BOX

he last time that the Philippine Stock Exchange Composite index (PSEi) reached an historic high was on April 10, 2015, at 8,127. It came near again on July 21, 2016, at 8,102. Most recently, everyone was hopeful another milestone would be reached, but on August 17, we fell short again with a daily closing of 8,072.

What is the problem with the PSEi? While Mark Twain could have said—although he never did— “If you don’t read the newspaper, you’re uninformed. If you read the newspaper, you’re misinformed.” That is particularly true of financial journalism when it comes to the stock market. Now don’t misunderstand me. Local journalists that cover business do a great job of covering and reporting accurate information about companies and business conditions and developments in general. But when it comes

to the stock market, there is a huge information gap between the reporting and the reality. While comments about the stock market are giving all sorts of reasons the PSEi has not recently reached an historic high, no one has mentioned these facts. There is much more to price performance than the PSEi. The PSEi that measures the price performance of the financial and banking issues has been at or above its previous historic high broken on April 5 for the past 16 weeks. This index reached that historic high at 1,904

and is now at 2,006, or five percent higher. The Property Sector index hit its historic high on June 8 and after a pullback has been near or above that high for a month. And I cannot find one reference to those facts from reading the stock-market reporting in the newspaper. It is not a “stock market”. It is a “market of stocks” in the same way the PSEi is a calculation of 30 issues. Recently, there have been several stories about how big the market value or capitalization of SM Investment (SM) is at P1 trillion. But SM is not the biggest company on the PSEi: it is No. 3. As of last Friday the value of SM is P998 billion. But the value of all the shares of Manulife Financial Corp. and Sun Life Financial Inc. is P1.8 trillion and P1.1 trillion, respectively. Those two issues rarely trade. The indexes are “weighted”’ meaning the movement of a large cap issue creates a larger movement in the index. The PSE Mining and Oil index should be the “PSE Semirara Mining and Power Corp. Index”. SCC has a 50.5-percent weight for that index with a market capitalization greater than the other 12 stocks combined.

cutting supplies to the market, which is a ground for raising prices. It is important to note that manipulation of prices and supplies in the cement industry affects other sectors, such as construction, real estate and even the government’s infrastructure program. In the property business, where I am involved, players engage in dogeat-dog competition, which benefits homebuyers through better pricing and products. Cement is a major cost of housing construction, so increasing prices artificially, for instance, will compel developers to pass on the added cost to homebuyers. The same is true with contractors for other building activities, including the infrastructure projects being implemented by the government. These projects are paid by taxpayers, so the additional expenses resulting from anticompetitive practices will ultimately be borne by every Filipino taxpayer. The investigation into the alleged cement cartel could serve as a precedent in the government’s campaign against unfair and illegal business practices. My wife, Sen. Cynthia A. Villar, said she would request the PCC to investigate the operation of a garlic cartel, which has been blamed for the skyrocketing prices of the essential kitchen commodity. For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

There was a time when the PSEi was the same with PLDT Inc. (TEL) being the Emperor God of the PSEi. Now TEL has only a 4.9-percent weight, No. 9 in terms of indexmoving power. SM is the “heaviest” at 11.5 percent, followed by Ayala Land (ALI) at 8.6 percent and SM Prime Holdings (SMPH) at 8.33 percent. Look at the approximate combined PSEi weight of the issues controlled by two of the conglomerates: SM (SM, SMPH, BDO bank) at 25 percent, Ayala with Ayala Corp. and ALI at 22 percent. However, there is one “problem” with the PSEi not reaching its historic high recently. The JG Summit conglomerate group has a combined weight of 10 percent, including Universal Robina (URC) and Robinson’s Land (RLC). The price of JG Summit, URC and RLC are all down 18 percent since May. That’s the problem and why we are not at an historic high. E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

Opinion BusinessMirror

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The Reform the Armed Forces Movement

Water firm: Rate adjustment reasonable Ernesto M. Hilario

Cecilio T. Arillo

database Part One

Toward a unique martial tradition

NKNOWN to many people, the living founders and key members of the Reform the Armed Forces Movement (RAM), the reformist group that led the historic 1986 People Power Revolution, quietly celebrated on July 23 their 35th anniversary with an appeal to President Duterte, himself a RAM and a GUARDIANS member, that he finally establishes a martial tradition in this country.

Led by Sen. Gregorio B. Honasan, they also appealed to the President in a meeting that they be granted amnesty because while the key leftists, their social democrat allies and other enemies of the States were released from prison, some were given choice positions in the government, treated as heroes and inordinately compensated by the Aquino administrations (mother and son) and the three other presidents between them; many, if not all, of the RAM members were persecuted, jailed, ousted from the service and denied their salaries, pensions and other benefits. Curiously, the Ombudsman, an agency known to RAM as staffed with slippers from the Yellow Camp similar to the Human Rights Commission, while it let free the guilty in the multibillion-peso Disbursement Acceleration Program, Priority Development Assistance Fund and the Malampaya Fund scams involving high officials in the previous regimes, charged Honasan, who often finds himself as a usual suspect in almost all antigovernment activities, with an antigraft case before the Sandiganbayan at almost the same time he and others were quietly celebrating the founding anniversary of the reformist organization. Some civilian R AM members and sympathizers also suffered the same fate, including this writer who was ridiculously jailed, charged with rebellion twice, multiple-murder, kidnapping and illegal possession of firearms, ammunition and explosives while in the legitimate pursuit of his profession, as detailed by the late Manila Times publisher Adrian Cristobal in the introduction of the best-selling book, Greed & Betrayal, published by Amazon, one of the world’s largest publishing houses, in 2011. For the RAM, its participation in the revolution has institutionalized a martial tradition for our people. Forged on the anvil at Edsa after turning over power to Mrs. Corazon C. Aquino in a silver platter, it is a covenant that is both an article of faith and a warning that never again shall the liberty, sovereignty, independence, welfare and security of the nation be compromised in the interest of would-be tyrants, corrupt and unscrupulous men. Appearing to match faith with faith, Mrs. Aquino accepted the gift of power, took her oath of office and pledged to obey the “fundamental law of the land” (Constitution), enforce the laws and do justice to every one. Then she said: “Beloved brothers and sisters, it is fitting that, if the rights and liberties of our people were taken away at midnight 14 years ago, the people should recover those rights and liberties in full

