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As of 8:30 p.m.

Country

S B Total

1 China

27 17 12

2 Japan

11 15 17

3 korea

12 13

4 indonesia

5 Iri iran

6 dpr korea

7 india

8 chinese taipei

9 Mongolia

10 Kazakhstan

11 Uzbekistan

12thailand

13 lebanon

14 PHILIPPINES

15 JORDAN

16 MACAu, CHINA

17VIETNAM

18Kyrgyzstan

19HONGKONG,CHINA

20 TURKMENISTAN

21 MALAYSIA

21 singapore

Wednesday, August 22, 2018 Vol. 13 No. 312

NG debt payment up 9.9% to ₧416B ₧378.369B T By Rea Cu

Medal Tally

@ReaCuBM

HE national government’s debt payments for the first half of the year amounted to P415.898 billion, with amortization outpacing interest payments for the period, data from the Bureau of the Treasury (BTr) showed.

The P415.898-billion payment represented a 9.9-percent increase compared to the P378.369 billion made in the same period for 2017. Broken down, amortization accounted for P250.388 billion, while interest payments took P165.510 billion of the total. Amortization for the six-month period showed an increase of 10.4 percent compared to last year’s

‘Hawkish BSP halts further fall of peso’

P226.792 billion, while interest payments posted an uptick of 9.1 percent from the P151.577 billion recorded in the same period last year. Under domest ic amor t i zation, redemptions accounted for P170.388 billion—made up of payments to the government’s Bond Sinking Fund (BSF) of P169.517 billion and to the assistance of

The debt payments made by the national government in the first half of 2017

agrarian reform beneficiaries (ARBs) of P871 million. Foreign amortization accounted for P29.928 billion, with global bond exchange payments comprising P50.072 billion as of end-June this year. Under domestic interest payments, the government paid out a total of P114.572 billion, with P79.095 billion going to fixed-rate Treasury bonds, P30.269 billion to retail treasury bonds and P4.146 billion for Treasury bills. Foreig n interest pay ments See “Debt,” A2

AS N.A.I.A. RETURNS TO NORMAL, UNSLOTTED PLANES BRING TROUBLE By Recto Mercene @rectomercene

HE country’s main gateway on Tuesday resumed normal operations after a four-day closure, but another crisis of sorts ensued as 61 airplanes that had been sitting on the tarmac of provincial airports since the August 17 fiasco decided to return to Manila. These include other flights from Xiamen Airways, which entered the Philippine Flight Information Region (FIR) without prior notice, according to the Manila International Airport Authority manager, Ed Monreal. A Xiamen Air B737-800 had caused one of the Ninoy Aquino International Airport’s (Naia) worst crises in decades when it skidded while landing in heavy rain close to midnight on Friday and got stuck in a muddy portion at the side, blocking the vital runway 06/24

HIDILYN WINS ASIAD GOLD

Govt investing P31B in key tourism access roads in 2019 @akosistellaBM Special to the BusinessMirror

PESO exchange rates n US 53.4140

and preventing all other planes from landing or taking off. Explaining why authorities had to find ways to accommodate the 61 planes on Tuesday despite having put in place earlier a slotting arrangement that these planes ignored, Civil Aviation Authority of the Philippines(Caap) Director General Jim Sydiongco said that once an airplane is within the country’s FIR, “we could not turn them away. “One inside our FIR, the Caap air traffic controllers have no choice but to accept them. We cannot ask them to go back to their point of origin or they could run out of fuel.” The untimely arrival of the 61 airplanes, including the four Xiamen planes, added to the parking congestion at the Naia that was still coping with more than 100,000 passengers stranded in Manila. See “Naia,” A8

By Ma. Stella F. Arnaldo

@BcuaresmaBM

See “BSP,” A2

business news source of the year

P25.00 nationwide | 5 sections 24 pages | 7 days a week

By Bianca Cuaresma HE Bangko Sentral ng Pilipinas’s (BSP) openness to take further action to tame persistent inflationary pressures in the economy has kept the peso afloat, amid volatile global markets, a private bank economist said on Tuesday. ING Bank Manila economist Joey Cuyegkeng said that, while the peso weakened in the previous week in line with most Asian emerging market currencies, the BSP’s recent stance kept the peso from incurring a greater depreciation during the period. “The effect of the aggressive BSP policy rate hike of the previous week has worn off, but the continued hawkish stance moderated any weakness,” Cuyegkeng said in a recent analysis of the local economy.

2016 ejap journalism awards

Hidilyn Diaz adds a gold medal from the 18th Asian Games women’s weightlifting competition to the silver she bagged in the 2016 Rio de Janeiro Olympics, giving the Philippines a sigh of relief in the Jakarta Palembang 18th Asian Games on Tuesday night in Indonesia. With the gold, Diaz banks a total of P6 million in bonuses. Story on page A8. NONIE REYES

OME P31 billion will be invested by the Duterte administration in constructing roads to key tourism destinations in 2019. This was disclosed by Tourism Secretary Bernadette Fatima Romulo Puyat in a recent presentation before members of the World Trade Center Metro Manila (WTCMM) and tourism industry stakeholders. “Our convergence with the Department of Public Works and Highways [DPWH], called the Tourism Road Infrastructure Prioritization Program [TRIPP], will spend P30.9 billion in 2019 to develop 1,236 kilometers of roads leading to tourist destinations all over the country. This

n japan 0.4830 n UK 68.0922 n HK 6.8048 n CHINA 7.7564 n singapore 38.9542 n australia 39.0723 n EU 61.1056 n SAUDI arabia 14.2426

See “Govt,” A2

Source: BSP (20 August 2018 )

News

BusinessMirror

A2 Wednesday, August 22, 2018

Labor, employers want clear IRR for workplace safety law

By Samuel P. Medenilla @sam_medenilla & Elijah Felice E. Rosales @alyasjah

ESPITE its more stringent regulations, the newly enacted Republic Act (RA) 11058, also known as the Occupational Safety and Health Standards (OSHS) law, still has ambiguous provisions that must be ironed out in its implementing rules and regulations (IRR), according to labor groups. A similar concern was separately aired by employer groups. Employers want the OSHS law to have clear rules of engagement, as they worried that labor inspectors might get “overzealous” in finding fault in establishments. In interviews with the BusinessMirror, employers said they still find the administrative fine the law slaps on violators “worrisome and a cause of concern.” RA 11058, or the OSHS law, imposes a penalty of P100,000 per day until a violation is corrected. Meanwhile, Federation of Free Workers (FFW) Vice President Julius Cainglet told the BusinessMirror some provisions of RA 11058 expose workers to possible sanctions from their management. The labor leader was referring to the provision of the bill allowing employees to refuse work in dangerous workplaces.

“Workers’ right to refuse work that endangers his life, health, safety and even morals; and work that harms the env ironment should further be defined so as to protect workers from being fired, suspended or disciplined in whatever manner by management for insubordination,” Cainglet said in an SMS. FFW also appealed to the government to specify the inclusion of labor representatives in crafting the guidelines. Under the law, Cainglet said only government agencies were explicitly included to form the interagency council that will craft the IRR. “Workers’ participation should also be spelled out,” Cainglet said. Last, he said, the IRR should also contain specific incentives for employers to encourage them to report workplace accidents. “These reports are important for policy decisions and one of the

₧100,000

The penalty imposed per day of violation, until such is corrected, by RA 11058, or the OSHS law basic information the interagency council can work on,” Cainglet said. Associated Labor Union-Trade Union Congress of the Philippines (ALU-TUCP) Spokesman Alan Tanjusay agreed with Cainglet. The success of the enforcement of RA 11058 will depend on the inclusiveness of its IRR, he said. “The felt benefits of the improved law now depend on the outcome documents from workers, government and employers,” Tanjusay said in a statement. Labor Undersecretary Joel B. Maglunsod said they will start consultations for drafting the guidelines of the OSHS law once it takes effect 15 days after its publication. “We have 90 days after publication. We will be immediately drafting. By December we should have completed it,” Maglunsod told the BusinessMirror in an ambush interview. The labor official, however, admitted they still lack labor inspectors to effectively enforce the OSHs law. The Department of Labor and Employment (DOLE) has been seeking a budget to hire an additional 2,000 labor inspectors next year. It

only has at least 500 labor inspectors tasked to regularly assess over 900,000 companies nationwide.

Labor realities ignored?

Jose Roland A. Moya, director general of the Employers Confederation of the Philippines (Ecop), thinks that several provisions of the new law failed to take into account the country’s labor realities. However, with President Duterte’s approval, he said businessmen have nothing else to do but take part in the crafting of its IRR and comply with the requirements. “The only thing that I will add is that Ecop will participate in the formulation of the IRR to ensure a fair and just elaboration of the provisions of the OSHS law. As it is now a law, Ecop, despite its objections to the punitive provisions of the OSHS law, will launch an information campaign among its members to ensure compliance,” Moya said. George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry, branded the OSHS law as “good” for its intention of upholding the welfare and safety of workers. “When a worker is wounded or handicapped and in the process loses his job, businesses lose productivity also,” Barcelon argued in a mix of English and Filipino. He added businesses can no longer afford to lose its workers, particularly skilled laborers, to accidents.

BSP. . .

Continued from A1

Latest data from the Bankers Association of the Philippines (BAP) showed the peso traded at 53.38 to a dollar on Monday, strengthening from Friday’s 53.425 to a dollar. Trade in local financial markets were suspended on Tuesday, due to the public holiday to commemorate both the Ninoy Aquino Day and Eid’l Adha. In early August the BSP let out its most aggressive move in a decade, raising its main policy rate by 50 basis points on account of rising inflationary pressures for 2018 and 2019. This, after the Central Bank already made two 25-basis-point hikes in its previous meetings for the year. “The BSP’s hawkish stance is to anchor inflation expectations, as the BSP expects inflation to reach a peak in this month or September,” Cuyegkeng said. In his view, the BSP’s keeping a hawkish stance is “not only about reassuring the market that inflation would ease to within the target range of 2 percent to 4 percent next year,” but is also meant “to reduce concerns of a weak Philippine peso also fuelling inflation.” While the economy usually welcomes certain degrees of depreciation in its local currency as it strengthens the purchasing power of the billions of dollars in remittances sent by overseas Filipino workers (OFWs), a sustained fall of the peso’s value means higher prices of imported goods, particularly in petroleum. With the BSP’s controls in place, Central Bank officials earlier expressed optimism that inflation will not hit 6 percent for this year—a view not shared by the ING Bank Manila economist. “We believe that inflation could breach 6 percent in the next two inflation reports,” Cuyegkeng said. “We continue to see upside risk on the inflation front, especially with the latest reports of rice prices continuing to rise, with supply-related constraints also compounding the pressures,” he added. Should inflation hit higher than 6 percent, Cuyegkeng said further tightening is likelier, projecting another 25-basis-point hike in September or November. The latest inflation report showed the growth of local consumer prices hit 5.7 percent in July. The Monetary Board is expected to meet again to set policy levers on September 27. This will be its sixth monetarypolicy meeting for the year. With PNA

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Bong Go video shows ‘alive, fairly healthy’ Duterte dining in Davao By Bernadette D. Nicolas @BNicolasBM

RESIDENT Duterte broke his silence on Monday night and went live via Facebook to say that he is “alive” and “fairly healthy,” quashing allegations made by Communist Party of the Philippines founder Jose Maria “Joma” Sison that he is in a coma. The live video, which was taken and uploaded by Special Assistant to the President Christopher Lawrence “Bong” T. Go, showed the President even having dinner with a woman from Davao named Vernice, who the President said is on leave from Harvard. The President said he invited the lady to discuss some things along the way. “I’m alive, fairly healthy. And I am having a dinner with a beautiful lady in Davao,” Duterte said. “How can you be comatose with a beautiful lady? If I am really comatose, if I see Vernice, I will immediately get out of my bed.” Reports said it was Frances Veronica Victorio, former chairman and now commissioner of the Climate Change Commission. Sought for confirmation on the lady’s identity, Go told the Business M irror that he does not know who the lady was. This was the first time that the President spoke about the issue since talk spread over the weekend about his health condition. According to the Constitution, the public shall be informed about the state of the President’s health in case of serious illness. The Cabinet members in charge of national security and foreign relations and the chief of staff of the Armed Forces of the Philippines shall not be denied access to the President during such illness. The President even took a swipe against Sison and accused him of being the one who is ill and comatose. “The truth is, the Netherlands is already complaining because you have been in and out of the hospital without paying,” he said in a mix of English and Filipino. “You are not paying and you are abusing the hospitality of the Netherlands.” The President even suggested that Sison come home and said he will provide him a space in the New Bilibid Prison if he is sick. Sison fled to Europe after peace talks failed in 1987 and has been abroad since. “If you think you are sick, come home and I will bring you to a place, it’s called Bilibid,” he said. “But there I will provide you with a space, a bed and plenty to keep you company.” He also wished Sison what is considered akin to a biblical curse, made against a man doomed to

Govt. . .

