Businessmirror august 23, 2017

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Wednesday, August 23, 2017 Vol. 12 No. 314

PHL to feel double-edged effect of weaker peso soon

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By Cai U. Ordinario & Catherine N. Pillas

@cuo_bm @c_pillas29

he weakening of the peso against the US dollar could make certain food items more expensive in the near-term, but it would be good for exporters as it could improve their bottom line, economists said on Tuesday.

PHL e-commerce space still ‘shop at your own risk’ By Catherine N. Pillas

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Boncato: “There are still a lot [of people] who haven’t learned how to discern scams from authentic deals. Our advocacy now is to inform the public of the e-commerce ecosystem.”

@c_pillas29

eeking relief, refund or redress in e-commerce transactions for consumers remains an area that the Department of Trade and Industry (DTI) needs to add more teeth to. A considerable portion of the marketplace has long migrated from the physical to the virtual. Even the casual online surfer can attest it’s impossible to open social media these days without being inundated with ads from one selling platform to another. According to the DTI, Philippine e-commerce sales reached P79 billion, or 0.6 percent of the country’s total income in 2012, with more than 76.2 percent, or P60.17 billion, credited to the services sector, including Transport and Storage, Administrative and Support Service Activities, and Whole Sale Retail Trade. Conglomerates have already set their sights on e-commerce: the Ayala Group took a 49-percent stake in Zalora Philippines just last February, while the Lina

Group of Cos.’s Air21 Global has been operating local platform Shopinas as early as 2011. These online “malls”, operated by big businesses, can be made to adhere to global standards in the e-commerce space, with the government enforcing the same registration procedures as the brickand-mortar stores, said Arturo P. Boncato Jr., DTI Supervising Executive of the Competitiveness Bureau, E-Commerce, and BIMPEaga Teams assistant secretary. “Each platform would have that mechanism. Most of these are equipped with 24/7 customer service line or an online facility to file complaints,” he added. Complaints or consumer disputes in these platforms are often swiftly See “E-Commerce,” A12

PESO exchange rates n US 51.4940

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Agenda item 118: The UN Global Counter-Terrorism Strategy

₧48-₧50: $1

The exchange-rate assumption of the DBCC for 2017 The Philippines is a net food impor ter t hat purc hases var ious food items from across the globe. A weaker peso would increase the cost of importing some food products. This could accelerate inflation, as nearly 40 percent of the country’s basket of goods is made up of food and beverages.

Teddy Locsin Jr.

free fire Philippine statement delivered by Ambassador Teddy Locsin Jr. at the United Nations’s General Assembly Hall on July 28, 2017.

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r. President, there are many ways to fight terrorism—but only one way to destroy it and that is to do so.

The roots of terrorism cannot be traced seriously to any cause—social and economic inequality or religious and ethnic difference, but only to the fallen nature of man, which can corrupt any idea and which has never sunk so low since the Holocaust.

See “Peso,” A2

Continued on A10

BMReports

Can 13-year-old manual save PHL from bird flu? By Jasper Emmanuel Y. Arcalas @jearcalas

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Conclusion

REVENTION is better than cure. But prevention has its limits; once exceeded, the only remedy left is to solve it. And this is something that the Department of Agriculture (DA) will not forget, after the dreaded avian influenza (AI) virus landed in the Philippines. “We will be stricter now and learn from this incident,” Agriculture Secretary Emmanuel F. Piñol said. “If we only had a biosecurity team that regularly inspects the farms, then we could have discovered [AI] as early as May.” The DA traced back the AI outbreak in two towns in San Luis, Pampanga, and found out that symptoms of the disease were observable as early as April. The government confirmed the AI on August 11.

Stage 2

THE Philippines has reached

CHICKENS are displayed on August 18 inside a cage at Jaen, Nueva Ecija, a province the Department of Agriculture (DA) said reported an outbreak of the avian influenza (AI) or bird-flu virus. The DA is now halfway in a 21 rest-day period prior to dispersing sentinel birds in the AIaffected areas in San Luis, Pampanga—considered ground zero of the outbreak. NONIE REYES

Stage 2. Under the government’s Preparedness and Response Plan for Avian and Pandemic Influenza (PRPAPI), there are four possible stages the Philippines could en-

counter with the bird-flu virus: 1) an AI-free nation; 2) AI outbreak in poultry; 3) AI transmission from poultry to humans; and 4) AI transmission among humans. Stage 1 the Philippines is no longer.

The government, led by the DA, is now addressing the AI outbreak under the guidance of what experts call “the bible” on AI: Avian Inf luenza Protection Program (AIPP) Manual of Procedures. Under the AIPP, an area shall be considered as a “Suspect Premises” of having AI upon the observation of any unusual increase in the mortality rate of fowls among commercial poultry operations, backyard poultr y raisers and caged birds. “For commercial poultry operations: Occurrence of a one-day mortality of 3 percent [on the basis of the house population] followed by a twofold increasing trend for the next three days with no evident cause attributable to management, nutritional or environmental factors,” the AIPP read. “For backyard poultry raisers: Any unexplained mortality of poultry in two or more households within a barangay/purok in a span of two days.” Continued on A2

n japan 0.4726 n UK 66.4427 n HK 6.5821 n CHINA 7.7284 n singapore 37.8549 n australia 40.8605 n EU 60.8556 n SAUDI arabia 13.7314

Source: BSP (22 August 2017 )

BMReports BusinessMirror

A2 Wednesday, August 23, 2017

www.businessmirror.com.ph

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

For caged birds, aviaries and wild birds, “any unexplained mortality with no evident cause attributable to nutritional, management or environmental factors or human intervention”, should be suspected of AI, according to the AIPP.

Reporting

ONCE the unusual deaths of fowls in a certain area is reported to the government, a veterinarian in charge shall initiate and complete within 24 hours the recommended diagnostic procedures to confirm the case. “For farms with diagnostic laboratory capabilities, the veterinarian may opt to initially conduct an infarm testing of a minimum of 30 tracheal/oropharyngeal [throat] swabs collected from poultry that recently died or from poultry showing any clinical signs, using a rapid test for [the] Influenza-A virus,” the AIPP read. The veterinarian will submit 30 blood and tracheal/oropharyngeal, or OP, samples (15 from apparently healthy and 15 from sick birds) to the Animal Disease Diagnostic and Reference Laboratory (ADDRL) of the Veterinary Laboratory Division (VLD) of Department of Agriculture (DA)— Bureau of Animal Industry (BAI) or Regional Avian Influenza Laboratories of identified DA Regional Field Offices (Darfos), the AIPP manual said. It added that the samples will also be tested for other avian diseases such as newcastle disease (ND), infectious bronchitis (IB), infectious laryngotracheitis and fowl cholera, among others.

Prohibitions

AFTER the initial report, an investigating team shall be formed to conduct an investigation within 24 hours on the suspected AI-affected premises. The team shall be comprised of local veterinarian; technical staff of the

Peso. . .

Continued from A1

“Inf lation w ill most likely increase because depreciation makes imports expensive,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror. However, Philippine Institute for Development Studies Senior Research Fellow Roehlano Briones said higher costs could discourage businessmen from importing these items. Briones added the impact of the peso appreciation may be limited, since the country’s rice imports may not be affected. The government has already bought its rice requirements for the year.

Regional Animal Disease Diagnostic Laboratory; and DENR local officers if the suspicion involved wild birds, according to the AIPP manual. “The Investigating Team shall submit a written report to the BAI director within 24 hours,” it read. The AIPP pointed out that all people within the suspected AI-affected premises shall stay in the area for 24 to 72 hours while awaiting the results of the laboratory tests. “Movement of poultry, poultry products, equipment, supplies, feeds, manure, etc. out of the suspect premises is strictly prohibited and shall be imposed by the veterinarian in authority,” it read. “Additional assistance from the Philippine National Police [PNP] and local chief executives [LCEs] shall be sought in case there is a need to enforce regulations.” The AIPP manual added that stray animals and rodent in the area shall be also monitored and controlled.

Quarantine

AN area shall only be declared as affected by AI once the BAI-VLD-ADDRL, or the national reference laboratory, confirms the samples from the site tested positive for H5 or H7 via reverse transcription polymerase chain reaction (RT-PCR) tests. Once confirmed, the BAI-Animal Health and Welfare Division (AHWD) shall submit a formal case reporting the confirmation to the BAI director. The BAI AHWD will also recommend the reclassification of suspect premises to HPAI-infected premises. “The BAI director will inform the DA secretary and coordinate with the Darfo, DENR, Department of Health [DOH] and local government unit [LGU] concerned before the formal declaration of the area as HPAI-infected premises,” the AIPP read. “The LGU shall acknowledge the declaration through a local ordinance stating the activities to be carried out in an infected premises

The share of rice to the total expenditure of households nationwide is at 8.92 percent, or nearly a tenth of the share of food and nonalcoholic beverages to the Consumer Price Index. “Clearly, depreciation will tend to push up inflation. That will be tempered by reduced incentive to import due to higher cost,” Briones told the BusinessMirror. EagleWatch Senior Research Fellow Alvin Ang and National Economic and Development Authority Undersecretary Rosemarie G. Edillon are not worried about the peso’s impact on inflation. Ang said the depreciation may have a “limited” impact on inflation, since what the government measures is the average price. Edillon said the peso’s level of

and the responsibilities of the different government agencies.”

Culling

UPON announcing there’s an outbreak in an area, the DA shall immediately declare a quarantine area, which is a “minimum” of 1-kilometer radius from the infected premises. The DA will then conduct a stamping out, or culling, of all poultry birds found within the quarantine area to contain the spread of the virus. The stamping out of the poultry in the quarantine area shall be conducted through three possible ways stated under the AIPP: cervical dislocation (breaking the chicken’s neck whether manual or mechanical), carbon dioxide (CO2) suffocation and electrical single application. Cervical dislocation shall be done by crushing the neck of the fowl using a pair of pliers or by hands. As for CO2 suffocation, the birds shall be placed in a container exposed to an atmosphere of at least 30-percent CO2, which puts the fowl to sleep, and 70 percent to kill them. Meanwhile, the third option shall involve placing the bird in an electrified water bath wherein a 50Hz frequency current shall be applied for a minimum of 10 seconds to kill them.

Deaths

ONCE the birds are dead, they shall be buried in an identified location within the 1-km quarantine area. A burial pit should be constructed with a dimension as deep as practically possible, where the dead birds will be buried. “All poultry products and materials associated with euthanized poultry or birds in the infected premises and quarantine area shall be included in the disposal. This shall include rice hulls, eggs, manure, feeds, etc.,” the AIPP manual read. “Every person involved in the destruction of the birds shall wear protective gear, such as

depreciation is still within the expectations of the interagency Development Budget Coordination Committee (DBCC). While the current level of the peso against the US dollar is above the exchange assumption of P48 to P50 for 2017, it is within the DBCC’s expectations of P48 to P51 until 2022. “We’re okay. [The foreign exchange level] is still within our target,” Edillon said via text message. The Philippine Statistics Authority (PSA) data showed food imports are included in raw materials and intermediate goods, particularly wheat and corn, as well as nondurable consumer goods. Based on the latest import data, the PSA said imported raw materials and intermediate goods ac-

cover-all, mask, headgear, rubber boots and waterproof gloves. Farm owners shall be required to secure the necessary protective gears for their farm personnel.” The protective gears include protective clothing; heavy-duty rubber work gloves that can be disinfected; N-95 masks; safety goggles; and rubber/polyurethane boots. The AIPP manual also stipulated that people conducting the culling shall be given a prophylactic medication as to prevent transmission of bird flu. It added that they should also wash their hands frequently with soap and water, followed by hand disinfection with 70-percent alcohol or iodinebased hand wash. Movement of poultry, poultry products, and even live swine in and out of the 1-kilometer quarantine is prohibited. The government shall trace and identify the possible source of the AI by back-tracking 21 days prior to the declaration of the infection. The following are considered potential sources of the virus: hatchery, poultry farms, processing plants, poultry and poultry product retail outlets, live-bird markets, aviaries, egg depots and cold-storage facilities.

Control area

THE BAI director shall also identify a 7-kilometer-zone radius from the periphery of the boundary of the quarantine area as a control area. If he or she deems it possible, the BAI director can extend the control area. All the avian species within the 7-km radius shall be under strict surveillance for possible detection of Influenza A. “Observation of clinical signs suggestive of avian influenza in any avian population, such as respiratory and nervous, signs and high mortalities should be immediately reported to the city, municipal, provincial veterinarian or agriculturist so that

counted for 36.9 percent, or $2.6 billion of total payments, in June. The PSA added wheat and corn imports amounted to $99.88 million and $11.91 million, respectively. Wheat accounted for 1.4 percent of total imports, while corn accounted for 0.2 percent.

‘Good for economy’

The peso reached an 11-year low last Friday, closing at its weakest at P51.49 to the greenback. “Yes, it will be good for them,” Briones said when asked whether the depreciation of the peso would be beneficial to exporters. The Semiconductors and Electronics Industries in the Philippines Inc. (Seipi), however, said the weakening of the peso would not have a significant impact on their

DOT. . .

Continued from A12

give the boxer-turned-lawmaker better chances during the rematch. Teo added that Pacquiao, in promoting the rematch abroad, has agreed to endorse the agency’s “Bring Home a Friend” program, which will run from September 1 to March 15, 2018. Targeted primarily at the United States market, she said the program will help entice more visitors to the Philippines through raffle draws, where the lucky

BBB. . .

Continued from A12

D a t a re l e a s e d by t h e N e d a showed that only 18 of the 75 flagship projects have been approved by the President for implementation. These approved projects have a price tag of P462.74 billion. There are two projects that are pending Neda Board approval worth P285 billion. These are the P151-billion Philippine National Railway (PNR) Long-haul from Calamba to Bicol and

immediate evaluation of avian health status can be done,” the AIPP manual said. “Animals with respiratory signs shall be subjected to a rapid field test procedure for the detection of Influenza A by the BAI or Darfo. Tracheal or oropharyngeal swabs will also be collected and submitted to BAI-ADDRL for RT-PCR testing.” The government shall also prohibit the movement of poultry and poultry-related products within and outside the 7-km radius. On top of which, any activity involving the gathering of any/bird species in the control area is not allowed. “This shall include cockfighting, sale of live birds in public market or in any road network, trade fair or show of poultry, etc.” The government shall only allow movement of poultry and poultryrelated products from the control area if there will be new case of AI reported after a 21-day period since the start of stamping out. However, shipments from the 7-km radius must have a veterinary health certificate and shipping permit issued by the BAI.

sentinel poultry shall be grown to a minimum period of 35 days.” During the 35-day growing period, 30 oropharyngeal or tracheal swab samples from the same set of poultry shall be taken on Days 1, 7, 14, 21 and 28, which will be tested using RT-PCR for H5 or H7. On Day 35, 30 representative sentinel animals (or 10 birds for backyard farms) shall be sacrificed for necropsy and organ sampling for testing, according to AIPP.

