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Thursday, August 24, 2017 Vol. 12 No. 315

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PPPs no longer exempt from full project scrutiny ₧2.5B T By Cai U. Ordinario

2016 ejap journalism awards

Social protection unlimited?

@cuo_bm

he National Economic and Development Authority (Neda) is rescinding an Aquino administration policy exempting publicprivate partnership (PPP) projects from scrutiny of the Investment Coordination Committee (ICC) Technical Board to speed up the approval process.

Rene E. Ofreneo

laborem exercens

The cost threshold for PPP projects that need to be evaluated by the Investment Coordination Committee Technical Board

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he passage of the law providing free tuition for students of state universities and colleges is a historic addition to an expanding umbrella of social-protection programs in the Philippines.

Socioeconomic Planning Secretary Ernesto M. Pernia told the BusinessMirror on Wednesday that as long as a PPP project meets the cost threshold of P2.5 billion,

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Continued on A12

Bird flu fails Japan Tobacco targets smoker-heavy zones Smartphone distributors to dampen need fresh strategies to W demand for survive China onslaught yellow corn By Jasper Emmanuel Y. Arcalas

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@jearcalas

he outbreak of bird flu in some towns in Central Luzon did not depress the farm-gate price of yellow corn as demand remains stable, according to the Philippine Maize Federation Inc. (PhilMaize). Despite the decline in the farmgate price of broilers, PhilMaize President Roger V. Navarro told the BusinessMirror that the price of yellow corn remained at around P12 per kilogram (kg) to P13 per kg. Yellow corn is one of the main ingredients used in manufacturing animal feeds. “Surprisingly, the price of yellow corn stabilized. It was not affected by the bird-flu outbreak,” Navarro said. He noted that the price of yellow corn in Central Luzon stabilized at P12 kg even after bird flu struck poultry farms in San Luis, Pampanga. The price of yellow corn in other Continued on A2

hile most tobacco companies have embraced smokeless products to survive ever-tightening controls, the Japanese maker of Winston and Camel cigarettes is pressing ahead with a more lowtech strategy: selling smokes to emerging markets. Japan Tobacco Inc., whose domestic market is predicted to shrink 27 percent in the decade through 2021, on Tuesday announced plans to buy a second Southeast Asian rival to expand in a region where cigarette prices are lower, smoking rates are higher and the population is growing. The $1.6 billion that the Tokyo-based company said this month it will spend on acquiring traditional cigarette makers is at odds with a global industry shifting away from such products. The US Food and Drug Administration said last month it intends to regulate the level of addiction-causing nicotine in tobacco products. Japan Tobacco, which has fallen behind in the market for next-generation a lter natives, is betting emerg ing markets will take longer to respond to globa l effor ts to prevent tobacco-induced harm, providing opportunities for growth. “We want to establish ourselves

PESO exchange rates n US 51.3770

By Lorenz S. Marasigan

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in markets like Brazil, Bangladesh, Indonesia and the Philippines, and grow sustainably to strength our business foundations,” spokesman Kana Miyauchi said via phone on Tuesday, when the company announced its largest Asian deal yet: paying about $936 million for Mighty Corp.,

the No. 2 cigarette maker in the Philippines. That followed the purchase earlier this month of Indonesia’s PT Karyadibya Mahardhika for $677 million. “The purchases in Indonesia and the Philippines are consistent with the strategy,” Miyauchi said. See “Japan Tobacco,” A2

@lorenzmarasigan

MARTPHONE shipments to the Philippines dropped by a tenth during the second quarter of 2017 due to the downscaling of local vendors who experienced stiff competition with Chinese producers. Data from International Data Corp. (IDC) showed that there were only 4 million smartphones shipped to the Philippines in April to June. Jerome Dominguez, a market analyst at IDC, attributed the decline to the disruption caused by Oppo and Vivo, which both launched a cash-rich marketing program. “This challenged the traditional vendor-dealer relationship smartphone vendors have been accustomed to. Smaller players with less marketing and merchandising budget at their disposal were unable to do so, thus, suffering drops in market shares,” he said. Dominguez noted that the rise of t he t wo C h i nese vendors further affirmed the “ importance of combining an expansive

sales and distribution approach with strong marketing and advertising strategies to capture consumer mindshare.” To preserve brand equity among consumers, leading global and local vendors—those who have previously cut down on marketing spend back in 2016—were seen to divert their resources to funding actively on integrated marketing campaigns this year, he added. “As the battle for mindshare intensifies, top global and local mobile-phone vendors were left with no recourse but to double down on marketing spending to maintain the brand presence,” Dominguez explained. He added: “Aside from the tried-and-tested formula of appointing A-list celebrity endorsers and conducting road shows, new marketing strategies, such as cobranding and strategic product placements, are being explored by local and global vendors as means to remain competitive against Chinese vendors.” Names, such as Filipino singer Sarah Geronimo and American See “Smartphone,” A2

n japan 0.4689 n UK 65.8910 n HK 6.5647 n CHINA 7.7119 n singapore 37.7162 n australia 40.6238 n EU 60.4399 n SAUDI arabia 13.7002

Source: BSP (23 August 2017 )

A2 Thursday, August 24, 2017

BMReports BusinessMirror

Bird flu fails to dampen demand for yellow corn Continued from A1

parts of the country remained favorable to farmers, according to Navarro. In Mindanao, for instance, he said yellow corn was being bought by traders at P13 per kg. “Probably there is a perception that there’s a disruption in trade due to the Marawi crisis and the bird-flu outbreak in Luzon. So the price of corn in Mindanao picked up,” he said. Navarro added he is optimistic that the price of yellow corn in Luzon would still increase and stabilize at P13 per kg after the Department of Agriculture (DA) lifted the ban on the shipment of poultry products from Luzon to the Visayas and Mindanao. “Once the operations of poultry growers return to normal, there will be higher demand for yellow corn,” he said. Preliminary data from the Philippine Statistics Authority (PSA) showed that

the farm-gate price of corn a week before the bird-flu outbreak was confirmed reached P11.22 per kg. It was slightly higher compared to the previous week’s level of P11.10 per kg to P11.20 per kg. Navarro added a breakeven farm-gate price for yellow corn is around P9 per kg. to P9.50 per kg. A farm-gate price of P11 per kg to P12 per kg would already be profitable for farmers. The PhilMaize chief said about 60 percent of the country’s corn output are sold to makers of livestock and poultry feeds. Navarro said corn constitutes 50 percent of poultry feeds. “The feed conversation ratio is for a kilo of poultry meat, a raiser would need 2.8 kg of feeds and about 1.4 kg of it are corn,” he said. Earlier, the United Broiler Raisers Association (Ubra) said it 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. “ T h i s de ve lopme nt wou ld hopefully restore the confidence of consumers and poultry producers that products outside of the areas affected by bird flu are safe,” Ubra President Elias Jose 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. ‘Recover y’ would mean farm-gate prices would be on a par with production cost,” he added. Ubra noted that the farm-gate 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. 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. 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.

July interest payment widens budget deficit Continued from A12

“Netting out the interest payments from expenditures, the NG recorded a P5.9-billion primary deficit for the month of July, 45 percent lower than last year’s level of P10.6 billion,” the BTr said. The primary balance of the government was at a year-to-date deficit of P8.8 billion, reversing the primar y surplus recorded from January to July last year of P22.7 billion. According to the BTr, 18 percent of total spending for the month of July went to interest payments, which rose 12 percent to P44.6 billion. This brought the cumulative level to P196.2 billion, up 1 percent from last year’s P193.7 billion.

Taipei. . .

Continued from A12

Progressive Party (DPP) Administration. This is the evidence that this case is not politically motivated. This case is purely an economic criminal case,” a statement from the Taiwanese government said. It added: “Chen is a notorious Taiwanese fugitive swindler. Chen was the former CEO of Ttuntex Group in Taiwan. He was prosecuted by the Taiwan Taipei District Prosecutors

NG disbursements for July 2017 amounted to P245.1 billion, which saw an expansion of 11 percent, from the comparable figure last year at P220.9 billion, with year-to-date spending recorded at P1.576 trillion. This saw a 9-percent increase from the P1.442 trillion recorded in 2016. Finance Undersecretary Gil S. Beltran said revenue-generating agencies are still behind targets. “The revenue-collection offices are moving toward their goal—they exceeded their target in July; but they are still behind year to date,” Beltran told reporters. Still, he expressed hopes “that the growth will be sustained so that by the end of the year they will exceed their target”.

The Bureau of Internal Revenue (BIR) has collected P138.1 billion for July alone, which saw an increase of 18 percent, from the P117 billion recorded in the same month last year. From January to July this year, total BIR collections was at P986.1 billion, registering a 9-percent growth from last year’s level of P900 billion. The Bureau of Customs (BOC) has collected P35 billion for the month, which saw a growth of 13 percent over the P31 billion recorded in July 2016. Year-to-date, BOC revenues increased by 11 percent reaching P245.3 billion, from the P221.5 billion in the same period for 2016. The BTr saw its income in July

contracting by 7 percent to P8.5 billion, from the P9.1 billion in the same month for 2016. The BTr said its lackluster performance was “due to lower income from Bond Sinking Fund/Securities Stabilization Fund, NG deposits with the BSP [Bangko Sentral ng Pilipinas] and income from other government services.” Nonetheless, the BTr said its year-to-date income totaled P61.2 billion, which surpassed by P23.6 billion (63 percent) the 2017 fullyear program of P58.6 billion. Beltran said the government agency still expects an annual revenue growth target of 10 percent for this year. He added government expenditures target is at a 14.1-percent growth rate. Rea Cu

Office on account of fraud, unlawful embezzlement and other serious economic crimes of defrauding more than NTD 800 million (equivalent to P1.32 billion). As a result, he has been officially indicted and wanted by the Taiwan Taipei District Court since January 14, 2014. “However, he subsequently escaped from Taiwan and fled away to Xiamen, China. Chen and his Tuntex Group left nothing beneficial to the Taiwanese people but owed Taiwan government at least NTD 415-million (equivalent to P684.75-

million) tax arrears and defrauded the Taiwanese banks and investors over NTD 70 billion (equivalent to P115.50 billion). “As an economic criminal, Chen took the fraudulent capital to Xiamen and became the founder and the chief executive of Xianglu Dragon Group. His new Group invested RMB 3.88 billion for PX Chemical Zone in Fujian Province of China with the said proceeds of crimes from Taiwan. Nevertheless, the new Group’s deficit has been reaching RMB 2 billion due to the poor management and a series

of horrible petrochemical industrial explosions and serious pollution in the said PX Chemical Zone in April 2015. Now, Chen is stuck in the mire of cash-flow gap. If he can not find a new financing source, his Xianglu Dragon Group will never afford the RMB 15.7-billion debt due and will go bankrupt. He needs to find another suitable place/country to repeat his criminal business model and it seems that his new target place is the Philippines. “Although Chen’s huge investment projects seem beneficial to the Philippine people and its economy at first appearance, it actually will not only have negative impact on the Philippines’s good image and foreign direct investment, but also will put the whole country into a very high financial and legal risk and even adversely affects the reputation and credibility rating of this country. There is a high probability that the Taiwanese and even the Chinese creditors especially the tax authorities, investors and banks may file as many lawsuits as they can against Chen and his investment projects in the Philippines. And the proceeds of the crimes may also be confiscated through the existing antimoney laundry mechanism or/and mutual legal assistance channel. “Therefore, the Teco has already filed a formal request to call on the relevant Philippine authorities to be vigilant and reject this notorious crook’s highly risky investment projects derived from Chen’s ill-gotten capital and assets from Taiwan and also urged the Philippine legal enforcement agencies, especially the BI to arrest this notorious economic fugitive criminal immediately and deport him back to Taiwan, the country of origin, to face justice as soon as possible.”

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NORTH KOREA HINTS IT IS DEVELOPING MORE ADVANCED MISSILES Continued from A12

In its most recent test of its Hwasong-14 ICBM, on July 28, North Korea demonstrated that the missile could reach major cities in the middle of the continental US, analysts said. But South Korean intelligence officials and other analysts still doubt that the North has mastered re-entry technology, although they said it was making faster progress than they had previously believed. The North’s Hwasong-series missiles have used liquid fuel. But, in recent years, the country has been testing solid-fuel missiles known as Pukguksong. Last August it flight-tested a submarinelaunched ballistic missile called the Pukguksong-1. It also tested a land-to-land Pukguksong-2 intermediate-range ballistic missile in February and again in May. One of the photos from Kim’s visit to the institute that were carried in the main North Korean state-run newspaper, Rodong Sinmun, showed what appeared to be a conceptual diagram for a missile called the Pukguksong-3. It was identified as an “underwater strategic ballistic missile”, indicating that it would have a longer range than the Pukguksong-1. South Korean officials have long feared that North Korea was building a more advanced Pukguksong missile. Since at least 2013, South Korea has been building a program known as Kill Chain that is aimed at detecting signs of imminent missile and nuclear attacks from the North with the help of US spy satellites, and, if necessary, neutralizing its weapons with preemptive strikes.