daylight. It took the brutal murder of Ninoy [Benigno S. Aquino Jr., her husband] to bring about a unity so strong and the phenomenon of people power. We became exiles in our own land— we Filipinos who are at home only in freedom—when Marcos destroyed the republic 14 years ago. Through the power of the people we are home again. And now I would like to appeal to everybody to work for national reconciliation, which is what Ninoy came home for. Continue to pray! Pray to the Lord to help us, especially during these difficult days.” Acting proud and magnanimous, she announced to the nation and to the world that she would restore unity, genuine reconciliation and democratic space; that she would not file charges against Marcos; that she would not reside in the Presidential Palace (“because in these difficult times, it is not proper to live in extravagance”); and that she would be “the opposite of Marcos”. In the historical narration and exposition of the key participants in the Edsa revolution, detailed in Greed & Betrayal, what really happened was the opposite of what Mrs. Aquino had pledged to the nation as the book relived the events that marked her regime’s corrupt and bungled presidency and how it systematically and repeatedly blamed President Ferdinand E. Marcos, Sen. Juan Ponce Enrile, Sen. Honasan, Vice President Salvador Laurel, Speaker Ramon Mitra and others as the all-purpose scapegoats to hide its own incompetence, plunder, corruption, failures and perfidy. And as the elitist image of the Aquino regime permeated society as a whole, its propaganda experts began to shape the political landscape as well with their self-serving political and economic contingencies, and transformed most of the unsuspecting citizens into consumers of its own brand of illiberal democracy and a pro-elite political, social and deregulated economic policies symbolized by the yellow banner, the yellow ribbon and the yellow confetti. Like the bad experiences of revolutions in other countries, the Edsa uprising had also its own stories of credit-grabbers and a lot of m__r f__s, which were also exposed in that best-selling book and other books of the same author. In the succeeding articles, you’ll see how the reformist officers gambled with their lives, their careers and the comfort of homes in the hope that Mrs. Aquino and the succeeding regimes would restore peace, unity and progress in this country. To be continued

Tuesday, August 22, 2017 A11

ABOUT TOWN

n July 24 the three-member International Chamber of Commerce (ICC) arbitral tribunal in Singapore unanimously upheld the validity of the claim of Maynilad Water Services for compensation for the delayed implementation of its relevant tariffs for the rebasing period 2013 to 2017. The ICC ordered the government to pay through the Department of Finance (DOF) the amount of P3.42 billion to Maynilad. It also ruled that its July 24 decision will not preclude Maynilad from taking further action to recoup losses from January 2013 to March 2015 and from September 2016 onward. This ICC decision is significant because, first, it affirmed the raterebasing mechanism under Maynilad’s original Concession Agreement (CA) with the Manila Waterworks and Sewerage System Authority (MWSS), which compels the government to honor its contracts; and, second, it ensured the financial sustainability of Maynilad’s multibillionpeso maintenance and expansion programs for the benefit of half of Metro Manila’s water consumers. The decision should not be surprising at all because even our Supreme Court had already pointed out in one of its rulings that private companies are entitled to reasonable profits for them to recoup their investments. The High Court noted that “while

the interests of the public are ideally to be accorded primacy in considering government contracts, the reality on the ground” is that big-ticket projects cannot be realized without investments from the private sector, which, naturally, would expect its “usual share of profit”. The two water concessionaires, Maynilad and Manila Water, have been spending billions of pesos each year to modernize the water distribution system servicing some 15 million water consumers in Metro Manila. Their investments involve upgrading antiquated water piping systems and expansion projects to ensure that Metro Manila and nearby areas have access to a steady and sufficient supply of potable water. These investments are for the long term, stretching for several decades. In a bid to attract investors, the Ramos administration allowed tariff and rate adjustments when it decided to privatize Metro Manila’s deplorable water distribution system in the late 1990s. In the case of Maynilad and Manila Water, their concessions limited them to a fixed after-tax

profit. The government provided a clause in their contracts that defined the allowed profit after tax. Under this provision, if corporate tax rates drop, the price of water will go down but the profits of the water concessionaires will remain the same. The truth is that water distribution services in Metro Manila have improved tremendously since the two water concessionaires took over in 1997. Before the privatization of water services, low-income consumers were forced to source their daily water needs mostly from itinerant vendors who were charging consumers by as much as 13 times higher than the MWSS rate. The ICC ruling benefits both the water concessionaire and consumers as this will lead to a steady revenue stream for Maynilad’s maintenance and expansion projects intended to provide a sufficient and regular supply of potable water for West Zone’s over 9 million consumers. The MWSS, now headed by Reynaldo Velasco as administrator, has been working on a stronger partnership with its concessionaires Maynilad and Manila Water, which will benefit National Capital Region’s over 15 million water consumers. Velasco has, in fact, cited privatization as a major factor in the vastly improved water services in Metro Manila. He described the two concessionaires as “partners in the water service”, which the MWSS was willing to work with closely in their bid to strengthen their wastewater treatment plants to help reduce water pollution and protect our water resources. Maynilad ’s capital-expenditure (capex) program will help the

goals, published last month, don’t rule this out. It’s even possible that the agreement can be improved here and there, bringing it up to date with current trading conditions and strengthening its support for crossborder competition and efficiency. The main thing, though, is to avoid a breakdown that puts the existing arrangements in jeopardy. This risk arises because Trump has repeatedly said trade deals only

E-mail: ernhil@yahoo.com.

Asian nations facing aggression must join forces Ricardo Saludo

DIPLOMASIA

T may never happen, but what South China Sea nations fearful of China can forge is an alliance among them. Brunei Darussalam, Malaysia, Indonesia, the Philippines and Vietnam cannot match the People’s Liberation Army (PLA) and the PLA Navy and Air Force. Bringing in the United States risks escalating frictions, and may simply exchange one hegemon for another. Plus: Washington’s defense commitment could falter, depending on national priorities, leadership changes, and its own relations with Beijing.

So, the third option may well be the only viable one: a regional alliance. No way, Asia watchers and military analysts would chorus. How can countries with territorial disputes among themselves band together to defend their rival claims? And Beijing is now cosy with most of these states, so that the Asean has toned down its criticism of islandbuilding and force deployment in the South China Sea. Most of all, even if all Asean members combined their forces, they could never match the 2.3 million PLA and its air, sea and missile weaponry. So, forget about this alliance fantasy.

Winning with asymmetry

IF Vietnamese freedom fighter Ho Chi Minh thought that way in 1950, all Indochina might still be under French rule. Military experts then didn’t give Ho’s ragtag guerrillas much chance of defeating the French colonial army.