Cleaning, repopulation

AFTER the stamping of all fowls in the 1-km quarantine area, the government shall start cleaning and disinfecting the affected premises. The government will also observe a 21-day rest period prior to the restocking of sentinel poultry, which will serve as determinants of the presence of the bird-flu virus in the affected area. The government will use broiler chicks as sentinel birds for this matter. “Restocking of sentinel poultry at 2 percent of the house population [for commercial poultry operation] or 30 heads [for backyard poultry operation] shall be done in the infected premises and in selected locations within the quarantine area,” the AIPP read. “The poultry shall be given the basic vaccination program for infectious bursal disease, IB and ND. The

THE AIPP manual said in the event of a potential repeat of infection in the infected premises, the growing of the sentinel birds shall be immediately terminated. “The same procedures as [cited] in the Stamping Out activity shall be implemented.” Once laboratory results from the BAI-VLD-ADDRL showed the absence of the NAI virus, the premises then shall be subjected to cleaning and disinfection in preparation for repopulation. “The director of BAI shall declare an infected area as a disease-free area when no indication of infection is detected in the sentinel population,” the manual read. “The declaration shall be based on RT-PCR test results from BAI-VLD-ADDRL.” Repopulation of the previously infected premises shall be carried out upon approval by the DABAI based on results of growing the sentinel poultry, the manual added. Today, the DA is now halfway the completion of the 21 rest-day period to conduct the dispersal of sentinel birds in the AI-affected areas in San Luis, Pampanga. If things unfold the way they should be, then the Philippines’s firstever AI case could be put into rest at the soonest practical time. Should this happen, the government’s 13-yearold manual could prove to be really its bible: an ageless remedy to bird flu.

profits. “The foreign exchange impact is not that significant. It takes up less than a percent,” Seipi president Dan Lachica told the BusinessMirror in a text message. In its board meeting in July, the group projected that electronics shipments could grow by as much as 8 percent this year. Earlier, Seipi said it expects electronics exports this year to expand by 5 percent to 7 percent. Export receipts from electronics could return to the $30-billion level this year on the back of the recovery in demand from the country’s major markets. Last year export receipts from electronics reached $ 28.44 billion. It was in 2010 when revenues from electronics shipments reached $31 billion. Electronics products remained as the country’s top export

in June, accounting for 53.3 percent of total receipts in June. Revenues from electronics exports reached $2.62 billion. Consumer spending could also pick up, as a weaker peso is generally good for families of overseas Filipino workers. The Philippine Exporters Confederation Inc. (Philexport) echoed the sentiment of Bangko Sentral ng Pilipinas Governor Nestor A. Espenilla Jr., who said the weakening of the peso is no cause for alarm, as it contributes to strengthening macroeconomic fundamentals. “Genera l ly, a wea ker peso improves consumption in the economy, and I don’t think that even if it reached P52 to a dollar, there’ll be an adverse impact,” Philexport President Sergio R. Ortiz-Luis Jr. said.

winner gets to bring a home a friend or relative to visit the Philippines. One of the major raffle prizes also include a condominium unit from property developer Megaworld Corp., round-trip tickets on business and economy classes from pioneering flag carrier Philippine Airlines, and P200,000 worth of pocket money for use at the Duty Free Philippines outlets. “We are just finalizing the mechanics of the program. When completed, we will launch it in September,” the DOT chief said. “If it is successful, we may continue the program further,”

she added. The “Bring Home a Friend” program, Teo said, was a brainchild of former Tourism Secretary Mina T. Gabor during the latter’s term. The renewed project initially targets next-generation Filipino-Americans and Filipino expatriates living in the US who are mostly into leisure travel. The US is the second major source of foreign visitors for the Philippines, with 513,443 arriving in the first half of 2017, up 13 percent from the same period last year. Visitors from the US accounted for some 15.3 percent of total arrivals for the six-month period in 2017.

the P134-billion PNR South Commuter Line from Tutuban to Los Baños. Of the 75 flagship projects, some 55 projects are still pending at the Neda investment Coordination Committee (ICC). Only 33 projects have cost estimates, which amounted to P831.44 billion, while the remaining 22 projects still do not have cost estimates as of press time. The projects pending with the ICC that have the highest costs are the P230-billion Manila Metro Line 9 under the Mega Manila Subway Project—Phase 1, followed by the

P72.06-billion Bohol-Leyte Link Bridge, which is included in the Nationwide Island Provinces Link Bridges. Other big-ticket flagship projects with cost estimates are P57.65-billion Luzon-Samar Link Bridge under the Nationwide Island Provinces Link Bridges program and the P57.6-billion ClarkSubic Railway project. Among the flagship projects approved by the President, the one with the highest cost is the P211.46billion PNR North 2, or the MalolosClark Airport-Clark Green City Railway project.

Recovery

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Editor: Vittorio V. Vitug • Wednesday, August 23, 2017 A3

AFP vows to crush group calling for Duterte ouster

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he Armed Forces of the Philippines (AFP) on Tuesday said it has nothing to do with a group calling itself the Patriotic and Democratic Movement, or Padem, which is seeking the ouster of President Duterte.

The group, reportedly composed of AFP and Philippine National Police members, claimed that Duterte has committed “gross crimes in betrayal of public trusts and in violation of national sovereignty and democratic rights of the Filipino people”. “The AFP categorically denies the recent statement issued by a group that pretends to be representative of the men and women of the AFP and the PNP and called themselves the Padem,” AFP Spokesman Brig. Gen. Restituto Padilla Jr. said in a message to reporters covering the police and military beats.

Faeldon: My resignation is best for the country

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By Joel R. San Juan

@jrsanjuan1573

ESIGNED Customs Commissioner Nicanor E. Faeldon said on Tuesday that his decision to leave the agency would be beneficial to the country. “My relief from my post is the best for our country,” he said. It can be recalled that Faeldon has been under pressure form various sectors, including some legislators to vacate his post for failing to stop the entry of 604 kilos of shabu on May 26.

There is a personal change, but there is no change in management trust in the agency. First of all, let me say I have no doubt of Faeldon’s integrity. Second, I am very confident in the new appointee who is Sid Lapeña, he is a very honest, thorough and very straight guy. So I expect that the improvements will continue and the we will move forward with the current thrust of the agency.”—Dominguez Faeldon initially refused to leave his post, but on Monday, President Duterte announced that he has accepted Faeldon’s resignation. Duterte said Philippine Drug Enforcement Agency (PDEA) Director General Isidro Lapeña will be replacing Faeldon as head of the Bureau of Customs (BOC). Lapeña would be the first police officer to be appointed at BOC’s helm. “I thank everyone who has supported the Bureau of Customs during my stay and I appeal to the BOC employees and to the public to support the new commissioner,” the former Customs Commissioner said in a news statement. Lapeña belongs to the 1973 class of the Philippine Military Academy. He previously served as Philippine National Police Director for Operations, chief of the Directorial Staff, Davao Region Police director and Cotabato City Police director. BOC Legal Division Chief Alvin Ebreo, who is one of the retired Army captains of the Magdalo Group, said that he was still undecided on whether he would stay with the BOC or leave the bureau. He added that he has yet to talk to Faeldon. “I will ask for his advice, what are his marching orders since he was the one who recruited us to BOC. After this, we would still maintain the friendship,” Ebreo said. Aside from Ebreo, Faeldon brought with him other Magdalo leaders, such as retired Army captain Gerardo Gambala, who was appointed as BOC deputy commissioner for Management Information System and Technology Group; Import Assessment Service Director Milo Maestrecampo; and former Navy Lieutenant Senior Grade James Layug as head of the Special Studies and Project Development Committee. Gambala had earlier offered to resign from his post due to the controversy, as well as BOC-Customs Intelligence and Investigation Service Director Neil Anthony Estrella. The Department of Finance, meanwhile, has reassured that despite the resignation Faeldon from his Customs post, the bureau’s management will still continue to improve its revenue generating capacity along with its other mandate. During a recent forum, Finance Secretary Carlos G. Dominguez III said that despite the change of leadership in the bureau, its management will continue to strive for improvements and that the government’s trust in the agency has not wavered. “There is a personal change, but there is no change in management trust in the agency. First of all, let me say [that] I have no doubt of Faeldon’s integrity. Second, I am very confident in the new appointee, who is Sid Lapeña, he is a very honest, thorough and very straight guy. So I expect that the improvements will continue and then we will move forward with the current thrust of the agency,” Dominguez said. The finance chief pointed out that the successful tax-liability settlement from Mighty Corp. of around P30 billion could not have come to fruition without the efforts of the BOC. With Rea Cu

He added that the entire AFP supports the constitutionally mandated government and unequivocally supports the President, who is also the Commander in Chief. “The accusations and issues cited by the group are unfounded and uncalled for. Such issues are clearly politically motivated and a matter that the AFP does not and will not subscribe to,” Padilla said. He added that current developments and issues that this group wishes to take advantage of is now being ad-

dressed by the Department of Justice and parties to a possible crime are now under detention. “Let us respect these processes and not allow ourselves to be used by individuals or groups with vested interests. We appeal for sobriety, reason and patience as we await the results of these processes,” the AFP spokesman added. Also, as the constitutionally mandated protectors of the people, Padilla said the AFP will stand by the law-abiding citizens whenever necessary.

“Having affirmed this, the AFP however, will not hesitate in acting against forces who shall undermine the stability and security of our country and those who wish to destabilize our nation through unconstitutional means,” he said. In the same vein, Padilla said the entire AFP is appealing to the public and the various political groups to respect the apolitical stance of the military and help bring unity and healing instead of fomenting divisiveness and collapse. PNA

Economy

A4 Wednesday, August 23, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

DFA vows improved OFW service with P1-B budget

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he Department of Foreign Affairs (DFA) will allot, beginning next year, some P1 billion to assist distressed Filipinos abroad, according to Foreign Affairs Secretary Alan Peter S. Cayetano. Cayetano assured Filipino diplomats, especially in the Middle East, of additional resources, which they would need to allow them to more effectively assist Filipinos in distress. The secretary was briefed by Foreign Affairs Undersecretary for Migrant Workers Affairs Sarah Lou Arriola on the recent consultations she conducted with officials of the country’s diplomatic missions in Abu Dhabi, Dubai, Doha, Kuwait and Saudi Arabia. “I commend our diplomats in the Middle East for all the hard work that they have been doing for our people,” Cayetano said. “Our diplomats cannot be expected to quickly respond to any request for assistance from our kababayan in the Middle East and in other parts of the world if they cannot be provided with the resources they need to be able to do so,” he said. President Duterte, in his second State of the Nation Address in July, said he will raise the government’s budget for overseas Filipino workers (OFWs) assistance from P400 million to P1 billion. “To ensure that their rights are protected, I ordered the increase of our assistance for the OFW from P400 million to more than

P1 billion,” Duterte said in his speech, recognizing their significant contribution to the growth of the country’s economy. “I would like to assure them [Middle Eastern diplomatic missions] that they will have all the support they would need to let them accomplish the instructions of the President for them to better serve and protect our kababayan there,” the secretary added. “The ATN [assistance to nationals] budget will be utilized to the fullest to allow our posts to respond more quickly and more effectively,” Arriola said. According to her, the DFA has already spent almost 60 percent of the P400 million that was allocated by Congress to support ATN operations abroad in 2017. Arriola said diplomats she met with have requested additional budgetary support from Manila to allow them to effectively respond to ATN cases and extend prompt consular services to their constituents. “With the increase in ATN funding, we should be able to accommodate more overseas Filipinos who would need our assistance,” Arriola said. “We will use those funds to cover not just the usual rescues and repatriations but also to open new shelters, hire more translators, interpreters and other personnel and purchase equipment needed by our posts,” she said. Recto Mercene

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100 LGUs face charges for failure to shut down ‘stinking’ dump sites

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By Jonathan L. Mayuga

@jonlmayuga

he government is preparing to file charges against officials of 100 local government units (LGUs) for failing to implement Republic Act 9003, or the Ecological Solid Waste Management Act of 2000. Eli Ildelfonso, executive director of the National Solid Waste Management Commission (NSWMC) secretariat, said the Office of the Ombudsman is currently preparing for the formal filing of the charges. Last year officials of 50 LGUs, led by their local chief executives, were charged for neglect of duties, mainly for failing to shut down open dumps within their jurisdiction. “We will really file the charges if they continue to defy the order to close down the dumps,” Ildelfonso told the BusinessMirror in a telephone interview.

Last week the Department of Environment and Natural Resources (DENR) vowed to shut down over 50 illegal dump sites by the end of the year. “We target to close down more than 50 illegal dump sites by December as part of our intensified enforcement of Republic Act [RA] 9003, or the Ecological Solid Waste Management Act of 2000,” Environment Secretary Roy A. Cimatu said in a news statement. The DENR recently issued a decision denying the request of the Quezon City government to reopen

the Payatas sanitary landfill until December this year, citing serious environmental violations and susceptibility to trash slide. The DENR secretary lamented that a lot of LGUs still maintain open dump sites, which are prohibited under RA 9003. He vowed to press charges against LGU executives who allow the continued operation of open dump sites in their localities. “RA 9003 gives prime importance to the roles of LGUs in managing solid wastes. They are primarily responsible for the law’s implementation, not the DENR,” Cimatu said. “The DENR’s role is limited to monitoring the compliance of LGUs with the law,” he pointed out. Cimatu said the DENR will shut down all open dump sites that pose serious public-health threats and adverse environmental impacts. He said the agency plans to close a total of 500 illegal dump sites before the term of President Duterte ends in 2022. Based on the NSWMC records, however, only 400 open dumps remain operational. Close to 90, he said, are in the process of shutting down.

RA 9003

The law that mandates all, especially LGUs, to adopt a systematic, comprehensive and ecological solid-waste management program that would ensure the protection of public health and environment

“All our decisions at the DENR are taken with focus on the protection of the environment and the welfare of the general public,” Cimatu assured. RA 9003 specifically mandates all, especially LGUs, to adopt a systematic, comprehensive and ecological solid-waste management program that would ensure the protection of public health and environment. It directs LGUs to utilize environmentally sound methods; set targets and guidelines for solidwaste avoidance and reduction; and ensure proper segregation, collection, transport and storage of solid waste among others.

Villar receives 2017 UP Most Distinguished Alumni Award

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en. Cynthia A. Villar was awarded the Most Distinguished Alumni Award by the

University of the Philippines Alumni Association (UPAA) during the homecoming and awards ceremonies at the Bahay ng Alumni in UP Diliman, Quezon City. Villar, in receiving the award, said, “I am truly honored to be among the awardees this year and to be in the company of such lineup of distinguished alumni, who are most respected and considered as experts in their fields of endeavor.” Aside from Villar, Supreme Court Senior Associate Justice Antonio Carpio and Budget Secretary Benjamin E. Diokno also received the alumni award. Some 20 others were also named as professional awardees. “It is not so much about our achievements per se as individuals,

but how our efforts have benefited others and have done this esteemed university proud,” Villar said. “This recognition encourages me to carry on with my advocacies and it also serves as a validation of my continued efforts to inspire and help our fellow Filipinos. The award is really a bonus. It feels good to be recognized. But it feels even better to know that you are making a difference in people’s lives,” she added. As the current chairman of the Senate Committee on Agriculture and Food, Villar is pursuing poverty reduction as a legislative priority. Together with former Senate President Manuel Villar, she established the Villar Social Institute for

Poverty Alleviation and Governance (Villar Sipag), which allowed her to provide assistance to overseas Filipino workers, to support environmental protection and to establish livelihood projects and farm schools all over the country. Villar earned her degree in Bachelor of Science in Business Administration from UP and completed her Master’s Degree in Business Administration at the New York University. She was elected as representative of Las Piñas in 2001 and served for three terms until 2010. In 2013 she was elected as senator. Aside from the agriculture committee, she is also the current chairman of the Committee on Environment and Natural Resources.