Continued from A1

is in addition to the P84.6 billion that we have invested so far since 2011 for 1,578 km of national and local roads,” she said. These roads will be located in what the DOT has identified as 20 tourism clusters in the country, seven of which are in northern Philippines, six in central Philippines, and seven in southern Philippines. Of these clusters, nine are dubbed “gateway clusters,” which host international airports, as well as 48 tourism development areas. According to the proposed National Expenditure Program for the DPWH for 2019, some P1.85 billion will be spent on the construction and improvement of access roads leading to airports, while about P2.5 billion will be earmarked for the construction/improvement of access roads going to seaports. Outside of the National Capital Region, four provincial regions have been slated to receive the bulk of the budget for the construction/improvement of access roads leading to declared tourism destinations. President Duterte’s Davao region has been allocated the largest funds at some P1.61 billion, followed by Central Visayas at P1.46 billion, Western Visayas at some P1.3 billion, and Central Luzon at P915,000. Among the DOT’s priorities, Romulo

Debt. . .

Continued from A1

reached P50.938 billion as of endJune 2018.

June payments

For June alone, the government’s debt payments amounted to P30.756 billion, expanding by 22.8 percent from last year’s P25.043 billion. Interest payments of P24.065 billion outpaced amortization of P6.691 billion for the month.

stay alive and roam the Earth. “Joma, my wish for you is to live about 1,000 years, although you have already no purpose in this world,”he said, noting that the man he once called his “friend” and professor will be like the reincarnation of a character who walks around planet Earth and does not die.

He’s sick, Joma insists

Responding to the video through a strongly worded Facebook post on Tuesday, Sison said he never claimed the report to be true and stressed that the report is still subject to verification or negation by the public appearance of Duterte and the release of a credible medical bulletin. However, after seeing the video, he still stood by his claim that the video appearance of the President still proves his allegations right. “He looks like he just came from dialysis or some other kind of treatment on Sunday,” he said, adding that it also confirms the report on Saturday, August 18, that the President’s face was darker than usual and that he was slow and unstable while shaking hands with his Lex Talionis fraternity brothers. “The video indicates that Duterte suffers from some serious illness, such as the aggravation of his self-admitted Buerger’s disease and or his kidney problem due to frequent use of pain killers, including fentanyl.” Someone with Buerger’s disease suffers from inflammation and thrombosis (blood clotting) in small and medium-sized blood vessels, usually in the legs, sometimes resulting in gangrene. The lower extremities are also often painful. It is associated with smoking. Duterte used to smoke. Sison stressed that he does not have any death wish for the President, unlike the latter who seems to imply he’d rather see him dead. “If the video showing Duterte hoteldating a young woman was really recorded on Monday night [Davao time], I am pleased to see that Duterte is still alive and that there is a chance of his living long enough to be held accountable for his crimes against the people and be tried by the people’s court or by the International Criminal Court.” Sison added: “In fact, I wish him to live long enough to receive a warrant of arrest, unlike the so many thousands of victims of Oplans Tokhang and Kapayapaan.” He said the President’s irrationality and self-contradiction of his rants reflect his mental and moral condition, something that, Sison noted, made him believe that Duterte is unfit to be a president. Puyat stressed, is the “[improvement] of policies on access, connectivity and security, as well as enhance programs on tourism infrastructure.” This will help boost the number of foreign visitors in the Philippines to reach 12 million by 2022; and domestic travelers to 89.2 million. “[These] are expected to translate to P921 billion inbound receipts, and P12.95 billion domestic revenues,” she added. The DOT chief also said she looked forward to getting support and closer collaboration with the WTCMM and other professional event organizers and venue managers, as the agency has drawn up a road map to position the Philippines as the “top-of-mind” destination for MICE (Meetings, Incentives, Conventions, Exhibitions) events. For 2018, she said the DOT’s marketing arm, the Tourism Promotions Board, is targeting to achieve the following: 300 business leads, seven bids assisted, 140 assisted MICE events, and invite 40 MICE organizers. “In 2017 the global MICE authority, ICCA [International Congress and Convention Association], ranked Manila 59th among 658 under this category. This is a good indication of our capital city’s capacity in hosting and organizing MICE events, as well as the international participants’ preference to hold their events in our country,” said Romulo Puyat.

The government borrows funds both from onshore and offshore lenders to support its various programs, including its infrastructure buildup projects and social programs, among others. “[Commercial borrowings] is really for financing our deficit, our amortization, because we have maturities that we have to fund... our cash flow is very strong because of the revenue collections, the performance of the revenue agencies,” said National Treasurer Rosalia V. de Leon.

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Don’t be hasty in condemning cops in Makati drug den raid–Lacson By Butch Fernandez @butchfBM

en. Panfilo M. Lacson Sr. took up the cudgels for beleaguered police officers under fire for arresting three lawyers in the midst of last week’s raid at a suspected drug den in Makati. “Do not be too quick to condemn the Philippine National Police [PNP] over the arrest of three lawyers following an antidrug operation at a bar in Makati City last week,” Lacson said. In a news statement issued on Tuesday, the senator, a former PNP chief, suggested that the public should at least see the side of the PNP’s National Capital Region Police Office on the incident before judging. “Let us not be too hasty or harsh in condemning the NCRPO, without getting their side of the story. There is such a thing as presumption of regularity.” Lacson, who headed the PNP from 1999 to 2001, pointed out that videos taken of the raid at the Makati City bar showed that the NCRPO officers asked the lawyers on who they were representing, and arrested them after

they could not give clear answers. He added the videos also showed one of the police officers explaining to the lawyers that their entering the scene and taking videos without prior authorization may constitute obstruction of justice, noting that while the lawyers claimed to represent one of the establishment’s owner, “they did not provide names.” Moreover, the senator said, the NCRPO team’s report indicated the three lawyers roamed inside the premises, took pictures in every floor and touched items “as if doing their own search without authority,” which may have contaminated the evidence. Lacson, likewise, noted that the PNP leadership had “shown it is sincere in cleansing its ranks of rogue members, and deserves at least a chance to have its side on the issue heard.” At the same time, the senator added: “On the other hand, as part of its internal cleansing efforts, [the PNP] should put an end to the palakasan system that could allow dismissed scalawags in uniform to sneak back into the service.”

DND remains keen on Russian sub acquisition, Lorenzana says

By Rene Acosta

@reneacostaBM

espite a word of caution aired by a United States defense official, the Philippines will push through with the exploratory talks of possibly acquiring a submarine from Russia. The vessel acquisition is among the issues that Defense Secretary Delfin N. Lorenzana will discuss with his scheduled meeting with his Russian counterpart Sergey Shoygu, upon whose invitation was the reason he is now in Moscow. Lorenzana, who left for Russia on August 16, said he would bring the submarine-acquisition proposal with Shoygu, while also exploring other areas of possible military cooperation with Moscow.

“To look at some defense equipment they are offering: like submarines, helicopters,” Lorenzana said when asked about the purpose of his visit to Russia. Last year Lorenzana and Shoygu signed an agreement for militarytechnical cooperation between the two countries following the port visit of a Russian warship in Manila. The port visit was accompanied by the donation of Russian-made military trucks and firearms to the country.

Govt allots P447 million for PUV modernization program next year By Jovee Marie N. dela Cruz @joveemarie

he national government will spend P447 million next year for the Public Utility Vehicle (PUV) Modernization Program. On top of the P447 million, Surigao del Sur Rep. Johnny T. Pimentel, a member of the House Committee on Appropriations, said the government is planning to provide another P2.2 billion in low-cost financing to help PUV operators under the program. For this year, P843 million has been allotted to support the program. “The government is likewise arranging to provide another P2.2 billion in low-cost financing to help PUV operators and drivers acquire the newly configured buses, vans and jeepneys under the program,” Pimentel said. Once available, Pimentel said the P2.2 billion will be coursed through two state-owned lenders—the Land Bank of the Philippines and the Development Bank of the Philippines—at P1.1 billion each. He said the P2.2 billion is lodged in the “unprogrammed appropria-

tions” of the proposed P3.757-trillion national budget for 2019. Unprogrammed appropriations “provide standby authority to incur additional agency obligations for priority programs or projects when revenue collection exceed targets, and when additional grants or foreign funds are generated,” according to the Department of Budget and Management. “We have very high hopes that the modernization program, once completed, will offer the public an easier and safer way to commute in the years ahead, while enabling PUV operators and drivers to upgrade their vehicles,” Pimentel said. “There’s also no question that the program will help improve air quality, because the new PUVs are meant to comply with lower emission standards,” Pimentel, also House transportation committee member, said. Earlier, House Committee on Transportation Chairman Cesar Sarmiento of Catanduanes questioned why the modernization program is being implemented ahead of the issuance of duly approved route-rationalization plans. “Why is there a rush in modernizing the existing fleet of PUVs when

Editor: Vittorio V. Vitug • Wednesday, August 22, 2018 A3

we have not yet determined, for instance, the required number of units for an existing route as per public demand, or the most efficient mode of public transportation—whether bus, jeepney, UV express or tricycle—for any given route?” he said during a hearing of the transportation committee last August 1. Sarmiento also said requiring PUV operators and owners to invest in modernizing their units without a concrete and objectiverationalization plan is like “jumping into the water without knowing how to swim.” He added it is counterproductive and is not the long-term solution to the countries’ urban traffic woes. “The committee believes that a concrete route-rationalization plan must be accomplished first before we proceed with fleet modernization,” he added. Officially launched only in June last year, the PUV modernization program is being implemented by the Department of Transportation (DOTr). Under the program, all PUVs more than 15 years old will be phased out and replaced with new models equipped with automated fare-collection systems, digital se-

curity and dashboard cameras, Wi-fi Internet connectivity, GPS tracking devices and speed limiters. The new PUVs will run either on electric batteries with zero exhaust gas emissions, or on Euro 4-compliant diesel engines that discharge 68 percent less particulate matter, 57 percent less nitrogen oxides and 50 percent less carbon monoxide. The modernization program a lso refor ms the franchising system to reinforce regulatory supervision of PUVs. To build up accountability, enforcement and compliance, fewer new franchises will be issued to PUV operators and drivers who will be required to form themselves into cooperatives or firms. In the case of jeepneys, for instance, each operator must have a minimum of 10 units to obtain a single franchise. Thus, drivers running their own units will have to band themselves into groups of at least 10 members to secure a franchise. Under the program, the DOTr will draw up new PUV routes in consultation with local government units. An academy will also help reinstruct PUV operators and drivers on basic road discipline, courtesy and safety.