Even after France capitulated at Dien Bien Phu in 1954, breaking up its Asian empire into Cambodia, Lao PDR, North and South Vietnam, doubters still dismissed Ho in his quest to unify his nation against the wishes of the most powerful nation on earth. But two decades later, there was one Vietnam, and the US suffered its first defeat against a foreign adversary. What won it for Ho’s heroes was asymmetric warfare: fighting a conflict in which an adversary’s massive superiority in arms and numbers counts for little. In Vietnam’s liberation struggle, the asymmetric strategy was guerrilla warfare, with the vastly outgunned Vietnamese mounting hit-and-run attacks, blending with a supportive population, and safeguarding men and materiel in bomb-proof underground caverns and tunnels. The ancient Spartan king Leonidas

also used asymmetric warfare by engaging a mammoth invading Persian army in the narrow Thermopylae pass, where his force of several hundred bettered the odds against attackers many times their number, as depicted in the film 300. For sure, Vietnam got immense help from communist allies Russia and China. Without their backing, the North might have run out of war materiel and funds. More crucially, Washington might have unleashed more devastating firepower against Hanoi, maybe even sending troops above the 17th Parallel dividing the country. But communist allies merely kept Ho Chi Minh from being overwhelmed. What made their forces win was asymmetric warfare, harnessing their mastery of terrain through guerrilla tactics and structures.

The strait and narrow

SO, do Southeast Asian nations have some asymmetric strategy to use in matching up with the PLA? Yes, and as Vietnam did against France and America, the nations around the South China Sea must harness geography. Specifically, they must exploit their control over the Malacca, Sunda and other straits linking the Indian Ocean and the South China Sea. Through these chokepoints pass much vital shipping, including four-fifths of Chinese oil imports. With naval vessels and coastal batteries of antiship missiles, Indonesia and Malaysia can interdict shipping going through those waterways, Vietnam and the Philippines can target ships within their 200-nautical-mile exclusive economic zones (EEZs). These EEZs encompass nearly all

Rebranding the North American Free Trade Agreement S talks to revise the North American Free Trade Agreement (Nafta) start in Washington, it still isn’t clear whether President Donald J. Trump wants to dismantle the pact—“the worst trade deal maybe ever signed anywhere”, he’s called it—or merely rebrand the same basic product under his own name. With any luck, it will be the latter. The administration’s negotiating

administration realize its aggressive infrastructure program while, at the same time, accelerate government initiatives to protect the environment. Maynilad is behind the “Plant for Life” program, a multisite reforestation and afforestation program that covers the areas along the coastlines of Laguna de Bay and Manila Bay and the watersheds in Angat, Ipo and La Mesa dams. Maynilad also keeps a greenhouse gas and air pollutants inventory that monitors and reports its emissions. Through this system, the company quantifies and validates carbon emissions from its operations and the effectiveness of its environmental programs. These efforts have earned for Maynilad recognition as one of the “Top Green Companies in Asia” during the Asia Corporate Excellence & Sustainability (ACES) Awards 2016 held earlier this year in Singapore. The ACES Awards “recognizes successful companies and individuals in Asia across two main domains; leadership and corporate social responsibility”. Maynilad bagged the award along with four other companies from Thailand and Indonesia for operating “with minimal negative impact on the environment, community, and society while remaining financially viable”. On top of its green projects, Maynilad is setting aside P35 billion in the next five years for its capex. For 2017 alone, Maynilad will be spending P13.2 billion for its water and wastewater infrastructure projects.

serve US interests if they reduce the country’s current-account deficit. This is simply wrong—and if it becomes his litmus test for the new Nafta, the talks could easily do serious harm. Trade agreements don’t drive trade imbalances. Their purpose is to foster competition— hence greater efficiency, higher productivity and rising living standards. Make that the test of the new pact, and the talks present an opportunity

to make a good agreement better. The US says it wants stronger labor and environmental standards, and better protections for intellectual property. Those ideas—built into the proposed Trans-Pacific Partnership, by the way, which the US abandoned—are worth pursuing. And seeking formal rules on currency manipulation shouldn’t do much harm, because the issue hasn’t arisen in North American trade; this

too could set a useful precedent for future trade agreements. There are two main hazards. The US says it wants to weaken Nafta’s dispute-settlement system, which would make it easier to take unilateral action against trade practices the US deems unfair. The US also wants governments to have more latitude to prefer local over foreign suppliers when it comes to their own procurement. The first of these, especially,

of the South China Sea, but for a thin sliver, which includes Fiery Cross Reef, one of two outcrops enlarged by Chinese reclamation and equipped with military-capable base facilities. Now, this joint blockade would be undertaken only if provoked by hostile action in violation of international law. For instance, if Beijing’s maritime security or navy were to stop oil drilling or fishing activities within another country’s EEZ or its 320-nautical-mile extended continental shelf, then the envisioned alliance of rival claimants can retaliate by closing chokepoints to China’s shipping. Won’t the PLA retaliate? Sure, but sending warships into the teeth of enemy air, naval and missile defenses, far beyond land-based fighter cover, sounds suicidal. As for launching ballistic missiles against Asian targets, this would be where Western allies come in. Just as Russian and Chinese backing deterred a US invasion of Vietnam, the West and Japan could warn against an excessive escalation by the PLA. None of this needs to happen, however, if Beijing shows goodwill by signing a binding Code of Conduct, ceasing its island-building and military deployment, and respecting sovereign rights under the Law of the Sea. Then the emerging joint maritime security effort by Indonesia, Malaysia and the Philippines does not have to expand. It can just stick to stopping terrorism, and not encompass deterring aggression and protecting sovereign rights. Will China behave? Will its neighbors join forces? Don’t hold your breath.

might be capable of wrecking the talks. Canada has objected strenuously to the idea, and rightfully so. Resolving disputes through arbitration rather than unilateral sanctions is a core tenet of liberal trade. By all means let Trump rebrand Nafta, especially if he can make it better at the margin. But if he succeeds in ruining a good thing, he’ll be the worst US president on trade maybe ever seen anywhere. Bloomberg View

Global Eye BusinessMirror

A12 Tuesday, August 22, 2017 • Editor: Angel Calso

news@businessmirror.com.ph

With some countries, China is in the red

hina’s big trade surpluses hog all the headlines, but imbalances go both ways.

South Korea’s $72.2-billion surplus with the People’s Republic in fact tops a list of more than 40 nations that export more to the country than they import from it, followed by Switzerland and Australia, data compiled by Bloomberg show. Besides commodity exporters, such as Iran, and machinery producers, like Germany, smaller economies, such as Ireland, Finland and Lao PDR round out the tally. Imports by the world’s biggest exporter show how its humming factories prop up other economies— and for some of those, what’s on the line should they find themselves involved with territorial disputes or geopolitical tensions with one of their biggest customers. The data itself can be skewed as a result of those tensions. The International Monetary Fund and the World Bank omit data from Taiwan. If included, the island would outrank all other economies, except South Korea with a China

surplus (including Hong Kong) of $67 billion in 2016. Asia, South Korea and Malaysia are among the more vulnerable to China’s economic arm-twisting, while Japan and Vietnam look relatively immune, according to Bloomberg Intelligence estimates based on their trade surpluses with China as a share of total output. One of China’s biggest appetites is for machines and electronics from South Korea, Malaysia and Germany, according to World Bank data from 2015, the most recent year available. Semiconductors from South Korea and Malaysia account for much of that as they’re brought in and then installed in other electronic products assembled in China’s factories. The iPhone itself is an ecosystem that illustrates the global reach of far-flung supply chains. China’s assembly lines for the device incorporate expensive components imported from sources, including

Germany, Japan, South Korea, the US and Taiwan. Such complex and crucial trade relationships give South Korea something of a buffer against Chinese reprisals like those it faced last year after agreeing to install a US missile-defense system.