Budget Secretary Benjamin E. Diokno (left), Sen. Cynthia A. Villar and Senior Associate Justice Antonio Carpio are among the awardees at the 2017 University of the Philippines Alumni Association general homecoming at the Bahay ng Alumni in UP Diliman, Quezon City.

S&P marks PHL economy growth risk

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nternational credit watcher Standard & Poor’s (S&P) believes the Philippine economy remains strong and domestically driven, as most risks to its growth would likely emanate from external factors. In its most recent review on Asia-Pacific Economic Snapshots, S&P retained its growth forecast of the Philippines at 6.4 percent at year-end, despite the recent announcement of a strong 6.5percent GDP growth in the second quarter of the year. “GDP growth remained strong at 6.5 percent in the second quarter, in line with our estimate of potential

growth. Consumption and investment remain the main drivers, a testament to the solid demographic trends that are benefiting the country,” S&P said. “Earlier in the year, the current account was pulled into deficit by higher commodity prices. However, the recent decline in crude prices is likely to ease downward pressure on the current account,” it added. Thus, the ratings agency expects strong domestic demand to drive solid GDP expansion over the next few years, at about 6.5 percent annually. Risks, meanwhile, to this growth,

remains outside of the country’s jurisdiction, the credit watcher said, as murky international waters continue to dampen the strong domestic growth story of the country. “External factors continue to be the main source of risks—be it rising protectionism overseas, geopolitical tensions, or uncertainty in financial markets that could lead to capital outflows,” S&P said. “The tail risk of a spillover of tension and fighting in the south— between government forces and extremists—appears to have receded significantly,” it added. Bianca Cuaresma

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Editor: Jennifer A. Ng • Wednesday, August 23, 2017

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Chicken prices seen recovering next month

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By Jasper Emmanuel Y. Arcalas @jearcalas

he United Broiler Raisers Association (Ubra) expects the farm-gate price of chicken to recover next month after the government lifted the ban on the transshipment of poultry products from Luzon to the Visayas and Mindanao. Ubra President Elias Jose Inciong made the statement after the Department of Agriculture (DA) announced the lifting of the ban on the transshipment of poultry products from Luzon on Tuesday. “ T h i s de ve lopme nt wou ld hopefully restore the confidence of consumers and poultry pro-

ducers that products outside of the areas affected by bird flu are safe,” Inciong told reporters on the sidelines of the DA’s news briefing on August 22. “The lifting of the ban would reverse the downtrend in farmgate prices. ‘Recovery’ would mean farm-gate prices would be on a par with production cost,” he added.

Ubra noted that the farmgate price of broiler chicken has fallen to as low as P10 per kilogram since the DA announced the outbreak of bird flu in San Luis, Pampanga. Inciong said broiler growers have been forced to dress their chicken and store them in coldstorage facilities so they won’t incur more losses. This posed difficulties to other poultry growers that are also about to harvest their broilers. “We hope the lifting of the ban on shipments to the Visayas and Mindanao will help unclog coldstorage facilities. Producers with nonintegrated operations will no longer go to dressing plants to store their chicken,” he said. “Meanwhile, chicken stored in storage facilities will be sold, which will allow growers to raise capital so they can load their day-old chicks. We will still lose money, but there is hope that our operations will normalize,” Inciong added. The Ubra chief said it could take months for broiler meat

₧10 per kilogram

The current farm-gate price of chicken, according to the Ubra sales to pick up. “We hope to reach the point wherein consumers are eager to buy chicken after weeks of avoiding it.” A g r icu lture Secretar y Emmanuel F. Piñol on Tuesday announced the lifting of the ban on the transshipment of poultry and poultry products from Luzon, after biosecurity experts said the bird-flu incident in San Luis has been contained. “The recommendation of our biosecurity experts is that products outside the 7-k i lometer control area are now safe to be shipped,” Piñol said. “Also, this [the lifting of the ban] is more of an emotional consideration. We also have to listen to our farmers. If the products are now safe, then let’s allow them to ship their products,” he added. Earlier, Ubra urged the DA to

lift the ban on the shipment of poultry products from Luzon to other parts of the country, as this could cause growers to incur more losses. The group said the ban has also “sown confusion” among consumers, as this made them believe that the bird-flu outbreak is widespread and affects broilers. The order is effective immediately. Piñol said he would issue an administrative order to formalize his decision to lift the ban. However, Piñol said only poultry products outside the 7-kilometer quarantine area of the bird flu-affected farms in San Luis, Pampanga and Jaen and San Isidro in Nueva Ecija can be shipped to the Visayas and Mindanao. “Any shipment to be made must be validated by our quarantine officers and must carry certification that it came from accredited and inspected farms in Luzon. Products must also carry a seal of the quarantine officers,” the DA chief said. “Fresh table eggs, balut eggs

[provided they are cooked before shipment], chicken meat and other products not mentioned but coming from accredited farms inspected by our quarantine officers and certified to be free from any diseases will be allowed,” he added. The DA chief said he would urge President Duterte and the Department of Social Welfare and Development, which oversees the current relief operations for people displaced by war in Mindanao, to purchase chicken in cold-storage facilities. “We could ship chilled and frozen chicken to Mindanao. Besides, there is a big cold-storage facility in Davao City near the port, called Sub Zero, where we can store them,” Piñol said. “ T he moment we ship the c h ic k e n i n col d - s tor a ge s to Maraw i City, farm-gate price would go back to normal. The problem is that traders are abusing the market right now, buying the chicken at lower farmgate price due to lower demand,” he added.

Dairy output up 11% in January-June–NDA Farm-gate price

of rice went up by 3.48%–report

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hilippine dairy production rose by 11 percent to 11,700 metric tons (MT) in the first half, from 10,540 MT recorded a year ago, according to the National Dairy Administration (NDA). In its report, titled “The Performance of the Philippine Dairy Sector”, the NDA, an attached agency of the Department of Agriculture (DA), attributed the hike to the increase in the production of all dairy-producing herd during the January-to-June period. “Total dairy production reached 11,700 MT and grossed more than P411 million at current prices. On the weighted average, farm gate price of dairy reached P35.15 per liter,” the report read. At current prices, the dairy sector’s value of production grew by 20.51 percent to P411.24 million, from P341.25 million posted in the first half of 2016. “The NDA-assisted/monitored dairy projects shared more than two-thirds [or equivalent to 8,480 MT] to the total national milk output,” the report read. Citing data from the Philippine Statistics Authority, the NDA said that among all the livestock subsectors, the dairy subsector registered the highest increase, both in terms of volume and value of production in the first half.

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Brent Lewin/Bloomberg

The NDA noted that during the period, the livestock sector’s production value rose by 10.95 percent year-on-year to P137.33 billion. Its output reached 1.338 million MT (MMT), slightly higher than the 1.326 MMT posted a year ago. The NDA noted that the livestock subsector accounted for 16.55 percent of total agricultural value of output of P829.97 billion

at current prices. The NDA attributed this to higher production value increment across all livestock subsectors. “Due to sustained demand and higher prices of all the livestock subsectors, hog, the major contributor to the subsector’s performance registered a 1.04-percent growth in production and realized a 12.09-percent gain

in earnings,” the report read. “Gross production and earnings from carabao sustained an upward trend by 0.33 percent and 13.78 percent, respectively. Despite the drop in production volume for cattle [0.42 percent] and goat [0.91 percent], production values, however, grew 2.83 percent for cattle and 3.44 percent for goat,” it added. Jasper Emmanuel Y. Arcalas

he average far m-gate price of paddy rice as of the first week of August rose by 3.48 percent to P19.59 per kilogram (kg), from P18.93 per kg a year ago, according to the Philippine Statistics Authority (PSA). The PSA said in its report that the farm-gate price of rice posted an increment of 0.39 percent, from the previous week’s level of P19.51 per kg. “At the wholesale trade, the average price of well-milled rice at P39.22 per kg recorded an uptick of 0.2 percent, from previous week’s level of P39.15 per kg and 1.21 percent from last year’s record of P38.75 per kg,” the report read. The report noted that the average retail price of well-milled rice at P42.09 per kg gained by 0.33 percent from P41.95 per kg a week ago and was also higher by 0.5 percent compared to the prev ious year’s level of P41.88 per kg.

As for regular-milled rice, the PSA said the average wholesale price of regular-milled rice at P35.75 per kg rose slightly in the first week of August. The figure is higher by 1.46 percent compared to last year’s record of P34.86 per kg. “The average retail price of regular-milled rice at P37.88 per kg declined by 0.07 percent, from previous week’s level. However, it went up by 1.46 percent from the same week in the previous year,” the report read. As for yellow-corn grain, the average farm-gate price at P11.22 per kg is lower by 12.32 percent year-on-year. The figure, however, is 0.23 percent higher than the price recorded a week ago. “The average farm-gate price of white-corn grain during the first week of August at P13.96 per kg went up by 3.74 percent, from a week ago level of P13.46 per kg and by 1.6 percent, from the previous year’s quotation of P13.74 per kg,” the report read.

Where’s the kelp? Warm ocean takes toll on undersea forests

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PPL EDOR E ISL A ND, Maine—When diving in the Gulf of Maine a few years back, Jennifer Dijkstra expected to be swimming through a flowing kelp forest that had long served as a nursery and food for juvenile fish and lobster. But Dijkstra, a University of New Hampshire marine biologist, saw only a patchy seafloor before her. The sugar kelp had declined dramatically and been replaced by invasive, shrub-like seaweed that looked like a giant shag rug. “I remember going to some dive sites and honestly being shocked at how few kelp blades we saw,” she said. The Gulf of Maine, stretching from Cape Cod to Nova Scotia, is the latest in a growing list of global hot spots losing their kelp, including hundreds of miles in the Mediterranean Sea, off southern Japan and Australia and parts of the California coast. Among the world’s most diverse marine ecosystems, kelp forests are

found on all continental coastlines except for Antarctica and provide critical food and shelter to myriad fish and other creatures. Kelp also is critical to coastal economies, providing billions of dollars in tourism and fishing. The likely culprit for the loss of kelp, according to several scientific studies, is warming oceans from climate change, coupled with the arrival of invasive species. In Maine the invaders are other seaweeds. In Australia, the Mediterranean and in Japan, tropical fish are feasting on the kelp. Most kelp are replaced by small, tightly packed, bushy seaweeds that collect sediment and prevent kelp from growing back, University of Western Australia’s Thomas Wernberg said. “Collectively, these changes are part of a recent and increasing global trend of flattening of the world’s kelp forests,” added Wernberg, coauthor of a 2016 study in the Proceedings of the National Academy of Sciences, which found that 38 percent

In this June 15 photo, research technician Kristen Mello shows a sample of a red shrub-like seaweed collected in the waters off Appledore Island, Maine. Kelp forests are critical to the fishing industry but are disappearing around the world. AP Photo/Charles Krupa

of kelp forest declined over the past 50 years in regions that had data. Kelp losses on Australia’s Great Southern Reef threaten tourism and fishing industries worth $10 billion. Die-offs contributed to a 60-percent drop in species richness in the Mediterranean and were blamed for the collapse of the abalone fishery in Japan. “You are losing habitat. You are

losing food. You are losing shoreline protection,” said University of Massachusetts Boston’s Jarrett Byrnes, who leads a working group on kelp and climate change. “They provide real value to humans.” The Pacific Coast from Northern California to the Oregon border is one place that suffered dramatic kelp loss, according to Cynthia Catton, a research associate at

the Bodega Marine Laboratory at the University of California, Davis. Since 2014 aerial surveys have shown that bull kelp declined by over 90 percent, something Catton blamed on a marine heat wave along with a rapid increase in kelp-eating sea urchins. Without the kelp to eat, Northern California’s abalone fishery has been harmed. “It’s pretty devastating to the ecosystem as a whole,” Catton said. “It’s like a redwood forest that has been completely clear-cut. If you lose the trees, you don’t have a forest.” Kelp is incredibly resilient and has been known to bounce back from storms and heat waves. But in Maine, it has struggled to recover following an explosion of voracious sea urchins in the 1980s that wiped out many kelp beds. Now, it must survive in waters that are warming faster than the vast majority of the world’s oceans­—most likely forcing kelp to migrate northward or into deeper waters. “What the future holds is more

complicated,” Byrnes said. “If the Gulf of Maine warms sufficiently, we know kelp will have a hard time holding on.” On their dives around Maine’s Appledore Island, a craggy island off New Hampshire that’s home to nesting seagulls, Dijkstra and colleague Larry Harris have witnessed dramatic changes. Their study, published by the Journal of Ecology in April, examined photos of seaweed populations and dive logs going back 30 years in the Gulf of Maine. They found introduced species from as far away as Asia, such as the filamentous red seaweed, had increased by as much 90 percent and were covering 50 percent to 90 percent of the gulf’s seafloor. They are seeing far fewer ocean pout, wolf eel and pollock that once were commonplace in these kelp beds. But they also are finding that the half-dozen invasive seaweeds replacing kelp are harboring up to three times more tiny shrimp, snails and other invertebrates. AP

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Wednesday, August 23, 2017

briefs Iran: Only 5 days needed for uranium enrichment

TEHRAN, Iran—Iranian state television is quoting the country’s atomic chief as saying the Islamic Republic would need only five days to ramp up its uranium enrichment to 20 percent—a level at which the material could start to be used for a nuclear weapon. State TV’s web site on Tuesday quoted Ali Akbar Salehi as saying: “If we make the determination, we are able to resume 20-percent enrichment in at most five days.” Iran gave up the majority of its stockpile of 20-percent enriched uranium as part of the 2015 nuclear deal with world powers. The nuclear deal, which lifted sanctions on Iran, currently caps the Islamic Republic’s uranium enrichment at under 5 percent. Iran long has said its nuclear program is for peaceful purpose. AP

Record $417-M award in lawsuit linking baby powder to cancer

LOS ANGELES—A Los Angeles jury on Monday ordered Johnson & Johnson to pay a record $417 million to a hospitalized woman who claimed in a lawsuit that the talc in the company’s iconic baby powder causes ovarian cancer when applied regularly for feminine hygiene. The verdict in the lawsuit brought by the California woman, Eva Echeverria, marks the largest-sum awarded in a series of talcum-powder lawsuit verdicts against Johnson & Johnson in courts around the US. Echeverria alleged Johnson & Johnson failed to adequately warn consumers about talcum powder’s potential cancer risks. She used the company’s baby powder on a daily basis beginning in the 1950s until 2016 and was diagnosed with ovarian cancer in 2007, according to court papers. Echeverria developed ovarian cancer as a “proximate result of the unreasonably dangerous and defective nature of talcum powder,” she said in her lawsuit. AP