The Department of National Defense (DND) has been looking at Moscow as a possible source of the first submarine for the Armed Forces of the Philippines, aside from South Korea and other countries as secondary sources. Lorenzana said the military is evaluating the suitability of the Russian Kilo-class submarine for the Philippine Navy. Defense Spokesman Arsenio Andolong said Russia has offered to provide two platforms for the military under a soft loan, but such offer has to be discussed further. The plan to acquire a submarine, with Moscow as the source, elic-

ited reactions from US Assistant Secretary of Defense and Pacific Security Affairs Randall Schriver, who thought it would not be good for the alliance. “I think they should think very carefully about that. If they would have [to] proceed with procurement of major Russian equipment, I don’t think that’s a helpful thing to the alliance,” Schriver said a few days ago. But Lorenzana said the country will acquire assets that it knows will work best for the military at the most affordable price. Andolong said that Lorenzana’s visit to Moscow was also to reciprocate Shoygu’s recent visit to Manila.

If they [the Philippines] would have [to] proceed with [the] procurement of major Russian equipment, I don’t think that’s a helpful thing to the alliance.”—Schriver

Election watchdog lauds Duterte vow of ‘clean and orderly’ polls

ess than a year into the 2019 midterm elections and amid rumors of a so-called no election scenario, election watchdog Democracy Watch expressed support to President Duterte’s assurance of a “clean and orderly” polls. Citing the great strides introduced by the switch to the Automated Election System in the past three elections, the country can ill afford to go back to how things were, Democracy Watch Secretary-General Claudette Guevara said in a news statement. “Transparency is a key principle in ensuring credible elections as it helps establish trust and confidence in the process by guaranteeing that the results reflect the true will of the people,” Guevara said. The 2016 elections was widely believed to be the most credible in recent memory, a view attested by nationwide opinion polls and accounts of foreign observers. In a Pulse Asia survey conducted after the polls, more than 90 percent of respondents believed that the conduct of the exercise was fast, orderly and peaceful. By election night, some 86 percent of all votes had been

transmitted, something that was unheard of in the history of Philippine elections long marred by cheating and sluggishness. “On May 2016 the world saw more than 44 million Filipinos troop to their respective polling precincts and made their voices heard through a process that has long been a cornerstone of our democracy. The faster conduct resulted in less instability and greater confidence in the process,” Guevara said. Duterte’s assurance also came amid a protracted and bitter electoral protest by losing vice presidential candidate Bongbong Marcos. “An election that is hailed as one of the most successful and credible in history should be above senseless politicking,” Guevara said. Democracy Watch said a way to improve the polls even more is to invest on the retooling and building of an adequate IT infrastructure and developing the human resources for the Commission on Elections so it can fulfill its mandate. “Such investments are also investments in our political stability,” Guevara said.

BIR padlocks beauty, wellness ILO cites Pinoy workers’ ‘fragility’ to risk factors establishment in Pasig City By Samuel P. Medenilla @sam_medenilla

he Bureau of Internal Revenue (BIR) has closed down the operations of a beauty products maker in Pasig City for alleged violations of the National Revenue Code and other tax laws. BIR Regional Director Marina C. de Guzman, of the Revenue Region 7 which covers both Pasig and Quezon cities, ordered the closure of The Greenhouse Inc. at 57 East Capitol Drive, Barangay Kapitolyo, Pasig City on August 16. A BIR report said a team composed of Assistant Regional Director Albino Gallanza, Revenue District Officer Rufo Ranario, and Tax Examiner Cynthia Y. Lobo conducted surveillance and inspection opera-

tions of the beauty and wellness establishment prior to the issuance of the closure order. Initial reports show the establishment which manufacture, store, sell beauty and wellness products since 2014 may have consistently failed to settle tax liabilites since 2016. The closure order was signed by Arnel Guballa and was received by Jonalyn Valencia, sales ambassador of the said company. The operation was conducted as part of the BIR’s “Oplan Kandado” program, which suspends the business operations of noncompliant taxpayers and enforce closure of establishments found to have violated certain tax laws.

he International Labor Organization (ILO) has listed the Philippines as among the two countries in the Asia-Pacific region where workers have become more vulnerable to calamities in recent years. In ILO’s concept notes for its Recommendation 205, the Genevabased labor arm of the United Nations identified the country and Afghanistan to be more “fragile.” It cited Supertyphoon Yolanda (international code name Haiyan), which hit the country in 2013, devastating nine regions, and armed conflicts in Mindanao. ILO defines “fragility” as sudden and/or cyclical situations in

which external and internal risk factors exacerbate preexisting political instability and socioeconomic vulnerability. Worldwide, it reported around 2 billion people, including those in the Philippines, are experiencing fragility and armed violence in the last decade. It pointed out that another 200 million are victims of “slow or sudden onset of disasters.” “Left unattended, these problems can lead to increased poverty, inequality and social unrest,” ILO said. To address this challenge, ILO is now pushing for greater role for labor groups to participate in disaster management through its recommendation 205. The nonbinding document was adopted by the International Labor

Conference in 2017 to update recommendation 71 (Transition from War to Peace). “Trade unions can contribute to reducing causes of conflict, manage situations of disasters and also be effectively involved in assisting post-conflict countries and disasteraffected communities to build back better,” ILO Country Office for the Philippines Khalid Hassan said. ILO is now in the process of conducting its regional consultation for the first phase of the countryspecific mainstreaming of the said recommendation. The three-day Asia-Pacific leg is currently being hosted by the country and attended by 22 delegates from 14 countries. The Department of Labor and Employment supported the initia-

tive, which, it said, will help mitigate the impact of climate change in the country. “Climate change exposes our workers and industries to changing vulnerabilities. Climate change makes our communities weak. It affects labor productivity, working conditions, and occupational safety and health,” Labor Undersecretary Joel B. Maglunsod said. ILO said it hopes the recommendation will be applied by its member-countries after the completion of the initial promotion of the program on 2023. “ILO will provide continued support through technical advisory and services for the design and implementation of regional, subregional and national trade union plans of action,” Hassan assured.

LandBank’s net income grew 5.4 percent to ₧7.8 billion from April to June this year By Bianca Cuaresma @BcuaresmaBM

TATE-OWNED Land Bank of the Philippines (LandBank) reported a rise in its net income in the second quarter of the year, as the bank

benefitted largely from its robust loan portfolio during the period. LandBank’s net profit grew 5.4 percent in the second quarter of 2018 to hit P7.8 billion. This is some P400 million higher than its net income in the same period last year of P7.4 billion.

“LandBank remains among the most profitable banks in the country, and we are confident about continued growth for the next half of the year,” LandBank President and CEO Alex Buenaventura said. We work hard to maintain the

bank’s sound financial position as the profits from our commercial banking operations allow us to further drive support to our priority sectors, especially farmers and fishers,” he added. The rise in the bank’s net income

was primarily driven by the 30-percent jump in its revenues from loans, as LandBank’s gross loan portfolio was up 27 percent to P758.7 billion during the month. In terms of assets, LandBank reported a 14-percent growth to reach

P1.7 trillion as of end-June this year, rising from the P1.48 trillion in the same period in 2017. LandBank’s deposits also posted a double-digit growth rate of 15 percent for the quarter to hit P1.5 trillion, from the P1.3 trillion in June 2017.

A4 Wednesday, August 22, 2018 • Editor: Vittorio V. Vitug

Economy BusinessMirror

DOF pushes for reforms in real property valuation and taxation

By Rea Cu

@ReaCuBM

he Department of Finance (DOF) is pushing for reforms in the country’s real property valuation system to generate additional revenues for local government units (LGUs) and attract more investments in the country. Pending bills proposing to reform the country’s real property valuation system which are supported by the DOF include Senate Bill (SB) 44 filed by Sen. Panfilo M. Lacson Sr. House Bill (HB) 2207 introduced by House Speaker Gloria Macapagal-Arroyo and HB 68 by Albay Second District Rep. Joey S. Salceda. In separate letters sent to Lacson, Salceda and Arroyo, Finance Secretary Carlos G. Dominguez III said the three lawmakers can count on the DOF’s full support behind their bills’ immediate enactment in Congress, even as the DOF suggested several enhancement measures to their proposals to further strengthen the country’s real property valuation and taxation system. “Essentially, real estate is the most valuable asset and biggest financial resource. But its contribution to government revenues, particularly

for local governments, has remained dismal due to outdated schedule of market values (SMVs), poor collection efficiency and tax administration and lack of uniformity in the valuation of real property,” Dominguez said in his letters. The proposed reforms under the three bills aim to adopt international standards in real property valuation and strengthen local autonomy by “setting up a single valuation base for taxation and benchmarking purposes, insulating the valuation process from politics as LGUs will continue to regulate tax rates and assessment levels, improving the oversight functions of the national government, and establishing an electronic database to support valuation.” Among the enhancements proposed by the DOF to SB 44, HB 2207 and HB 68 are the establishment

of a real property valuation service (RPVS) within the Bureau of Local Government Finance (BLGF), an attached agency of the DOF. While all the three bills provide for the creation of the RPVS, Dominguez has proposed the inclusion of a provision designating counterpart BLGF personnel in the RPVS in the bureau’s regional offices. With the BLGF serving as the lead agency in implementing the proposed reforms in real property valuation, the DOF is recommending the removal of the provision in SB 44 creating a Regional Technical Committee (RTC) on Real Property Valuation. Dominguez said doing away with this committee will streamline the review of the SMVs, because the same function will already be performed by the BLGF regional offices in coordination with Bureau of Internal Revenue (BIR) regional offices. The DOF also added a proposed provision which will bar an LGU from receiving any “conditional or performance-based grants or any form of credit financing from the national government” in cases when it fails to update its SMV and conduct a general revision of property assessments every time the finance secretary approves a new set of SMVs. Dominguez also proposed that a section be included stating that the process should include the approval and publication of the SMVs by the secretary of finance, and that the

bills make clear that the publication of the local ordinance for the new and revised assessment levels and tax rates should be the responsibility of LGUs. He also recommended a provision requiring local assessors and other local officials and staff dealing with real property valuation to undergo training under the Philippine Tax Academy, as well as mandating them to automate their operations, adopt tax mapping technology, maintain software-enabled valuation system, undertake data cleansing and computerize their records management system. The finance chief further recommended that a provision on the mandatory constitution of the Local Board of Assessment Appeals be included to ensure that available redress mechanisms are in place and that the Register of Deeds shall provide assessors with real property transactions data and make the information sharing free of charge. Under the Duterte administration’s Comprehensive Tax Reform Program (CTRP), reforming the country’s real property valuation system is outlined in Package 3. In July this year, Dominguez told financial reporters that the DOF will be submitting Packages 3 and 4 of the CTRP in July, with Package 3 tackling the single valuation for real property, and Package 4 focused on financial taxes.