“Eighty percent of Korean exports to China are intermediate goods, and everyday people can’t see them from the outside or feel them,” said Yang Pyeongseob, a senior research fellow at the Korean Institute for International Economic Policy in Beijing.

China’s factories, construction sites, vehicles soak up oil, metal and materials from commodity exporters around the world, so when the economy sneezes it spurs big swings in things, like the Australian dollar or Mongolian GDPt. Those two countries are key

suppliers of iron ore, precious metals and coal. Meanwhile, oil from Angola, Oman, Iran and Venezuela helps keep China’s cars and trucks running, and Turkmenistan sends natural gas. Chile offers metal, mainly copper, but wine and cherries are more familiar South American imports on Chinese supermarket shelves. Swiss trade is driven by pharmaceuticals, chemicals and precision instruments and watches. The surplus size may have been distorted by commodities trading, which doesn’t necessarily lead to actual shipments. South Africa’s shipments include diamonds, gold and wine. Elsewhere in the southern hemisphere, Brazil was China’s top overseas source of soybeans, soy oil, beef and sugar last year, according to China’s Ministry of Commerce. The most populous nation imported 38 million tons of soybeans alone from Brazil last year. And farmers in New Zealand are increasingly stocking those supermarket shelves for more discerning consumers. China imported more lamb from New Zealand than anywhere else, the most wheat from Australia, and the largest amount of fruit and nuts from Chile. Bloomberg News

Attack by jihadi terrorist in Barcelona shows Islamic State is down not out By Tobin Harshaw Bloomberg View

paniards have long lamented that Las Ramblas, the winding main artery of Barcelona, has devolved over the years from the tree-lined strolling place of Catalan flaneurs into a tourist trap filled by kitsch vendors and a cheesy sex museum. Now it will be associated with the deaths of 13 people when a van driven by a jihadi terrorist smashed into the crowded walkway last Thursday. More than 100 people were injured. It was one of several attacks along Spain’s Mediterranean coast, including an explosion at a house suspected of being a bomb factory. Islamic State has claimed responsibility. In the litany of European terrorist attacks over the last three years—Paris, Brussels, Manchester—the last three days in Spain were the least deadly. But in terms of European security—and the threat still posed by a terrorist group thought to be on its last legs in Syria—they are just as worrisome. And they are also just the tip of the iceberg: Last year Europe suffered 47 terrorist attacks that killed 142 and injured 379. More than 90 other plots either failed or were foiled by police and security services. Nearly all were the work of Islamic extremists. This data comes courtesy of a very timely report on trends in European terrorism from Anthony Cordesman, the Arleigh A. Burke chair in Strategy at the Center for Strategic and International Studies in Washington. While Cordesman and his team didn’t come up with the data—the figures come from IHSJane’s and the University of Maryland’s excellent center for the Study of Terrorism and Responses to Terrorism (Start)—their study provides crucial context of how the threat has changed over time, particularly between 2011 and 2016. Last Friday I contacted Cordesman to see how the Catalonian attacks fit into those larger patterns. Tony Cordesman is the reigning polymath of the defense-policy elite. He has written more than 50 books for both the professional and lay audiences, and, in the last year alone, he has put out reports on stabilizing Iraq after Islamic State; the dollar cost of America’s current wars; China’s emerging power; the Gulf’s new Game of Thrones; key metrics and developments in the Afghan War; the postwar rebuilding of Syria; hard choices in the war in Yemen; the national security economics of the Middle East—well, that only takes us back to March, but you get the idea. Here is a lightly edited transcript of our discussion: Tobin Harshaw: Let’s start with Barcelona. I think this series of attacks in Spain caught most Americans by surprise. The 2004 Madrid bombings, as horrible as they were with 191 deaths and 1,800 injures, are a distant memory. Were you surprised to see the jihadists choose it this week? Tony Cordesman: No one who looks at the data in detail over time sees clearly predictable patterns. If you look at trends from

1970 to 2016, you see just the opposite: sudden shifts in patterns of violence, targets, methods of attack and weapons by country. We also have no idea of how the Spanish counterterrorism forces saw the threat and reacted to the risk of vehicle attacks between the rise of this method in 2004 and the attacks in Barcelona. A detailed review of the data on terrorism shows that terrorists innovate and adapt because they have to. It was clearly likely by mid-2016 that vehicle attacks would rise in every country with high political visibility and media coverage, but Spain is only one of many, and some early indicators show that the attacks in Barcelona suddenly shifted methods of attack and target locations when they lost their explosives. We need to remember that we never saw September 11 coming in the US and largely forced terrorist to chose other targets and methods of attack afterward. This isn’t a “war” you can “win” by predicting how it will change. TH: Of course Spain has a lot of experience with terrorism—you logged 3,245 incidents since 1970, primarily by Basque separatists. How did this prepare the Spanish authorities, and people, for the latest murders? Are we worried about Islamic State and other jihadist groups possibly linking up with established non-Muslim groups in other countries? TC: If you look at the data, you see all too clearly that the patterns of locations of terrorism keep changing, and that this is an ongoing struggle that reaches far beyond ISIS. Historically, terrorist and extremists have also always been willing to find strange bedfellows, ranging from outside governments to drug lords. The real risk, however, is that some movement or figure can unite extremist and jihadist movements on a broad enough level to be truly dangerous. The ideological core here is a level of extremism at the far margins of Islam, just like extremism in Israel, and Christian extremism in the US and Europe. Historically, such movements tend to fragment and limit themselves, and there are literally well over a hundred jihadist movements recognized by the State Department. Some, like ISIS, al-Qaeda and the Taliban, however, are already far larger than others. No one can predict whether a truly charismatic leader will unify many such movements, and this

is the most serious threat TH: Looking more broadly at your data of both completed and failed incidents from 2011 to 2016, the UK is far and away the most common target, including more than half last year. We know it has a large Muslim population, but so do France, Germany and the Low Countries. Why is Britain so vulnerable? TC: Part of the problem is reporting. Britain is particularly honest about its national statistics, although scarcely perfect. The other key issue, however, is that the number of incidents does not measure the number of casualties or killed, or track Islamic terrorism. The incident-by-incident chronology in the Start database shows extensive low-level terrorism in Northern Ireland, and a few “nationalist” incidents in Scotland and possibly Wales. Many have unknown perpetrators, and some are absurdist actions by groups, like the Earth Liberation Movement—although none quite reach the level of two of the 14 pre-Barcelona incidents in Spain between 2011 and 2014—which Start classify as “anticlerical, prosex toy”. We must never forget that terrorism occurs for a wide range of reasons in free societies—many of which cause no casualties. Even in the US, Islamist terrorism killed more Americans than hate crimes between 2011 and 2016, but hate crimes physically injured far more Americans and innocent Muslims than terrorism. As Charlottesville shows, we need to look far beyond Islam or at least look far more closely and see ourselves in the mirror. TH: As you compiled the data for your study, did anything strike you as surprising? TC: No. Having worked with US officials, I was all too aware that the statistics involved