Mattis: I.S. militants caught in Iraq-Syria military vise

BAGHDAD—Expelled from their main stronghold in northern Iraq, Islamic State (IS) militants are now trapped in a military vise that will squeeze them on both sides of the Syria-Iraq border, US Defense Secretary Jim Mattis said. Mattis arrived in the Iraqi capital on an unannounced visit on Tuesday just hours after President Donald J. Trump outlined a fresh approach to the stalemated war in Afghanistan. Trump also has vowed to take a more aggressive, effective approach against Islamic State in Iraq and Syria, but he has yet to unveil a strategy for that conflict that differs greatly from his predecessor’s. In Baghdad Mattis was meeting with senior Iraqi government leaders and with US commanders. He also planned to meet in Irbil with Massoud Barzani, leader of the semi-autonomous Kurdish region that has helped fight IS. Mattis told reporters before departing from neighboring Jordan that the so-called Middle Euphrates River Valley—roughly from the western Iraqi city of al-Qaim to the eastern Syrian city of Der el-Zour— will be liberated in time, as IS gets hit from both ends of the valley that bisects Iraq and Syria. AP

Spain attack car ‘flagged for speeding’ in Paris

MADRID—French Interior Minister Gerard Collomb has confirmed reports that an Audi used by the attackers in the Spanish town of Cambrils had been photographed in the Paris region for speeding some time before last week’s attacks. Collomb said in an interview on Tuesday on BFM-TV that the black Audi A3 was photographed by radar, but did not give a timeframe or location to clarify whether it was transiting through the area. He said, “This group came to Paris but it was a quick arrival and departure.” The French daily Le Parisien reported on Monday that the car came through the Paris region about a week before the Thursday and Friday’s attacks in Barcelona and Cambrils that killed 15 people. Other papers said it was seen in the Essonne region south of the capital, as well. Collomb said French and Spanish services were in tight cooperation over the attacks, but the French “didn’t know the cell which was exclusively Spanish”. His Spanish counterpart is to pay a visit to Paris on Wednesday. AP

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Trump sets US strategy but no ‘blank check’ for Afghan war

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ASHINGTON—President Donald J. Trump put forward on Monday a longawaited strategy for resolving the nearly 16-year-old conflict in Afghanistan, but he declined to specify either the number of troops that would be committed, or the conditions by which he would judge the success of their mission there. In a nationally televised primetime speech to troops at Fort Myer, Virginia, Trump said there would be no “blank check” for the American engagement in Afghanistan. But in announcing his plan, Trump deepened American involvement in a military mission has bedeviled his predecessors and that he once called futile. “My original instinct was to pull out, and historically, I like following my instincts,” Trump said. “But all my life, I’ve heard that decisions are much different when you sit behind the desk in the Oval Office.” After what he described as a lengthy and exhaustive deliberation culminating in a meeting with his war Cabinet at Camp David, Trump said he had been convinced that “a hasty withdrawal would create a vacuum for terrorists, including ISIS [Islamic State in Iraq and Sysria] and al-Qaeda.” Speaking to a military audience at a base outside Washington, Trump declared, “In the end, we will win.” But he did not define what victor y would look like, nor did he explain how his path would be different from what he labeled the failed strategies of previous presidents. Tr u mp ca mpa ig ned for t he W hite House promising to

e x t r icate t he US f rom foreig n c o n f l i c t s , a nd m a ny o f t he steps t hat he a nnou nced on Mond ay have been proposed by prev ious ad m inist rat ions. He portrayed the strategy as a stark break with the Obama administration, arguing that, while his predecessor set artificial timetables for US involvement in Afghanistan, his strategy would be a comprehensive, conditions-based regional approach that would aim for a political solution there. Part of the plan is to deploy more US troops to Afghanistan to continue to train Afghan forces there, with the goal of convincing the Taliban—which have recently gained substantial ground in the war—that they could not win on the battlefield. Trump said the US would put sig n i f ic a nt ne w pressu re on Pa k istan to crack dow n on the ter ror ist sanctuar ies that line its border w ith A fghanistan. His comments could open a turbulent new chapter in relations with Pakistan, which has veered since the September 11, 2001, attacks from being an ally in the fight against terrorism to a haven in which Osama bin Laden hid out until he was killed in 2011. By refusing to place a number on troops or to specify benchmarks for success, Trump was in essence shielding himself against

President Donald J. Trump delivers an address to the nation at Fort Myer in Arlington, Virginia, on August 21. Trump pushed forward with a new strategy for the struggling US-led campaign in Afghanistan, saying, “The American people are weary of war without victory.” Al Drago/The New York Times

potential backlash from his political base and from the American public, which has grown weary of the war. T he president heaped contempt on his predecessor’s strategy, promising that he would avoid President Barack Obama’s mistakes. But in substance, Trump’s strategy was not all that different from Obama’s, relying on a mix of conventional military force and diplomatic pressure on Pakistan. O ne a d m i n i s t r at io n o f f i cia l conceded that there was to be no major change in the mi x of US forces operating in A fghanistan, and that the pr ior ities wou ld remain training A fghan forces and conducting counter ter ror ism operations. In some ways, Trump’s emphasis on a stripped-down counterterrorism mission was reminiscent of the approach advocated by former Vice President Joe Biden and ultimately rejected

by Obama. “ We are not nationbuilding again,” Tr ump said. “ We are k il ling ter ror ists.” W hatever the echoes, Trump projected a far more bellicose tone than Obama. He promised that he would loosen restrictions on US soldiers to enable them to hunt down terrorists, which he labeled “thugs and criminals and predators, and— that’s right—losers.” “The killers need to know they have nowhere to hide, that no place is beyond the reach of American might and American arms,” the president said. “Retribution will be fast and powerful.” T h e s e t t i n g f o r Tr u m p ’s speech—a flag-bedecked stage— was calculated to cloak the president in the mantle of a commander in chief. But Trump read stiffly from a teleprompter and his words lacked the rhetorical flourishes of other wartime presidents. Trump promised to launch an

intensive diplomatic and economic initiative, but he does so from a position of acute weakness at the State Department, which has yet to place an ambassador in Kabul, Afghanistan’s capital, and scrapped the office of the special representative for Afghanistan and Pakistan. Trump’s reference to a strategic partnership with India also has implications for Pakistan, which has a deeply antagonistic relationship with its neighbor. An estimated 8,400 US troops are stationed in Afghanistan, most assigned to an approximately 13,000-strong international force that is training and advising the Afghan military. About 2,000 US troops are tasked with carrying out counterterrorism missions along with Afghan forces against groups like the Islamic State’s Afghan affiliate, the Islamic State in Khorasan. New York Times News Service

US Navy orders global fleet to pause after Singapore crash

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he US Nav y directed its worldwide f leet to take stock of operations and pinpoint gaps after the second collision involving an American naval vessel in Asia in recent months left 10 sailors missing. The Navy ordered fleet commanders to execute a one- to t wo - d ay “operat ion a l pau se” within the next week to look at the “fundamentals” of naval practices, Adm. John Richardson, chief of Naval Operations, said on Monday. The pause is a time to “stand down”, but it’s up to fleet commanders to determine what the impact on their operations will look like, Richardson said. Ten sailors are missing and five were injured after the USS John S. McCain collided with a petroleum tanker near Singapore on Monday. Richardson called the crash “an extremely serious incident”, saying he was “devastated and rea l ly just hear tbroken”. It ’s the second such incident within three months—both being “very similar”—and the latest in a “series of incidents” in the Pacific Fleet, he said. “That gives great cause for concern that there’s something out there that we’re not getting at,” Richardson told reporters at the Pentagon. “My hope is that we will

learn, continue to improve in the short term—validating that we are sound on the fundamentals, and, if not, then we’ll take action to correct that and then look at broader, more systemic issues.” US Pacific Command chief Harry Harris said the halt was important, but wouldn’t have an averse effect on operations. “This is an opportunity for ship commanding officers to take a look at his or her procedures and look at the readiness of their crews to do the difficult job of sailing at sea,” Harris said at the Osan Air Base, south of Seoul. “As for the opertional pause and the effect on our ability to defend our nation and our allies, it will not have that effect.”

Singapore arrival

Search-and-rescue efforts are under way after the McCain collided with the Alnic MC. The US Seventh Fleet said on its web site the vessel had significant damage to its hull, resulting in f looding to compartments including berthing, machinery and communications rooms. Following the crash, the ship sailed under its own power to Singapore’s Changi Naval Base, the Seventh Fleet said on Twitter. There’s no indication yet that the crash was intentional on either side, but the Navy continues to

look into that, Richardson added. CNN repor ted on Tuesd ay that the US ship suffered a steering malfunction that led to the crash. It was unclear why the crew couldn’t utilize the vessel’s backup steering systems to maintain control, CNN said, citing an unidentified US navy official. T he col lision comes shor t ly af ter t he top 3 commanders of t he USS Fitzgerald—a Nav y destroyer t hat ran into a cargo ship near Yokosu k a, Japan, in June—were removed f rom their positions following an investigation t hat found f lawed teamwork and inadequate leadership contr ibuted to t he accident. Seven sailors drow ned in t hat accident. Connecticut Rep. Joe Courtney, the top Democrat on the House Seapower and Projection Forces subcommittee, said Congress needs to undertake “rigorous oversight” and review the “rising trend lines of accidents.”

Sailor training

“Our sailors are asked to operate ever y day in contested waters v ital to the interests of the United States,” Courtney said in a statement. “ We need to make sure that they have the tools, training and support they need to do their jobs successfully and safely.”

Besides the operational pause, over a few months the Navy will complete a longer term, comprehensive review of US naval forces in Japan, including looking at training and certifying readiness. The review also will consider the Navy’s process “for developing surface warfare community, shipdrivers” and whether that could be improved, Richardson said. Private industry experts, such as operating systems manufacturers, could help in that, he added. “Thoughts & prayers are w/ our @USNavy sailors aboard the #USSJohnSMcCain where search & rescue efforts are underway,” President Donald J. Trump said on Twitter. There was no report of oil pollution, and traffic in the Singapore Strait was unaffected, the Singapore government press center said in a statement. The collision took place in waters claimed by Malaysia and Singapore, Malaysian Maritime Enforcement Agency Director Zulkifili Abu Bakar told reporters. China hopes the missing sailors are safe, Foreign Ministry Spokesman Hua Chunying said at a regular briefing in Beijing. She also expressed concern for “dangers to freedom of navigation” in the South China Sea and the related area, and hoped it would be “dealt with appropriately”.

The USS John S. McCain is named after the father and grandfather of Republican Sen. John McCain. In a tweet, the Arizona lawmaker said he and his wife were praying for the sailors and appreciated the efforts of searchand-rescue crews. The Malacca and Singapore straits are key choke points of the oil trade in Asia. About 40 percent of oil shipped by water passes through the area, as well as about a quarter of the world’s traded goods, according to the Marine Department of Malaysia. The Alnic MC was chartered on August 17 to ship a cargo of petroleum from Southeast Asia to the Far East, according to shipbroker data compiled by Bloomberg. It was supposed to load its cargo on August 25. T he US Nav y a nd M a r i ne Corps have come under fire for stretching resources to keep up with demand for deployments. Between 1998 and 2015, the Navy shrank by 20 percent, to 271 ships, while the number of vessels deployed overseas remained at about 100 ships, Bryan Clark, a senior fellow at the Center for Strategic and Budgetary Assessment, wrote in a 2015 article for The National Interest. Clark concluded that each ship has to work 20 percent more to meet demand. Bloomberg News

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Second Korean war would quickly spread across Asia

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recent survey commissioned by the New York Times found that people who could find North Korea on a map were more likely to favor talks over militar y action. A glance at North Asia’s geography explains why. More than six decades after the Korean War ended without a peace treaty, the peninsula remains bisected in a perpetual stalemate, with the US-backed South Korean military lined up against more than a million North Korean troops. W hile tensions have occasionally f lared—such as after Kim Jong Un’s weapons tests or threats of “ merciless revenge” over American-led military exercises that began on Monday— the two sides have so far staved off another devastating conflict. The 250-kilometer border defined in a 1953 armistice lays bare one obvious peril of any confrontation: The demilitarized zone sits on the doorstep of the Seoul metropolitan area, where about half of South Korea’s 51 million people live. North Korea has spent decades concealing hundreds of artillery batteries along the frontier that could wreak havoc in the southern capital, according to Joseph Bermudez, an analyst for the 38 North web site run by the USKorea Institute at Johns Hopkins University’s School of Advanced International Studies. Those weapons could kill thousands of people and damage scores of factories in the time it took the US to project “fire and fury” across the border, as President Donald J. Trump has warned. “If all of a sudden artillery rounds started plopping down in the middle of the city, hitting those high-rises, there would be panic li ke you wou ld not believe,” Bermudez said. “Not only are people killed by direct explosion, they’re killed by all the debris, and they’re killed by accident. You don’t need much artillery to do that.” After an initial exchange of fire, the danger could quickly engulf the rest of South Korea and neighboring Japan, countries that have been American allies since World War II. More than 80,000 troops are based across the two countries and the US territory of Guam, which

would provide key staging areas for any American-led attack. Those US bases were within reach of Kim’s bombs long before his first successful test of an intercontinental ballistic missile on July 4. Even if Kim still lacks the capacity to outfit those missiles with miniaturized nuclear warheads, he could cause plenty of damage with conventional and chemical weapons. Kim would probably seek to maximize his advantage against more powerful foes by striking softer civilian targets in places like the greater Tokyo area, which is home to almost 40 million people. At the same time, North Koreans might look to escape the allied onslaught by flooding across the Yalu River to China. The region might also face environmental threats should the US strike Kim’s heavy-water reactor north of the capital Pyongyang, scattering radioactive debris into the atmosphere and groundwater. Mao Zedong’s decision to back China’s communist neighbors in North Korea was a key reason the US-led United Nations forces were never able to achieve a decisive victory in the Korean War. China’s concern then—that a unified Korea could provide a springboard for attacks on its own territory—remains largely unchanged. And the world’s most populous country would be hardpressed to remain on the sidelines if a full-fledged conflict erupted on its border. Unlike his predecessor, Chinese President Xi Jinping commands a nuclear power with one of the world ’s most advanced navies and air forces. Should China join a second Korean conflict, that firepower would make it harder for Trump to ensure the safety of the US homeland—much less its bases and allies across Asia. And don’t forget Russia, which shares borders with China, Japan and North Korea. Russian President Vladimir Putin is already challenging the US in hot spots around the world. The US is constantly engaging with China and Russia to explain what it would do in a conflict to minimize the chance of an escalation, Bermudez said. “It’s certainly possible to prevent superpower escalation,” he said. “Communication is the key here.” Bloomberg News