Smartphone. . . Continued from A1

basketball star Stephen Curry, were tapped by Oppo and Vivo, respectively, to bolster sales in the Philippines. Hence, the two Chinese brands succeeded in gobbling up significant market share. Local vendor share of the smartphone market was down to 41 percent in the second quarter of 2017 from 49 percent during the same period last year. Despite the heightened competition from Chinese smartphone vendors, local vendors in the Philippines remain in better standing relative to local vendors in neighboring Southeast Asian countries, reflecting the still solid affinity of Filipinos for homegrown smartphone brands. Local vendor shares of the

Japan Tobacco. . . Japa n Tobacco w a s l it t le changed at ¥3,741 on the Tokyo Stock Exchange as of 2:35 p.m. The stock had declined 2.7 percent this year, compared with a 5.5-percent gain in the benchmark Topix index. The tobacco industry has been consolidating over the past few years, amid declining smoking rates. After large deals like British American Tobacco Plc.’s $49-billion buyout of Reynolds American Inc., there are few big targets left. Smaller deals in Asia, the Middle East and Africa may offer the company better opportunities for growth. Emerging markets have been attractive investments for cigarette companies as they have higher smoking rates and fewer restrictive regulations on sales. Typically, their cheaper packs of cigarettes means lower profit margins. The operating profit margin for Indonesia’s Gudang Garam Tbk, for example, was 13.2 percent in

But submarine-launched ballistic missiles are relatively hard to detect, and a longer-range version of such a missile would g ive t he Nor t h considerably more strategic leverage, military experts said. “It appears that the North is trying to tell the world that its reentry and solid-fuel technologies are no longer experimental but have reached the stage of mass production,” said Kim Dong-yub, a defense analyst at the Institute for Far Eastern Studies at Kyungnam University in Seoul. “Though, whether that’s credible is another matter.” During a nationally televised news conference on Thursday, President Moon Jae-in of South Korea indicated that the North had not built a reliable ICBM. “I think the red line is when the North completes an ICBM and weaponizes it by loading it with a nuclear warhead, and it is inching toward that critical red line,” Moon said, warning that additional missiles tests by the North would invite tougher and “unbearable” sanctions from the US. Kim’s trip was his first reported public appearance since he visited the North Korean missile command last week and was briefed about its plan to launch four ballistic missiles to create an “enveloping fire” around Guam, home to key US military bases in the Western Pacific. At the time, Kim said he would watch the Americans’ activity for a while before approving that plan. The US and South Korea began annual joint military exercises this week to which the North vehemently objects. The New York Times smartphone markets in Indonesia, Thailand, Vietnam and Malaysia were now down to 19 percent, 11 percent, 6 percent and 1 percent, respectively. Global vendor shares of the smartphone market in the Philippines remained flat at 27 percent compared to a year ago, with only Samsung as the strong performer. Meanwhile, Chinese vendor shares jumped from 15 percent to 22 percent annually. Given these, Dominguez said his group “expects the smartphone market in the Philippines to stay subdued in the third quarter of 2017 due to increase in component prices, weaker Philippine peso and impending exits of a number of smartphone vendors”. Shipments, however, are expected to pick up during the last quarter of the year, as pre-Christmas buying season encourages healthier smartphone uptake.

Continued from A1

2016, much less than Philip Morris International Inc.’s 40.5 percent and Japan Tobacco’s 27.4 percent. Indonesia has the highest smoking prevalence in Asia, and the Philippines has the third-highest, according to market research firm Euromonitor International. The market researcher predicts that tobacco sales in developing markets, such as the Middle East and Africa, will expand at almost twice the pace of Western Europe in the next five years. Owen Bennett, who tracks tobacco companies for Jefferies International Ltd., said he is positive about Japan Tobacco’s efforts to build a presence in emerging markets, though he’d like to see more deals in the Middle East and Africa. At the same time, he said, “They need to put a lot more focus on offering reduced risk and improving their ability to compete in the US.” Bloomberg News

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The Nation BusinessMirror

Solon to police, military: No holds barred in fight vs ‘keyboard terrorists’ By Jovee Marie N. dela Cruz @joveemarie

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he chairman of the House Committee on Public Information is urging the military and the police to strengthen their partnership with the digital industry to curb “keyboard propagandists” advocating terrorism. Party-list Rep. Bernadette Herrera-Dy of Bagong Henerayson said the government has so far taken down 60 social-media accounts, with the help of the Philippine National Police (PNP) Anti-Cybercrime Unit and social-media companies, it deemed facilitating or supporting terrorism. “In this age of technology where anybody can access the Internet anytime and anywhere, it is also our responsibility, particularly to the young generation, to deny terrorists any social-media platform to spread their cause,” she added in a news statement issued on Wednesday. Dy has already filed House Bill 1378 seeking to establish Magna Carta for Philippine Internet Freedom, cybercrime prevention and law enforcement, cyber defense and national cybersecurity. As the country moves to provide wider access to Internet through its

free Wi-fi to public places, Dy said it was important to tighten the monitoring of social-media accounts promoting extremist propaganda, but without impeding the rights of the people. According to the lawmaker, the Armed Forces (AFP) has reported that it was closely monitoring about 300 accounts on various social-media platforms spreading terrorist propaganda. “We laud the Armed Forces of the Philippines and other law-enforcement agencies for their vigilance in monitoring social-media accounts that espouse terrorism and terrorist activities,” Dy said. “However, I feel we should do more in order to protect this public space that’s accessible to many, including children. We should not only guard the citizenry against the misuse of social-media platforms to forward terrorism, but also to the kind of information that is available out there,” she said. Earlier, the Department of Information and Communications Technology has warned in June that those who take part in spreading terrorist propaganda online could face arrest for “cyber rebellion” or “cyber sedition”.

Editor: Vittorio V. Vitug • Thursday, August 24, 2017 A3

Tug-of-war over witnesses in Kian’s gunslaying looms

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By Joel R. San Juan

@jrsanjuan1573

USTICE Secretary Vitaliano N. Aguirre II warned on Wednesday that the continued custody of the supposed eyewitnesses in the killing of 11th grader Kian Loyd delos Santos by the camp of Sen. Risa HontiverosBaraquel could affect their credibility. Aguirre noted that Hontiveros, a vocal critic of President Duterte, is biased against the administration’s all out war on drugs. “Of course it [Senator Hontiveros’s insistence to keep the witnesses under her custody] will affect the credibility of these witnesses considering the bias of their handler,” Aguirre said. Aguirre insisted that the witnesses should instead be transferred to the custody of the witness-protection program (WPP) as mandated by law. The Justice chief had earlier ordered the National Bureau of Investigation to conduct

a parallel probe into the killing of Kian by policemen during an antiillegal drug operation in Caloocan on August 16. “It is the WPP which has the mandate to protect witnesses,” Aguirre said, as he reiterated his offer to the witnesses and the family of Kian for coverage in the WPP after they reportedly received threats. Hontiveros took custody of the witnesses after she visited Kian’s wake last weekend. Earlier, Kian’s family has asked that the witnesses be transferred to the custody of the Public Attorney’s Office (PAO).

Jusmag turns over TARS radar system to PHL Navy

However, Hontiveros insisted that witnesses and their families have opted to stay under her care. “From the start, when my office took custody of the witnesses, it was in response to the request of these witnesses and their families, and even the family of Kian to protect them from the threats that they have been receiving,” Hontiveros said at a news conference. “Because of this we immediately talked and consulted [with] the witnesses and their families on the request that they be transferred to PAO. In the end, the decision of the witnesses and their families should prevail and according to them they are comfortable where they are right now,” Hontiveros added.

Of course it [Senator Hontiveros’s insistence to keep the witnesses under her custody] will affect the credibility of these witnesses considering the bias of their handler. It is the WPP which has the mandate to protect witnesses.”—Aguirre

PET issues guidelines on revision of Bongbong-Leni protest ballots

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Photo on the left shows the 28M Class Tethered Aerostat Radar System (TARS) anchored at the Naval Education and Training Command in Zambales. Next photo shows Col. Ernest C. Lee, chief of the Joint US Military Assistance Group and Vice Adm. Ronald Joseph S. Mercado, flag officer in charge of the Philippine Navy shake hands after signing the formal turnover documents awarding the TARS to the Philippine Navy. Recto Mercene By Recto Mercene @rectomercene

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ol. Ernest C. Lee, chief of the Joint US Military Assistance Group (Jusmag) in the Philippines, formally transferred a new 28M Class Tethered Aerostat Radar System (TARS) to Flag Officer in Command of the Philippine Navy (PN) Vice Adm. Joseph Ronald S. Mercado in a turnover ceremony at the Naval Education and Training Command (NETC) in Zambales on Tuesday. Mercado was the guest of honor and keynote speaker, and US Embassy Deputy Chief of Mission (DCM) Michael Klecheski also delivered remarks during the turnover. The 28M Class TARS is a selfsustained, rapidly deployable, unmanned lighter-than-air platform that can rise to an altitude of 5,000 feet while

tethered by a single cable. Some members of the diplomatic beat suggested that this radar be immediately deployed in the Pagasa Island in the West Philippine Sea to monitor the area and immediately report any signs of incursions by foreigners in real time. The Department of Foreign Affairs lamented that the report by Party-list Rep. Gary C. Alejano of Magdalo that a Chinese flag has been mounted on a pipe and planted on a sand cay some 7 nautical miles Northeast of Kota Island in the Kalayaan Island happened in July. Alejano, a former marine captain, would not divulge his source, but said he was told that the flag was discovered around the third week last month. Supreme Court Senior Associate Justice Antonio T. Carpio over the weekend said

China is guarding the sandy cay located some 2.5 nautical miles off Pagasa Island, which is well within its 12-nauticalmile territorial waters. China reportedly has two frigates, a coast guard vessel and two military fishing boats in the area. Pagasa also serves as the seat of government of Kalayaan town. Sixteen Philippine Naval Information and Communication Technology Center personnel are engaged in a rigorous sixweek training program at the NETC in Zambales to learn assembly, handling, operation, maintenance and troubleshooting for the TARS. These 16 students will become instructors for the next class of operators. Through this donation, the PN is poised to enhance its capability in Maritime Intelligence Surveillance and Reconnaissance by effectively detecting maritime

and air traffic within the country’s coastal waters using sensors. Moreover, it will also be utilized in Humanitarian Assistance and Disaster Response (HADR) operations. The TARS includes a weather station that provides telemetry data for the monitoring of ambient temperature, pressure, wind speed and other parameters to successfully operate the system. The NETC in Zambales is the staging point for the TARS as it is the largest PN base with flat terrain, and fits the minimum requirement of 300 square feet for the launching of the system. The donation is part of the US Maritime Security Initiative (MSI), a capacitybuilding assistance program for Southeast Asian countries, including the Philippines, that aims to improve their ability to address a range of maritime challenges.

No Pinoy casualty in Ischia island quake in Italy–DFA

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O Filipino was hurt in the 4-magnitude earthquake that struck the southern Italian island of Ischia, the Department of Foreign Affairs (DFA) reported on Wednersday. Philippine Ambassador to Rome Domingo Nolasco said the embassy is continuously monitoring the situ-

ation in coordination with the Philippine Honorary Consul in Naples. Nolasco reported to Secretary Alan Peter S. Cayetano that the embassy is “ready to extend all possible consular assistance to any Filipino who may have been affected by the earthquake.” The temblor hit the northwest of

the island at 8:57 p.m. on Monday (3:57 a.m. Tuesday, Manila time) with a depth of some 10 kilometers. Two women died and at least three dozen other people were injured near the island of Ischia, off the tyrrhenina Sea, a popular tourist destination off the coast of Naples, Italy.

The head of the local department of civil protection, Angelo Borrelli, said that two small communes, Casamicciola and neighboring Lacco Ameno, had borne the brunt of the quake. The main earthquake was followed by 14 smaller aftershocks, according to news reports. Recto Mercene

The three police officers being blamed for the killing of Kian have been identified as PO 3 Arnel Oares and PO1 Jeremiah Pereda and PO1 Jerwin Cruz. They earlier claimed that they killed Kian after he shot it out with them. But such claim was debunked by the reported statement of the eyewitnesses that Kian was already under the custody of the policemen before the incident. This account was supported by closed-circuit television footages in the area operated by the barangay. A forensic exam conducted by the PAO also indicated that Kian sustained three gunshot wounds in his head and at the back and was shot while lying face down.

HE Supreme Court (SC), acting as the Presidential Electoral Tribunal (PET), has issued the guidelines for the revision of ballots in the election protest of former Sen. Ferdinand “Bongbong” R. Marcos Jr. against Vice President Maria Leonor “Leni” G. Robredo. In a five-page resolution dated August 8, the PET laid the rules, including the composition, screening and hiring of members of the revision committees, the creation of an exploratory mission or retrieval team, as well as the compensation of those who will eventually take part in the actual revision of ballots. The PET formed an exploratory mission/retrieval team that will locate and examine all ballot boxes in the contested provinces and cities in order to facilitate retrieval and transport to the SC compound for the revision. It designated the following SC employees, namely; lawyers Mercedes Mostajo and Linuel Alindogan of the Office of the Chief Attorney as leaders, Joy Jemima Reyes and Jeffrey Raymond Atienza of the Cash Collection and Disbursement Division as special disbursing officers; and Joery Gayanan and/or any official/ employee to be recommended by the Office of the Administrative Services as chief security officer and/or assistant chief security officer. The resolution was signed by Clerk of Court Felipa Anama. It mandates that each revision committee be composed of a coordinator who shall be a lawyer, a recorder and a representative, each from the protestant and protestee. It also required the parties to designate their respective alternative representatives. It also provided for P1,500-perclustered-precinct compensation for each, revision committee, which will cover the members’ compensation and supplies with the coordinator receiving a compensation of P780, while the recorder will be entitled to P480. The remaining P184 will be for their supplies or materials. The Tribunal also amended its old rule, which required that the coordinator must come from SC personnel as it directed the Office of the Acting Chief Administrative Officer to post the vacancies for the members of the Revision Committees and accept applications for the staffing complement. The acting clerk of the Tribunal

will screen the applicants for the position of coordinators of the revision committee. It also fixed the compensation of the members of the panel of commissioners, namely, retired Justice Jose Vitug as chairman who will receive P50,000 a month starting July 2017, and his members lawyers Angelito Imperio and Irene Ragodon-Guevarra who will each received P45,000 monthly starting July 2017. The same resolution also approved the use of the SC gymnasium in the revision proceedings. It also added two more areas to be used in the election protest, namely, a portion of the fourth floor parking level of the SC-Court of Appeals Multipurpose building, as well as a room at the back of the division hearing room. This developed as supporters of Robredo asked on Wednesday the Tribunal to reconsider its earlier decision rejecting their motion to accept their contribution for the payment of the balance of her counter-protest fee amounting to P7.4 million. In a 13-page motion for reconsideration, the Piso Para Kay Leni, led by Museo Pambata Chairman Cristina Lim-Yuson, asked the PET to allow them to pay the rest of Robredo’s counterprotest fee. Aside from Lim-Yuson, the other petitioners are former Social Welfare Secretary Corazon J. Soliman, former Human Rights Commissioner Paulynn D. Sicam, former Bases Conversion and Development Authority Board Director Zorayda Amelia Alonzo, awardwinning singer Celeste Legaspi-Gallardo and Ateneo de Manila University Press Director Karina Bolasco. The petitioners, through their counsel, Purification Bartolome-Bernabe, said there is a need for the PET to reverse its earlier ruling since what her clients have raised is a matter of “transcendental importance. “This is a necessary exercise of the right of suffrage considering that VP Leni will be deprived of her victory, we will be deprived of her victory because she is financially disadvantaged,” Bartolome-Bernabe said. The petitioners believed that the PET decision denied them of their right to protect their vote for Robredo. They also said they were able to establish that they have locus standi or the ability to demonstrate to the court sufficient connection to and harm from the law or action challenged to support their participation in the case. Joel R. San Juan