are far too uncertain when they have to be estimated from unclassified reporting, and the data are usually sharply contradictory if they are based on independent estimates. One critical failure in the US is that our National Counterterrorism Center abandoned the effort to create a meaningful unclassified estimate, and we now rely on highly uncertain media sources. The uncertainty level can easily reach 50 percent in some countries or categories. There is exactly zero presidential and congressional responsibility or effort to publicly ensure that we have accurate data, and real transparency that attempts to accurately measure the global patterns in terrorism, or measure the effectiveness of our counterterrorism efforts. You have to do the best you can with the data available, and you have to realize that they can be grossly different or wrong. TH: The terrorists who rammed into the crowds along Las Ramblas in Barcelona eventually jumped out of the van and attempted to kill passersby with knives. We saw a similar approach in the London Bridge attack in March and on Friday in Turku, Finland. All told, use of firearms dropped from 57 incidents in 2015 to just six last year. Why the change in tactics? TC: Statistically, many incidents reflect a change in tactics from cases to case. Two incidents don’t set a pattern. The UK also has the best gun controls in Europe and knives have become the weapon of choice. The data on the Barcelona attacks to date indicate that the perpetrators were originally seeking to use explosives and suddenly had to shift when they lost their explosives in another area. They may have rushed into van and knife attacks in a hurry, or realized that knifings were quick and give far less of a “signature” locating the terrorist than gunfire. We’ll have to wait and see what more evidence surfaces. TH: The data show that France is the only country in which arrests have increased over the last three years. Is that because there are more plotters, or are the security services getting better? TC: French law permits much more active surveillance than in many other countries, and France has experience dating back to the days of the Algerian crisis in the 1950s and 1960s, and that was updated when a series of largely Arab and Islamic riots took place around Paris. Moreover, French politics led the government to be far more willing to act than in most other European governments, and some arrests may have been more for political visibility that practical reasons. The key question is whether the arrests did more to fight terrorism than provoke anger and resentment and cause more alienation and terrorism. Overreaction doesn’t simply lead to human-rights abuses; it often feeds extremism and terrorism, and it

is a key reason extremist movements, like ISIS and al-Qaeda, use it to try to breed Islamophobia and hatred between the Muslim world and the West. Valid and effective counterterrorism is critical to our security. Overreaction for the sake of politics, and hatred and prejudice undermine it. TH: In the aftermath of the Bataclan attack in Paris in 2015, airport/metro attack in Brussels in 2016, and Manchester concert attack this May, there was much concern over poor counterterrorism coordination between European countries and the various police and security agencies within them, as well as Europol. Do you feel this is a major problem? Will Brexit potentially make things worse? TC: European officials and experts make it all too clear in private that the level of coordination is still far too poor even within given countries, and coordination between Britain and other European states was too weak even before Brexit. There is still far too much to be done. The problem is that nothing could be more sensitive politically or reflect the real-world differences between states. The EU and many national officials are trying, but it is not easy to cross security and jurisdictional lines at the best of times, and many aspects of actual coordination affect serious differences in legal systems and views of human rights. TH: Finally, with Islamic State dead in Mosul and on the verge of defeat in Syria, do you think the terrorist threat to Europe and the US will diminish or expand? TC: The defeat of the physical “caliphate” in Iraq and Syria will remove the threat of what would have been the equivalent of a terrorist state, but it will also disperse thousands of experienced local and foreign fighters with a strong incentive to strike at the West. At least in the short run, it could increase such attacks. ISIS is also only a small part of the problem today. The Start database used by the US State Department in its annual country reports on counterterrorism indicates that ISIS was responsible for 4,343 incidents from 2011 to 2016—from its rise to the end of last year. This was 6.1 percent of the world total during the same period and 7.2 percent of the total in the Middle East and North Africa. Defeating the ISIS caliphate will not begin to defeat terrorism. More than that, it will do nothing to reduce the causes of terrorism in the Islamic and other parts of the world: massive population growth; economic development and major unemployment problems; resentment of secular governments that favor a few and are intensely corrupt; the feeling that state-supported religious figures support the state and not religion; and deep internal sectarian, ethnic and tribal divisions in many states. There are good reasons almost no one actually involved in the fight against terrorism believes this will be over in less than a couple of decades, and the current impact of the ISIS caliphate must be kept in perspective.

news@businessmirror.com.ph

Global Eye BusinessMirror

India needs to get healthy By Mihir Sharma Bloomberg View

S India celebrated 70 years of independence last week, a tragedy in a remote corner of India’s largest state, Uttar Pradesh, highlighted how far the world’s largest democracy still is from being able to provide a healthy life for most of its citizens. For all its talk of smart cities and industrial corridors, this is the government’s greatest failing —and one where it could make a big difference quickly. The town of Gorakhpur dominates the far northeast of Uttar Pradesh. Uttar Pradesh is a vast province, home to more than 200 million residents—including some of the poorest people in the world, living in conditions that Prime Minister Narendra Modi has compared to parts of sub-Saharan Africa. Gorakhpur lies close to the Nepal border, in a muggy, densely populated strip of land famous as much for the size and stamina of its mosquitoes as anything else. It is not a small town, but it’s rarely the center of attention in India. It is now, for a tragic set of reasons. Earlier this month, over 60 very young children died in the local government-run hospital in just five days, dozens of them on one particular night. That itself might, sadly, not have been sufficient to attract national attention. But on this occasion, many of the deaths had reportedly occurred because oxygen supplies had run out. The hospital hadn’t paid its bills—and the contractor had cut off the supply. The case has drawn particular attention because Gorakhpur is the home of the new chief minister of Uttar Pradesh, a pugnacious monkturned-politician named Yogi Adityanath. He represented the town in India’s parliament for decades—running it like a personal fiefdom—and he’d actually visited the hospital on one of the days in question, unaware of the unfolding crisis. Adityanath’s response has left much to be desired. He seemed to accept denials by state bureaucrats that they’d sat on the authorization to pay the oxygen supplier; instead, the hospital’s head was held accountable. More surprisingly, so