China, like US, struggles to revive industrial heartland

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HENYANG, China—The hulking, brown-brick industrial plants lining the roads were once the backbone of this gritty city. Today, they are outdated and unwanted, and the region is one of the Chinese economy’s most troubled. A short drive away, however, a newly minted industrial park offers reasons for optimism. Liu Qi, chairman of PQI Industrial Technology Group, opened an $18-million factory there last year, equipped with whirring robots that pound out car parts for the German automaker BMW. The factory, and the more than 200 jobs it has created, is just one small part of a grand plan led by China’s government to rejuvenate Shenyang, a city of 8 million, by replacing stumbling state industries with modern manufacturing and startup companies. “When things hit bottom, there is an opportunity for things to go up,” Liu, 46, said. Whether the rejuvenation happens will shape not just the future of Shenyang, but also, potentially, the entire Chinese economy. The city’s woes represent a broader problem: There are too many unproductive, debt-laden factories that are losing business as China’s growth slows. If Beijing fails to overhaul those crumbling industries and revive the communities that rely on them, Shenyang and the surrounding area—and other similar regions—could weigh heavily on the

country’s economic progress. The story of Shenyang will probably sound familiar in places like Midwestern towns in the US that have seen important industries decline or depart. During China’s go-go years, when factories, roads and housing were constructed with wild abandon, the city’s heavy industrial companies, many of them owned by the state, boomed. A rush of wealth was plowed into new apartment towers and shopping malls in Shenyang. The city still has an industrial air, with central office blocks designed in a near-uniform drab brown, matching its factory complexes. But as China’s investment binge fizzled, Shenyang and its fac tories sputtered. Last year the economy of the northeastern province of Liaoning, of which Shenyang is the capital, shrank 2.5 percent—a shocking figure in a country accustomed to seemingly endless expansion. Other major cities have sped ahead of Shenyang in the development of the high-tech and service companies expected to propel China’s future growth. The entire northeast of the country, where much heavy industry has been concentrated, runs the risk of being left badly behind. The decay of this factory zone has left Beijing with a similar knotty problem to the one that has plagued Washington for decades: how to resurrect down-on-theirluck areas. New York Times News Service

South Korean police officers rappel down from a helicopter during an antiterror drill as part of Ulchi Freedom Guardian exercise, in Goyang, South Korea, on August 21. US and South Korean troops kicked off their annual drills on Monday that come after US President Donald J. Trump and North Korea exchanged warlike rhetoric in the wake of the North’s two intercontinental ballistic missile tests last month. AP/Ahn Young-joon

N. Korea’s threat: US faces ‘merciless revenge’ over drills

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orth Korea threatened the US on Tuesday, saying it will face “merciless revenge” for ignoring Pyongyang’s warnings over annual military drills with South Korea. The isolated nation said it would be a misjudgment for the US to think that North Korea will “sit comfortably without doing anything,” the state-run Korean Central News Agency (KCNA) said, citing an unidentified military spokesman. The ongoing drills and visits of US military officials to South Korea create the circumstances for a “mock war” on the Korean Peninsula, KCNA said. The comments represent a more belligerent tone after a war of words between the US and North Korea appeared to have subsided. US President Donald J. Trump praised North Korean leader Kim Jong Un last week for waiting to launch missiles over Japan into waters near Guam, after previously warning of “fire and fury” if he continued to threaten the American homeland. US Pacific Command chief Harry Harris on Tuesday defended the drills while calling for a diplomatic solution to the North Korea crisis. He said the military needed to be ready for all scenarios, and added that the US has “complete confidence” in its ability to “destroy any missiles that come into our area.” “We hope for a diplomatic solution to the challenge presented by Kim Jong Un,” Harris told reporters at the Osan Air Base, south of Seoul. “A strong diplomatic effort backed by a strong military effort is key because credible combat power should be a support to diplomacy and not the other way round.” Tensions increased in July after North Korea conducted two intercontinental ballistic missile (ICBM) tests. Trump has said military force is an option to prevent Kim from gaining an ICBM that could deliver a nuclear weapon to the US. On Monday South Korea President Moon Jae-in said North Korea shouldn’t use the latest round of dr il ls as an excuse for any further provocations. The exercises “are not aimed at

raising military tensions on the Korean peninsula at all,” Moon told Cabinet members. Kim made a visit in early August to a guard post about 1 kilometer from the border with the South, Yonhap News reported, citing unidentified South Korean government officials.

Unusual act

The South Korean military considers the visit an unusual act and is preparing to prevent a possible military provocation, Yonhap said. Kim’s regime also unveiled a video of its threat to fire missiles near the US territory of Guam, Yonhap reported. The Ulchi Freedom Guardian military drills routinely spark condemnation from North Korea. During last year’s drills, North Korea launched a ballistic missile from a submarine and put its military on the highest alert. The exercise is a computerized command-and-control simulation, said a spokesman for US Forces in Korea. It will be of similar size to last year’s event with no field training, she said. About 17,500 US service members are taking part, down from 25,000 last year. Defense Secretary James Mattis said the reduction in numbers simply reflects a need for fewer personnel, and hasn’t been scaled back in response to tensions with North Korea. The US should never forget that North Korea is watching its moves closely with “fingers on triggers,

ready to pour a fire shower of penalties at any time,” according to KCNA. The US generals were to travel to the site of a contentious US missile-defense system in South Korea later on Tuesday. The North’s military statement said it will launch an unspecified “merciless retaliation and unsparing punishment” on the United States over the Ulchi Freedom Guardian drills that began on Monday for an 11-day run. Despite the threat, an unprompted direct attack is extremely unlikely because the US vastly outguns Pyongyang, which values the continuation of its dictatorship above all else. Impoverished North Korea hates the drills in part because they force it to respond with expensive military measures of its own. The North Korean statement accused the US of deploying unspecified “ lethal” weapons for the drills that it says involve a “beheading operation” training aimed at removing absolute ruler Kim Jong Un. “No one can vouch that these huge forces concentrated in South Korea will not go over to an actual war action now that the military tensions have reached an extreme pitch in the Korean Peninsula,” the statement said. “Moreover, highranking bosses of the US imperialist aggressor forces flew into South Korea to hold a war confab. Such huddle is increasing the gravity of the situation.”

Dialogue

Sen. Edward Markey, a Massachusetts Democrat who v isited Seou l w it h ot her l aw ma kers, said on Tuesday that a dialogue wou ld be t he best way to de f use t he Nor t h Korean nuc lear st a ndof f t hough he a rg ues t he US a nd its a l l ies must be ready to res p ond to p ote nt i a l a g g ression by Nor t h Korea w it h “over whel m ing force.”

No one can vouch that these huge forces concentrated in South Korea will not go over to an actual war action now that the military tensions have reached an extreme pitch in the Korean Peninsula.” —North Korea

“Talking with North Korea is not a concession, it is the only way to reach an agreement to denuclearize the Korean Peninsula and to reinforce that our military strength is there only to deter aggression and to defend against attack,” Markey told a news conference. Last month North Korea testlaunched two ICBMs at highly lofted angles, and outside experts say those missiles can reach Alaska, Los Angeles or Chicago if fired at normal, flattened trajectories. Analysts say it will be only a matter of time for the North to achieve its long-stated goal of acquiring a nuclear missile that can strike anywhere in the US. Earlier this month, Trump pledged to answer North Korean aggression with “ fire and fury” and later said a military solution was “ locked and loaded.” North Korea, for its part, threatened to launch missiles toward the American territory of Guam before K im Jong Un said he would f irst watc h how Washing ton acts before going ahead with the missile launch plan. No field training like live-fire exercises or tank maneuvering is involved in the Ulchi drills, in which alliance officers sit at computers to practice how they would engage in battles and hone their decision-making capabilities. The allies have said the drills are defensive in nature.

‘Guam is calm despite N. Korea threat’

T he l ieuten a nt gover nor of Guam reassured Japanese on Monday that the US territory is calm, amid the recent tension between the US and North Korea. Lt. Gov. Ray Tenorio said at a news conference with the president of the Guam Visitors Bureau in Tokyo that Guam remains in a “state of normalcy.” Japan is a major source of tourists for the Pacific island, with a tourism relationship that has lasted for more than 50 years. North Korea threatened recently to launch ballistic missiles into waters near Guam. However, leader Kim said later that he would watch Washington’s conduct before executing the plan. Meanwhile, Tenorio told reporters that the White House has told Guam Gov. Eddie Calvo that it “is closely watching North Korea and that people on Guam have nothing to worry about.” Bloomberg News and AP

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Banking&Finance BusinessMirror

Wednesday, August 23, 2017 • Editor: Jun B. Vallecera

news@businessmirror.com.ph

New governance guidelines for local banks bared

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By Bianca Cuaresma

@BcuaresmaBM

he Bangko Sentral ng Pilipinas (BSP) announced on Tuesday the Monetary Board has approved amendments to the BSP corporate governance guidelines aimed at ensuring that members of the board of local lenders include “a collective mix of individuals who possess the expertise and competence to effectively manage the financial institution”. The BSP said the amendments aim to promote a critical exchange of views and exercise of objective judgment within individual banks. As such, the new guidelines require banks to have nonexecutive directors, who shall include independent directors comprising the majority members of the board. The guidelines also set the prescribed number of independent directors to onethird of the members of the board, or two directors, whichever is higher. Also consistent with the proportionality principle, the BSP said it has retained the existing requirement for rural banks to have only one independent director. The policy further provides that an independent director may only serve as such for a maximum cumulative term of nine years and that a nonexecutive director may concurrently serve as director in a maximum of five publicly listed companies. The BSP’s new policy also provides that one person shall not hold the positions of

chairman and CEO. This will promote independence of the board from management and to support an environment where the board can sufficiently challenge the actions of those involved in operations. The Central Bank further said that in exceptional cases when the chairman and the CEO post is held by one person as approved

by the Monetary Board, a lead independent director shall be appointed. The BSP also said they have streamlined the duties and responsibilities of the board of directors, highlighting accountabilities in five key areas specifically related to (a) shaping the corporate culture and values; (b) setting out objectives and strategies and oversight on management’s implementation thereof; (c) appointing key members of senior management and control functions; (d) overseeing the corporate governance framework; and (e) adopting a robust risk governance framework. “The amendments to the corporate governance guidelines will promote prudence and greater accountability in line with the implementation of continuing reforms in the financial sector. The approved standards are at par with international standards and are, likewise, aligned with the Securities and Exchange Commission’s Code of Corporate Governance for Publicly Listed Companies,” the BSP said in its statement.

Case clippings

By Justice S J Ranada Jr.

SHERIFFS–procedure re: execution expenses The proper procedure for sheriff’s expenses : 1) sheriff secures court’s prior approval of estimated expenses and fees needed to implement the court process; 2) requesting party to deposit said amount with the Clerk of Court, who shall disburse same to the sheriff, subject to liquidation within the same period for rendering a return on the process/writ; and 3) any unspent amount shall be refunded to the requesting party who made the deposit. Geronilla v. Montemayor 05 June 2017

AM P-17-3676 Perlas-Bernabe, J

₧15-B Treasury bond issue awarded in full T By Rea Cu

@ReaCuBM

he Bureau of the Treasury (BTr) has awarded in full the P15-billion Treasury bond (T-bond) auctioned on Tuesday on the back of strong demand for government securities. National Treasurer Rosalia V. de Leon said the auction was met with healthy demand from investors, who took their cue from the Central Bank governor’s statement that the market should look at the macroeconomic fundamentals of the country despite the weakening peso. “We see the demand on the long end of the curve despite the peso’s weakness right now. After hearing the [Central Bank] governor’s statement, we should focus more on the fundamentals, which is very strong,” de Leon told financial reporters. The reissued T-bond with a life of nine years and eight months raked in tenders amounting to P28.356 billion, with the auction committee having to reject P13.356 billion in the end. “And then, of course, the very robust GDP growth for the second quarter of 6.5 percent, and we see that there’s an interest of the market on the Marawi bonds,” she added. The IOUs fetched an average annual rate of 4.718 percent, compared to the previous auction’s average annual rate of 4.692 percent.

Earlier, the Department of Finance announced it is looking to issue P30 billion worth of Marawi bonds to finance the rehabilitation of the war-torn city. Finance Secretary Carlos G. Dominguez III directed the BTr to study the possible issuance of P30 billion worth of debt securities to help fund the planned massive rehabilitation and reconstruction of Marawi City. Budget Secretary Benjamin E. Diokno said the amount for the bond issuance will depend on how the government plans to rehabilitate Marawi City. “There is no concrete plan yet, financing follows the plan. We just earmarked, just in case, P5 billion then, for next year, it is in the budget another P10 billion, and then, if there is still a need, it will be in 2019,” he said. In terms of the timeline for the issuance of the Marawi bond, de Leon said it will depend on the National Economic and Development Authority’s (Neda) needs assessment for the rehabilitation of the city, and the Department of Budget and Management (DBM) decision for the funding. “We have to wait for the rehabilitation plan, and then [the] Neda is also coming out with the needs assessment. I think for us to be able to see really the use of the funds, we also have to coordinate with the DBM for the authority for the spending part because we cannot raise funding without the authority to finance,” she said.

The Asian financial crisis: Indonesia Part Four

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till continuing our recollection of the Asian financial crisis 20 years ago, let us now focus on Indonesia. Among the countries affected, it was perhaps in Indonesia where the crisis caused not only financial turmoil but also resulted in violence, riots and public disorder. Ultimately, this led to President Suharto stepping down. Indonesia’s economy was then growing commendably at 7.8 percent in 1996. But also, in the same year, credit was expanding too fast, exports dropped precipitously and the current account deficit of 3.9 percent of GDP was moving to “unsafe” territory. Indonesian banks and companies weren at the same timen heavily exposed to dollar-denominated debts, which gave them the squeeze when the rupiah was severely devalued. It is well to remember that at the outbreak of the Asian Financial Crisis, Suharto had been presiding over Indonesia’s economic prosperity with GDP growth ranging from 9 percent in 1990 to 7.6 percent in 1995 (versus the Philippines, 3 percent in 1990 and 4.8 percent in 1995). Of course, the Indonesian economy was dominated by monopolies of a privileged few, notably the Suharto family and business cronies. But there was relative stability in the business environment with local and foreign investments coming in, exports in steady growth, a predictable foreign exchange rate and a manageable, low inflation rate. As we might also recall, Suharto’s children, Tommy, Bambang and Tutut, have been helping themselves to building business empires through their government connections. And this example of rapacity set the tone for a regime of cronyism and undiscipline in the financial sector. At the outbreak of the Asian Financial Crisis, Indonesia’s banks were discovered to have been, indeed, overlending to borrowers and to projects of doubtful credit quality. Indonesia was not to be spared by currency speculators. When the first wave of speculative attack came in August 1997, Indonesia responded by allowing the rupiah to float. Simultaneously, the government increased interest rates and cut its public spending, the usual prescription. But this tightened the economy and caused difficulties to businesses and consumers. The crisis contagion had revealed that far too many Indonesian companies were burdened with foreign debt so that when the rupiah had to be devalued, many businesses and their bank lenders with them, were distressed. This development very quickly transmitted itself to panic among Jakarta consumers who started to hoard food and other household supplies, fearing hyperinflation, seeing how the rupiah’s value was deteriorating in the foreign exchange market. Running to the International Monetary Fund (IMF) for rescue was inevitable, and so, in October 1997 Indonesia did, negotiating for $23 billion in loans (IMF, World Bank, ADB) with an additional

FINEX free enterprise Santiago F. Dumlao Jr. $10 billion from cooperating countries. The story is that Suharto, even with the IMF agreement, was, in fact, slow in implementing the IMF-imposed conditions for reforms in the financial sector. Disbursements from the rescue package were “rationed” until the agreed-upon reforms were instituted. In January 1998 a new round of talks with the IMF ensued, meant to get the IMF conditions enforced, among these, the abolition of fuel subsidies, dismantling of the crony monopolies and closure of insolvent banks. In turn, this caused a bank run across the whole banking sector. Meantime, dollars flowed out of the country to escape the uncertain environment. The rupiah by year-end 1997 was trading at 5,000 to 6,000 to the US dollar versus 2,655 in August 1997 when it suffered the first severe pressure from currency traders. Meantime, the harsh economic consequences flared to protests, disorder in the streets, looting and riots that were met with shooting from law enforcers. Suharto, just elected to another fiveyear term in January 1998, was forced to step down in May 1998 and was succeeded by his vice president, B.J. Habibie. We must try to imagine what was happening in Indonesia at that time 20 years ago. The currency crisis that started in Thailand had spread quickly to its neighboring countries. And, in Indonesia, it was a time of great economic and political uncertainty—banks being closed, bank runs, indebted corporations unable to meet obligations, exports down, food prices rising and speculations about Suharto’s health and questions on presidential succession. Chaos ensued and riots directed against the ethnic Chinese were the ugly scene. Many of them left the country. There are many postevent analyses of the Asian financial crisis, which provide continuing reasons for being alert about economic and political developments looking at a regional perspective, accepting the reality of the interconnectedness of economies and the possible triggers for systemic risks. In the case of Indonesia, one good redeeming feature of the crisis was the dismantling of the Suharto brand of political and business patronage, setting the stage for reforms in the financial and other sectors. The Indonesian rupiah is now trading at 13,348 to the US dollar (August 10, 2017) versus 2,362 in January 1997.