Economy

A4 Thursday, August 24, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

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ADB to PHL, developing nations: Invest ₧90.72B in workers’ education and skills training

House leaders file new proposal to do away with the Road Board

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he current leadership of the House of Representatives is pushing for anew measure to abolish the Road Board. In filing House Bill 6236, Speaker Pantaleon D. Alvarez and Majority Leader Rodolfo C. Fariñas of Ilocos Norte said that over the years, the Commission on Audit (COA) has unearthed signs of illegal utilization of the Road Fund, estimated to have amounted to a total of P90.72 billion from 2001 to December 2012. Under the bill, the functions of the Road Board shall be transferred to the Department of Public Works and Highways and the Department of Transportation (DPWH). The House leaders said their proposal seeks to prevent misuse of billions of pesos of the road user’s tax collected by the government. The Road Board was created under Republic Act (RA) 8794, which imposed a motor-vehicle users’ charge on owners of all types of motor vehicles. The board is tasked to ensure prudent and efficient management and use of the special funds known as the road user’s tax (or Road Fund), which is earmarked solely and exclusively for road maintenance and improvement of road drainage, installation of efficient traffic lights and road-safety devices and airpollution control. Under the bill, all collections of the Road Fund shall be “remitted to the National Treasury and shall be appropriated to the proper government departments, such as the Department of Public Works and Highways and the Department of Transportation, which will implement the road-

The total amount of amount of money from the Road Board, which, a COA report indicates, may have been utilized illegally from 2001 to December 2012

safety measures and projects.” On the other hand, the bill retained the original provision of the law, which requires that funds collected under RA 8794 related to the Trust Fund for Pollution Control, shall be appropriated to the Department of Environment and Natural Resources. Moreover, Alvarez, citing COA reports, said some P515.50 million of the Road Fund was used from 2004 to 2008 for payment of salaries, allowances, maintenance and other operating expenses, which were properly chargeable to the regular budget. In 2011 he said P62.52 million of the Road Fund was used for the Road Board’s engineering and administrative overhead expenses, according to the COA. Likewise, in 2013, COA uncovered findings of irregularities in the use of more than P1.66 billion of the funds. The Speaker added from 2001 to 2010 there were discrepancies amounting to P1.495 billion in the total collection of road user’s tax between the collections declared by the Land Transportation Office and the certification from the Bureau of Treasury. Jovee Marie N. dela Cruz

DENR aims to classify 183 more water bodies by end of 2022 By Jonathan L. Mayuga @jonlmayuga

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he Department of Environment and Natural Resources (DENR) is eyeing to classify more water bodies. Water bodies are classified based on their best beneficial usage in order to improve water quality and as a measure of protection against human pollution. In a news statement, Environment Secretary Roy Cimatu said the classification of the country’s water bodies is one of the mandates of the DENR under Republic Act (RA) 9275, or the Philippine Clean Water Act of 2004. The DENR chief is facing a tough decision to make in connection with the mine suspension and closure orders issued by his predecessor, Regina Paz L. Lopez. More than two dozens mining operations were either issued suspension or closure orders for failing a mine audit. Lopez had also issued “show-cause” orders, which threaten the cancellation of 75 mineral production and sharing agreement. Cimatu has vowed to uphold Lopez’s pro-environment policies, particularly in declaring watersheds as off-limits to mining and destructive development projects. “Clean water is a significant, and often undervalued, resource. It is important for many reasons, including human health, food security, healthy wildlife and habitats, fishing, bathing and other recreational activities,” Cimatu pointed out. “It is, therefore, necessary that we protect and improve the quality of our water resources,” he added. The environment chief said he has been assured by the DENR’s Environmental Management Bureau (EMB) that the classification of an additional 183 water bodies will be finished by 2022. So far, the DENR has already

classified a total of 761 water bodies —lakes, rivers, streams and marine waters—since the country’s cleanwater law was enacted. The purpose of water classification is used to set goals for water quality and promote management of water bodies, especially those identified as possible drinkingwater sources. “These water resources need to be protected and managed with care in order for them to supply us with abundant clean water for the foreseeable future,” Cimatu said. As a requirement in RA 9275, the DENR has instituted a classification system that establishes water quality classes and the associated quality standards, and identifies the administrative processes and requirements related to the classification of water. The classification standards establish designated uses, related characteristic of those uses and criteria necessary to protect the uses, and establish specific conditions for certain activities, such as the discharge of wastewater. Meanwhile, the EMB also threw its support behind Cimatu's resolve to strictly implement laws and programs on clean air, clean water and solid waste management. “Clean air, clean water and solid waste management are vital in making our communities liveable,” Cimatu told a recent meeting with DENR senior officials and regional directors. He added: “The agency’s resources must be directed toward ensuring clean air, clean water and proper solid-waste management, because these have the most impact to our people.” Three months into office, Cimatu has already spearheaded the cleanup of waterways in Bocaray Island and Iloilo province for the benefit of communities who depend on these waters for food and livelihood.

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By Cai U. Ordinario

@cuo_bm

utomation, artificial intelligence and other technological advancements brought by the “Fourth Industrial Revolution” could render low-skilled workers jobless, according to the Asian Development Bank (ADB).

In an Asian Development Blog, ADB Vice President for Finance and Risk Management Ingrid van Wees said this is the reason developing countries, including the Philippines, must invest in education and social protection for workers. “The forces unleashed by the Fourth Industrial Revolution have generated a rise in less stable forms of employment,” van Wees said. “Less-skilled workers and those with jobs involving tasks that can be automated are especially vulnerable.” Van Wees said the Fourth Industrial Revolution is being fuelled by mobile Internet, advances in computing power and big data, artificial intelligence and machine learning, robotics and nanotechnology. Despite the possible “substitution effect” this may create in terms of employing people, developing countries must still embrace technological advancements, she said. In the long term, van Wees said workers have a better chance of getting quality jobs in the era of the Fourth Industrial Revolution. This, in turn, will give economies in developing countries a boost. “The Fourth Industrial Revo-

lution is an exciting time. If we are prepared for its disruptions, it could deliver more and better jobs rather than fewer lower-quality ones,” van Wees said. In order to exploit the benefits of the Fourth Industrial Revolution, van Wees said developing countries must invest in high-quality education which focuses both on cognitive and noncognitive skills. She stressed the need to strengthen the noncognitive learning of future workers in primary and secondary schools. These skills will help them think more strategically to tackle future problems. Van Wees said it is lamentable that many young workers lack topend skills to solve complex problems and think strategically. “ Those future workers will need not just technical skills, like computer literacy, but also solid foundational cognitive and noncognitive skills that are best provided in primary and secondary school,” she said. Van Wees added that workers must also receive continuing education in the form of training to allow them to cope with the changing de-

mands of the world of work. Further, van Wees said workers who will lose their jobs should be compensated, as well as those who will encounter health shocks and will retire through a safety net. She said there are countries that have implemented a “social-security tax” which is a social insurance that workers can tap in order to augment their incomes when they fall into hard times. Van Wees added that companies should not find it hard to dismiss underperforming employees. If these employees are retained, it will limit companies’ ability to hire more workers. “Companies must retain their ability to make changes to their work force, while contributing their fair share to social insurance, much like the social-security tax already in place in many countries,” she said. Based on the April 2017 Labor Force Sur vey, there are 2.44 million Filipinos who are jobless and 6.47 million who are considered underemployed. The most number of unemployed came from those aged 15 to 24 years old and 25 to 34 years old, which accounted for 49.5 percent and 29.3 percent of the total. The majority or 63.7 percent

of these unemployed Filipinos are males, since only 36.3 percent of them are women. Around 44.3 percent of these unemployed workers are either undergraduates or graduates of junior high school. Some 34.3 percent were either college undergraduates or graduates. The Philippine Statistics Authority said that, by definition, employed persons who express the desire to have additional hours of work in their present job, or to have additional job, or to have a new job with longer working hours, are considered underemployed. In April 2017 underemployed persons who worked for less than 40 hours in a week are called visibly underemployed persons. They accounted for 60.4 percent of the total underemployed in April 2017 and 55.2 percent in April 2016. By comparison, the underemployed persons who worked for 40 hours or more in a week made up 37.7 percent. In terms of sector, 44.4 percent of the underemployed worked in the services sector, while 35.9 percent were in the agriculture sector. Those in the industry sector accounted for 19.7 percent.

The forces unleashed by the Fourth Industrial Revolution have generated a rise in less stable forms of employment. Less-skilled workers and those with jobs involving tasks that can be automated are especially vulnerable.”—van Wees

PEMC transition into IMO still in the works after 12 years By Lenie Lectura

@llectura

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he transition committee in Philippine Electricity Market Corp. (PEMC) is expected to include in its report to the Department of Energy (DOE) the composition of an independent market operator (IMO). Under the Electric Power Industry Reform Act of 2001, PEMC is supposed to last for only one year and would transition to an IMO. So far, PEMC has existed for 12 years now. PEMC is a 15-man body led by the secretary of the DOE and composed of representatives from each sector of the electric power industry, as well as independent members. The transfer of the Wholesale Electricity Spot Market (WESM) to the IMO is meant, among others, to dispel concerns of continuing government intervention at the WESM. The transition has yet to happen. Energy Secretary Alfonso G. Cusi said the transition to IMO “will be part of the road map” that the committee is working on. “Does an IMO need to be a GOCC [government-owned and -controlled corporation] or [a] private company. That is part of an ongoing discussion. It is included in the diagnostic process,” Cusi said. Cusi announced last month the creation of a five-man transition committee in PEMC, effective August 1. The committee is composed of the following: former Energy Regulatory Commission (ERC) Chairman Oscar E. Ala, as PEMC

Aerial combat

A team of glass cleaners splash a mixture of water and detergent to clean the wide glass-wall panel of a skyscraper at the Bonifacio Global City in Taguig. The workers say the task could be risky for both life and limb, but the job has to be done on a regular basis. NONOY LACZA

president; Francis Saturnino Juan, former ERC executive director; Rauf A. Tan, former ERC commissioner; Jose Mari T. Bigornia and concurrent chairman of the National Renewable Energy Board Jose M. Layug. Aside from Cusi, the PEMC board will be governed by Ronald Dylan P. Concepcion, Victor Emmanuel B. Santos, Emmanuel V. Rubio, Neeraj Bhat, Deon James, Rolando M. Cagampan, Octavius M. Mendoza, Allan L. Laniba, Noel V. Aboboto, Jesus L. Arranza and Peter L. Wallace. The committee w ill assess PEMC’s existing structures, systems and resources and propose a way

forward for the WESM to meet the challenges ahead. A department circular gives the committee seven months from August 1 to complete its tasks while PEMC transforms into an IMO. “We created a committee for transparency because we want to develop a policy so that we can gain the trust and confidence of investors. In seven months, the committee has to finish its work. I am waiting for its recommendation for the road map and implementation,” Cusi added. Cusi said the creation of the transition committee is in line with President Duterte’s thrust of ensuring the protection of the Filipino

electricity consumers, who are affected by the operation of PEMC and the WESM. Cusi added the PEMC shall continue to effectively govern the operations of WESM for the benefit of all electricity stakeholders. On the organizational level, Cusi assured the PEMC employees that the PEMC leadership shall continue to improve and advance their welfare as WESM operations continue to evolve. The PEMC was incorporated in 2003 and was constituted as the autonomous group market operator to oversee market governance and perform the functions of the market operator in the WESM.

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Editor: Jennifer A. Ng • Thursday, August 24, 2017

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Abaca output up 3.17% in January-June

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By Jasper Emmanuel Y. Arcalas

@jearcalas

hilippine abaca production grew 3.17 percent to 31,877.725 metric tons (MT) in the first half, from 30,898.8 MT a year ago, according to the latest data from the Philippine Fiber Development Industry (PhilFida).