www.businessmirror.com.ph

PHL taps Japan, Dutch expertise for smart city initiative–Neda By Cai U. Ordinario

@cuo_bm

lark Green City and Bonifacio Global City are just tips of the iceberg, as the Philippines turns to Japanese and Dutch technology and expertise to come into the smart cities initiative in a big way. In an interview, National Economic and Development Authority (Neda) Undersecretary for Investment Programming Rolando G. Tungpalan told the BusinessMirror that this is the main goal of the creation of three master plans for Davao City, Cebu City and the Manila Bay area. “We want to get into smart cities development so a good starting point are these master plans that will be coming up,” Tungpalan said. He added that the Davao master plan, which has recently been completed, will be focused on improving infrastructure. The master plan, called IM4Davao, is short for infrastructure modernization for Davao. He said the plan will soon be submitted to the interagency Infrastructure Committee (Infracom), which advises the President on policies, programs and projects concerning infrastructure development. This is a crucial step, Tungpalan said, since the projects to be financed to achieve the master plan are mostly national government funded. “The master plan was completed recently and is now for submission to Infracom to get its imprimatur,” Tungpalan said. The Cebu and Manila Bay master plans are also being crafted. The Cebu master plan, just like

the Davao master plan, is being undertaken by Japan, while the Manila Bay master plan is being undertaken by the Dutch. These efforts, Tungpalan added, are the Philippines contribution to the Asean Smart Cities Network (ASCN) spearheaded by the government of Singapore. The Neda, he added, is the country’s national coordinator for the initiative. Based on the concept note of the ASCN, the initiative aims to be a collaborative platform where up to three cities from each Asean member-state, work toward the common goal of smart and sustainable urban development In October the Joint Consultative Meeting, the primary reporting mechanism of the ASCN, will note city-specific action plans and endorse the Asean Smart Cities Framework. The ASCN will be officially launched by the Asean leaders in November 2018. There are 26 pilot cities included in the ASCN. Apart from the capital cities of each Asean country, the list includes cities like Davao and Cebu as pilot cities. Efforts to address the ills brought about by the urban sprawl is Goal 11 of the Sustainable Development Goals (SDGs). The goal encourages the use of better urban planning and management to make the world’s urban spaces more inclusive, safe, resilient and sustainable. The 17 SDGs were adopted by 193 United Nation-member countries, including the Philippines in 2015.The SDGs have 169 targets and 233 indicators.

ADB reminds Asian countries: Ensure social protection for aging population

F Asian countries fail to adopt innovative employment and social protection measures, many citizens won’t be able to afford retirement, according to the Asian Development Bank (ADB). In an Asian Development Blog released on Tuesday, ADB Principal Social Development Specialist Sri Wening Handayani said social protection can improve the future of Asian workers. Handayani said this is particularly the case in today’s gig economy, where workers have short-term contracts or are working as freelancers without any benefits such as retirement packages. “Developing Asia has and will be hit hard by rapid socio-demographic changes. A clear example is the rapidly growing population of older people, which is expected to triple in the next three decades,” Handayani said. “The good or bad news, depending on one’s perspective, is that most of the Asia’s elderly remain in the labor market because they can’t afford to retire,” she added. Currently, Handayani said the coverage of social protection programs in Asia is already very low compared to European countries. Based on the ADB’s Social Protection Indicator, less than half of Asia’s population was fully covered by at least one social protection scheme in 2015. Handayani said the range varies from Japan with more than 90 percent to Nepal with less than 30percent coverage. “The gap in social protection provision, coupled with the growing informality of the labor market and the region’s demographic transition, means that the implicit social contract under either the Bismarck or the Beveridge model is coming under increasing strain,” Handayani said. She explained the model of 19thcentury German Chancellor Otto von Bismarck is to assure standard of living, while the model used by UK progressive economist Lord William Beveridge focuses on securing a subsistence level. Handayani said these models

are being challenged by the nature of work that is being shaped by global trends, such as digitalization, socio-demographic changes and globalization. These global trends affect the social contract between employer, employee and state, and the growing diversification of work arrangements. While there is no one-size-fitsall solution to implementing social protection programs for workers across Asia, Handayani offered four critical points. Asian countries must close the gap on population coverage and adequacy of benefits and create innovative policy and regulatory frameworks to ensure compliance. “Policy innovations to enhance the coverage of social protection schemes for NSE [nonstandard employment] workers are key to prepare social protection systems for future work, as will be regulatory frameworks that can adapt to cover NSE workers when they expand social insurance coverage and benefits, Handayani said. “Expanding social insurance schemes will reduce the state’s financial burden in providing noncontributory social protection or social assistance schemes,” she added. Handayani also recommended that Asian countries must design sustainable financing mechanisms for social protection programs. This includes adopting tax-reform programs, such as the country’s Tax Reform for Acceleration and Inclusion (TRAIN) law that allows governments to expand and increase social protection programs. Under the TRAIN law, the majority of taxpayers receive tax cuts. However, the tax-reform program also included higher consumption taxes on fuel and vehicle purchases. In response, the government extended unconditional transfers to the poorest 10 million households to augment their incomes which may be affected by higher consumption taxes. “Some options to expand fiscal space are increasing tax revenue, boosting social insurance contribu-

tions, and reallocating public expenditures, among others. Fiscal and tax reforms are currently ongoing in Indonesia and the Philippines,” Handayani said. The last critical point is harnessing new technology to improve delivery of social protection, such as digital platforms and mobile services. These will be especially useful given the increasing number of NSE workers. Handayani said Indonesia, the PRC and Thailand have adopted adaptive universal health coverage with cross-subsidies for the poor and vulnerable. Bangladesh, Myanmar, Mongolia and the Philippines have also expanded the coverage for child benefits through cash transfers, and Nepal, Sri Lanka, Thailand and Vietnam are boosting old-age social pensions. “The role of the private sector is critical in developing and expanding registration, collection and delivery of social protection programs. There is plenty of space for public-private partnerships in harnessing new technology to expand social protection programs in Asia,” she said. Increasing social protection coverage is one of the targets under Goal 1 of the Sustainable Development Goals (SDGs). By 2030, countries should have provided substantial social protection coverage of the poor and the vulnerable. This includes unemployed persons, older persons, persons with disabilities, pregnant women, newborns, work-injury victims, and the poor and other vulnerable sectors. The 17 Sustainable Development Goals were adopted by 193 United Nation-member countries, including the Philippines in 2015. The SDGs have 169 targets and 233 indicators. The Global Goals aim to end poverty and hunger, promote universal health, education for all and lifelong learning, achieve gender equality, sustainable water management, ensure sustainable energy for all, decent work for all, resilient infrastructure and reduce income inequality between and among countries. Cai U. Ordinario

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

The World

U.S. govt ready to ease rules on coal-fired power plants

A S H I N G TO N —T h e Tr u m p administration is set to roll back the centerpiece of President Barack Obama’s efforts to slow global warming, the Clean Power Plan that restricts greenhousegas emissions from coal-fired power plants. A plan to be announced on Tuesday would give states broad authority to determine how to restrict carbon dioxide (CO 2) and other greenhouse-gas emissions that contribute to global warming. The Environmental Protect Agency (EPA) announced late Monday that acting administrator Andrew Wheeler planned to brief the news media by telephone on Tuesday on what the administration is calling the “Affordable Clean Energy” rule—greenhouse guidelines for states to set performance standards for existing coal-fired power plants. President Donald J. Trump is expected to promote the new plan at an appearance in West Virginia on Tuesday. The plan is also expected to let states relax pollution rules for power plants that need upgrades, according to a summary of the plan and several people familiar with the full proposal who spoke to The Associated Press on condition of anonymity, because they weren’t authorized to discuss the plan publicly. Combined with a planned rollback of car-mileage standards, the plan represents a significant retreat from Obama-era efforts to fight climate change and would stall an Obama-era push to shift away from coal and toward less-polluting energy sources such as natural gas, wind and solar power. Trump has already vowed to pull the US out of the Paris climate agreement as he pushes to revive the coal industry. Trump also has directed Energy Secretary Rick Perry to take steps to bolster struggling coal-fired and nuclear power plants to keep them open, warning that impending retirements of “fuel-secure” power plants that rely on coal and nuclear power are harming the nation’s power grid and reducing its resilience. A three-page summary being circulated at the White House focuses on boosting efficiency at coal-fired power plants and allowing states to reduce “wasteful compliance costs” while focusing on improved environmental outcomes. Critics say focusing on improved efficiency would allow utilities to run older, dirtier power plants more often, undercutting potential environmental benefits. The White House rejects that criticism. “Carbon-dioxide emissions from the power sector will continue to fall under this rule, but this will happen legally and with

proper respect for the states, unlike” the Clean Power Plan, the summary says. The AP obtained a copy of the summary, which asserts that the Obama-era plan exceeds the EPA’s authority under the Clean Air Act. Obama’s plan was designed to cut US CO 2 emissions to 32 percent below 2005 levels by 2030. The rule dictated specific emission targets for states based on power-plant emissions and gave officials broad latitude to decide how to achieve reductions. The Supreme Court put the plan on hold in 2016 following a legal challenge by industry and coal-friendly states, an order that remains in effect. Even so, the Obama plan has been a factor in a wave of retirements of coal-fired plants, which also are being squeezed by lower costs for natural gas and renewable power and state mandates that promote energy conservation. Trump has vowed to end what Republicans call a “war on coal” waged by Obama. “This is really a plan to prop up coal plants—or try to,” said David Doniger, a climate expert at the Natural Resources Defense Council, an environmental group. The Trump plan “will make no meaningful reductions” in greenhouse-gas emissions, “and it probably will make emissions worse,” Doniger said. Gina McCarthy, who served as EPA administrator when the Clean Power Plan was created in 2015, said that, based on draft proposals and news reports, she expects the plan will not set specific federal targets for reducing emissions from coalfired plants. The plan is expected to address power plants individually rather than across the electric grid as the EPA proposed under Obama. The new plan would give utilities and states more flexibility in achieving emissions reductions, but critics say it could harm public health. “They are continuing to play to their base and following industry’s lead,” McCarthy said of the Trump administration, and its new acting administrator, Andrew Wheeler, a former coal industry lobbyist. “This is all about coal at all costs.” Michelle Bloodworth, president of the American Coalition for Clean Coal Electricity, a trade group that represents coal producers, called the new rule a marked departure from the “gross overreach” of the Obama administration and said it should prevent a host of premature coal-plant retirements. “We agree with those policy-makers who have become increasingly concerned that coal retirements are a threat to grid resilience and national security,” she said. AP

Oil trades near $67 as investors assess outlook for U.S. crude

il traded near $67 a barrel as investors weighed an expected decline in American inventories against the US government’s plans to release crude from its emergency stockpiles. Futures in New York climbed 0.4 percent. The US government will offer 11 million barrels of crude from its Strategic Petroleum Reserve (SPR), a move that could help offset a tight oil market from sanctions on Iran’s exports. Stockpiles in the shale country are expected to have declined last week. Meanwhile, investors are also awaiting trade talks between China and the United States, and Federal Reserve Chairman Jerome Powell’s speech later this week. The planned release from the US SPR “could curb a rise in crude prices,” Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp., said by phone. “Traders are taking a wait-and-see stance ahead of the SPR release, US-China trade talks and Powell’s speech at Jackson Hole.” Oil has declined for seven straight weeks as uncertainty over a US-China trade standoff and the risk of economic turmoil in Turkey spilling over into other emerging markets weighed on prices. Investors are also closely watching supplies from the US and the Organization of Petroleum Expor ting Countries before American sanctions on Iran’s oil take effect in November. The measures may curb the Persian Gulf nation’s exports by as much as 1 million barrels a day. West Texas Intermediate (WTI) crude for September delivery, which expires on Tuesday, rose 0.4 percent to $66.66

a barrel on the New York Mercantile Exchange at 1:19 p.m. in Tokyo. The contract climbed 52 cents to $66.43 on Monday. The more-active October contract added 8 cents to $65.50. Total volume traded on Tuesday was about 53 percent below the 100-day average. Brent for October traded at $72.24 a barrel on the London-based ICE Futures Europe exchange, up 3 cents. Prices on Monday advanced 38 cents to close at $72.21. The global benchmark crude traded at a $6.74 premium to WTI for the same month. Futures for December delivery rose 1.4 percent to 498.1 yuan a barrel on t h e S h a n g h a i I nte r n at i o n a l E n e rg y Exchange. The contrac t dropped 1.1 percent on Monday. The release of crude from the US strategic reserve from October to December is viewed by the oil market as intended to help soften the impact of measures against Iran and lower gasoline prices for voters, Jogmec’s Nogami said. The renewed sanctions will take full effect in early November, followed by American midterm elections on November 6.