ExportUnlimited BusinessMirror

Editor: Efleda P. Campos • Wednesday, August 23, 2017 A9

Asean task force recommends boosting intraregional trade and investment flows

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MID the backdrop of steady economic recovery, highranking officials from the 10 member-states of the Asean gathered in the Philippines for the second time this year to finalize recommendations that could further bolster the region’s trade and investment flows.

The High-Level Task Force on Asean Economic Integration (HTLF-EI) is composed of trade vice ministers and serves as the visionary body for progressing the Asean Economic Community (AEC). It convened its 32nd Meeting on August 1 and 2 in Makati City in preparation for the upcoming 49th Asean Economic Ministers (AEM) Meeting in September 2017. The HLTF-EI is primarily responsible for ensuring the 10 Asean economies are on track and on time with the plans and programs intended to realize regional economic integration and achieve the vision of an AEC. The Philippines was led by Trade Undersecretary Ceferino S. Rodolfo. Among the issues discussed for Economic Ministers’ consideration are the rapidly changing global economic environment and current technological and scientific advancements brought about by the fourth Industrial Revolution (4IR). The HLTF-EI underscored the need for the Asean to be well prepared and in a position to maximize the opportunities from 4IR to foster the region’s economic growth, and promote inclusive and equitable economic development.

The HLTF-EI exchanged views on the need to strengthen Asean’s centrality and leadership in driving the RCEP negotiations, as well as in working toward the timely completion of the priority economic deliverables set by the Philippines for its chairmanship of Asean 2017. “As established in the AEC 2025, the region needs to be together to mitigate the changes. Regional economic integration must, therefore, be strengthened, with the target to narrow down the development gaps and look into raising intra-Asean trade and investment,” HLTF-EI Chairman Dato Paduka Lim Jock Hoi said. Latest forecasts from the International Monetary Fund and Asian Development Bank indicated the pickup in global growth remains on track, especially in developing economies, with global output projected to grow by 3.5 percent in 2017 and 3.6 percent in 2018. Strong economic outlook for Asean is also expected with a 4.8-percent growth of GDP in 2017 and 5 percent in 2018. The Philippines continues to lead the region with an expected GDP growth rate at 6.8 percent this 2017. As global trade growth steadily rebounds from a postcrisis low

THE High-Level Task Force on Asean Economic Integration (HTLF-EI) met recently to finalize recommendations that could further bolster the region’s trade and investment flows. Present during the meeting are (from left) Deputy Director General Prasith Suon (Cambodia), Director General Iman Pambagyo (Indonesia), Director General Saysana Sayakone (Lao PDR), Secretary-General Datuk Jayasiri Jayasena (Malaysia), HLTF-EI Chairman and Permanent Secretary Dato Paduka Lim Jock Hoi (Brunei Darussalam), Trade Undersecretary Ceferino S. Rodolfo (Philippines), Permanent Secretary Loh Khum Yean (Singapore), Deputy Director General Ronnarong Phoolpipat (Thailand) and Director General Luong Hoang Thai (Vietnam). Also in attendance was AEC Deputy Secretary-General Lim Hong Hin.

in 2016, the HLTF-EI discussed the importance of improving the overall trade environment in the Asean through better institutions and well-designed trade and regulatory policies, particularly by mainstreaming of good regulatory practice and addressing the issue of nontariff measures (NTMs). The HLTF-EI underscored that NTMs have different regulatory objectives, which often become too

Anuga participants attend seminar on EU labeling requirements conducted by PTTC and Citem

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HE Philippine Trade Training Center (PTTC), in cooperation with the Center for International Trade Expositions and Missions (Citem), conducted a seminar on “EU Labeling Requirements based on Regulation No. 1169/32011 of the European Parliament and of the Council” on August 9. Engr. Menandro Ortego of PTTC discussed the detailed labeling requirements for the European Union (EU) market and the Department of Trade and Industry-Bureau of International Trade Relations Director Ann Claire C. Cabochan emphasized the benefits under the EU-GSP+ and walk through the participants in exploring the web site of the EU Export Help Desk for the tariff code of their respective products. The seminar was attended by the 18 participants from eight companies (See’s International Food Manufacturing Corp., KLT Fruits Inc., Kitchen Witchery Food Ventures Inc., Mega Fishing Corp., Goldilocks, B-G Fruits and Nuts Manufacturing Corp., Magic Melt Foods Inc. and Brand Exports Philippines Inc.) that will participate in Anuga Food Fair 2017 with the theme “Taste the Future”. Anuga is a fiveday event from October 7 to 11 the Koelnmesse in Cologne, Germany. This event showcases products like exotic drinks, meat and meat products, frozen food, chilled and fresh food, dairy products, bread, bakery and soups,

organic products, etc. in the food and beverage industry. Present during the seminar were Alora Piñon and Cristy Luarca, Finance head, both from B-G Fruits and Nuts; Maynard Mañalac, export sales and marketing officer of CPFI; Jonathan Illana, sales and marketing manager of Magic Melt Foods Inc.; Chol dela Paz, senior Trade industry development specialist of the Citem; Janet Besagas, export development manager of Mega Fishing Corp.; Gregorio Canals, international business manager of Goldilocks; Jessica Genovia, senior trade industry development specialist of Citem; Menandro Ortego, speaker for EU Mandatory Labeling Requirements for Food; BMTSD Officer in Charge Alex Lucas, Trade Industry Development analyst, and Elvie Borje, division chief, both from the Citem; Carlota Legaspi, food safety officer, and Michael Abacahin, export sales officer, both from Brand Exports Philippines Inc.; Kaila Belarmino, business development associate of KLT Fruits; Nikki Andres, sales officer of Kitchen Witchery Food Ventures Inc.; Gelle Francisco, Sales supervisor of KLT Fruits; Helen Ruth See, export manager of See’s International Food Manufacturing Corp.; and Zharita Bagayas, assistant division chief of the Citem.

extensive and complex that they act as barriers to trade. In order to address this, enhancing transparency was thereby recommended to the ministers, as well as compliance to Asean agreements on notification, effective usage of existing Asean tools, private-sector engagement and regional cooperation on developing clearer guidelines to identify and eliminate such trade barrier effect. “For the Philippines, priority is

in pushing for an Asean driven by inclusiveness and innovation,” Rodolfo said. “Inclusive, InnovationLed Growth”, AEC’s thematic priority for 2017, sets the tone for the Philippines’s agenda on increasing trade and investments, integrating MSMEs in the global value chains and developing an innovationdriven economy. The meeting also tackled updates on the grand celebration of Asean’s

50th anniversary on August 8, as well as other commemorative activities lined up for the remaining months of 2017 to celebrate the region’s Golden Jubilee. The recommendations of 32nd HLTF-EI meeting will be submitted for consideration and further discussion at the 49th Meeting of the AEM, which will chaired by Trade Secretary Ramon M. Lopez, from September 4 to 10, in Manila.

MARKET DEVELOPMENT UPDATE Export Potential Map helps MSMEs identify products to export

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ENEVA, Switzerland—A new tool called Export Potential Map, which can be accessed for free via http://exportpotential.intracen.org, will help Pinoy micro, small and medium enterprises (MSMEs) identify what goods and services to export and where to export. The Export Potential Map is an innovative tool that enables users to make better export decisions based on rigorous economic analysis. It allows exporters, especially MSMEs in developing countries, to target new markets based on information on trade costs and expected demand. This tool is, likewise, useful for policy-makers and trade-promotion organizations in improving the policy environment and support programs for existing and prospective exporters. Since figuring out a country’s export potential—and particularly, which goods and markets would best contribute to sus-

By Magnolia Uy PTTC, Geneva Switzerland

tained economic development— is a lot more complicated than it may seem, the newly developed tool by the International Trade Centre (ITC) can help exporters in carrying out export evaluations of a country, such as potential sectors and prospective markets. The Export Potential Map extracts data from a range of sources, including import and export data, tariffs, GDP and geographic data. Using the Export Potential Map, the results show the total untapped export potential for the Philippines is equivalent to $44.7 billion. The

products with the highest untapped export potential from the Philippines to the world are smart cards, electronic integrated circuits and other electrical devices. While the largest absolute difference between potential and actual exports in value terms, leaving room to realize additional exports for the said products is worth $17.5 billion. In terms of markets, the countries with the greatest potential for said products are China, Hong Kong and Singapore. China provides the biggest opportunity with potential export worth $7.8 billion. Using the tool, one can also drill

down up to six-digit product level of the harmonized system. For example, the markets with the greatest potential for the Philippine exports of HS 080111 desiccated coconuts are the US, the Netherlands and Germany. It shows Germany offers the most lucrative trade opportunity equivalent to $23.2 million. The Export Potential Map covers 222 countries and territories and 4,064 products. The web tool has a user-friendly interface and innovative visualizations that can be easily downloaded, shared on social media and embedded into reports or web sites. The ITC is the joint agency of the World Trade Organization and the UN whose mandate is to assist MSMEs in developing and transition economies to become more competitive in the global market through various technical assistance and capacity building activities, including developing online tools. For more information, visit www.intracen.org.

CIAP, EMB ink partnership to promote PHL construction industry By Gliceria N. Cademia

Trade and Industry Development Specialist, Export Marketing Bureau, Services Division

Conclusion Monitoring of sales generated is the last step in OBMM. The Department of Trade and Industry

(DTI) monitors the deliverables and outputs of the mission to have consistent promotional support for the mission. This is being reported cumulatively for DTI use only and treated with confidentiality. Loring presented the Big 5 International Building and Construction Show in November 2017 as a sample event for Philippine construction

companies and showed a list of other international construction events for possible participation next year.

Negotiation techniques in overseas construction

SALVADOR P. Castro Jr., chairman and president of SP Castro Inc., said each country and each

company have different negotiating techniques. Contractors should capitalize on their strengths and address their weaknesses. He emphasized that contractors must be aware of the country’s legal system, regulations on practice of profession and contractors accreditation, taxation and repatriation of income, international consul-

tancy agreements, construction contracts, forms of agreements and key provisions therein. Ruth B. Castelo, undersecretary for Competitiveness and Ease of Doing Business Group provided an inspirational message and mentioned the series of capacity-building seminars they are providing for contractors. She

said they would like Filipinos to do overseas work and practice their profession abroad, but expressed the wish they would come back to the Philippines and keep their family here and Filipino talents in the country. She said they want them to become globally competitive and bring home the bacon afterward.

A10 Wednesday, August 23, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

We must help govt eliminate bird flu

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he bird-flu outbreak in San Luis, Pampanga, has not only resulted in losses for poultry growers but also threatens the country’s exports. On August 14 Japan, the country’s biggest market for chicken products, informed the government that it has temporarily banned Philippine poultry products. South Korea, a market which the government wants to tap because of its huge poultry requirement, also decided to suspend the importation of chicken products from the Philippines.

The two Asian countries are viable markets for local farm products, particularly Japan, because of their proximity to the Philippines. While Thailand and Vietnam can offer cheaper chicken products, Philippine poultry meat can command a premium price because it was bird flu-free. That is, until the virus struck a farm in San Luis, Pampanga, and killed thousands of fowls. Agriculture Secretary Emmanuel F. Piñol lamented that the owner of the affected quail farm did not immediately inform the government of the incident. As early as April, scores of birds have already died because of the virus, but farmers attributed the incident to what they call peste (pest). They had no name for it; they merely thought that it was the usual peste that killed their flocks. Unfortunately, farmers and owners of poultry farms did not know how and where to report the incident. A “bird-flu hotline” was set up by the Department of Agriculture (DA) after tests confirmed that the peste, which struck pou ltry farms in Pampanga, was, indeed, avian influenza. There was also no biosecurity team in place to inspect the farms, which could have prevented the spread of the virus in two barangays in San Luis, Pampanga, according to Piñol. With the hotline in place, poultry growers should immediately report to the DA if they suspect that their farms had been struck by bird flu. It is their responsibility to report any unusual incidents to their regional veterinary offices. While there is no clear penalty for not reporting, hiding the incident could cripple the entire Philippine poultry industry, as new outbreaks would make it difficult to regain the trust of local and foreign buyers. Farmers should also desist from catching migratory birds and selling them as pets and food. An editor from this newspaper once saw farmers in Nueva Vizcaya catching migratory birds at night. This practice, if not stopped, would make it more difficult for the government to eliminate the virus. Everyone must do his or her part to help the country weather this crisis. Poultry growers, who should have been preparing for the holidays, face an uncertain fourth quarter, as farm-gate prices have dropped to as low as P10 per kilogram. Chicken exporters have put on hold their shipments because their foreign buyers have banned Philippine poultry. The government can only do so much; it needs the cooperation of stakeholders and the public in general to kill the bird-flu virus. Since 2005

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

Virus of corruption Art Amansec

All About Social Security

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he Bureau of Customs (BOC) has recently shown that the virus of corruption that has plagued the agency for years continues to live and thrive. The vaccine of determination and scare tactics of the present administration to weed out corruption from the BOC and from other government bureaus are, so far, being exposed as puny and ineffective.