File photo

‘PHL has enough chicken, no need for imports’ T

he United Broiler Raisers Association (Ubra) on Wednesday said the Philippines does not need to import chicken as its current inventory is “more than enough” for its requirements. Ubra president Elias Jose Inciong also said Agriculture Secretary Emmanuel F. Piñol had informed him during a dialogue on August 22 that he will not authorize special importations of chicken. “The country has 17.3 million kilograms [kg] of chicken in cold storage, 8.9 million kg of which were imported and 8.39 million kg from local producers,” Inciong said in a statement. The Ubra said the country’s per-capita consumption (PCC) of chicken was pegged at 35 kg in 2016, which more than doubled

from the PCC of 15 kg in 1986. This, the group said, indicates that the upswing in chicken consumption was a “fairly recent phenomenon”. Inciong also noted that the volume of chicken meat in cold storage may have actually increased, since the figure was based on the government’s weekly survey ending August 7. The 8.9 million kg of imported chicken products in cold storage are comprised of quarters, legs and other cuts. Mechanically deboned meat (MDM), which is largely chickenused for processed meat products as an extender, is not included in the list. The survey also came a day after the Department of Agriculture banned the entry of Brazilian imports owing to salmonella contam-

ination. Brazil is a major source of the country’s MDM imports. Also, Inciong said demand for chicken meat plummeted after the government confirmed the outbreak of bird flu among layers in San Luis, Pampanga, on August 11. He added no broiler farms were infected since the outbreak, which is consistent with the findings of veterinarians that broilers are sturdier against bird flu and are least vulnerable. Nonetheless, Inciong said only the haemglutinin (H) protein responsible for bird flu has been confirmed by tests, which determined it to be of the H5 strain out of 16 identified strains. As to the neuraminidase (N) protein, of which there are nine subtypes, the results from an OIE-accredited laboratory in Australia may be out by August 25,

according to Dr. Arlene Vytiaco of the Bureau of Animal Industry. In explaining the epidemiology of bird flu, the Food and Agriculture Organization (FAO) said in its bulletin this year that “only two types of avian-influenza viruses—H5 and H7—are known to include highly pathogenic viruses”. The FAO said “not all H5 and H7 influenza viruses are highly pathogenic, but H5N1 is. This form may cause disease in chickens and some other species of birds that affects multiple internal organs and has a mortality rate that can reach 90 percent or 100 percent, often within 48 hours”. Inciong said if a highly virulent bird flu did hit San Luis, Pampanga, flocks could have been wiped out within two days and could spread to other provinces quickly. Jasper Emmanuel Y. Arcalas

Feds review annual whaling quotas for Alaska Native hunters

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NCHOR AGE, Alaska— Federal officials are reviewing annual catch limits for 11 A laska Native communities whose subsistence hunters are authorized to harvest bowhead whales. The National Oceanic and Atmospheric Administration (NOAA) says the public has until September 14 to comment on quotas for a six-year period to begin in 2019. The International Whaling Commission, which has final say on quotas for subsistence harvesting of large whales, meets next in Brazil in 2018. The Environmental Impact Statement (EIS) being prepared will help NOAA decide how Alaska’s share of catch limits is allocated, according to NOAA spokesman Chris Rogers. The Alaska Eskimo Whaling Commission (AEWC) decides how the quotas are actually split among the whaling communities. “The EIS is a routine step

to consider the environmental consequences of continuing to authorize the harvest,” Rogers said in an e-mail on Tuesday. The last such assessment was last done in 2013. A federal notice posted on August 15 by NOAA fisheries lists four possible alternatives to be considered, including not allowing any quotas. The other alternatives include annual strike limits of 67 bowheads, with as many as 336 whales landed over the six-year period. Each of those options adds other potential limits, including how many unused strikes can be carried over to subsequent years, if at all. In 2012 the International Whaling Commission extended bowhead catch limits allowing Alaska and some Russia Native hunters to land as many as 336 whales through 2018. According to NOAA’s new federal notice, the US and Russian Federation submit a joint request to the

In this October 7, 2014, file photo, a man hauls whale blubber as a bowhead whale is butchered near Utqiagvik, then known as Barrow, Alaska. AP Photo/Gregory Bull, File

commission for the catch limits. Representatives of the AEWC did not immediately respond to requests for comment on the federal plan. But harvesting bowheads is considered a sacred accomplishment by many Alaska Eskimos in the whaling communities who heavily rely on the meat for much of their food. The hunts are blessed through ceremonial dances. Successful harvests prompt celebrations where tons

of meat are cut up and distributed. The AEWC says on its web site that the bowhead whale has been hunted by native people for thousands of years. “The entire community participates in the activities surrounding the subsistence bowhead whale hunt, ensuring that the traditions and skills of the past associated with their culture will be carried on by future generations,” the organization writes. AP

Data from the PhilFida showed that the Bicol region remained as the top abaca-producing province, contributing 40.2 percent of country’s total output during the January-to-June period. The region’s production expanded by 8 percent to 12,818.2 MT, from 11,867.275 MT. Central Luzon region recorded the fastest increase in abaca production during the six-month period. Its output rose by a whopping 2,025 percent to 10.625 MT, from 0.5 MT posted in the same period last year. Data from the PhilFida also showed that export receipts from abaca in January to February reached $23.902 million, 7.2 percent higher than the $22.307 million recorded a year ago. Abaca pulp accounted for the lion’s share of the earnings during the period at 70.5 percent. Exports receipts from abaca pulp grew 16.5 percent to $16.859 million, from $14.472 million. The United Kingdom and Germany were the top 2 importers of local abaca pulp, accounting for 43.6 percent and 25.5 percent of shipments, respectively. Abaca pulp exports to the UK grew by 35.6 percent to 1,748.523

MT, from 1,289.922 MT last year. Local abaca pulp bought by Germany in the two-month period expanded to 1,021.455 MT, from 806.239 MT. Data from PhilFida, an attached agency of the Department of Agriculture, showed that revenues from abaca-fiber exports in the two-month expanded by more than a third, or by 37.6 percent, to $5.523 million, from $4.013 million. In terms of volume, Philippine abaca exports went up by 30 percent to 2,900.5 MT, from 2,231.25 MT recorded in the first two months of 2016. China was the top importer of abaca fiber, accounting for 34.6 percent of total shipments. Exports of local abaca fiber to China declined expanded by 2,016.6 percent to 1,002.75 MT, from 47.375 MT. The UK was the second top importer of local abaca fiber during the period. However, local abaca-fiber exports to the UK declined by 33.3 percent to 720.25 MT, from 1,080 MT last year. The Philippines produces about 85 percent of the world abaca supply, which is globally known as Manila hemp.

SMAARRDEC vows to help farmers boost output By Jonathan L. Mayuga @jonlmayuga

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he Souther n Mindanao Agriculture Aquatic and Natural Resources Research and Development Consortium (SMA ARRDEC) on Wednesday staged the “Sipag ni Juan FIESTA sa Dabaw: Farms and Industry Encounters through Science and Technology Agenda” in Davao City. The event showcased the various research and development (R&D) projects developed by local scientists based in Mindanao. It was held at the Ayala Abreeza Mall in Davao City from August 23 to 25, as SMAARRDEC observes its 30th Founding Anniversary. SMAARRDEC Director and University of Southeastern Philippines (USep) Vice President for Research, Development and Extension Danilo B. Canyo said SMAARRDEC will continue to strengthen collaborative effort to develop more products and technology to help boost agricultural production and increase farmers’ incomes. “There will be more collaboration, more R&D, and hopefully, more funding to sustain our projects,” Canoy said. The event featured the 2017 Regional Symposium on Research and Development Highlights, Farmers and Fisherfolks Forum, Technology to the People, Business Coaching, Technology Matching and Stakeholders’ Appreciation Night. During the event, Davao City Mayor Sara Z. Duterte-Carpio, who was represented by Councilor Marissa Salvador Abella of the Second District of Davao City, welcomed the guests and participants to Davao City. In a message read by Abella,

Duterte-Carpio underscored the importance of research and development in boosting agricultural production and helping improve the lives of Filipino farmers and fishermen. For her part, Abella, who is also the chairman of agriculture and food committee of the Davao City Council urged SMAARRDEC to come up with, not only solutions to the problems besetting durian, mango growers and poultry sector, including fighting-cock raisers of Davao, but preventive measures to prevent the spread of epidemics. Prior to the event, on August 18, a coconut-planting activity was conducted at Manambulan, Tugbok District, Davao City in support of Republic Act 8048, otherwise known as Coconut Preservation Act of 1995 and the campaign of the Philippine Coconut Authority (PCA) to grow more coconut trees in the country. SMA ARRDEC’s Regional Research and Development Coordinating Council Chairman and USep President Lourdes C. Generalao said in its 30 years in service, SMAARDEC made a significant contribution to the regional agriculture and aquatic resources sectors, as well as small and medium enterprises. It has played a crucial role in the production of technologies for various agricultural products, including banana and coconut, two of the country’s dollar-earning commodities. A c c o rd i n g t o G e n e r a l a o, SMA ARRDEC was able to help manage the impact of the Fusarium wilt or Panama disease infestation. Through SMA ARRDEC, the PCA-11 also aided coconut farmers across Mindanao in solving the Brontispa longissima infestation, also called coconut-leaf beetle.

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Thursday, August 24, 2017

Federalism: Key to a peaceful

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By Ernesto G. Banawis

HE paradigm shift from a unitary to a federal system of government will be a watershed event in the political history of the Filipino people.

President Duterte reviews the troops during the 120th anniversary celebration of the Philippine Army on April 4, 2017, at Fort Bonifacio in Taguig City. Duterte is confident federalism will put to rest the secessionist movement in the South. AP/Bullit Marquez

Advocates of federalism believe it is the system of social arrangement most adaptable to the Filipino nation, adding that it is most suited to their character, upbringing and predilection. They contend that the federal system will likewise effectively address the problems which have stunted the country’s development and growth. President Rodrigo Duterte is confident federalism will put to rest the secessionist movement in the South. The need for Charter change has long been felt. But earlier efforts in three previous administrations were strongly opposed and stalled on suspicions that they were designed to advance the proponents’ political interests and ambitions. A paper on Federalism by Rosario G. Manasan of the Philippine Institute for Development Studies cites the country’s governance structure as centralized. “However, the degree of central government control over the LGUs [local government units] has been changing,” Manasan said in her paper presented to a conference in Singapore in 1992. She traced this governance structure as rooted in history.

Nationhood

WHY did it take too long to establish a Filipino nation? It took over 350 years before the Filipinos could wage a successful revolution. It was only on June 12, 1898, that they proclaimed the First Republic of the Philippines and freed themselves from Spanish colonial rule. But in just a few days, they found themselves enslaved once again by another country, the United States of America, to whom they were sold for only $20 million, roughly at $2 a head since there were only about 10 million of them at the end of the 19th century. The Filipinos declared war against the United States to defend their independence. Still disorganized and short of arms and logis-

tics, they eventually had to accept the presence of the Americans on Philippine soil. Under the pretext of teaching the Filipinos how to govern themselves, the Americans forcibly took over the Philippines as they looked covetedly at the vast market in Asia, particularly in China. It was unjust and illegal for the United States to take position of the Philippines.

Colonization

EXCEPT for the victory of Commodore Tomas Dewey over the Spanish armada at the naval battle at Manila Bay, the Americans did not engage the Spaniards in any battle on land. It was the bogus surrender, arranged by a Belgian consul, of the Spanish colonial officials to the American troops, on which the US based its claim of conquest over the Philippines as a colony of Spain. What is even more ironic is that the protocol ending the SpanishAmerican war was signed three days before the simulated surrender at Intramuros, the seat of the Spanish colonial government. The Filipinos were hoping that the United States will recognize and respect the independence of the Philippines as it did much earlier with the colonies in South America that successfully overthrew the colonial rule of Spain.

Movement

THE Filipinos, led by Sergio Osmeña and Manuel Quezon, launched the Movement for Philippine Independence. They sent independence missions to the United States to plead for their emancipation from colonial reign. They suffered humiliation and were treated with contempt and condescension from most of the proconsuls sent by the US to the country. It was not out of generosity or sympathy that the United States Congress finally passed the law

creating the Commonwealth government and setting the proclamation of Philippine Independence on July 4, 1946. It was the American farmers who pressured their representatives in the US Congress to set adrift the Philippines. They were resenting the stiff competition of Philippine agricultural exports to their crops and the increasing influx of Filipino labor into the pineapple plantations in Hawaii and the vineyards in California. It was also, at this time, that the United States was reeling from the Great Depression that wiped out billions of income and wealth.

Decentralization

MANASAN cites a sharp shift toward greater decentralization during the Third Republic (1946 to 1972). She said the Second Republic (1941 to 1946) did not provide the atmosphere for decentralization as its leaders “were too preoccupied

with survival during the war.” During the Third Republic several laws were passed that enhanced the interest on decentralization: Republic Act (RA) 2262 (“An Act Amending the Laws Governing Local Governments by Increasing their Autonomy and Reorganizing Provincial Governments”), RA 2370 (“An Act Granting Autonomy to the Barrios of the Philippines”) and RA 5185 (“Decentralization Act”). The two former laws were passed in 1959 during President Ramon Magsaysay’s term, while the latter was legislated in 1967. RA 2262 provided the city and municipal governments greater fiscal, planning and regulatory functions. Aside from broadening their taxing powers, the law also allowed cities and municipalities to undertake locally funded publicworks projects and adopt zoning and planning ordinances. RA 2370 gave barrios or villages

a quasi-municipal corporate character with legislative and taxing powers. RA 5185 increased the financial resources of LGUs and gave local governments greater authority over fiscal, personnel and other substantive matters, Manasan wrote. “Provincial and city governments were allowed to retain amounts that they were previously mandated to contribute to the central [or national] government,” she wrote. The Act likewise specified certain “duties and powers of local chief executives not subject to direction or review by any national official.”

Context

CITING former Bureau of Local Government Supervision Director Gaudioso Sosmena, Manasan said the interest on decentralization became second priority in the postwar years as the state focused on rehabilitation. “The Huk rebellion was at its

height and political factionalism was a negating factor to local autonomy, thereby promoting centralism.” Former Senate President Aqulino Pimentel Jr. has asserted that “the highly centralized, unitary system…resulted in an imbalance in the distribution of resources among LGUs.” “Impliedly, it has fueled the armed rebellion of Muslim factions in parts of Mindanao against the government and has hampered the speedy development of the local communities, and of the people residing therein,” Pimentel said. Living in over 7,000 widely scattered islands, the early inhabitants of the villages or barangays developed their own distinct and diverse ethnic language and cultural traditions. It took centuries for the Filipinos to unite and struggle for their liberation from colonial rule. It must have been their shared misery and enslavement which awakened their sense of unity, patriotism

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l and progressive Philippines States

PIMENTEL’S federalism proposal eyes the creation of 11 Federal States out of the existing political subdivisions of the country and one federal administrative region. In a paper Brillantes presented in July, he said Luzon will have the Federal States (FS) of Northern Luzon (FSNL), Central Luzon (FSCL), Southern Tagalog (FSST) and Bicol (FSB). Tuguegarao City is proposed by Pimentel as the capital of the FSNL, while Tarlac City for the FSCL. Tagaytay City is being proposed as the capital of the FSST, while Legazpi City for the FSB. “Metro Manila will be converted into a Federal Administrative Region [FAR] along the lines of a Washington, D.C., a New Delhi or a Kuala Lumpur,” Pimentel has proposed. The FAR Metro Manila would have 16 cities, one municipality (Pateros) and 1,706 barangays. The Visayas will have the federal states of Minparom (Mindoro, Palawan, Romblon; FS-MPR), Eastern Visayas (FSEV), Central Visayas (FSCV) and Western Visayas (FSWV). Pimentel has named Catbalogan City as the proposed capital of the FSEV and Toledo City for the FSCV. Iloilo City is being proposed as the capital of FSWV, while Mamburao, Mindoro Occidental, for the FS Minparom.