was a doctor who’d been the hero of the initial reports because he had wandered the town commandeering extra oxygen cylinders when the piped supply had run out. (This attracted particular attention because the doctor happened to be Muslim, and Adityanath does not have a reputation for religious tolerance.) And, finally, the small company that had been granted the oxygen contract—which had not been paid an outstanding bill of millions of rupees for months—found itself the subject of a police investigation. This seems a near-perfect example of all that is wrong with India’s public health-care system and with state administrations in general. Local strongmen prioritize control and capturing rents over governance and welfare. Bureaucrats run the offices of the state callously and with an eye to self-preservation. And any companies or professionals who step out of line are made scapegoats if anything goes wrong. Nor is this an isolated tragedy. As Adityanath himself pointed out, ostensibly in his defense, children in his home city have long fallen victim to a mysterious diseaseknown as Japanese encephalitis, which—spread by those terrifying mosquitoes—carries off hundreds in northeastern Uttar Pradesh every year. Yet, there is little indication that local health services have received the investment needed to deal with the epidemic. For India’s federal government in New Delhi, this tragedy comes at a particularly awkward time. Its election manifesto promised health care for all. But it seems to think that its finances are too straitened for the kind of expansion of public health care that Indians expect. Currently, India spends barely 1 percent of GDP on public healthcare—one of the lowest proportions in the world. The government has promised to increase that amount. But a recently leaked draft health-care bill for India’s towns revealed the government was planning to further privatize the system. As with other such systems worldwide, this will be difficult to manage, and costs might explode. Worse, the Indian state simply doesn’t have the capacity to monitor or regulate private hospitals properly. In health, regulation doesn’t come cheap.

The most pressing challenges being faced by Europe’s leaders

rein in errant states, as populist leaders in Poland and Hungary have been emboldened by Donald J. Trump’s US presidency and Britain’s decision to quit the EU. The spat is unlikely to be resolved soon, and could become a key issue between the EU and some of its members in coming months as the bloc tries to balance sensitive Brexit negotiations.

Reform of the euro area

The European Union headquarters in Brussels Bloomberg

By Viktoria Dendrinou & Ian Wishart | Bloomberg

S summer draws to a close, the European Union (EU) will seek to tick off a number of boxes from the top of its to-do list, leveraging its newfound political capital following the ascent of pro-EU leaders on the continent.

Brussels will have its hands full as negotiations ramp up with the UK on its impending exit from the 28-nation bloc, with some eastern European countries testing the boundaries of antidemocratic initiatives and the euro area still working on reforms to protect its economic well-being. Here are the main topics to look out for in the coming months:

Brexit talks

Hundreds die from Japanese encephalitis every year in Uttar Pradesh. Sanjay Kanojia/AFP/Getty Images

Tuesday, August 22, 2017 A13

The UK and EU have three more rounds of negotiations on Britain’s departure from the bloc before a summit in October. It’s at that gathering in Brussels that leaders are supposed to give approval for the start of phase two of the talks—dealing with how the relationship between the two sides will look once the UK has left in March 2019. But there’s already doubt about whether there will be sufficient

progress by then on phase one— how the UK will protect rights of EU citizens and Britain’s financial obligations to the EU—to allow that to happen as scheduled. And, if timing is delayed, it raises the prospects of the UK slipping out of the EU without a deal, which would mean no foundation for a future trade agreement and no transitional period to soften the blow, something that neither side wants. That makes the next few weeks crucial. The British government will publish documents setting out its positions on various issues as negotiators on both sides try to agree on complicated topics, such as the border between Northern Ireland and the Republic of Ireland and the role of the European Court of Justice in post-Brexit Britain. If Prime Minister Theresa May, under pressure at home and due to

face members of her Conservative Party at its annual conference in the first four days of October, can leave the EU summit on October 19 and 20 having won approval for the start of trade discussions, it will be a sign that Brexit negotiations are on course. But it’s a very big if.

Rule of law

IN the coming months, Poland is facing the threat of unprecedented EU penalties from the first-ever probe of a member’s respect for the rule of law. The European Commission said last month there was excessive political influence over the legal system in Poland and launched action against the country for violating EU law in a process that could see the EU suspending its voting rights. The European Commission sent Warsaw a “letter of formal notice” in July, giving the government one month to reply. The next step in the infringement process would involve a final warning by the commission to the Polish government in the form of a “reasoned opinion”, after which a lawsuit could be filed. The battle between EU regulators and the Polish government over its plans to weaken the judiciary’s independence underscores the emergence of a new fault line between eastern and western Europe and comes as scrutiny of democratic standards within the EU has moved up the bloc’s agenda. The government in Warsaw is at the sharp end of a campaign to

Discussions over how to reboot the euro have already started taking place in recent months, having been given fresh impetus by the election of Emmanuel Macron in France, a staunch advocate of further integration. While there is no consensus yet among the currency bloc’s 19 members on if and how the euro area should get its own finance minister, budget or a regional Monetary Fund, talks are expected to pick up steam after the German election in September. The EU’s biggest economy has so far resisted calls for further fiscal integration, but Chancellor Angela Merkel has signaled her willingness to discuss some of these issues in the future. Euro-area leaders and finance ministers have repeatedly said that the currency union needs to adjust to be able to withstand future financial shocks. Whether this will come in the form of new responsibilities for the bloc’s bailout fund or greater integration in the areas of banking union and financial regulation will depend on the political constraints of member-states and on their priorities. But the matter of further integration will likely feature prominently in finance ministers’ discussions over the coming months, while some decisions could be taken as soon as the end of this year.

Investment screening

The European Commission could make proposals as early as September on possible ways to better scrutinize investments from third countries into the EU, following pressure from leaders, including Macron, to move to protect the bloc’s industries from foreign takeovers in strategic sectors. The proposed measures will come after the commission published a reflection paper on “harnessing globalization” in May and after EU leaders—who met in June—asked the commission to “analyze investments from third countries in strategic sectors while fully respecting member-states’ competencies”.