It seems that not even the presence of Magdalo soldiers or the threat of being shot by no less than the assigned bureau head himself could scare the corrupt at the BOC to turn away from their well-crafted moneymaking habits. President Duterte’s campaign against corruption is fine. He says that he does not and will never sign government contracts. True, that will insulate him from charges of corruption, but how about his subalterns? How can it be guaranteed that they are as resolute as the President in fighting and avoiding corruption? Dismissing his secretaries for a mere scent of wrongdoing may be a good deterrent, but the bureaucracy is so big, and he may not know or smell all that happens in other corridors, corners and closets of power. It is a known fact that since the years he was mayor of Davao City, Duterte has already been quite

allergic to dipping his hands into private or public funds. A man of character and impeccable integrity, he is the best thing that ever happened to Philippine politics because of his incorruptibility. The late nationalist Renato Constantino’s thesis that corruption is endemic in Philippine society and may be difficult to destroy appears to be showing validity. According to Constantino, the imbalance and inequitable distribution of wealth in Philippine society where the wealthy use their wealth to corrupt the bureaucracy is one of the root causes of corruption. Which is why the wealthy want the bureaucracy to receive starvation wages, to make it easier for them to corrupt the hungry bureaucrats. Ideally, the corrupt and the corruptor, if caught, are both punished under our laws. However, it is difficult to catch, much less prosecute them. Corruption, particularly the

variety of paying money for a favor, is usually done in secret and, unless the corrupt is entrapped by marked money, corruption goes on unseen, undetected and unabated. Moreover, there is usually no paper trail in the transaction. In contracts, for example, the corruptor issues a receipt acknowledging receipt of the entire price and, from the money he receives, he gives the agreed grease money to the corrupt. In corruption transactions, the poor public servant suffers the brunt of public ridicule and punishment. He is fired by a mere scent of corrupt activity while the elite, the businessman, the industrialist or their lawyers who enticed and persuaded him to kowtow to their corruption proposition, are hardly exposed and identified, much less punished. To deter or neutralize corruption, the corruptor should be pursued and punished as resolutely as the public servant. It is a sad commentary that in Philippine society, the wealthy and the elite are hardly punished at all, even if they engaged in corrupt activities. Our laws have seen to that. Unlike public servants, they are not required to submit Statement of Assets, Liabilities and Net Worth or explain how they had amassed, or continue to amass, great wealth. The Ombudsman and the Sandiganbayan were created to run after the corrupt bureaucrat, but no special body was created to run after the corrupt elite. While some government agencies, like the BOC, the Bureau of

Internal Revenue and a few offices performing judicial or quasi-judicial duties, are vulnerable to the virus of corruption, other agencies, however, are almost insulated from the virus. Employees and officials of the said insulated agencies should feel fortunate because they would not have to wrestle with the temptation of corruption or be dragged into controversies involving corrupt acts. The Social Security System (SSS) is one such agency. At the SSS, beneficiaries of maternity benefits, salary loans, funeral, disability and death benefits may complain of a little delay in the processing of their claims, but they may not complain about corruption in the procedure, for there is practically none. Perhaps, this is due to the innate humanity of man toward another man in need, the relative smallness of the claims or the strict, computerized processing of claims, but no matter the reason or reasons. The procedure is free from corruption, and that reality comforts and suffices. Character is also a reason for the corruption-free SSS. The SSS is manned by mostly dedicated employees and managers who are more concerned and satisfied about exercising their administrative and clerical skills than devising devious means to make more money than what they receive as salaries, and benefits like free monthly sack of rice and free hospitalization, which, taken together, concededly do not pale in comparison with what their private-sector counterparts receive.

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Agenda item 118: The UN Global Counter-Terrorism Strategy Free fire Continued from A1

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nother thing is clear: There can be no political accommodation with terrorism. We cannot buy safety from terrorism by yielding to any of its demands. We cannot live with terrorism because it will not let us live. Brazilian philosopher Roberto Mangabeira Unger told us in the classroom that the means prefigure the end. Terrorist means can only end up in a reign of terror as we have seen.

It is said that one man’s terrorist is another man’s patriot. No. The new terrorists have no patria, no country and no cause other than a delight in inflicting torture and death to spread the terror of their name—and, thereby, instill a willing submission to more cruelty. It is perilous because it can be self-serving to define terrorism. It is as hard to arrive at a common definition of it as it is to define

pornography: but we know it when we see it; we know it when we view what terrorists do—to the women and girls they rape and trade or murder after use; to the men and boys whose throats they slit or they burn or drown in cages; to those they fling from rooftops in boyish fun; and to the cities they take and hold until they themselves destroy them or which have to be destroyed to liberate them. In the destruction

of cultural artifacts, terrorism is the enemy of memory so that those who survive know only the terror of their name. This is an evil so pure that it must be countered with means that are sure: a global effort against terror on every front by every society; even those not yet threatened, because they will be. In May 2017 terrorists pledged to ISIS and, backed by foreign fighters, proclaimed their control of Marawi, the capital and largest city of Lanao del Sur in Mindanao in the Philippines with a population of 200,000. They had, long before, entrenched and fortified themselves in the community. We did not see it coming because we are a democracy pledged to diversity. The presence of foreign terrorist fighters spoke to the transnational nature of the takeover. While the international community is successfully closing doors to these terrorist groups, new doors are opening up for them in other parts of the world. Mr. President, Marawi highlights important points of the Report of the Secretary-General on

the United Nations Global CounterTerrorism Strategy. It reaffirms that member-states regard terrorism as one of the gravest, if not the gravest, threats to peace and security anywhere in the world. The fight against terrorism should unite us all. Foreign terrorist operations do not recognize borders, and the complexity and reach of the threat they pose have expanded. Every civilized society they destroy is a platform for the destruction of another. To put a stop to them, memberstates must work together. International cooperation must cover the whole range of the counter-terrorism spectrum: from border control to countering the narratives of violent extremism—and always and ever to fighting it. Finally, the UN has assumed a critical leadership role in bringing together, in a cohesive whole, all the work on counterterrorism by member-states and the UN so as to bring about real results and not more rhetoric. On this note, the Philippines welcomes the creation of the United Nations Counter-Terrorism Office. Thank you.

Opinion BusinessMirror

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Is the Duterte enigma already creating its negation? Michael Makabenta Alunan

on the contrary

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he politically unorthodox bad-mouthing President, who has emerged initially as enigmatic leader for mesmerizing the downtrodden hoi polloi who catapulted him to power with 16 million votes, seems to be dangerously bringing his administration into a trap of his own making with the classic saying “the road to hell is paved with good intentions”. n Machiavellian war ped belief. After his election victory, President Duterte’s ratings even shot up to 91 percent, as people pinned their hopes on real change—stopping drugs and corruption, achieving peace with communist and Moro rebels, checking the excesses of cartels and the rentseeking oligarchy, and wiping out poverty and joblessness. His popularity even surged after foul-mouthing the American ambassador, former President Barack Obama, the United Nations, the European Union, etc. Even unconfirmed Environment Secretary Regina Paz L. Lopez, known for her impeccable sincerity and love for country, expressed adulation for Duterte for his empathy for the poor. Apparently, Duterte idolizes Niccolo Machiavelli (1469-1527) for his quotation, “The end justifies the means,” which gained notoriety as it justified dishonesty and killing of innocents as normal and effective in politics. Unfortunately, the advances in civilization, democracy and respect for due process and rule of law have made Machiavellian ideas warped with rust, and that the rust is already history as more are now empowered with the digital revolution and could not be cowed easily. Moreover, the President cannot simply return to malpractices of centuries past, and to his belief in “retribution,” which smacks of the Old Testament’s “an eye for an eye, a tooth for a tooth” justice system, as the world is now governed by the civilized principles of the Westphalian Treaties of 1648, now enshrined in the United Nations. He must distinguish between “limits” of law and malimit (without limits in the Filipino language). Otherwise, it will lead him to the classic saying attributed to Saint Bernard of Clairvaux (1090-1153) that the “road to hell is paved with good intentions”. n Sycophants reinforcing his hubris. Actually, it is the people themselves, particularly his fanatical blind adherents, minions and sycophants, who are reinforcing his behavior as they root for him, despite his oral diarrhea and footin-mouth diseases. Worse, when the more learned and snooty scented people demean his followers, you actually insult their dignity and only reinforce their blind loyalty for Duterte. Remember, in the ancient tribal ways, insulting one’s dignity was a higher crime than murder itself, that is why statements like niyurakan ang pagkatao (trample one’s dignity) carries so much value-laden weight to this day. They are even tolerant of his abuses, thus encouraging the President to blindly believe, as well, that what he is saying and doing is okay. Even if he is a lawyer, he has forgotten the rule of law, even ignoring the Senate probe’s findings on the Albuera mayor’s murder, which was surprisingly reduced to homicide and the guilty Superintendent Marcos pardoned and even given a new post. In his obsession to achieve his noble objectives, he is increasingly losing the capability to accept feed-

backs and criticisms and becoming less tolerant and understanding of the sensibilities of victims of his antidrug war—like Kian, who once wore a Duterte shirt as a supporter. This increasing intolerance to criticisms from media, social media and from human-rights advocates is a manifestation of hubris or arrogance creeping in. In fact, he must thank critics as they keep him in check. n Nobody else to blame but himself? He must realize that hubris is increasingly blinding him from reality, as he loses the trait he was known for—listening and empathizing with people. He must realize it is hubris that has been the folly that led to the downfall of many leaders in history. Hubris results from the saying “power corrupts, and absolute power corrupts absolutely”. He must also be aware that his real opposition, out to destabilize him, will capitalize on his tolerance for abuses of his police and will even initiate more abuses to be blamed on him. In the end, the emerging culture of impunity will have no one to blame but himself for allowing lopsided double standards in the execution of the law. Increasingly, we are also becoming numbed and desensitized from the wanton rampant killings and lamentably accepting it as the norm. Insidious Carl Schmitt’s shadow emerging? When Duterte throws his weight around, almost bamboozling the legislature and the Supreme Court, with his brand of martial law in Mindanao, he may not realize it, but he is unconsciously reviving the creeping shadows of Schmitt, the real brains behind Hitler’s fascism and the rise of Nazi power. Schmitt pushed the idea of the “Unitary Executive”, justifying dictatorship by overruling both the Judiciary and the Legislative. He argues that under a crisis, the Executive branch must rule over the other two branches of government. So the simple strategy was to create a crisis like the burning of the Reichstag (German Congress) that justified succeeding “law-substituting decrees” similar to what strongman Marcos did. Schmitt, however, is less popular than Joseph Goebbels, Hitler’s propaganda chief, who believed that repeating lies over and over will make people believe it is the truth. But with the advances in Internet technology, people are now empowered to simply factcheck and counter lies with a click of a finger. The Duterte administration cannot forever peddle propaganda or lies as these will be the very “lice” that will corrode the gains it has achieved. Conversely, the opposition will launch its counter-propaganda in a tug-of-war battle for perception. Perception being propaganda, from both sides, may not be the truth or the objective reality, but ironically, perception as expressed in beliefs of people as subjective forces form part of objective reality. And in the end, it is subjective forces or people expressing their beliefs collectively in action that trigger and effect real social change.

Wednesday, August 23, 2017 A11

New regulator in Hong Kong Dennis B. Funa

INSURANCE FORUM

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N June 26 a new regulatory authority in Hong Kong— dubbed as the independent Insurance Authority (IA)—became operational, replacing the Office of the Commissioner of Insurance (OCI). The Provisional Insurance Authority (PIA) became a transitory authority as regulation transitioned from the OCI to the IA. In proposing the creation of the IA, HK Secretary for Financial Services and the Treasury Prof. K.C. Chan, stated: “We propose that the independent IA should be given the required regulatory powers to issue licenses, conduct routine supervision, inspection, and imposing disciplining sanctions against breaches, etc. Such regulatory powers apply not only to insurers, but also to insurance intermediaries, including insurance agents and insurance brokers.” It has been described as a more powerful regulator than its predecessor. The much strengthened and enlarged regulator was originally conceived with the enactment of the Insurance Companies (Amendment) Ordinance (Amending the Hong Kong Insurance Companies Ordinance on July 10, 2015, in a

bid to make the insurance regulator financially, politically, and operationally autonomous and independent of the government and to make regulations compliant with international standards. While it will be independent from the government, its initial funding will come from the government. The IA will be governed by the Governing Board. For its first CEO, John Leung Chi-yan, the former commissioner of insurance, has been appointed. He will serve until June 25, 2018. The principal functions of the Insurance Authority are to ensure that the interests of policyholders and potential policyholders are protected and to promote the general stability of the insurance industry. The IA also has the following major duties and powers: a) authorization of insurers to

The regulatory framework over the insurance industry is provided in the amended Insurance Ordinance. Under this framework, the IA would have inspection, investigation and disciplinary powers over regulated entities. Notably, the IA has the power to impose a fine up to the greater of HK$10 million or three times the profit gained or loss avoided as a result of the misconduct. carry on insurance business; b) regulation of insurers’ financial condition, primarily through the examination of the annual audited financial statements; and, c) development of legislation and guidelines on insurance supervision. The regulatory framework over the insurance industry is provided in the amended Insurance Ordinance. Under this framework, the IA would have inspection, investigation and disciplinary powers over regulated entities. Notably, the IA has the power to impose a fine up to the greater of HK$10 million or three times the profit gained or loss avoided as a result of the misconduct. The IA would also have the power to issue guidelines, the counterpart of the circular letters in the Philippine Insurance Commission. Under its used terminologies, guidelines would be abbreviated to “GL”, as opposed to our circular

letters abbreviated as “CL”. As one example of the reforms, while insurance intermediaries (i.e., the Professional Insurance Brokers Association; the Hong Kong Confederation of Insurance Brokers) have been self-regulatory in the past, IA will now have regulatory authority over them. Other self-regulatory entities include the Insurance Agents Registration Board, and the Hong Kong Federation of Insurers. What is notable here is that, while the Philippines had recently adopted the self-regulatory framework in the amended Insurance Code, Hong Kong is dropping self-regulation on the ground that it is not appropriate in the financial services. Previously, as self-regulated entities, insurers, through the Hong Kong Federation of Insurers, issued its own guidelines. Anticipating future trends in the industry that would have to be addressed, the IA constituted the Future Task Force (FTF) of the Insurance Industry in December 2016, chaired by Moses Cheng, the chairman of the IA. Among those that will be looked at by the FTF is the adoption of a risk-based capital regime. Another regulation to be put in place is regulation on corporate governance and the “fit and proper” rule. Atty. Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.

Switch to renewables won’t end the geopolitics of energy Meghan L. O’Sullivan

BLOOMBERG VIEW

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N another sign that the age of fossil fuels is waning, the California State Senate has passed a bill to commit the state to use 100-percent renewable energy for power by 2045. Other states and cities—including Massachusetts, Chicago and Atlanta—intend to make similar switches. Proponents highlight a bevy of ways in which the Age of Renewables will improve our lives: lower carbon emissions, cheaper electricity rates, new abilities to bring power to impoverished nations...and independence from the economic and political entanglements of volatile global oil and gas markets.