Mindanao

Bluraz | Dreamstime

MINDANAO will have the Federal States of Northern Mindanao (FSNM), Southern Mindanao (FSSM), the BangsaMoro (FS BangsaMoro) and Sabah (FSS). Pimentel proposed Cagayan de Oro City as the capital of the FSNM and Davao for the FSSM. Marawi City is proposed as the capital of the FS BangsaMoro. Brillantes said the Pimentel proposal includes Sabah as it is only 350.67 kilometers from Bongao, Tawi-tawi. “Sabah is ours; not Malaysia’s,” he said. According to Brillantes, boundaries of a Federal State “will maintain or cut across present regional boundaries.” “The Federal States should be constituted out of bigger political territories to provide the environment for competitiveness and sustainability rather than create them out of provinces that in many instances might simply be too small to survive as Federal States.” Every Federal State, according to Brillantes, shall have a state governor and a vice governor elected by the people of the state. Each will still have provinces, cities, municipalities and barangays. The powers of the LGU “will be adjusted accordingly,” he said.

and nationhood. Citing Sosmena again, Manasan said historical trends in both political and administrative decentralization have been influenced by several factors. She cited these as threat to national security, national integration, national development, perception of the central government on the competence of local government and personalities of the Presidents of the Philippines. It is against these sad background and bitter experiences that the pivot to federalism should be undertaken with serious circumspection, understanding and concern.

Martial Law

THERE are proven theories and valid arguments in favor of a federal system. Social scientists assert that federalism or a federal system of government is most appropriate for people with diverse ethnic, cultural and religious backgrounds. They also argue that the diffu-

sion of powers between the central or Federal State and those of the provinces or regions or sub-states will effectively prevent the rise of authoritarian or dictatorial regimes. The ordinary citizens, they add, will be more conscious and assertive of their rights and privileges. They also point out that no dictator or ruler lasted long in countries where the people’s sentiments were ignored or stifled. The absence of a democratic process of consultation with the sovereign people, according to them, creates an explosive political vacuum. This theory is best exemplified in President Ferdinand Marcos’s Martial Law regime. According to Manasan it was during the Martial Law years (1972 to 1981) that the decentralist wave waned. After four years of running the country alone and by himself since he abolished Congress and set aside the installation of an ad interim

assembly, Marcos felt he was no longer aware and was deliberately misinformed by his advisers and lackeys of what was going on in the entire country and what were the sentiments of the people. He realized he could no longer rule the country under a volatile political situation. He called for elections to the Batasang Pambansa midway in his regime of military rule.

Objectives

COMMISSION on Higher Education official Alex B. Brillantes Jr. said the federal system aims to accomplish two things. One is to “cause the speedy development of the entire country by unleashing the forces of competitiveness among the States.” The other is to “dissipate the causes of rebellion in the country and particularly in Mindanao.” He explained that the dual nature of Pimentel’s federal proposal is “not simply a ‘political’ undertak-

ing… [but] also an economic effort.” “By creating 12 Federal States and by converting Metro Manila as a federal administrative region, we immediately establish 13 centers of power, finance and development throughout the country,” Brillantes said at the conference held in Cagayan de Oro City. “Under the unitary system that has characterized the government for centuries, we only had one center of power, finance and development: Metro Manila.” “The federal proposal will hopefully provide a just and lasting redress of the grievances of the powerless and the neglected sectors of society, like the Moro and lumad peoples of Mindanao,” Brillantes said. “And in the case of the Moro peoples, their own federal state would conceivably enable them to run their state government according to their customs and traditions subject, of course, to the norms of modern democratic governments.”

Examples

IT has also been proven that federalism promotes unity rather than factionalism. In most of the over 30 countries with a federal system of government, the components of the Federal State are steadfastly loyal and supportive of the central government even as they remain zealous of their powers and their autonomy as local governments. The United States of America offers the best example of a federal government, which enjoys the strong adherence and support of its 50 component states. Under the Articles of Confederation earlier drafted, the founding states gave the US Congress the power to declare war but not to collect taxes. Gradually, the component states had to cede to the central government broad powers which they cannot exercise on their own behalf and even in their own local interests. One of these powers is the responsibility to handle the country’s foreign affairs. Diplomacy has to be vested in the president and in the Congress of the United States. Early on, the various states also realized that they should not

involve themselves in certain issues on national affairs. Among the other powers vested in the federal or central government, some in absolute terms, and others shared with the member states, are eminent domain, education, banking and credits, labor and professional licensing, insurance, public works and other national concerns. The local governments or substates adopt state laws which promote their interests and address their own unique concerns. They also have powers to collect taxes, license business establishments and create agencies that dispense basic public services. India is another country whose federal system runs as smoothly and efficiently as that of the United States. Yet, its cultural, religious and racial background is clearly different from the US.

Conventions

THERE are many intricate and sensitive aspects of the relationship between the central authority and the local governments of a federal state that must be carefully delineated and defined in the Constitution of a federal government. The ideal arrangement is for the central or federal state not to be too powerful to dominate the local government units and for the latter not to be too strong to be capable of breaking away from the federal state. I hope that Duterte will exercise due diligence in appointing the 24man Constitutional Commission he proposes to convene. The appointees must be men of high scholarships in the rarefied fields of civilization, history and politics. They must be among the best and the brightest of our national leaders. Most keen observers of the political scene favor the plan of Duterte to convene a Constitutional Commission instead of a Constitutional Convention (Con-Con) or a Constituent Assembly (Con-Ass) of the Senate and the House of Representatives. Calling a Con-Con or convening a Con-Ass will entail enormous expense. Its proceedings could be tedious, contentious and protracted. Some suggest that the commission’s membership be expanded to a little more than 50 but less than 100.

Hopes

I note with great interest Mr. Duterte’s oft-repeated assurance that he has no ambition to stay beyond his six-year term. The Commander in Chief says he is determined to leave a legacy of his own and to make a difference in national affairs. The country can expect dramatic reforms and changes once the federal system is installed. Federalism will effectively minimize and discourage graft and corruption. The national bureaucracy will be downsized and streamlined. Many of its services will be devolved to the local governments. Opportunities for influence peddling and bribery will be greatly limited. Most important, federalism will promote more inclusive economic growth. The local communities will create more livelihood and entrepreneurial opportunities. Cooperatives will be encouraged. The federal system will encourage the establishment of cooperatives which offer the most equitable opportunities for economic advancement. The ultimate goal of any social arrangement or system of government is to protect and promote the welfare and interests of its constituents. A truly egalitarian society is the central mission of republican systems of government. This author firmly believes that federalism is the key to a peaceful and progressive Philippines. With reports from Dennis D. Estopace

A8

Banking&Finance BusinessMirror

Thursday, August 24, 2017 • Editor: Jun B. Vallecera

news@businessmirror.com.ph

DOF sees economy breaking out from slow growth By Rea Cu

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Insurance Commission cites need for coverage against terrorism

@ReaCuBM

he Duterte administration will ride on the 6.5-percent growth in GDP in the second quarter to score irreversible economic achievements this year for the benefit of more Filipinos, according to the Department of Finance (DOF). Finance Secretary Carlos G. Dominguez III said the 6.5-percent GDP expansion in the second quarter demonstrates the country’s move toward a more dynamic, investments-led and inclusive economy where the incidence of poverty will be significantly reduced, incomes improved and domestic consumption strengthened. “I assure you, this is an exciting economic story, and it has just begun. Stay with us as we stay the course. We will deliver the change that matters. We expect even more impressive numbers in the succeeding quarters as private investments begin moving and as the infrastructure program gathers steam,” Dominguez told a recent forum. Dominguez said the economy’s rapid expansion, which is necessary to achieve the Duterte administration’s goal of cutting the poverty rate to 14 percent by 2022, will not come at the sacrifice

of fiscal discipline. “It will not be a reckless growth that incurs unsustainable debt and causes inflation to spike. We have set clear quantifiable targets against which our performance might be measured,” he added. The Duterte administration is striving to push the GDP growth rate close to the 7-percent level, which will be founded on strong domestic demand and reliable remittance and investment inflows, with the rate of inflation contained at 3 percent or lower. “We are doing our best to provide you with the latest details of this remarkable economic unfolding. You will agree this is an exciting story to tell, more exciting than the natural and man-made calamities in our disaster-prone country,” he said. The finance chief said the country invested much over the past three decades working down the national debt, improv-

Dominguez

ing revenue flows and containing the budget deficit to achieve its strong fiscal position to date, which came at the expense of postponing capital investments and the expansion of social services. “Now is the time to catch up and modernize our economic base. Now is the time to deliver the benefits of increased social spending for our people. Now is the time for our economy to break out from slow growth and begin performing as the region’s dynamo,” he added. Dominguez said the government is aiming to show an annual improvement in the aspect of reducing the rate of involuntary hunger in the country, addressing both underemployment and unemployment challenges, increasing the strength of agricultural output, as well as exports, and raking in greater amounts of investment inflows for the Philippines.

Senators eye repeal of bank-secrecy law By Butch Fernandez

@butchfBM

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enators looking into the reported multimillion peso hidden wealth of Commission on Election (Comelec) Chairman Andres D. Bautista are set to push for the passage of remedial legislation relaxing bank-secrecy rules. Sen. Francis G.Escudero and Minority Leader Franklin M. Drilon, however, assured they would insist on including provisions for “adequate safeguards” against potential abuse. Apart from repealing bank-secrecy rules for so-called politically exposed persons like Bautista, Escudero, chairman of the Senate Committee on Banks, said he would also move to “relax rules” on confidentiality of statements on assets, liabilities and net worth (SALN) that all public officia ls are required to file annually. For his part, Drilon confirmed he will support legislation to ease bank-secrecy rules “ but there must be adequate measures to protect depositors”, “We will support the repeal of bank secrecy law but we will insist on strict safeguards against misuse,” Drilon said. Escudero and Drilon aired their views after Wednesday’s Banks Committee inquiry into possible violation of the AntiMoney Laundering Act by some covered banking institutions that Bautista is believed to have used to hide his suspected hidden wealth. A former Justice Secretary himself,

Drilon reminded National Bureau of Investigation officials they “must comply with the law” in following incumbent Justice Secretar y Vitaliano N. Aguirre II’s order to look into Bautista’s case. This developed as Senate probers voiced frustration in failing to elicit vital information on Bautista’s bank accounts during Wednesday’s hearing attended by officials of the Bangko Sentral Ng Pilipinas, Anti-Money Laundering Council and the Luzon Development Bank, where the Comelec chief is said to have millions of pesos in secret deposits, as alleged by

his ex-wife Patricia Bautista. Senate probers voiced frustration that bank-secrecy law prevented officers of Luzon Development Bank, led by LDB president David Sarmiento, from confirming authenticity of 35 passbooks submitted by Bautista’s wife as evidence of the Comelec chief ’s hidden wealth. Sarmiento affirmed that LDB fulfilled the bank’s duty to “file suspicious transaction reports” on such deposits, and followed procedures in opening accounts of politically exposed persons.

Case clippings

By Justice S J Ranada Jr. JUDICIAL ADMISSIONS–failure to deny allegation A defendant’s failure to refute plaintiff’s possession of the subject property may be deemed as a judicial admission. A party may make judicial admissions in the pleadings, during the trial or in other stages of judicial proceeding. A judicial admission conclusively binds the party making it and he cannot, thereafter, take a contradictory position. Acts or facts admitted do not require proof and cannot be contradicted, unless admission was made through palpable mistake. Ocampo v. Ocampo 05 Jul 2017

GR 227894 Velasco, J

The public needs protection against losses and damages resulting from terrorist attacks, like the Marawi seige. FILE PHOTO

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he Insurance Commission (IC) on Wednesday renewed its call on the need for insurance against acts of terrorism, following the Marawi seize and the recent attack in Spain by terrorists. Insurance Commissioner Dennis B. Funa also urged the insurance industry to develop products to mitigate such risks, as he emphasized the need to have insurance cover against terrorism. “In the light of the continuing risk of terrorist attacks, it is important that the public is protected against losses and damages resulting from terrorist attacks. Since the 9/11 attacks, terroris- insurance industry has grown exponentially. In the Philippine setting, however, it was only recently that a product has been approved which covers losses as a direct result of a terrorist act,” Funa said. The IC chief added that, at present, the only company offering a terrorism insurance cover in the Philippines is FWD Life Insurance Corp. (FWD Life). “While existing insurance products specifically exclude death and disability claims arising from terrorist attacks, FWD Life developed a product that specifically covers this risk,” he added. Funa said the product developed by FWD Life is the first of its kind in the country, which provides a financial-protection component in the event of death or serious injury stemming from circumstances, such as a terrorist attack. “Terrorism is one of the major social issues in our country. Considering that

terrorism is an indiscriminate attack, any person is exposed to the risk of incurring loss to life, limbs and property. This leaves a significant gap between the likelihood of terrorist attack and the risk we are exposed to upon the happening of such attack,” he said. In trying to address the gap, Funa urged insurance companies to develop products that will afford protection against losses and damages as a result of acts of terrorism. “Considering that the Philippines is considered as high-risk country in terms of likelihood of terrorism attack, we encourage insurance companies to develop life and nonlife-insurance products that specifically cover losses and damages resulting from acts of terrorism,” Funa added. Earlier in the month, the IC reported an 11.15-percent increase in premium income in the first six months of the year to P117.29 billion, due to the strong performance of the life, nonlife and mutualbenefit associations. Funa said the growth was due to the sale of traditional and variable life-insurance products, which posted growth of 3.05 percent and 13.69 percent, respectively. In the first half of 2016, the insurance sector reported a 9.11-percent decline in premium income to P105.52 billion, from P116.11 billion in the same period in 2015.The insurance industry’s total net worth stood P310.74 billion in the first six months this year, up 18.37 percent, from P262.51 billion in 2016. Rea Cu