Stockpile slide

On the other hand, US crude stockpiles are forecast to have declined by 2 million barrels last week following a surprise gain a week earlier, according to a Bloomberg survey of analysts before the Energy Information Administration’s data due Wednesday. Inventories at the Cushing storage hub in Oklahoma rose 900,000 barrels last week, according to a survey compiled by Bloomberg. Bloomberg News

BusinessMirror

Wednesday, August 22, 2018

Trump accuses China, EU of currency manipulation

resident Donald J. Trump accused China and the European Union (EU) of manipulating their currencies as he tries to wrestle concessions from two of the United States’s largest trade partners. “I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also,” Trump said in an interview with Reuters published on Monday. T he president’s accusation, presented without explanation or substantiation in the Reuters report, conf licts w ith the findings of his own administration. The Treasur y Department stopped short of naming China, the EU or any other countr y as a cur renc y manipu lator in Apr il, in a semiannua l repor t on fore i g n - e x c h a n ge p ol ic y. The US hasn’t officially accused anot her countr y of cur renc y manipu lation since 1994. The dollar extended its drop to trade at the day’s low as measured by the Bloomberg Dollar Spot Index while the euro rose

to its highest level in more than a week at $1.1481. The dollar was already under pressure after Bloomberg News reported earlier that Trump complained about interest-rate hikes under Federal Reserve Chairman Jerome Powell. In the April report, Treasury dialed up its criticism of China, citing lack of progress in rectifying its trade imbalance. The department said that China’s “disproportionate share of the overall US trade deficit” required “enhanced analysis” of whether it’s a manipulator, along with five other countries. A designation requires the US to engage in expedited negotiations with the country. China’s stock market has suffered declines and the yuan has been on a losing streak for more than a month. Chinese authorities, bracing

United States President Donald J. Trump speaks to members of the media before boarding Marine One on the South Lawn of the White House in Washington, D.C., on Friday. Trump said today he’s asked the Securities and Exchange Commission to study ending quarterly reporting for US businesses in order to ease regulations and spur growth. Andrew Harrer/Bloomberg

for economic fallout, have introduced measures to support growth ranging from shifting toward a more accommodative monetary policy to boosting fiscal spending. “ There is little evidence of more than scant Chinese foreign exchange market intervention,” Mark Sobel, a former US Treasury official who worked at the department for nearly four decades, wrote in a column published on Monday by a London-based think tank, the Official Monetary and Financial Institutions Forum. He cited a lack of evidence in China’s foreign reserve holdings data and other measures.

Trump also said the Federal Reserve should help him in his trade disputes with China, the EU and other nations, asserting that other central banks are assisting their countries. Trump complained to Republican donors on Friday that Fed Chairman Jerome Powell hasn’t kept interest rates as low as he expected. “We’re negotiating very powerfully and strongly with other nations. We’re going to win,” he said. “But during this period of time, I should be given some help by the Fed. The other countries are accommodated.” Bloomberg News

Venezuela unveils new currency to fight inflation

ARACAS, Venezuela—Saul Jimenez just wanted to buy bread from his neighborhood bakery in Venezuela’s capital on Monday. It did not go well. Banks and most other businesses were closed for the day as Venezuela launched a series of dramatic economic reforms, beginning with the release of a currency with five fewer zeros in a bid to tame soaring inflation. Rampant inflation means it would take a fistful of bills to pay for a loaf of bread, so many Venezuelans like Jimenez rely on bank cards. But with banks closed to reset their systems for the change, Jimenez’s cards wouldn’t work—in a scene that played out across Caracas. “It wasn’t just mine. Others’ didn’t work either,” said the attorney, who left the baker y empty-handed and frustrated. “Neither the debit card nor the credit card.” The currency conversion is among the less controversial parts of President Nicolas Maduro’s economic plan. He’ll next hike the minimum wage by more than 3,000 percent and raise gasoline prices—now less than a penny to fill up—to international levels. Critics say the package of measures will only make the economic crisis worse. Opposition leaders are seizing on tension among residents, calling for a nationwide strike and protest on Tuesday. They hope to draw masses into the streets against Maduro’s socialist ruling party—something they’ve failed to do in over a year. The closed banks spent Monday preparing to release the new currency: the “sovereign bolivar.” Maduro’s government says it will raise gasoline prices in late September to curtail rampant smuggling across borders. The dramatically higher minimum wage will go into effect starting on September 1. Economists say the package of measures is likely to accelerate hyperinflation rather than address

Pedestrians walk past the Central Bank displaying a banner featuring the faces that will grace the country’s new currency, in Caracas, Venezuela on Monday. Banks remained closed on Monday as they prepare to release the “sovereign bolivar,” the new currency printed with five fewer zeroes in a bid to tame soaring inflation. AP/Ariana Cubillos

its core economic troubles, like oil production plunging to levels last seen in 1947. As Maduro declared Monday a national holiday, Caracas was quiet with most stores closed for business. Other banking activities shut down for about 12 hours to allow for a transition to the new currency. Most banks on Monday reactivated their online services and automated teller machinces, but some customers complained of troubles. The impact of the currency conversion won’t be known until Tuesday. One question is whether the banks hold enough cash to meet the public’s need, as officials have promised. Venezuela was once among Latin America’s most prosperous nations, holding the world’s largest proven oil reserves, but a recent fall in oil prices accompanied by

corruption and mismanagement under two decades of socialist rule have left the economy in a historic economic and political crisis. Inflation this year could top 1 million percent, according to economists at the International Monetary Fund. Inflation has made it difficult to find paper money. The largest bill under the outgoing cash system was the 100,000-bolivar note, equal to less than 3 cents on the commonly used black market exchange rate. A cup of coffee costs more than 2 million bolivars. The new paper bills will have two coins and paper denominations ranging from 2 up to 500. The lowest represents the buying power of 200,000 current bolivars, while the highest stands in for 50 million. The old and new currencies will remain in circulation together during a transitional period.

The government made a similar move in 2008, when then-President Hugo Chavez issued new currency that eliminated three zeros to combat soaring inflation. Maduro has also said he wants to peg wages, prices and pensions to the petro—a cryptocurrency announced in February but which has yet to start circulating. He said one petro would equal $60, with the goal of moving toward a single floating exchange rate in the future tied to the digital currency. Business owners say they fear the sudden wage hike would make them unable to pay employees without sharply increasing prices. The next few days will be very confusing for both consumers and the private sector, especially commercial retailers,” said Asdrubal Oliveros, director of Caracasbased Ecoanalitica. “It’s a chaotic scenario.” AP

A6 Wednesday, August 22, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

‘Band-Aid’ solutions for high food prices

early 100 years ago, an employee at Johnson & Johnson invented adhesive bandages for his wife who often suffered minor cuts and burns doing housework. Earle Dickson invented the adhesive bandages because he needed a less tedious way of dressing the wounds of his wife. Later, these were marketed under the BAND-AID brand, and Dickson’s adhesive bandages eventually became a fixture in the first-aid kits of families worldwide. As most everyone knows the brand, writers often refer to it as a solution that does not solve the underlying cause of a problem. Band-Aid solutions are precisely what some lawmakers and economic managers are pitching to arrest the continuous increase in commodity prices. Proposals, such as cutting tariffs on meat and fish, were made after data from the Philippine Statistics Authority (PSA) showed that inflation rate in July accelerated to 5.7 percent. This brought the year-to-date inflation to 4.5 percent, faster than the government’s target of 2 percent to 4 percent for the year. Experts said the worst is not yet over and that inflation would quicken in the next few months. The unabated increase in commodity prices has punished the poor, who spend about 70 percent of their income for food. This means that for every P100 they earn, around P70 goes to food items, including rice. This is probably the reason some lawmakers and economic managers want to reduce tariffs in meat, fish and wheat. Some lawmakers wanted zero tariff on these products, but economic managers are content with a uniform 5-percent tariff on some food items. Scrapping or reducing tariffs on imported agricultural products is probably the easiest way to make food more affordable. Unless it becomes permanent, however, tinkering with tariffs will not solve the root causes of the problem of expensive food in the Philippines. For one, many rural areas continue to lack farm-to-market roads, which would help farmers access markets. Their difficulty in tapping markets made farmers reliant on usurers and middlemen who buy their produce at cheap rates. Farmers turn to usurers or loan sharks because they could not obtain loans from banks that charge relatively lower interest rates. What complicates matters for farmers is that commercial banks usually require collateral and a number of documents. Farmers need help with their production capital given the increasing cost of inputs, particularly at this time when fuel and fertilizer have become more expensive following the implementation of the Tax Reform for Acceleration and Inclusion law. Obviously, stopgap measures are just that—a temporary expedient. If the Duterte administration seriously wants to make food affordable to all Filipinos, it must take the lead in implementing initiatives that will eliminate the ills plaguing the farm sector. It is the duty and obligation of the government to spend taxes judiciously, and this administration can start by prioritizing the farm sector in its National Expenditure Program. Implementing policies aimed at making the agriculture sector more attractive to the private sector will not be enough, particularly if facilities and infrastructure, such as farm-to-market roads, are lacking. There were attempts to involve the private sector in agriculture during the past administration via the public-private partnership scheme. Sadly, there were no PPP projects implemented for the agriculture sector. Here’s an example of how the sector gets prioritized: Of the 75 big-ticket “flagship projects” that this administration will undertake, only 11 will benefit farmers. To help millions of farmers, the government only needs to revisit Republic Act 8435, or the Agriculture and Fisheries Modernization Act of 1997. Afma prescribed additional funds for the agriculture sector on top of the allocation given by the national government to the Department of Agriculture. It also outlined strategies that must be undertaken to modernize the farming sector and prepare farmers for globalization. But two decades after it was enacted, Afma joined the list of laws that were unfunded. The Duterte administration can still do something to prevent this well-intentioned law from ending up in the dustbin.