Yes, there are many reasons to be enthusiastic about a shift toward renewables. Unfortunately, an escape from energy geopolitics is not likely to be among them. Americans and Europeans, in particular, are familiar with the geopolitical downsides of a heavy reliance on fossil fuels. Even though energy embargoes are extremely rare, and hardly ever in the interest of the producers, the specter of the 1973 Arab oil remains. For many in Eastern Europe, the 2006 and 2009 gas cut-offs to Ukraine by Russia are an equally disturbing memory. Simply the threat of such actions carries political weight. For other nations, particularly in Asia, reliance on energy supplies coming from afar, through numerous transit chokepoints such as the Strait of Malacca between Indonesia and Malaysia, is a permanent worry. And, of course, there are the volatile politics of the Middle East and other energy-producing countries, such as Nigeria and Venezuela. Why won’t an embrace of solar, wind and the like relieve us of all such geopolitical concerns? First, a shift to renewables in the power grid, as with the California plan, will only go so far until our transportation sector is radically changed by electric cars becoming more of the norm. As long as most of the energy used in transportation is petroleum-based, more renewables will have little impact on the geopolitics of oil (or its consumption). More important, a shift to renewable energy could well bring its own complications in the geopolitical domain. This should come as no surprise. Think of the many such wrinkles that have come with the adoption of nuclear energy. For in-

stance, as the world has seen with Iran, the enrichment of uranium for civilian purposes can provide a cover for efforts to pursue a nuclear weapon. Moreover, historically, every big shift in the global energy mix—from wood to coal and from coal to oil—has brought with it its own geopolitical ramifications. Renewables will be no exception. The ways in which a future more dependent on renewables will bring both good and bad geopolitical karma is the subject of a new report I issued with David Sandalow of Columbia University and Indra Overland of the Norwegian Institute of International Affairs. Among the most interesting of possible trends we highlight is the idea that a more renewable-heavy future will likely bring with it new forms of the “resource curse”—the phenomenon that political and economic development in many resource-wealthy countries seems stymied when compared to resourcepoor ones. In many resource-rich nations, economic growth is actually slower and political institutions are more likely to be repressive and nondemocratic. In the world of fossil fuels, this curse has generally applied to big producers of oil and gas. In a world heavier on renewables, the curse will probably not be so relevant for producers of power; solar, wind and geothermal energy are more likely to be generated and consumed within the borders of a country than to become profitable exports and generators of huge windfall cash flows. Rather, we may see this curse surface in countries rich in the materials required to produce the components that make renewable energy possible. Many of these resources are rare-

There are lessons here not just for US industry, but also for American foreign policy. For instance, the majority of the world’s cobalt reserves are believed to be in the Democratic Republic of the Congo. Thus it would benefit US policymakers to look at the African country as not only a humanitarian crisis and failed state, but as a more pressing strategic priority.

earth metals and other commodities deep underground. For example, indium and cobalt—neither is technically a rare-earth metal, but they are still relatively hard to come by—are essential for making solar panels and batteries. China provides approximately half of the indium consumed globally today, whereas the Democratic Republic of the Congo is the source of more than half the world’s cobalt. The big producers of lithium, another material essential for the production of batteries, are Argentina, Australia, Chile and China. Yet, Bolivia’s large untapped reserves of lithium could catapult it into this league in the future. Tellurium is not a rare-earth mineral, but it is another key component of solar panels. The US has imported most of this material from Canada, but relies to some extent on Belgium, China and the Philippines. By some estimates, China supplies as much as 95 percent of all the rareearth elements in the global market. Given Beijing’s dominant position, the world should expect repeats of the 2010 episode when China halted the sale of rare earths to Japan—where they are vital for the production of solar panels and batteries—in the wake of a maritime dispute. Policy prescriptions are, in some cases, obvious. But it will take time for efforts to bear fruit, so there is a need to act quickly. For example —staying with the China-Japan example—in order to stem the political power that producers might get from their rare earth and other critical elements, the US should reassess whether its current efforts to mine these materials are sufficient. The reality is not that only a small number of countries have these resources, but that only a few actually produce them. The US, too, is rich in many of these resources; the US Geological Survey estimates that the United States possesses 13 percent of global rare-earth reserves,

14 percent of global tellurium deposits, and 3 percent of the world’s indium reserves. Yet, in recent decades, America has found it too expensive to develop these materials, especially given Chinese production, which is part of a centralized industrial policy. The US federal government may need to return to more expansive stockpiling of these materials, or provide more backing to domestic production. There are lessons here not just for US industry, but also for American foreign policy. For instance, the majority of the world’s cobalt reserves are believed to be in the Democratic Republic of the Congo. Thus, it would benefit US policy-makers to look at the African country as not only a humanitarian crisis and failed state, but as a more pressing a strategic priority. Finally, and most important, Washington could do even more to encourage innovation—in this case, by supporting more research into the possibility of recycling rare earths and nonrare-earth elements. For example, funding for the Critical Materials Institute—set up in 2013 under the Department of Energy to help overcome obstacles to the embrace of clean energy—will be eligible to appeal for more funding next year. Given the Trump administration’s apparent lack of interest in renewables, it may be tempted to terminate the program. But doing so on these grounds would be a mistake; such efforts to reduce constraints on supplies of critical materials will only become more important as renewables muscle their way into the global energy mix. The private sector, too, can play a role. Just see Apple’s recent announcement that it aspires—eventually—to stop relying on mined minerals and instead to use only recycled material. This goal will inevitably spark more innovation as the company seeks viable substitutes for such materials. This question of new dynamics around critical resources is just one of many examined in our new report. But none of the potential dark sides is a reason to halt or slow the momentum toward a more renewable-energy future. The benefits will likely outweigh the costs. Yet, policy-makers need to start thinking seriously and objectively about the geopolitical contours of a future more reliant on renewable energy, and how to prepare for it. It is coming, sooner or later.

2nd Front Page BusinessMirror

A12 Wednesday, August 23, 2017

D.O.T. TO SPONSOR PACQUIAO-HORN DECEMBER REMATCH IN MANILA

Tourism Secretary Wanda Corazon T. Teo announces the Manny Pacquiao rematch with Australian boxer Jefrrey Horn in Manila this December. The Department of Tourism will be tapping its partners as sponsors for the event slated at the Philippine Sports Arena. Stella Arnaldo By Ma. Stella F. Arnaldo

akosistellaBM Special to the BusinessMirror

@

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HE Department of Tourism (DOT) has agreed to sponsor the rematch of “Pambansang Kamao” Manuel Pacquiao and Australia’s pride Jeffrey Horn in Manila. In a news conference at the DOT Building in Makati on Tuesday, Tourism Secretary Wanda Corazon T. Teo said: “We were approached by Rep. Eric Pineda [Party-list, 1-Pacman] today to ask us to sponsor the rematch of Senator Pacquiao with Horn this December.” The event is scheduled in December and will be held at the Philippine Sports Arena in Bulacan. She added the DOT has agreed to do so but stressed that no government funds would be used to actually finance the event. “We will look for sponsors among our industry partners,” she said. Teo declined to say how much funds are being asked by Pacman’s group for the

sponsorship, but earlier published reports said it could amount to P1 million. “It’s kind of expensive,” she admitted of the sponsorship of the event. DOT Spokesman and Assistant Secretary for Public Affairs, Communications and Special Projects Frederick M. Alegre later told reporters that Pacman’s group had wanted to “match” the crowd that watched the fight that was held in Brisbane on July 2. The Philippine Sports Arena has a maximum seating capacity of some 52,000. “This event will help attract more foreigners to visit the Philippines,” Alegre said as he explained the reason the DOT agreed to sponsor it. The DOT aims to attract some 6.5 million to 7 million foreign travelers to the Philippines this year. He also said Pacquiao claimed it was “too cold” in Australia when he fought with Horn, intimating that the friendlier tropical climate in the Philippines in December would See “DOT,” A2

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Housing could see 69% cut in Duterte’s 2018 budget despite huge gap

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By Jovee Marie N. dela Cruz

@joveemarie

lready swamped with complaints on humanrights violations, President Duterte could be taken to task anew for apparently neglecting another basic right—housing. House Committee on Housing and Urban Development Chairman Rep. Alfredo B. Benitez of Negros Occidental lamented that the Duterte administration is cutting the country’s budget for the housing sector—already among the lowest in the region today—by 68.87 percent to only P4.795 billion. This is in the face of a seemingly insurmountable 6.5 million housing backlog in the country. “It is deeply disconcerting that housing is left neglected by the government when shelter is one of the most basic human needs and the most visible manifestation of human dignity,” Benitez said. He added: “Compared to neighboring Asian countries, the Philippines has the lowest public spending on housing. The figure represents a measly 0.13 percent of

the [proposed P3.7 trillion] 2018 national budget.” He said if the government wants to address the long-standing problem of homelessness in the country, it should invest more in the housing sector. The bulk of the proposed 2018 housing budget will go to the National Housing Authority (NHA) and the Social Housing Finance Cor poration with 2.235 billion and 773.63 million, respectively. He said the NHA’s 2018 budget is 82.38 percent lower than 2017’s, and will be devoted to resettlement areas for informalsettler families (ISFs) and housing for military and police personnel. The NHA said there are 1.5 million ISFs in the country, 600,000 of them are in Metro Manila. T he l aw m a ker, c it i ng t he

₧4.795B The proposed 2018 allocation for the housing sector, just 0.13 percent of the national budget

Housing and Urban Development Coordinating Council, said the country’s total housing needs could balloon to 6.8 million by 2022. Benitez also said the 760,400 housings needs for this year are also part of these 6.8 housing backlogs. He said there will be an estimated 774,441 housing needs in 2018; 788,773 in 2019; 803,405 in 2020; 818,363 in 2021; and 833,619 in 2022. Benitez noted that at least 1 million housing units should be constructed every year to address the country’s shelter gap. “To address this, the government should allocate more funding for housing programs for poor and lowincome families, particularly those living in informal settlements and danger areas,” Benitez said. According to Benitez, the Philippines is one of the fastest urbanizing countries in Asia Pacific. “In 2010 45.3 percent of the population lived in urban areas. By

2020, the figure will be 56 percent,” he said.

Permanent housing

Also under the 2018 budget, Benitez said there is no fund for permanent housing for disaster victims, as well as those who will be affected by the “Build, Build, Build” (BBB) program. “We have long been grappling with homelessness and each year the country’s housing needs, especially in urban areas, keep on swelling along with population growth and rapid urbanization,” Benitez added. According to Benitez, there is also no allocation for social preparation for affected families of the government’s massive infrastructure program. He said there’s an estimated 102,636 ISFs that will be affected by the BBB program. Benitez added that the government’s BBB program should not just concentrate on transportation infrastructure. “Building affordable and adequate homes for poor Filipino families should be part and parcel of our efforts to ensure inclusive and sustainable development,” Benitez added. The spending for the housing sector is dwarfed by the P1.097trillion BBB budget by more than 200 times.

Govt to create ‘war room’ for ‘BBB’ project monitoring By Cai U. Ordinario

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he interagency flagship project-monitoring task force will use technology and even create its own “war room” in checking the progress of big-ticket administration projects, according to the National Economic and Development Authority (Neda). In an interview, Neda Undersecretary for Investment Programming Rolando G. Tungpalan told the BusinessMirror the memorandum on the details of the Project Monitoring Facilitation and Innovation (PMFI) is already being circulated. Tungpalan said once the agencies that are part of the PMFI have agreed with the contents of the circular, the PMFI will be immediately convened.

E-Commerce. . .

resolved without need to call a third party, in this case the DTI. But these large-scale virtual marketplaces occupy but a fraction of the online vendors and shops catering to the Filipino buyers. The majority of those proliferating on the Internet are considered as “customerto-customer”, or C-to-C businesses. These C-to-C enterprises include that bakeshop your friend decided to put up on Instagram, or a trading page for bags and leather ware your aunt is operating for extra income. According to the DTI’s e-commerce office, there are roughly 20,000 legitimate vendors on all

“We can have one of the rooms here [in the Neda] as war room because we will be using technology where it is applicable, [such as] geotagging to monitor projects in real time,” Tungpalan said. Tungpalan added setting up the PMFI will also require some funding that could be secured from the technical-assistance loan, like the $100-million Asian Development Bank (ADB) financing dedicated to project monitoring. The PMFI will have the Neda as its secretariat, while its members will be composed of the Neda secretary, finance secretary, budget secretary and heads of other agencies that are part of the “Build, Build, Build” (BBB) program. Tungpalan said the PMFI will use project monitoring techniques such as S-curves, which plots the release of monetary resources with the

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electronic platforms operating in the Philippines. These micro, virtual entrepreneurs, just like the physical community stores, have little incentive to comply with the same rules—say for consumer redress—as the large online marketplaces, given the burden it takes to register a business or secure clearance from the Bureau of Internal Revenue (BIR). This is where the regulatory trap comes in. The DTI’s dispute-resolution mechanism for the consumer can only come in if the enterprise is recognized as a formal business, meaning the subject of the complaint

time of release, as well as the Project Evaluation Review Technique/ Critical Path Method (PERT-CPM), which helps predict which projects will encounter delays. He added that the PERT-CPM can help the PMFI determine certain activities that can be done in parallel with the completion of a certain milestone in project implementation. It will help monitor the slack, as well as the critical path of projects. “Milestones will be plotted for each project. Milestones are not too aggregated, in other words, we will not just talk about contract for bidding [but the exact] part of the bidding process they are in,” Tungpalan said. These will be crucial, Tungpalan added, in unplugging bottlenecks based on the necessary interventions in project implementation. See “BBB,” A2

has registered with the government. “We are constrained in many ways because those that can be aided [by the DTI] are the legitimate businesses—those registered with local government permits and registration with the BIR,” Boncato said. For registered businesses-selling wares online, the Consumer Act appears to be a formidable legislation for consumer remedies. The law is now being revised to include specific guidelines to cover e-commerce. “There’s an amendment now to address issues specific to ecommerce. We have a current joint administrative order with the Department of Health and of Agriculture, but we want to put

Solar eclipse covers U.S. in darkness The moon covers the sun during a total eclipse on August 21 in Cerulean, Kentucky. (Inset) President Donald J. Trump squinted and pointed skyward before donning protective glasses to take in the solar eclipse at the White House in Washington. The stars came out in the middle of the day, zoo animals ran in agitated circles, crickets chirped, birds fell silent and a chilly darkness settled upon the land on Monday, as the US witnessed its first full-blown, coast-to-coast solar eclipse since World War I. Millions of Americans gazed in wonder at the cosmic spectacle, with the best seats along the so-called path of totality that raced 4,200 kilometers across the continent from Oregon to South Carolina. AP/Timothy D. Easley and Andrew Harnik those provisions in the law,” the DTI official said. But for the unregistered businesses that have gone under the radar of the DTI—or those in the underground economy—seeking consumer remedies is a matter to be handled by police authorities. Being part of the informal economy pushes the vendor out of DTI’s reach, and relegates the case to the police, where such consumer issues may not be given as much attention. “Those who don’t have these permits may still sell something online; but if the buyers encounter something along the way, the intervention leads them to police investigation, or it becomes a police

matter,” he explained. Many C-to-C online stores wishing to secure that legitimacy as a business have taken the trouble to undergo business registration, but these are a precious few. “We know there’s a lot of these unregistered ones, we just don’t have the exact numbers. We’re working under the assumption that there are so many sellers to be brought above-ground to the formal economy, that’s why we have these Negosyo Centers,” the DTI official said. Given this limitation, the responsibility to be always onguard is on the consumers. “There are still a lot [of people] who haven’t learned how to discern

scams from authentic deals. Our advocacy now is to inform the public of the e-commerce ecosystem,” the official added. The thrust now for the DTI e-commerce office is to encourage more of these in the informal economy to come to the fore and register their business, using all means to cut through the red tape and make it easy for compliance. Boncato said they are also banking on the Department of Information and Communications Technology to get the E-Business Permit Licensing System for automation to trickle down to the local government unit for businesspermit applications.