AXA Philippines rolls out Internet-based insurance product By Kathryn Jose @kathryntjose

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h ilippin e A x a L i f e I n s u r ance Corp. (A X A Philippines), t he cou nt r y ’s second-l a rgest l i fe i n s u r a nce f i r m , l au nc he d on Wednesday the first domestic Internet-based insurance product that offers Filipinos middle-priced protection and fund-accumulation resource in line w ith the company’s digital transformation. A X A Ph i l ip pi ne s’s MyA mbit ion product requires one-time payment of P50,000 to P125,000 for those who want to avail themselves of an investment-linked insurance policy. Clients can choose among stocks, bonds or combination, called balanced funds,

to grow their money. The product that caters to individuals aged 20 to 60­— young professionals starting their careers or retiring employees seeking to fulfill their other life goals—is payable with a credit card on the firm’s web site at www.axa.com. ph, or the downloadable mobile application MyA X A. MyAmbition is among the initial digital-insurance products designed by A X A Philippines to widen market reach among digitally savvy millennials and to comply with the guidelines of the Insurance Commission (IC) that encourages insurance firms to extend life-protection and wealth-management products through electronic commerce or online business. “Our launch today is about A X A

strengthening its digital platform. Now digital is the way of life, not only a buzzword. As in other parts of the world, most of the transactions today in the country happen in the Internet. We know very well that the Philippines, as the Facebook capital of the world, is ahead in Internet usage,” said Rahul Hora, AXA Philippines president and CEO, at the product launch in Makati City. “A X A Philippines is also very glad that the IC allowed us to sell insurance products online, and we want to be the first in the industry to offer insurance the way Filipinos want to buy insurance products,” he added. According to the guidelines, insurance firms must only sell simple and straightforward products up to 10 items with a minimum payment of P50,000

and maximum of P125,000 each, or not exceeding a total payment of P1.25 million to individuals aged 20 to 60 who must present a proof of source of income. The IC also prohibits switching of funds to various products. Hora said the firm will be upgrading MyAmbition to add payment options. At present, the mobile application provides information on all products, fund values of clients and client interaction with agents and download and upload options of certificates, which other financial institutions require for application for other financial services, such as loans. A X A Philippines is the insurance partner of Metropolitan Bank and Trust Company, which gained P21.6 billion in gross premium income in 2016 from its

811,000 clients. To strengthen the firm’s services to clients, Hora said A X A Philippines is relocating one of its shared services center in Hong Kong to the Philippines, along with Malaysia. The majority of the employees will come from the Philippines, Hora said. “We’ll be adding more features and moving our shared services center to the Philippines. We will be increasing our people from 200 to 300 toward the end of the year. This is a great opportunity for us to also create employment for talented Filipino IT [information-technology] specialists,” he said. At present, A X A Philippines is exploring Metro Manila for the specific location.

The World BusinessMirror

news@businessmirror.com.ph

briefs

➜ N. Korea photos suggest

new solid-fuel missile designs

TOKYO—North Korea’s state media released photos on Wednesday that appear to show the designs of one or possibly two new missiles. Concept diagrams of the missiles were seen hanging on a wall behind leader Kim Jong Un while he visited a plant that makes solid-fuel engines for the country’s ballistic-missile program. One of the photos clearly showed a diagram for a missile called “Pukguksong-3,” which appears to be the latest in its Pukguksong, or Polaris, series. The other was harder to discern, though it carried a “Hwasong,” or Mars, designation name. AP

➜ New Afghanistan plan could

offer clues to ‘Trump Doctrine’

WASHINGTON—Never tip your hand to the enemy. No timelines for military operations. No free pass for a neighbor who tolerates extremists or enables US foes. In President Donald J. Trump’s new Afghanistan strategy, elements of a broader approach to America’s most pressing national security concerns begin to emerge, consistent with his efforts in Iraq, Syria and elsewhere. Though details are limited, the plan draws on organizing principles that are also woven throughout his plans for defeating the Islamic State group and containing the threats posed by North Korea and Iran. Trump’s advisers say his Afghan strategy reflects a consistent world view, both in terms of America’s overseas objectives and the tactics to achieve them. But it’s too soon to say whether he is being driven by a wellformed doctrine or merely coining catchphrases on the fly. “We are not nation-building again. We are killing terrorists,” Trump said in his Monday night speech. He was striving to differentiate his plan from failed approaches of the past. AP

➜ U.S. officials: Navy 7th Fleet

commander to be removed

TOKYO—The commander of the Navy’s 7th Fleet will be removed after a series of warship accidents in the Pacific this year, two US officials said on Wednesday. One official said that Vice Adm. Joseph Aucoin was being removed because of the leadership’s loss of confidence in his ability to command. Both officials spoke on condition of anonymity because they were not authorized to discuss the decision. The move follows four Navy accidents in the Pacific since late January, including two that left sailors dead and missing. AP

➜ WH adviser Kushner in Cairo

for talks on Mideast peace

CAIRO—White House (WH) adviser Jared Kushner has touched down in Cairo, the latest stop on his Mideast trip to discuss the possibility of resuming the Israeli-Palestinian peace process. Egypt’s Foreign Ministry says Kushner, the son-in-law of President Donald J. Trump, will meet with Egyptian officials, including Foreign Minister Sameh Shourky, on Wednesday. The US delegation also includes Jason Greenblatt, envoy for international negotiations and Dina Powell, deputy national security adviser. The delegation was in the Persian Gulf on Tuesday. Separate meetings with Israeli Prime Minister Benjamin Netanyahu and Palestinian President Mahmoud Abbas were expected for Thursday. AP

➜ DNA of headless torso

matches Swedish journalist

COPENHAGEN, Denmark—The Danish police said on Wednesday that a DNA test from a headless torso found in the Baltic Sea matches with missing Swedish journalist Kim Wall, who is believed to have died on an amateur-built submarine that sank. Wall, 30, was last seen alive on August 10 on Danish inventor Peter Madsen’s submarine, which sank off Denmark’s eastern coast the day after. Madsen, who was arrested on preliminary manslaughter charges, denies having anything to do with Wall’s disappearance. He initially told police that she disembarked from the submarine to a Copenhagen island several hours into their trip and that he did not know what happened to her afterward, but later told authorities “an accident occurred onboard that led to her death” and he “buried” her at sea. AP

Editor: Lyn Resurreccion • Thursday, August 24, 2017 A9

Seoul to US: No to revision of trade deal

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outh Korea rejected a US proposal to revise a five-year-old trade deal, as the Trump administration pushed for major changes, which, it says, will cut its trade gap with the Asian nation.

“The US asked for resolution of its trade imbalance, full implementation of the existing FTA [free-trade agreement] and modification and amendment of the current deal,” South Korean Trade Minister Kim Hyun-chong told reporters in Seoul after speaking on Tuesday with US Trade Representative (USTR) Robert Lighthizer via videoconference. The officials spoke amid joint meetings in the South Korean capital after Lighthizer last month gave notice that the US wants to amend the deal. “We told the US that it’s necessary to figure out the reasons for the trade imbalance through a joint study to research, analyze and assess the effect of the FTA,” Kim said. “From my point of view, there’s no agreement regarding negotiations” to revise the deal. “We did not agree to the unilateral proposal from the US to amend the Korea-US FTA,” Kim told reporters in a briefing after a talk with US trade representatives. “We made our position clear that investigation, analysis and evaluation of the impact of the [South] Korea-US [Korus] FTA must be preceded.” The two sides found they had different views on the impact of the free-trade deal and could not reach any agreement during the talks, he added. Kim said Seoul will be waiting for Washington’s response to its proposal for the joint study. The countries’ trade officials held their first talks in Seoul, in what Washington hoped would lead to discussing amendment or

$27.7B The volume of US trade deficit with South Korea last year

modification of the trade deal that took effect five years ago under former President Barack Obama. The US trade official said discussions will continue. Following Kim’s remarks, Lighthizer said President Donald J. Trump is seeking “substantial improvements” that address the trade imbalance, adding that the US wants to see the deal “fully implemented.” Too few American workers have benefited from the accord, and negotiations are an opportunity to address issues, such as long-standing requests by the US that South Korea tackle rules that exclude American firms, he said in an e-mailed statement.

Coming weeks

NO date was set for a future meeting on the issue, Kim said. However, the USTR said discussions would continue in coming weeks. The agreement could be terminated if either nation said it wanted to do so. That process would take 180 days. “I’m not quite sure what problems the administration has with the agreement with Korea, other than we have a trade deficit with them, which the agreement has very little

South Korean Trade Minister Kim Hyung-chong speaks during a news conference at the Foreign Ministry in Seoul, South Korea, on August 22. Kim said on Tuesday that Seoul will not discuss renegotiation of the free-trade agreement with the US without first looking into what is really causing the trade imbalance. AP/Ahn Young-joon

to do with,” said Mayer Brown partner Michael Kantor, who served as USTR under Bill Clinton. “We need to calm down and grow up, and be more realistic with the American public.” In June Trump told South Korean President Moon Jae-in that US automakers should have a “fair shake” for better car sales. Kim said last year that the deal was a “slamdunk shot” for the US. South Korea describes the Korus as a mutually beneficial deal, basing its argument on a surge in bilateral trade volume. But the US sees it as one of the main reasons for the trade imbalance.

Trump’s push

Trump’s push to revise the deal is part of his broader drive to reduce his

nation’s trade deficits with various nations, such as his pursuit of a full renegotiation of the North American Free Trade Agreement. Countries, such as Japan, which have large trade surpluses with the US are watching with interest. The trade issue has emerged just as the US and South Korea need each other’s support to fight together against North Korea’s nuclear threat. The Korus also helps the US on a strategic level, as China’s economic and political influence grows in the region. South Korea is the US’s seventhlargest trading partner, while the US is South Korea’s second-biggest partner, after China. US figures indicate its goods deficit with South Korea was $27.7

billion last year, or about $4.4 billion more than the number Korea came up with. The Trump administration criticized the pact with its ally, saying that the US trade deficit with South Korea had doubled since the deal went into effect. The US trade deficit with South Korea widened from $13.2 billion in 2011. But South Korea said the deal has been beneficial to both countries. The US runs a trade surplus with South Korea in services such as banking and tourism, estimated at $10.7 billion in 2016. South Korea also believes that the FTA is not the cause of the US trade imbalance, and that other, complex factors in the global economy are to blame. Bloomberg News and AP

Trump points finger at news media for US’s deepening divisions

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HOENIX—President Donald J. Trump, stung by days of criticism that he sowed racial division in the US after deadly clashes in Charlottesville, Virginia, accused the news media on Tuesday of misrepresenting what he insisted was his prompt, unequivocal condemnation of bigotry and hatred. After declaring, “What happened in Charlottesville strikes at the core of America,” Trump delivered a lengthy, aggrieved defense of his statements after the violence that left one person dead and the nation reeling at the images of swastikas in Thomas Jefferson’s hometown. He notably left out the part where he said there was violence on “many sides,” which prompted the most intense criticism. Removing his statements about the violence from his jacket pocket, Trump glibly ticked off a list of racist groups that he had been urged to explicitly denounce and ultimately did two days later. But he said the news media quoted him selectively, accused him of responding too late and ignored his message of unity. “I hit ‘em with neo-Nazi. I hit them with everything. I got the white supremacists, the neo-Nazi. I got them all in there, Let’s see. KKK [Ku Klux Klan], we have KKK,” Trump said sardonically on Tuesday of a statement he issued two days after the August 12 clashes, after being faulted for failing to condemn those groups in his initial response. Trump also implied that he planned to pardon Joe Arpaio, the former sheriff of Maricopa County, Arizona, who became a national symbol of the crackdown on unauthorized immigrants with round’em-up searches that landed him in legal trouble.

“Was Sheriff Joe convicted for doing his job?” Trump asked to wild whoops and cheers. “I won’t do it tonight because I don’t want to cause any controversy,” Trump said. “I’ll make a prediction: I think he’s going to be just fine.” In an angry, unbridled and unscripted performance that rivaled the most sulfurous rallies of his presidential campaign, Trump sought to deflect the anger toward him against the news media, suggesting that the news, not him, was responsible for deepening divisions in the country. “It’s time to expose the crooked media deceptions,” Trump said. He added, “They’re very dishonest people.” “The only people giving a platform to these hate groups is the media itself and the fake news,” he said. Trump also derided the media for focusing on his tweets, which are his preferred form of communication. “I don’t do Twitter storms,” said Trump, who often posts a few tweets in a row on a given subject, with exclamation points. It was the latest shift in what has become a nearly daily change of roles for this president: from the statesmanlike commander in chief who sought harmony on Monday evening by citing the example of America’s soldiers to the political warrior who preached unapologetic division to his supporters here, eliciting louder cheers with every epithet. Returning repeatedly to Charlottesville, he said the media failed to focus on anarchists, who, he said, turned out in their “helmets and the black masks—Antifa,” Trump said, spitting out the nickname for the antifascist groups. Trump accused the media of

President Donald J. Trump speaks during a campaign-style rally at the Phoenix Convention Center on August 22. Tom Brenner/The New York Times

“trying to take away our history and our heritage,” an apparent reference to the debate over removing statues to heroes of the Confederacy, which prompted the rally by neo-Nazis and white supremacists in Charlottesville. The president singled out a familiar list of malefactors—including the “failing New York Times,” which he said erroneously had apologized for its coverage of the 2016 election; CNN; and The Washington Post, which he described as a lobbying arm for Amazon, the company controlled by the paper’s owner, Jeff Bezos. Pointing repeatedly to the cameras in the middle of a cavernous convention center, Trump whipped the crowd into fevered chants of “CNN sucks.” Members of the audience shouted epithets at the reporters, some demanding that they stop tormenting the president with questions about his ties to Russia.