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‘Tip of an iceberg’ Florante S. Solmerin

FACT IS MIGHT!

he “Pandora’s box”, or simply “can of worms”, in the Armed Forces of the Philippines Medical Center (AFPMC) has been opened. But the figures that came out in news reports that was bared by Malacañang citing a report from a military investigating body is just the “tip of an iceberg”. Allegations of corrupt practices in the premier military hospital and in other armed services are nothing new. They have been there for the longest time because some corrupt defense and military officials made these institutions their personal “milking cows.” Why are all these “bombshells” being brought to the fore only now and under the leadership of AFP chief Gen. Carlito Galvez Jr.? It’s because President Duterte came to know about these corrupt activities, and he will not let them pass just like what his predecessors knowingly or unknowingly did. Just a whiff of corruption, he would always say, and you are dead. Therefore, not even

Galvez can save his honorary mistah (classmate), one of the accused, from Duterte’s fury. It’s the President talking and cracking the whip this time. I’m interested to know who are the people behind the web of corruption at the AFPMC as mentioned by Galvez in one of his radio interviews. Malacañang should disclose all the names of the people lining up their pockets with the people’s money. Let’s see if the AFP list of alleged corrupt officials and employees really contains the real ones, not fall guys. I had information that some civilians involved were persons close to some generals who share the same roof with the President. Some said one of these corrupt employees reportedly

I covered the defense beat for many years and one of the corruption stories I wrote was about the AFPMC. One of these exposés caused the relief of a commanding general of the hospital and some other officials. However, after a “thorough investigation” by the AFP, they were found “innocent” and right after that they were ordered to return to their favored positions. made a scene in one of the visits of Duterte at the AFPMC. Duterte has to explain to the Filipino people why he put former military and police officials in key government positions. He hates corruption. Soldiers are trained to follow an order, that’s what he always says. But it’s a fact that some of his military and police appointees were axed because of corruption. Still, Duterte sticks with his leadership framework of having good soldiers on his side. Unlike other military chiefs who got no balls to stop this web of corruption in the AFPMC, Galvez did a difficult task, I think, to carry

out the President’s anticorruption drive. Many times in the past, corruption issues had rocked the military institution. Sad to say, some of the investigations just came to pass and the culprits went scot-free. That gave them courage to go back to their “monkey business.” I covered the defense beat for many years and one of the corruption stories I wrote was about the AFPMC. One of these exposés caused the relief of a commanding general (CG) of the hospital and some other officials. However, after a “thorough investigation” by the AFP, they were found “innocent” and right after that they were ordered to return to their favored positions. The position of CG AFPMC is the choice of the Chief of Staff, of course, with the consent of the secretary of the Department of National Defense. Then they will forward the recommendation to the Commander in Chief, the President, for approval. Whoever is the military chief, almost always automatically, the CG AFPMC is his classmate at the Philippine Military Academy or an honorary member of the class. Most often, the CG AFPMC comes from the AFP Medical Corps. E-mail: fetad@yahoo.com.

Emerging markets may lose their friendly banker

By Shuli Ren | Bloomberg Opinion

hina’s willingness to extend credit has transformed it into the best friend of emerging markets. But there are reasons to believe the flow of easy money may suddenly dry up— just as distressed economies from Argentina and Venezuela to Turkey and Pakistan look to Beijing for a lifeline that would be less onerous than an International Monetary Fund (IMF) bailout. In the last decade, China made more than $62 billion of loans to Venezuela, where hyperinflation prompted the government to devalue the bolivar by 95 percent at the weekend. In July another $5billion advance was approved to increase petroleum output there, even though a previous oil-for-loan program backfired. China has also signed currency swaps with 32 counterparties since 2009. While mainly aimed at facilitating trade in the yuan, these arrangements also served to boost foreign-exchange reserves at troubled partners. Argentina’s central bank is reportedly negotiating to expand its swaps from $11 billion to $15 billion, while trying to stem the peso’s slide by pushing up banks’ reserve ratios. Hosts of President Xi Jinping’s Belt and Road initiative are also recipients of China’s largesse. As its relationship with the US and Nato sours, Turkey is turning to the

country for financing. China Development Bank (CDB), the nation’s most prominent policy lender, extended more than $2 billion of loans to Turkey last year, a jump of more than 40 percent from 2016, data compiled by Bloomberg show. Pakistan, poised to seek an IMF package for the 13th time, is another candidate for a Chinese bailout. But China’s shaky domestic economy may mean that it’s no longer politically viable for Beijing to keep being so generous. CDB makes a good example. Known for funding overseas projects, the bank’s main mandate is actually domestic. In its 2017 annual report, supporting belt and road got a lower billing than fighting poverty at home and financing Chinese infrastructure projects and strategic industries, such as semiconductors and electric vehicles. Last year CDB advanced 880 billion yuan ($128 billion) for shanty-

town redevelopments, and only $17.6 billion in loans to belt-and-road projects. Outstanding loans to destinations outside Mainland China account for only 2.4 percent of the bank’s loan book. In late June, China’s property and stock markets were jolted after reports that policy banks have tightened approvals for shantytown project loans, as part of government efforts to rein in the red-hot property market. That will hurt the real economy. In 2017 policy bank funding accounted for about 85 percent of total shanty-town renovations, Nomura Research estimates. Households receiving cash settlements from the government accounted for 23 percent of property sales by value in tier 3 to 5 cities last year. These, in turn, accounted for half of China’s total property sales. If China Development Bank can’t fulfill its primary goal of lifting millions of Chinese from poverty, it becomes harder to justify extending a helping hand to other nations. The trade war and tighter liquidity are starting to bite. China’s consumer confidence dipped in recent months, while the second-quarter earnings report card for technology companies, barometers of consumer power, is looking ugly. Private enterprises are bearing

the brunt as Beijing restricts shadow banking. The Caixin purchasing managers’ index, which is weighted toward manufacturing activity by smaller companies, has fallen behind the official PMI number for five straight months. Meanwhile, the mainland stock market is in solid bear territory, in part because corporate defaults may pop up in the most unexpected places. What will China’s citizens say if Beijing is splashing out billions to foster friendships with (perceived) basket cases, when, at the same time, people at home are stuck in ghettos, small businesses are going bankrupt and no one is feeling rich because of the stock market and peaking home prices? You can expect a revolt. Back in February, President Xi Jinping looked invincible as China abolished presidential term limits after a year during which the economy and markets proved resilient. Now, with signs the economy is faltering amid the trade war, many are starting to question whether his strongman approach has backfired. Xi is running out of political capital to pursue grand geopolitical ambitions. Expect him to scale back. And if you’re a struggling emerging market looking for a loan—maybe the IMF isn’t such a bad option after all.

Opinion BusinessMirror

www.businessmirror.com.ph

Wednesday, August 22, 2018 A7

Could US-China trade The jeepney ‘Pantawid Pasada’ program war lead to the real thing?

By Kevin Rudd | Bloomberg Opinion

ews that China and the United States will resume trade talks this week swiftly lifted markets. This follows the first meetings at the annual summer retreat of the Chinese Communist Party leadership at the beachside resort of Beidaihe. As might be expected, the main topic this summer has been the USChina trade war, where it might lead and what could conceivably be done to avert it without an unacceptable loss of political face. While we won’t have any real indication as to the tenor of the Chinese discussions or their conclusions for awhile yet, it’s worth thinking through where this trade war could take us all in the absence of effective diplomatic intervention. History tells us trade wars are easy to start and hard to stop, just like real ones. There’s a reason for that. The material stakes become greater as hostilities continue. And the domestic political cost of backing down gets higher and higher. Let’s start with trade. The traded sector represents some 38 percent of Chinese GDP and 27 percent of US GDP. If the current, small-scale dispute escalates to cover the entire $650 billion in bilateral trade, the world will have an objective economic problem on its hands, not just one of general market sentiment. Once growth numbers start declining, however marginally, it won’t take all that much for sentiment, and then the real economy, to head south. Falling sentiment and economic numbers will contribute to a mutually reinforcing spiral. There’s a foolish idea in some quarters of the US that because China exports nearly $500 billion to the US and the US exports only $150 billion in return, there’s a limit to the impact Chinese retaliatory tariffs can have. Furthermore, so this argument runs, because China’s overall economy is more tradeexposed than that of the US, and because China’s total GDP (as measured by market exchange rates) is smaller than US GDP, Beijing ultimately has much more to lose from continued escalation than Washington does. Such logic could well encourage President Donald J. Trump to double down and impose tariffs on the remaining $400 billion in Chinese exports. The assumption would be that the Chinese would buckle first through sheer economic necessity. This argument also assumes that the domestic political pressure on Chinese President Xi Jinping would only increase as tensions rise, meaning that either he, or those around him, would rapidly seek a deal. While protests from US farm states would also get nastier, US subsidies could be used to appease these good, Republican-voting folks until the Chinese haul up the white flag. Of course, China has a few cards to play, as well. For instance, it could impose tariffs on any US components used in global supply chains, even if the final country of origin for the export in question is a country other

than the US. China could warn other nations that they have a year, say, to sort out alternative, non-US sources of supply. Messy? Yes. But, such measures would escalate America’s traderelated pain far beyond the US-China bilateral trade account. The other factor that can’t be ignored is plain old political psychology. If someone is forced into a corner, they can either back down or double down. The assumption in Washington seems to be that Xi will do the former. This may be right. But US leaders need to remember that China, even as a one-party state, has its own domestic politics to confront—both internal regime politics, as well as the wider court of Chinese public opinion which, despite Internet censorship, is remarkably well-informed. Over the last five years, when faced with domestic challenges, Xi hasn’t shown much inclination to back down. Whenever anyone has given him serious trouble in internal politics, he’s smashed them and then tarred them as disloyal to the Party or the country. Such a narrative would be even easier to promote against Uncle Sam, where the line would be: “We Chinese have absorbed pain in the past, we can do it again and we all know that the real US motives are ultimately racist because they will do anything they can to prevent China from becoming the largest economy in the world.” I’m not sure which way the Chinese leadership will choose to go. If they decide to double down rather than back down, the global economy should prepare for a major blow, one capable of tipping us all into recession. And that’s not even considering where the next steps in escalatory politics could take us once trade-related measures are exhausted. Bilateral investment flows are already slowing rapidly. A new Cold War in high technology is looming, if not already under way. And on the security front, we could easily see escalation in the South China Sea and beyond. Historically, we’ve routinely failed to discern when the tipping points come between public disagreement, failed diplomacy, political crisis, failed crisis management, limited conflict and then more general war. In this case, we aren’t even yet at phase two in the sequence. So those of us, like myself, of a modestly religious frame of mind should light a candle for the upcoming round of negotiations. A great deal rides on them, and not just for the US and China.

Michael Makabenta Alunan

on the contrary

ue to hikes in fuel excise taxes and surging prices of oil products, jeepney drivers will get fuel subsidies. To ensure that these subsidies will benefit the drivers who are affected by high fuel costs, the government must see to it that holes in the system of distributing the debit cash cards are plugged. The debit cash cards are distributed through operators listed as official jeepney franchise-holders. However, there are fears that some operators may take advantage of the opportunity to defraud the government and dupe their drivers. Operators are not directly affected by rising fuel prices, as their drivers are the ones shouldering fuel costs. Operators are assured of boundary income, whether fuel costs rise or drop, or drivers get passengers or not. However, the Land Transportation Franchising and Regulatory Board has no better choice but to deal with operators who control the drivers. However, leakages are likely owing to some unplugged holes and the lure of cash. What can stop some erring operators from sending dummy-drivers to claim cash cards if all they need to do is to show government IDs? Much “a-dough” about nothing? Transport Undersecretary Tim Orbos confirmed that less than P1 billion was earmarked for 2018 for the subsidy program involving some 179,000 jeepneys, with P5,000 distributed per jeepney driver.