Janet Yellen, Mario Draghi head to Jackson Hole as prices wallow below goal By Jeanna Smialek & Carolynn Look Bloomberg

S the world’s top central bankers gather in Wyoming this week, their relief about a stronger global economy will be tempered by a growing unease that inflation remains inexplicably low. Federal Reserve (the Fed) chairman Janet Yellen and European Central Bank (ECB) President Mario Draghi will be among the officials addressing this year’s installment of the annual conference hosted by the Kansas City Fed. The summit, held at a Jackson Hole mountain retreat, comes as central banks in advanced economies creep toward the policy exit after years of unprecedented easing, even with outlooks that are clouded by stubbornly tepid inflation. Prices have been slow to pick up despite solid growth and falling unemployment, suggesting that the long-observed relationship between inflation and labor-market slack might have frayed. That puzzle will likely surface as the conference debates this year’s theme of “Fostering a Dynamic Global

Economy” against the backdrop of the Grand Teton mountains. “Inflation has been the big question mark, both here and abroad,” said Michelle Meyer, head of US economics at Bank of America Corp. in New York. Yellen will speak about financial stability at 8 a.m. local time (10 a.m. in New York) on August 25. Draghi will take the podium at 1 p.m. His remarks will focus on the theme of the conference, an ECB spokesman said, responding to speculation over whether the Italian might choose to send a policy signal on the central bank’s bond-buying program. Advanced economies face common challenges that range from rising asset valuations to the uneven effects of globalization that galvanized the populism behind Brexit and the election of Donald Trump. It’s a lot easier to solve these problems with faster growth. “What we’re trying to analyze is— how do we improve growth?” Dallas Fed President Robert Kaplan told reporters in Lubbock, Texas, last Thursday, when asked about Jackson Hole. Still, inflation may be the most pressing riddle facing central banks, which are failing to meet their price mandates.

YELLEN

DRAGHI

US inflation fell to 1.4 percent in June, based on the Fed’s preferred gauge, and consumer prices in the euro area— currently at 1.3 percent—have wavered since the start of the year. Both central banks shoot for 2-percent inflation, although the ECB formally aims below, but close to, that level. Those glacial price gains come even as unemployment has dropped steadily, more than halving in the US to 4.3 percent since its postrecession peak and declining to 9.1 percent, from a high of 12.1 percent, in the euro area. Inflation is also low in Japan, though subpar price gains have been a longer-lived issue there. While the Bank of Japan hasn’t con-

firmed Governor Haruhiko Kuroda’s schedule, he’s attended Jackson Hole every year since becoming chief in 2013. Bank of England Governor Mark Carney plans to skip the event. The slow progress on inflation suggests that the Phillips Curve—a relationship where low joblessness begets higher prices—may no longer operate. If central bank leaders reaffirm their belief that it will start to work, that would be a sign of confidence that price gains are coming. Jackson Hole almost guarantees market-important information, and, this year, “I would bet it has to do with inflation”, said Guy LeBas, chief fixed-

income strategist at Janney Montgomery Scott in Philadelphia. “Inflation is the biggest—and the discussion of the Phillips Curve is the second-biggest—economic issue that has policy implications.” The Fed has already signaled that it will probably get moving on unwinding it’s $4.5-trillion balance sheet in September, and Yellen could solidify that view. Still, if the Fed chairman signals any uncertainty over her inflation outlook, it could cast doubt on the Fed’s projection for one more interest-rate increase this year. Draghi, who will have spoken in Lindau, Germany, last Wednesday before traveling to Wyoming, will be a key focus on policy-watchers’ attention. The ECB is entering a crucial phase of its battle to restore euro-area price stability. It was in Jackson Hole three years ago that Draghi laid the groundwork for its 2.3 trillion-euro ($2.7-trillion) bondbuying program. The region’s recovery has gathered pace since the start of the year, allowing officials to pledge to start talks this fall about a strategy for 2018 that could include gradually reducing purchases to zero. Yet, policy-makers also appear uncertain about how fast to proceed. That’s

become more evident since a Draghi speech in late June, in which he referred to reflationary forces, sent the euro higher. At the ECB’s Governing Council meeting on July 20, officials expressed concern over the potential for an exchange-rate overshoot that undermines the economic revival. “As the ECB signals that it is gradually approaching the exit, euro appreciation could be provoked, which will flatten the expected recovery in inflation and, thereby, reduce the probability of exit,” London-based Deutsche Bank economist Mark Wall said. Draghi may therefore choose to strike a cautious tone—expressing optimism over the economy but steering clear of signaling his thoughts on tapering until September 7, when the Governing Council meets and he holds a news conference. Yellen’s action, as the Fed leads the way in unwinding emergency-era policies, may also be a key determinant for the ECB as it crafts the timeline for its own removal of stimulus, said Claus Vistesen, an economist at Pantheon Macroeconomics in Newcastle, UK. As the Fed starts to move, “it gives the ECB room, with a lag, to move as well”, Vistesen added.

2nd Front Page BusinessMirror

A14 Tuesday, August 22, 2017

Fintq to help small entreps veer off from ‘5-6’ loans

By Kathryn Jose

@kathryntjose

intq, the financial-technology arm of the country’s largest telecommunications and digitalservices firm PLDT, is launching a financial-inclusion movement that turns members of the lowincome classes into promoters of formal financial services as part of a community of self-help entrepreneurs, which is seen to grow by over a million by the end of the year.

Fintq will officially launch the movement, called “Kasama Ka”, on September 6 at the Bangko Sentral ng Pilipinas to introduce its 21 loan products on Lendr, a mobilebased one-stop loans shop that is accessible online, along with savings, deposits and insurance services,

among low-income earners, especially vendors of sweetened tofu with tapioca balls, or magtataho, and fertilized duck egg, or magbabalut, and tricycle drivers. The individuals will be integrated in a referral system where they can share informa-

20% The rate of interest being charged by so-called 5-6 lenders, who give fast and usually collateral-free loans to self-help entrepreneurs

tion on the financial services by Fintq’s partner banks and other financial institutions with their customers and earn additional income from it. This year Fintq plans to attract at least 1 million referors and clients belonging to the financially inclusive community. The firm sees its members expanding to 60 million, as the Philippine population increases more than the current 103 million and basic information on Lendr spreads through word of mouth in the next years.

“We are building a base of shakers and movers at the bottom of the pyramid. It is an incomebuilder movement where multisectoral, self-help individuals will now be given a unique referral code that will be used by their loyal customers, or suki, or whoever wants to apply for a loan or insurance. The referred persons then can enter the code and, if the loan is approved, the referor will get a commission of P300,” Fintq Managing Director Lito Villanueva told the BusinessMirror. Vil lanueva said among its objectives, the movement was created to stop informal lending through 5- 6 to members of low-income classes who are demanded by the lender 20-percent interest rate on fast but exorbitant loans. “To be able to address [the socalled] 5-6 lending, we can now make the referors, who travel about 6 kilometers to 10 km a day to sell, be promoters of financial inclusion, as well, through products See “Fintq,” A2

DFA: Missing Filipino boy among Spain attack fatalities By Recto Mercene

@rectomercene

he 7-year-old Filipino boy earlier reported missing in Barcelona turned out to be among the 14 fatalities last Thursday’s terrorist attack that seriously injured his mother and more than 100 others, the Department of Foreign Affairs (DFA) said on Monday. The boy was separated from his 43-year-old mother when a van plowed through a crowd in the tourist area of Las Ramblas. The mother and son were in Barcelona to attend a relative’s wedding. “It pains us to break the sad news to our kababayan that we lost one of our own in the recent violence unleashed by extremists against the innocent in Barcelona,” Foreign Secretary Alan Peter S. Cayetano said. “We join the loved ones of our little brother in mourning his passing and in praying for the eternal repose of his soul.” Cayetano directed Foreign Undersecretary for Migrant Workers Affairs Sarah Lou Arriola to make sure all possible assistance is extended to the family of the deceased and other Filipino victims of the incident. According to Chargé d’Affaires Emmanuel Fernandez, the Philippine Embassy in Madrid was informed of the boy’s demise by his family after his father positively identified his remains. In his report to Manila, Fernandez said the victim’s 43-year-old mother remains in the intensive care unit