The people in Arizona on Trump’s enemies list include both of the state’s Republican senators: Jeff Flake, a longtime nemesis whom Trump has described as “toxic,” not to mention a “flake;” and John McCain, who cast the decisive Republican vote in the Senate to dash Trump’s effort to repeal former President Barack Obama’s Affordable Care Act. His voice thick with sarcasm, Trump said he had been instructed not to mention either of the senators by name. Of Flake, he said, “Nobody knows who the hell he is.” Of McCain, he repeated over and over, “One vote,” which cost Republicans health care. Trump recited a familiar litany of complaints about lawless immigrants and naive trade deals. But aside from a reference to renegotiating the North American Free Trade Agreement with Canada and Mexico—he said he expected he would have to terminate the accord first—the speech was light on policy specifics.

At another point, he heralded the arrival of clean-coal plants, adding, “They are taking out coal. They are going to clean it”—which is not how clean-coal plants function. Trump also said little about foreign policy, offering only a bare summary of the Afghanistan policy he unveiled on Monday night, and suggested that North Korea’s dictator, Kim Jong Un, had retreated in the face of Trump’s threats of military action against him. The president made no mention of the accident involving the Navy destroyer John S. McCain, named for the father of the senator, which left several sailors presumed dead. Hours earlier, Sarah Huckabee Sanders, the White House press secretary, had said that Trump would not issue a pardon for Arpaio on Tuesday. Arpaio was found guilty of criminal contempt of court after he flouted an order to stop detaining people his office suspected of being undocumented immigrants. Arpaio said in an interview on Tuesday night that he did not know Trump was going to mention his name at the rally and reiterated that he had not talked to the president since last fall. But he said he “wasn’t really surprised” to hear he would likely be pardoned. “I just know him,” Arpaio said of the president. “And even though everybody said he’s not going to talk about it—deep in my heart I knew he was going to say something. I had no hints, but that’s who he is.” Trump’s teased pardon of him energized the crowd at the convention center, where the president had been expected to stick to a theme of national unity but, instead, tripled down on his defense of statements about Charlottesville. New York Times News Service

A10 Thursday, August 24, 2017 • Editor: Angel R. Calso

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Privatize Customs

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hen President Duterte announced on Monday that he accepted the resignation of Customs Commissioner Nicanor E. Faeldon, certain quarters, including some members of the House of Representatives and the Senate, publicly rejoiced. The President named Undersecretary Isidro S. Lapeña, the director general of the Philippine Drug Enforcement Agency (PDEA), to replace the embattled Customs chief. Faeldon, who headed the Bureau of Customs (BOC) for over a year, came under fire for the entry of some P6.4 billion worth of shabu in the country. The contraband went through the BOC “green lane” reserved for big corporations with clean record as importers. The shipment, which arrived in May at the Manila International Container Port, should have passed through the “red lane” as it was consigned to a sole proprietor, who turned out to be a new importer. Despite accepting Faeldon’s resignation, Duterte still stood by the former military officer. He said: “I really believe he is an honest man. Naisahan lang siya [he was outwitted]. The BOC has a rotten system.” Not only is the BOC a center of big-time corruption. It is also a center of incompetence, as seen in an embarrassing incident last year involving a Customs examiner who opened a diplomatic pouch meant for the Embassy of Japan. Despite being shown a certificate from the Department of Foreign Affairs allowing the release of the pouches, the examiner arrogantly insisted on opening them. That there is systemic corruption at the BOC is just stating the obvious. Customs officials and employees can enrich themselves by simply turning a blind eye to smuggling and big-time drug trafficking. If authorities, like the PDEA or the National Bureau of Investigation, conduct operations to apprehend smugglers, all the BOC insiders have to do is tip the target. No wonder the government is losing potential revenues to the tune of hundreds of billions of pesos to smugglers. According to the latest study of the Federation of Philippine Industries’ Fight Illicit Trade Movement, some P904.6 billion worth of products have been smuggled into the Philippines from 2011 to 2015. The study found that smuggling was rampant in the following industries: petroleum, steel, resins, wood, cigarettes, sugar, palm oil and automotive batteries. How to cleanse an inept, incompetent and corrupt bureau? For the longest time, concerned Filipinos have proposed the privatization of the BOC to give it a clean slate. They said privatizing the BOC will eliminate political interference in its operations and free it from the image of being a “fund-raising” agency for the political party in power. We are sure the President will have none of this. But, as most everyone believes, no matter how straight the Customs chief is, his job will be made difficult by corrupt old timers who will deliberately underperform in their collection efforts to put the BOC chief under a negative light. Even if Duterte names a clean person to lead the BOC, weeding out corruption is still very challenging if the system is rotten at the core. Obviously, we can’t privatize the BOC’s sovereign functions. But we need to identify in the value chain those areas that could be privatized to professionalize operations and put the right people for the right job. We need to adopt and practice meritocracy, instead of the padrino system where influential individuals can dictate who gets appointed to what position at the BOC. We can tap the services of global firms, like the Societe Generale de Surveillance, which, alongside other companies, like Bureau Veritas, Intertek, TÜV, DNV GL and Cotecna, has a good record in the inspection and verification of the quantity, weight and quality of traded goods. That’s how we can collect the correct duties and taxes. That’s how we can plug leakages and stop technical smuggling. The BOC, meanwhile, can focus on running after smugglers and drug traffickers.

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Which government is best? John Mangun

OUTSIDE THE BOX

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T is not as if we haven’t had enough experience and time to get it right. Damascus, Syria has probably been a continuously inhabited city for 11,000 years. An area north of Aleppo, Syria shows there was a city 13,000 years ago. The “Cradle of Western Civilization”—Athens, Greece—goes back 7,000 years. Luoyang, one of the ancient capitals of China, has been around for 4,000 years.

It does not matter what type each of these places enjoyed—from a tyrannical Iron Throne to “The Committee to Decide What Time to Close the City Gates”—there has always also been some sort of government. Archeologists say that the Potter’s Wheel was invented around 3,500 BC, and while it took another 300 years for some bright person to turn it on its side and attach it to a horse-drawn cart, eventually humanity got it figured out. But from Plato’s idea of government ruled by “philosopher kings” to North Korea’s

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Kim (“I learned to drive at the age of three”) Jong Un, we have not found a lasting answer to government. Every form of government, no matter how many times the faces have changed through thousands of years, is still closer to a square wheel than to the ideal. Winston Churchill once said, “Democracy is the worst form of government except for all those other forms that have been tried from time to time.” That is not exactly a resounding recommendation. After 13,000 years, humanity has

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N 2007 an up-and-coming Chinese leader by the name of Xi Jinping was having dinner with the US ambassador. As the evening wound down, the ambassador asked Xi if he’d seen any good movies lately. Xi said he had a DVD of Flags of Our Fathers that he meant to watch. He added he liked Hollywood’s World War II films because they’re “grand and truthful” in their moral outlook. By contrast, he thought Chinese films were too concerned with “talking about bad things in imperial palaces”. If that’s a guide to what Xi wants to watch, then he’s probably a fan of Wolf Warrior 2, the patriotic shoot’em-up that has just become the topgrossing film in Chinese history, and the first non-Hollywood title to crack the top 100 of all time. China’s filmmakers have long hoped to tell patriotic stories with Hollywood flair, and Wolf Warrior 2 shows they can do it. That’s good news for Chinese audiences—and a stark warning to Hollywood. Ever since China opened its screens to foreign entertainment, Hollywood has maintained a stronghold on its audiences. Last year international films—most of which originated in the US—accounted for 42 percent of China’s box-office take, even though the government

allows only 34 foreign films to be released each year, and restricts them to unpopular times and limited runs. But as popular as American films are in China, there’s an undeniable hunger for well-told Chinese stories. Historically, two factors have stood in the way of meeting that demand. China’s movie business has long lagged Hollywood’s standards, for everything from special effects to choreographing chase scenes. And political concerns have led filmmakers to censor themselves to avoid unwanted attention. The results were films that didn’t look good and didn’t tell compelling stories. Recently, however, that’s been changing. Local filmmakers have found genres that they can explore without much government

still not been able to get it together. On one hand is the argument that a stronger and more powerful government is the solution. Soviet Communism and Mussolini’s Fascism was supposed to offer that and failed miserably. Weaker government with less control also let things get out of hand with an example being the late-19th century “Robber Barons” of the US. The logical thought would be that we should be able to find a balance that would provide an overall and continuing situation as close to an ideal as possible. But it has never happened. If you look at what makes a nation and society better, you would probably talk about—in no particular order—health care, education, wealth opportunities and equality, and safety and security for example. But there is always something missing. Wealth inequality is a big issue and is partially measured by the Gini coefficient with a low number showing more equality. And on the top of the list is Ukraine. Of course, that country has an ongoing civil war and is one of the most corrupt on Earth, but, at least, everybody is “equal”. Switzerland usually is at

the top of the list of great places to live. But there the wealth equality is virtually the same as in Bangladesh and Niger and worse than Germany, Austria and Norway. Switzerland also has a great overcrowding problem in its prison system, criticized by human-rights groups. And then there is the economic side. Since 2008 the value of financial assets—stocks and bonds—has risen by 40 percent in the US. But the value of “real” assets, like airports, roads, seaports and factories is virtually unchanged. And that is the fact for most every Western country. While the global poverty rate is improving, the actual number of people existing on less than the equivalent of $2.50 per day is 3 billion, or nearly one-half of humanity. Is the government to blame for the problems? Not entirely, of course. But the government—except in the most extreme examples—usually does reflect the people. What haven’t we learned in the past 13,000 years?

interference, and their storytelling skills have improved with bigger budgets and increased exposure to Hollywood films. Several Chinesemade comedies have recently become big hits, propelled by locally flavored humor (often incomprehensible to overseas audiences), good production values and themes that touch on middle-class anxieties. China suddenly has localized versions of everything from the Hangover series to Planes, Trains and Automobiles. As satisfying as that success has been, though, Chinese studios have mostly failed at a bigger prize: making big-budget action films that can compete with the flag-waving blockbusters perfected by Hollywood. It’s not for lack of trying. Last year China’s most famous director helmed The Great Wall, a ridiculous $150 million China-Hollywood coproduction in which Matt Damon defended the Great Wall from CGI monsters. It flopped, both critically and commercially, much to the disappointment of studios in both countries. The film’s effort to include “Chinese elements”, such as a clumsily recreated folk opera, came off as patronizing at best. Many in Hollywood presumably expected Wolf Warrior 2 to be a similar flop. The story follows Leng Feng, a moody ex-soldier who drinks excessively, in part to dull the pain from the loss of his presumed-dead girlfriend. Over the course of the film, he finds

purpose, patriotism and redemption, all via death-defying one-man rescues of Chinese citizens trapped in an unnamed African country. He’s a cliché, echoing characters from Dirty Harry to John Rambo. Yet, in China, where military men are typically depicted as one-dimensional patriots, Leng turned out to be a cinematic revolution. Wu Jing, the film’s star and director, doesn’t deny that the jingoistic plot elements are inspired by red-white-and-blue blockbusters. “America makes movies that promote the American spirit,” he said in an interview. “Why can’t I do that for China?” A few years ago, he probably couldn’t have. Today, he’s planning Wolf Warrior 3 and his next assault on Hollywood’s action films. The copycats are sure to follow. That’s mostly a good thing. China’s filmmakers have an inherent advantage in grasping the mood of mayhem-loving local audiences. As their tradecraft improves, they’re likely to take back some of Hollywood’s share of the domestic box office. When a rebooted Rambo goes toe-to-toe with the next Leng Feng, the outcome is likely to be in China’s favor. For Hollywood, that’s an ominous sign of new competition. But it’s also an opportunity to get creative, and start taking Chinese audiences seriously. That’s a blockbuster everyone should want to see.

E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stockmarket information and technical analysis tools provided by the COL Financial Group Inc.

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Social protection unlimited?

Rock of invincible service Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

Dr. Rene E. Ofreneo

LABOREM EXERCENS Continued from A1

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he umbrella includes the government’s centerpiece program, called the Pantawid Pamilyang Pilipino Program (4Ps) or the conditional-cash transfer (CCT) for the poor; national health insurance provided by the Philippine Health Insurance Corp. (PhilHealth); social insurance programs administered by the Social Security System (SSS) and the Government Service Insurance System (GSIS); Pag-Ibig Pabahay Program and Housing Loans, income and livelihood support for disadvantaged groups; free basic education; Technical Education and Skills Development Authority training program for the poor; monthly pension of P500 for indigent senior citizens, senior medicine and food discounts; rehabilitation services for disadvantaged groups; food programs for poor school children; Kalahi-CIDS assistance for poor barangays; disaster and relief programs for victims of disasters; microfinance relending program; Philippine Charity Sweepstakes Office assistance to indigents; benefits for solo parents and so on and so forth. Accordingly, the government, under the PDP 2017-2022, is moving toward a regime of universal social protection. Also, the budget plan calls for an expansion of the social-protection spending, from 3 to 5 percent of the GDP. This is close to what the International Labor Organization deems as the minimum budgetary spending for universal “social protection floor”, which is 6 percent. Is the government turning social democratic? Are we now moving toward the social and economic arrangement obtaining in Canada, Australia and many countries in Europe, where citizens facing adversities in life such as work disability, illness and so on are guaranteed social and economic protection. In the most developed social-protection system in some welfare states, the budget for social protection is as high as 24 percent of the GDP. Thus, in Canada, an aging couple who have to undergo dialysis twice a week due to kidney problem need not worry about the cost of medical treatment and even the fare for going to and back from the hospital. Incidentally, the PDP 2017-2022 lists unemployment insurance law as part of the country’s priority legislative agenda. This means the enactment of a law to provide “meaningful jobs, guarantee income security during sudden unemployment” to the displaced. Such a law is one of the major hallmarks of a welfare state. Endos and contractuals and job-order employees, no more postproject job anxieties! The foregoing developments excite the advocates of universal and adequate social protection for all in the Philippines. The social discourse has somehow changed in the last three decades—from the neo-liberal thinking that the government should stay out of the social insurance system and let the market take care of citizens’ needs to one where the government plays an activist role in providing protection for all, the needy and marginalized in particular. However, certain obstacles have to be handled before universality and adequacy can be fully met. First, as the 2017 Decent Work Diagnostics for the Philippines put it, many of the social-protection programs are fragmented, disparate and even overlapping with one another. As a result, overall administrative and budgeting efficiency is affected. As borne out by recent debates arising from Judy Taguiwalo’s nonconfirmation as Department of Social Welfare and Development secretary, the CCT or 4Ps is beset with numerous problems. Foremost among these are the perennial problems of leakages and political meddling in the allocation and disbursement of funds. The lista issue (who should be included and excluded) is a big one at the barangay and local government level. The cost of managing the CCT is also high, as much as P1 billion for several million households.