Finance Assistant Secretary Tony Lambino said at a National Press Club forum that P20,000 per jeepney is planned for 2019, with a budget reaching P3.86 billion. This would help jeepney drivers absorb excise taxes of P2.50/liter of diesel for 2018, P4.50/liter in 2019 and P6/ liter in 2020. The P20,000 subsidy per jeepney may look like a lot of dough, but Engr. Dave Garcia, a transport cooperative organizer, said if computed against average consumption of 30 liters/day on 300 operating days a year for a total of 9,000 liters, it only amounts to P2.22/liter. Garcia said the same subsidies should be spent instead on a package of maintenance materials that will benefit both operators and drivers, while enabling jeepneys to comply with emission standards and partly with government’s jeepney modernization program. Better be “kind,” perhaps? Instead of giving cash, it is advisable therefore to give in kind, which will make the program kind enough and one of a kind. But what kind of materials worth P20,000 must be packaged per

jeepney? They can be given spare parts and maintenance consumables that address friction zones subjected to regular wear and tear, which include oil filters, lubricants, etc. The government can be kind enough to accommodate all suppliers so it won’t be accused of favoring any company or brand. This will enable jeepney operators and drivers to test these materials themselves and later make their own choices that match their needs. Benefits are more than the subsidy. Experiments of some progressive transport groups show that proper maintenance can generate 10 percent to 30 percent in fuel savings. Thus, diesel price at P47/liter can mean savings or earnings of P4.7/ liter to as much as P14.1 per liter, or much more than the subsidy equivalent of P2.22/liter as discussed earlier. This also means additional earnings, enough to absorb rising fuel prices. Apart from fuel savings, operators also benefit from savings in cost of maintenance, which help stunt wear and tear and prevent regular engine breakdowns, resulting from passenger overloads and 14-hour-a-day average operating time. The shift in spending from cash to maintenance in kind also prepares the sector for modernization and clean fleet management. Why maintenance is key. The government may not fully realize it, but the success of the jeepney modernization is anchored mainly on maintenance, which is vital in preventing engine breakdown due to stressful 14-hour operations. Sustainability and amortization payments are thus assured, considering that warranties cover only the first three years. Without proper

Remember John W. Dean, a Watergate informant? He’s back in the limelight By Laura M. Holson New York Times News Service

pivotal figure in the Watergate investigation, John W. Dean, was dragged back into the limelight on Sunday with President Donald J. Trump’s defense of the current White House counsel, Donald F. McGahn II. On Saturday The New York Times published an article online about McGahn’s extensive cooperation with the investigation by the special counsel, Robert Mueller. The Times also reported that McGahn told people he was determined to avoid the fate of Dean, former White House counsel for President Richard Nixon. Trump took issue with the story on Twitter, saying on Sunday morning that McGahn cooperated with his blessing. Further, he attacked The Times over the article, saying the news organization had falsely implied McGahn was a “John Dean type ‘RAT.’” (The Times publicly stated it stood behind the reporting.)

On Sunday The Times reported that Trump, who is said to be obsessed with the role Dean played as an informant during Watergate, was jolted by the idea that he did not know what McGahn had shared with the special counsel’s investigators. Now 79, John Wesley Dean III served as White House counsel to Nixon from July 1970 until he was fired in April 1973. He captivated the attention of Americans, though, with his televised testimony in June 1973 before the Senate Watergate Committee. Dean sat at a table—in a tan suit and signature horn rim glasses, his wife, Maureen, behind him—and told the senators that Nixon was directly involved in the Watergate cover-up. He was one of the first officials in the Nixon administration to speak out. Dean was worried he was being set up by his former boss to take the blame for the June 1972 break-in by five men at the Democratic National Committee headquarters at the

Watergate office complex in Washington. Indeed, the White House called him the cover-up’s “mastermind,” The Times reported in June 1973. For his part, Dean has long maintained his colleagues sought to make him a scapegoat. In an interview in The Times last year, Dean said he had warned his White House peers at the time: “The jig is up. It’s over.” He also famously told Nixon in a conversation taped by the president in the Oval Office, “We have a cancer within, close to, the presidency, that is growing.” As the Watergate investigation intensified in 1973, Dean cooperated with the Senate committee. As part of that deal, Dean pleaded guilty to obstruction of justice and was disbarred from legal practice in Virginia and the District of Columbia. He did not go to prison, serving four months at Fort Holabird, a former Army base in Baltimore. His testimony and cooperation, though, aided the downfall of Nixon, who resigned on August 9, 1974.

Kim focuses on economy as nuclear talks with US stall By Choe Sang-hun New York Times News Service

EOUL, South Korea—When North Korea’s leader, Kim Jong Un, visited a hydroelectric dam under construction last month, he reportedly “flew into a rage” after learning why the dam was still unfinished after 17 years of work. The dam, central to Kim’s efforts to alleviate his country’s chronic power shortages, suffered from a lack of workers, equipment and materials, Kim is said to have found, and he learned that officials overseeing the project had not even visited the construction site. “What makes me angrier is that these officials will never fail to miss the opportunity to show their shameless faces and take credit when a ceremony is held to mark the completion of a power plant,” Kim was quoted

by the North’s Korean Central News Agency as saying. “I am speechless.” The reports in the North Korean state news media about Kim’s anger were a jarring contrast to their typical portrayals of such visits, which show Kim being mobbed by his adoring subjects. Since late-June Kim has devoted almost all of his public activities to visiting factories, farms and construction sites rather than the military units and weapons test sites that he frequented last year. And instead of boasting of his country’s military prowess, he is lashing out at poor management at the sites he visits, highlighting his intense focus on fixing his economy. Kim’s message is directed as much to the United States as to his people, experts in North Korean politics said, since his pledge to deliver economic prosperity depends on persuading

Washington to ease damaging international sanctions. Over the weekend, Kim said his people were engaged in “a do-or-die struggle” against “brigandish sanctions,” which he said caused “a serious setback” to his economy. “What’s clear is that Kim Jong Un is desperate to ease sanctions and find his own ways of boosting production and improving the lives of his people,” said Koh Yu-hwan, a professor of North Korean studies at Dongguk University in Seoul. “At the same time, he is shifting the blame to his underlings by criticizing lazy officials.” By showing himself focused on the economy, rather than on weapons programs, Kim may be signaling that he is willing to negotiate away his nuclear weapons if Washington offers the right incentives, Koh said. But deep skepticism persists that Kim will ever

give them up or that the United States will provide the kind of rewards, like a peace treaty ending the Korean War, that the North demands. When Kim met President Donald J. Trump in Singapore in June, the two agreed to build “new” relations and work toward the “complete denuclearization of the Korean Peninsula.” But their agreement lacked details and frustrations have since mounted on both sides over the lack of progress in carrying out the summit deal, dimming North Korea’s hopes for sanctions relief and Washington’s desire for rapid denuclearization of the North. Washington has so far canceled its joint military exercises with South Korea to help encourage North Korea to denuclearize. But it has refused to ease sanctions, demanding that the country first move quickly toward denuclearization, initially by

declaring all of its nuclear assets. North Korea has made some moves to placate Washington, suspending its nuclear and missile tests, demolishing its underground nuclear test site and tearing down a missile engine test site. But before it moves any further, it wants Washington to declare an end to the Korean War, setting the stage for a formal peace treaty to replace the armistice that halted the war in 1953. The logjam between North Korea and the United States is hampering South Korea’s efforts to expand economic and other ties with the North. The South’s president, Moon Jae-in, is scheduled to meet next month with Kim in Pyongyang, the North Korean capital. On Wednesday he revealed a bold vision for economic cooperation with North Korea, including building joint economic zones along the border and linking the nations’

maintenance, government’s massive multibillion-peso investments will be at risk. It’s mandated by law. Section 21 of the Clean Air Act mandates the transportation department to implement emission standards two ways: 1) Inspection through the Motor Vehicle Inspection System (MVIS) and 2) Maintenance policy or program, which is nonexistent, but aimed supposedly to oblige motorists to assume the responsibility and habit of maintenance. The government has five clean air programs, all limited to measuring air pollution: 1) Ambient Air or pollution in the air; 2) MVIS; 3) Private Emission Testing Centers (PETC); 4) Anti-Smoke Belching operations; and a planned 5) Emission Inventory of sources of pollution. Unfortunately, there is no program on seeking solution to emissions, which a maintenance program can provide. And yet Section 3 asserts that focus must be on “Pollution Prevention than Control” and “Information and Education,” and, therefore, not just on measuring pollution that we’ve been doing for years. Section 11 on making available all information on pollution control is not being done, and Section 15 on Pollution Research remains unimplemented. Section 46 also states that penalties on smoke-belchers must be accompanied by seminars on pollution prevention. The Department of Science and Technology is also supposed to validate all technologies used in any government program. But all these are achieved indirectly with maintenance as an action-research or applied-research, this time done directly with jeepneys. E-mail: mikealunan@yahoo.com

On Monday Dean, who lives in Los Angeles, did not respond to an e-mail from The Times seeking comment. But he has been outspoken in his disdain for Trump, and is a ubiquitous figure on cable news shows. On Saturday Dean tweeted: “Nixon, generally very competent, bungled and botched his handling of Watergate. Trump, a total incompetent, is bungling and botching his handling of Russiagate.” He has spent most of his career writing books about the Nixon administration. He is also a teacher and regular on the lecture circuit. His main theme in books and speeches is to sound the alarm about presidential abuses. Dean told the news organization Axios on Sunday, in response to Trump’s tweet, that he was “actually honored to be on his enemies list as I was on Nixon’s when I made it there.” “This is a president I hold in such low esteem,” he said, “I would be fretting if he said something nice.”

railways, provided that the North starts denuclearizing. In pushing economic development, Kim has a lot at stake as he seeks to cement his power over a country that suffered a devastating famine in the 1990s and has only recently seen the emergence of a nascent, aspirational middle class. “North Koreans are now as materialistic, greedy and unsatisfied as their comrades in the Soviet Union and East Germany once were, and as are most of us in the West,” wrote Rüdiger Frank, a North Korea expert at the University of Vienna. “North Korea has begun playing the capitalists’ game and it has gone much further than most European socialist countries ever went.” In 2012 in his first public speech as North Korean leader, Kim pledged that his people would “never have to tighten their belt again.”

2nd Front Page BusinessMirror

A8 Wednesday, August 22, 2018

www.businessmirror.com.ph

Hidilyn gives PHL first gold in Asian Games By Jun Lomibao

AKARTA—Hidilyn Diaz came to the rescue early for an already embattled delegation and—as everyone has expected—delivered the first gold medal for the Philippines in the 18th Asian Games on Tuesday night at the Jakarta International Expo Hall.