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D.O.T. PUSHES ‘FUN’ IN LONDON BUSINESS DISTRICT

Virtual-reality headgear “brings” London visitors to the Philippines. Philippines Department of Tourism in London took over Canary Wharf, the capital’s major business district, from July 31 to August 6 to show the fun that can be experienced when visiting the Philippines. pdot london By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

ORKERS in Canary W harf, London’s financial capital, were greeted every day with the cheerful tune “It’s More Fun in the Philippines”, as the Philippines Department of Tourism in London (PDOT London) once more undertook a major campaign to attract more travelers to the country. In a news statement, Gerard O. Panga, Philippines tourism attaché in London, said the campaign was implemented from July 31 to August 6. “Imagery of the Phil-

ippines’s best islands, tarsier, rice terraces and the Manila jeepney, among others, dominated the 30 digital screens and 40 static posters inside Canary Wharf ’s malls.” It also included a pub night at a Canary Wharf favorite, Smollensky’s, on August 2, with social-media influencers and PDOT London’s partners as guests, he said. The United K ingdom is considered a key tourism market for the Philippines with 173,299 arrivals in 2016, up 12.1 percent from 2015. Data from the DOT also show arrivals from the UK up 7.8 percent 93,649 in the first half of 2017. See “DOT,” A2

US continues to upgrade PHL’s radar technology By Rene Acosta

People stand next to candles and flowers placed on the ground, after a terror attack that left many killed and wounded in Barcelona, Spain, last Sunday. AP/Santi Palacios

of a local hospital after undergoing surgery for fractures in both legs and one arm that she sustained in the incident. In addition to the boy’s mother, two other Filipinos based in Italy were among those injured when a va n plowed t h rough crowds gathered at the Las Ramblas tourist district. The injured Filipinos—one male and one female—will be assisted by

the Philippine Consulate General in Milan in getting medical attention, according to Consul General Marichu Mauro. Also injured in the attack were four Irish citizens of Filipino descent, who were also attended to by the embassy and the honorary consulate in Barcelona. The four were identified as Norman Potot, 45; his wife Pederlita, 39; daughter Nailah Pearl, 9; and

son Nathaniel Paul, 5. They are residents of Dublin. Norman and Nathaniel remain confined at the Hospital Del Mar in Barcelona. The father suffered a minor head injury but remains under observation for hematoma of the kidney. His son is recovering from surgery for the fractured leg he sustained in the incident. Norman’s wife sustained minor bruises, while his daughter had a fractured arm.

@reneacostaBM

espite President Duterte’s rants against the United States, Washington continues to aid the Philippines in various, including the turn over today of a radar system to the Philippine Navy. This is part of Washington’s support in efforts to continuously beef up the intelligence and monitoring capabilities of the Armed Forces of the Philippines (AFP). Navy Spokesman Capt. Lued Lincuna said officials, led by Navy Chief Vice Adm. Joseph Ronald Mercado, will receive the Tethered Aerostat Radar System (TARS) from the US through US Embassy Deputy Chief of Mission Michael Klescheski. The turnover of the TARS—a self-sustained, unmanned lighter-than-air radar system—at the headquarters of the Naval Education and Training Command in Zambales, is the second donation by the US in less than a month. Late last month the US turned

over to the AFP two Cessna 208B Caravan aircraft, which Manila will use in monitoring its maritime territory. The two aircraft, principally used for intelligence, surveillance and reconnaissance (ISR), were provided by the US government under its maritime-security initiative through the US Pacific Command. T he two aircraft are longrange patrol planes that would be used in monitoring the Sulu Sea, the West Philippine Sea and even Benham Rise. Lincuna said the TARS should enhance the Navy’s capability in ISR by “effectively detecting maritime and air traffic within the country’s coastal waters using sensors”. “Moreover, it will also be utilized in the conduct of Humanitarian Assistance and Disaster Response operations,” Lincuna added. The TARS also include a weather station that provides telemetry data to the ground station for the monitoring of ambient temperature, pressure, wind speed and other pertinent parameters in the operation of the system.

Compliance is good business sense Continued from A1

Opportunity—business partners and suppliers are increasingly required to document their anticorruption compliance programs or risk losing contracts. Reputation—your company’s reputation is its most valuable asset. Corruption investigations can harm business opportunities. Blacklisting—companies convicted of corruption offences can be excluded from bidding on contracts. The EU, the World Bank and others blacklist convicted companies.

In this context, your company should perform periodic risk assessments of its internal and external risks. Your company must focus most on managing the most serious corruption risks. Perform a periodic and comprehensive risk assessment to identify and weigh internal and external risks and, in turn, define your priorities. Remember to work together with those familiar with your company’s processes and sales channels to make effective risk assessments. Geographical risks—identif y the nature and levels of

corruption, including relevant regulations in the countries you do business. For instance, the Chinese Compliance Guide underlines the high risk of official bribery as many Chinese companies are state-owned enterprises. Sector and products—your market sector may entail a higher risk of corruption than others. If you operate in sectors dependent on large-scale government contracts or tightly controlled licences, your business may be exposed to a higher risk of agents or subcontractors committing a corruption offense

on your company’s behalf. Representatives—make sure to identify current and anticipated future representatives. Different types of representatives have different risk profiles and include third-party agents, consultants and joint-venture business partners. Corruption Types—evaluate risks for the various forms of corruption. Does your company risk encountering big-value kickback payments, or smallvalue bribery or facilitation payments? Does your company give gifts or donations, and could

these be seen as a corrupt inf luence on their recipients? Keep in mind that some legislation does not distinguish between bribery and facilitation payments. Keep records—document your compliance activities, including your risk assessments. This will demonstrate your commitment to fighting corruption, facilitate potential cooperation with authorities, help establish possible legal defences and demonstrate compliance to your business partners. Define priorities—your risks should be evaluated for likelihood,

impact and velocity. And tools can be used to help visualize your assessments to distinguish risk levels. Remember, your compliance activities should be proportionate to your risks! If you need assistance, contact us at the Integrity Initiative—e-mail me under Schumacher@integrityinitiative.com, or contact Gan International Inc. (www.ganintegrity.com ) directly. Remember, implementing adequate procedures can help manage risks while creating a competitive business advantage.