Diaz was relied upon to deliver the golden mint following her women’s weightlifting silver medal in the 2016 Rio de Janeiro Olympics. And

deliver she did—by the skin of her teeth—in the 53 kgs class. Diaz lifted 92 kgs in the snatch and 207 in the clean and jerk for a to-

tal of 207, just enough to douse the challenge put up by Turkmenistan’s Kristina Shermetova, who had a 206 total for the silver. Thailand’s Khambao Surodchana completed the podium with 201 kgs. “I am grateful to God that I won the gold medal that all of us Filipinos dream of,” Diaz said. “This proves the Olympic gold medal is possible.” Diaz’s gold catapulted the Philippines to 14th overall in the medal standings with one gold and four bronze medals—the fourth coming

in also on Tuesday from taekwondo’s Pauline Louise Lopez. With the gold dangling around her neck, the 2016 Philippine Sportswriters Association Athlete of the Year also stands to receive a cash windfall of P6 million—P2 million from the Philippine Olympic Committee, P2 million from the government through Republic Act 10699, which expands the coverage of incentives granted to national athletes and coaches, and P1 million

each from the Siklab Foundation and the Philippine Ambassador to Indonesia Lee Hoong. “In the Olympics, no one expected me to win a medal, and I did with the silver. Here at the Asian Games, everyone expected me to win,” she said. “For two to three months, I was on the edge. I had hardly gotten enough sleep. But I just kept on training and gave my fate to God.” The Asian Games, she said, is a different level—although she ad-

mitted she expected to win the mint. “Yes, I was rather confident of winning gold—but that gave me pressure,” she said. Philippine Olympic Committee President Ricky Vargas was quick to congratulate Diaz. “I’m overjoyed by Hidilyn’s victory,” Vargas said. “I was entering a meeting with some Asean sports leaders when I got the news and I needed a few moments to compose myself before I went in. I was overcome by emotion.”

Bird flu ground zero could have been Candaba, says FAO study By Jasper Emmanuel Y. Arcalas @jearcalas

HE poultry farms in Candaba, Pampanga—not in neighboring San Luis—may be the ground zero where the country’s bird-flu epidemic was first found, the BusinessMirror learned. This was part of the hypotheses of the Food and Agriculture Organization (FAO) study on the country’s bird-flu outbreak in August 2017, according to the Bureau of Animal Industry (BAI). The FAO was tapped by the government last year to trace the causality of the country’s first confirmed avian-influenza (AI) outbreak. BAI-Animal Health and Welfare Division Chief Dr. Arlene Vytiaco told the BusinessM irror that the FAO study had two hypotheses on how the AI was introduced to the country: 1) through migratory birds and 2) through smuggled bird flu-infected poultry commodities. Vytiaco said the FAO study hypothesized that the country’s very first AI case may not be in San Luis but in Candaba, due to migratory birds. The possibly AI-affected migratory birds could have overstayed in the area

and mingled with the free-grazing duck population in Candaba. Shorebirds or migratory birds and ducks are known to be carriers of bird flu viruses. “It is possible that San Luis, which we are referring to as the ground zero, may not be the area where the [AI virus] started,” she said in an interview. “The FAO report is saying that Candaba was hit first by AI even before San Luis. The report noted that as early as April, or even March, there has been unusual mortality [in poultry population] in Candaba,” she added. Vytiaco explained that the government was not able to establish the index case, or the very first farm affected by AI, due to non-reporting by farmers. This, she said, delayed the discovery of the problem and San Luis was later identified as the ground zero. On the possibility—as noted in the FAO report—that Candaba poultry farms were affected by AI through migratory birds, Vytiaco said, “Migration period of birds starts as early as September and [they] stay in the country until February, with some overstaying until March.” Thus, it “is possible that [the deaths of poultry flocks in Central Luzon] did

not start in July but in April. Because if some migratory birds stayed until March and considering the incubation period of about 21 days, it is highly possible that population in Candaba was affected in April,” Vytiaco added.

Smuggling Vytiaco said the FAO report indicated that smuggling of bird flu-affected poultry and poultry commodities could also be behind the AI. However, the report, according to her, wasn’t able to trace the timeline on when the smuggled poultry products could have entered the country, as no index case was established. “[However], with vague timeline for index case, the identification of imported poultry and poultry [timeline is difficult].” With these, the FAO study noted that it was “inconclusive” to determine the concrete reason behind the introduction of AI in Central Luzon, Vytiaco said. Vytiaco noted that the study was conducted for only about three months, September to December, last year. It usually takes two years to concretely determine the AI virus pathway, according to her. “These are all hypotheses of the FAO study, which...cannot be proven

although they are very highly possible causes,” Vytiaco said.

Mutation Furthermore, Vytiaco explained that the presence of a highly pathogenic AI H5N6 could only be a result of mutation between an already present low pathogenic AI and H5N1. “There were two factors to establish the presence of H5N6 in an AI-free area. One is the presence of low pathogenic strain and the second the presence of H5N1,” she said, quoting the FAO study. “When these two mix and mutate, it would result in H5N6. And the FAO noted that both low pathogenic [AI] and H5N1 could be introduced by migratory birds,” she added.

Spread Vytiaco said the FAO listed three potential “high risk actors for the introduction and maintenance of infection within the poultry population” in Central Luzon. First, the virus could have spread from Candaba to San Luis due to dumping by poultry farmers of carcasses in the Pampanga river. “And based on the outbreak, the current of the river [then] was heading to

Naia. . .

Continued from A1

SOUTHWEST MONSOON AFFECTING WESTERN SECTION OF LUZON as of 5:00 pm - August 21, 2018

The four Xiamen Air B737s landed on runway 13-31 from China to pick up the passengers who were aboard the B737-800 plane that skidded out of runway 06-24 last Friday.

Slotting ignored Apparently pressured by their passengers who have been left waiting in provincial airports across the country like Davao, Mactan-Cebu, Zamboanga, Iloilo, Kalibo and others, the local carriers proceed to the Naia, disregarding a previous slotting arrangement. Air carriers were compelled to resume normal operations as fast as they could to continue servicing other routes, local and international. Besides ferrying thousands of passengers inconvenienced by the Xiamen Air fiasco, the airlines must service the currently scheduled flights. “This is aside from the fact that [airlines have] to generate income since most of them were acquired on lease or lease-to-own or bought outright. It takes between 10 and 15 years before an aircraft could be fully amortized,” according to an airline executive who requested not to be named. The Naia chief, on the other hand, explained that the 61 airplanes were not part of those that were in the list of the slotting arrangement, and their unexpected arrival filled up the parking bays intended for those on regular operations. “I told the airlines not to leave Miaa from the equation. If they land here and they are not on our list, of course, we get surprised. I hope that does not happen again,” Monreal said. “There were a lot of airlines that did not inform us,” said the former Cathay Pacific station manager. Monreal, meanwhile, justified the 36 hours it took to remove the damaged 66-ton B737-800, from the mud, saying: “It is not like removing a bus since

San Luis,” she said. Candaba is 20 kms north of San Luis. Under the Avian Influenza Protection Program: Manual of Procedures 2016, eight barangays in Candaba were tagged as poultry-critical areas, meaning, vulnerable to the introduction of AI. These are Bahay Pare, Paligui, Pangclara, Pulong Gubat, Tenejero, Vizal San Pablo, Dawe and Lourdes. These villages have waterfowls, shorebirds and duck grazing areas with a duck population of more than 5,000 heads. Citing the FAO study, Vytiaco said the free grazing ducks in San Luis could have had contact with the contaminated river and roamed around the area, causing the spread among layers and quail farms. Another risk factor was technical assistance, referring to private veterinarians and sales representatives, according to Vytiaco. Some veterinarians visiting various poultry farms may have misdiagnosed the sick population as affected with newcastle disease (ND). “Because it was a misdiagnosis, and these veterinarians handle about three to five farms, they transfer from one farm to another. They believed that it

was ND instead of AI, they eventually came carriers,” she said. Poultry traders were the last factor cited by the FAO study, which, however, tagged them as a protective factor, as well. “They are protective to farm owners because they know what is happening in the industry. So they could urge the poultry owners to sell their chickens early because other poultry population are already dying,” she explained. But because the traders did not know the flocks they bought could have been affected by AI, they effectively became carriers of the virus, as well, Vytiaco added. Furthermore, Vytiaco said based on the FAO study, the infection of three towns in Nueva Ecija with bird flu were “spillover” cases from San Luis. Vytiaco said culled chickens bought by traders in San Luis were brought to San Isidro, Nueva Ecija, which later tested positive for AI as well. “When the FAO mapped the location of the infected farms in San Isidro, they found that they were just right across the live bird market in the area,” she said.

the authorities have to follow a strict protocol dictated by the International Civil Aviation Organization [Icao], ‘the bible of aviation.’” This was supported by a statement from the D epar tment of Transporation (DOTr), which said in a statement on Tuesday, “Recovering a disabled aircraft is far different from towing a bus or a car. There are technical protocols [Icao standards] and intervening factors that all international airports observe in recovering a disabled aircraft. “In the case of the recent Xiamen incident, please note that in addition to its size and weight, there were also four tons of unused fuel at the wings that are highly combustible, necessitating extra care to avoid fire or explosion. Apart from passengers, we also think about the safety of the rescuers. One false move, the plane might explode.”

waits and discomfort.” “We acknowledge, however, that our efforts were not enough at some of the critical times. For this, we sincerely apologize and we assure you that we will strive to do more and make the necessary improvements for the benefit of all,” she added. Runway 06-24 had to be closed after the damaged Xiamen Airways B737 blocked any takeoff or landing, forcing the carriers, Villaluna said, “to divert many flights to Clark, Cebu, Davao and even overseas, including Bangkok, Hong Kong, Tokyo and Ho Chi Minh City [Saigon], where more than 20 of our airplanes were stranded.” PAL said timely deplaning of passengers became a challenge at some diversion airports, “despite our efforts in coordinating with airport authorities at these airports, because the sudden influx of multiple diverted flights from various airlines.” She said runway 13-31 could only accept smaller aircraft. PAL and CEB simultaneously announced the normal resumption of operations, “barring the intervention of bad weather and other calamities.” “Barring any other technical, weather-related or other extraordinary circumstances, we do not plan to cancel flights.” However, the CEB said, passengers on all domestic and international flights flying out of the Naia Terminal 3 from August 17 until August 21, 2018, still had the option to rebook their flights for travel within 30 days. In an advisory, CEB said: “Please allow us to extend our heartfelt gratitude to the men and women of Cebu Pacific—from our pilots to cabin crew, frontliners, ticketing agents, call-center representatives, customer communications staff, and other support team members for volunteering to take on extended duty to help manage the situation as best they could. Most importantly, we thank our passengers for their patience and understanding.”

PAL, Cebu Pac thank passengers Meanwhile, legacy carrier Philippine Airlines (PAL) and Cebu Pacific (CEB) gave profuse thanks to the passengers who bore the severe inconvenience with them during the crisis. PAL and CEB also thanked the Miaa, Caap and other government agencies “here and abroad, with whom we have been constantly coordinating during the closure of the international runway.” “We also want to express our appreciation to all PAL and CEB personnel service providers and other program partners who are giving their all-out dedication during this difficult time,” the statement from both carriers said. “Unfortunately, there were still delays and cancellations as dozens of flights from different airlines switched to that runway,” said PAL Spokesman Cielo Villaluna, referring to runway 13-31. “We exerted all efforts to take care of affected passengers, who, we recognize, had to endure uncertainty, long