The foregoing developments excite the advocates of universal and adequate social protection for all in the Philippines. The social discourse has somehow changed in the last three decades—from the neo-liberal thinking that the government should stay out of the social insurance system and let the market take care of citizens’ needs to one where the government plays an activist role in providing protection for all. Some beneficiaries checks that they get their share or checks only after six months. But the most troubling is that the CCT is simply treated as a dole-out for those who are unable to get jobs, whether quality ones or not, in an economy fueled by the PPPs and the “Build, Build, Build” program. The incentive to work is eroded and is replaced by outright social tokenism. In other countries, such as Brazil, CCT is only part of a bigger and broader poverty-reduction program, which includes urban and agrarian reform, industrialization, enactment of protective labor laws and so on. CCT cannot be a solo antipoverty program, for, given its present design, it can only alleviate, not reduce, poverty. The adequacy issue is also a big problem. In a country as big as the Philippines, where the informal sector accounts for at least two-thirds of the labor force and where the “unpaid family workers” number around 4 million, the budgetary allocation of 5 percent of the GDP for the various social-protection programs is obviously not enough. The inadequacy is reflected in the numerous complaints about the availment of PhilHealth benefits, foremost of which are as follows: out-of-pocket expenses (mostly medicines, which are generally expensive) are not covered, available medical facilities for the enrollees are limited, the principle of “no-balanced-billing” for PhilHealth patients is not being observed by many hospitals, and information on PhilHealth benefits and availment process is not fully shared with the public. Finally, a strong system of universal and adequate social protection is unsustainable in an economy where inequality is high, meaning only a few are able to reap the benefits of growth, while many wallow in poverty. Such a system naturally breed mass poverty and social unrest, both of which force the government to spend so much on military spending and social-protection palliatives. The ideal is to have a transformative social protection, where the citizens are empowered to become active and productive members of society in a more equal or egalitarian society. This way, expensive programs like the CCT or 4Ps shall naturally shrink, and so is the budget for it. In short, there is a need for a revisioning of the social-protection program alongside that of the economic development road map.

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hese next two Sundays we shall meditate on Peter’s ministry as Christ’s chosen servant for a special task in the service of the Church. Two Sundays back in the story of the Lord walking on the stormy sea, we saw Peter typifying the disciples’ faith, daring but doubting and needing the outstretched hand of Jesus. Now in speaking out the faith of the disciples, Peter receives from Jesus an unexpected responsibility in the community (Matthew 16:13-20).

‘You are the Christ’ Jesus in instructing His disciples is about to reveal to them the mystery of His passion. Faith is clearly necessary for those following the suffering Messiah. Jesus sounds them off first about the people’s opinion of Him, then He zeroes in on their own perception of Him. Peter’s confession: “You are the Messiah, the Son of the living God” is a synthesis of the faith of the disciples in Jesus as the long awaited savior. This more likely post-resurrection proclamation of faith in Jesus as “the Son of the living God”

(1 Corinthians 15:5), is placed here by the evangelist as some sort of climax to the disciples’ formation to illustrate the importance of the witness of their faith in Jesus in their mission of leading others to him. The very location for the confession underlines its momentous significance. Caesarea Phillippi in the foothills of Mount Hermon, a traditional site for encounters between God and the people, underscores that Peter’s faith is indeed coming not through human mean (“flesh and blood”) but through revelation from Jesus’ “heavenly Father”.

Thursday, August 24, 2017 A11

‘You are Peter’ TO believe in Jesus as the Christ means to be involved and to be committed. Faith entails responsibility, and the name Peter (kepa in Aramaic, transliterated kepas in Greek, Petros in Latin, means “rock”), particularly assigned by Jesus to “Simon son of Jonah”, indicates the task entrusted to him—to be the rock foundation that provides solidity and stability to the community of salvation, the ekklesia (katipunan) Jesus is assembling together. The apostles’ faith is a divine gift intended as a basic means of durability and permanence to the Christian community. Jesus promises, “The gates of the netherworld shall not prevail against it.” The forces of death shall not overcome the Church; faith makes her invincible. The pivotal role of Peter as a vital witness of faith to the early community is further emphasized by the symbolism of the keys (Isaiah 22:15-25). The keys of the kingdom of heaven signify that he has the authority to unlock and to lock up, to allow in and to bar out, to “loose” and to “bind”, to permit and to forbid, anything or anyone that may be good or bad for the faithful in terms of God’s reign. And this authority on earth is confirmed in

heaven; it will not just be human whim but fidelity to the divine intention. Under the stewardship of Peter as leader of the Twelve, the faithful did survive the aftermath of Jesus’ death, the persecutions by the Jews and by the Romans, and the trials of conflicting cultures and ideas. The burden of authority has been given to Peter for the welfare of all those who would come to believe in Jesus through the words and works of the apostles. Alálaong bagá, to recognize and confess Jesus Christ in times of joy as well as in moments of doubt and fear, is the responsibility of Peter and his successors to ensure till the end of time. Church stewardship is a loving service for the faith that saves. Authority in the Church is for the Church, to enable those responsible to carry out their mission of love and service in, through and for the community of faith. It is received with a sense of unworthiness because it is a sacred trust undeserved. It is a share in Christ’s invincible mission to carry out the Father’s plan of salvation for all humankind. Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on DWIZ 882, or by audio streaming on www.dwiz882.com.

The applicability of VAT in pre-incorporation subscription agreements Atty. Jared C. Vicencio

Tax Law for Business

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ne of the most important considerations for investments is the calculated rate of return on investment. It is generally the standard used to measure if an endeavor is worth pursuing. The application of certain taxes can significantly impact the cost to participate in a particular investment, as well as the eventual rate of return. It goes without saying, then, that it is vital to clarify the taxability of investment transactions. One such investment vehicle where application of tax was made an issue is a pre-incorporation subscription. Particularly, it is important to clarify if pre-incorporation subscriptions are subject to valueadded tax (VAT). In CTA Case 9145, the CTA

resolved an issue where a taxpayer was being assessed with deficiency VAT arising from its transfer of real property pursuant to a preincorporation stock subscription agreement. The Bureau of Internal Revenue (BIR) insists that the transfer of the said real property constituted a sale subject to VAT. The matter is complicated by the fact that the taxpayer in this case is engaged in the real-estate business. This made the BIR conclude that the subscription was pursued in the ordinary course of business,

as the properties exchanged for the subscription are the same type that the taxpayer would list as part of its inventory. The CTA resolved the issue by clarifying the nature of a pre-incorporation subscription agreement. The Tax Court harmonized the provisions of the Tax Code on VAT, as well as Sections 61 and 62 of the Corporation Code. It ruled that given the provisions of the Corporation Code, a pre-incorporation subscription agreement is not a sale, which is subject to VAT. In addition, it is interesting to note that the Tax Court also ruled that the pre-incorporation subscription in question was not entered into in the course of trade or business. The honorable CTA considered the primary purpose of the taxpayer, and from there concluded that entering into pre-incorporation subscriptions are not part of the same. The earlier discussion on the nature of preincorporation subscriptions should have been sufficient to address the issue at hand. The further discussion on the

taxpayer’s regular course of business, however, raises more questions. Does this mean that if entering into such subscriptions are part of a taxpayer’s primary purpose, the said transaction is subject to VAT? Given that the Court already ruled on the nature of pre-incorporation subscriptions, the answer should be in the negative. However, since the Court found it necessary to touch on the primary purpose of the taxpayer, it may be more prudent to make careful considerations when entering into pre-incorporation subscription agreements. The author is a junior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global. The article is for general information only and is not intended, nor should be construed, as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported therefore by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at jared.vicencio@bdblaw.com.ph or call 4032001 local 370.

The lowflation demon that vexes central banks By Mohamed A. El-Erian Bloomberg View

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ersistently low inflation, or “lowflation”, is vexing lots of people. According to the recent minutes of policy meetings of the Federal Reserve (the Fed) and the European Central Bank (ECB), central banks on both sides of the Atlantic have been trying to identify the causes—but with limited success so far. This complicates monetarypolicy decisions and undermines the range of institutional solutions that have been proposed by academics. Until this changes, central banks may need to think more holistically about the objectives of monetary policy, including the unintended consequences for future financial stability and growth of being too loose for too long. Four facts stand out in reviewing recent inflation data: n Inflation rates have been unusually and persistently low. n This is primarily an advancedcountry phenomenon. n Inflation has not responded to the prolonged pursuit of ultra-low interest rates and huge injections of liquidity by central banks through quantitative easing. n This has coincided with a

period of notable job creation, especially in the US, thereby flattening the “Phillips curve” that plots unemployment and inflation rates. Many economists worry that such lowflation frustrates the relative price adjustments that are critical to a well-functioning market economy. And if the inflation rate, and related inflationary expectations, flirt with the zero line for too long (as had occurred in Europe), there is an increased risk of actual price declines that encourages consumers to postpone their purchases, weakens economic growth and undermines policy effectiveness (as had been the case in Japan). The many reasons that have been put forward for the lowflation phenomenon range from benign measurement errors to worrisome structural drivers, with a host of “idiosyncratic factors” in the middle. Indeed, the Fed minutes released last week contain a list of possible drivers. These also note that a few central bankers are questioning the usefulness of traditional models and approaches in explaining and predicting inflation behavior. The recent ECB minutes also refer to “a number of explanatory factors” for lowflation and the importance of monitoring “the extent to which such factors could be transient or more permanent.” (And

that is not the only issue vexing central bankers and economists more generally —productivity and wage formation have also been puzzles to an unusual extent.) Turning to solutions, some economists have suggested that central banks increase their inflation targets, typically set at 2 percent currently. Others have proposed that the monetary authorities should pursue a price level target so that shortfalls in meeting the desired inflation rate in one year would require aiming for a higher rate in the subsequent year. As attractive as they may sound to some, these solutions are operationally challenged, particularly if structural factors are depressing inflation. Having failed to meet the 2-percent target despite aggressive monetary policy, it is far from obvious that central banks would be able to meet a higher objective. And no one is quite sure how the political system would respond to a central bank that pursues much higher inflation as it tries to offset the shortfalls of prior years. Indeed, until we have a better understanding of how the transmission mechanism has evolved, there is no guarantee that a change in policy approach would do anything more than threaten even greater collateral damage and unintended consequences.

Already, economies on both side of the Atlantic must contend with the risk that a loose monetary-policy approach may have overly repressed financial volatility, excessively boosted a range of asset prices beyond what is warranted by economic fundamentals, and encouraged too much risk-taking by nonbanks. Indeed, in the Fed minutes, the central bank staff noted that “since the April assessment, vulnerabilities associated with asset-valuation pressures had edged up from notable to elevated.” Robust job creation, financial conditions and the overall health of the economy should guide monetary-policy formation rather than the excessive pursuit of a stillmisunderstood lowflation. The lowflation demon is real and, in the case of the US, the market now believes that it will likely dissuade the Fed from delivering on the next signaled step in the gradual normalization of monetary policy, including an interest-rate hike in the remainder of 2017. Yet, a lot more work is needed to understand the causes and consequences of persistently low inflation. Until that happens, central bankers may be well advised to stick with the demon they know rather than end up with one of future financial instability that undermines prospects for growth and prosperity.

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PHL leads Asean in Gallup poll on people’s migrant acceptance 6.77 W By Cai U. Ordinario

@cuo_bm

ith millions of Filipinos being hosted in various parts of the globe, the Philippines is ready to return the favor by being the Southeast Asian country that is most accepting of migrants, according to the latest Gallup poll. Based on the Gallup survey results, the Philippines obtained a score of 6.77 out of a perfect score of 9 in the Migrant Acceptance Index (MAI), outdoing its Asean peers. The MAI aims to gauge people’s

acceptance of migrants based on increasing degrees of personal proximity. The index is based on three questions that Gallup asked in 138 countries in 2016 and the US in 2017.

The score of the Philippines in the Migrant Acceptance Index, with 9 as the perfect score

“The most accepting countries for migrants are located in disparate parts of the globe,” Gallup said. “A common thread tying many of the most accepting countries together is their long history as receiving countries for migrants.” The Philippines and Vietnam, which had a score of 6.08, were the only Southeast Asian countries that bested the global average score of

5.29 out of 9. Southeast Asian countries Singapore posted a score of 5.21; Indonesia, 3.93; Cambodia, 3.65; Myanmar, 2.96; and Thailand, 2.69. However, the top Asian country in terms of accepting migrants is Bangladesh, with a score of 7.45, pushing it to the list of top 20 countries that are most accepting of migrants in the world. The survey also showed that Americans are more accepting of migrants than Filipinos. The index score of the US is 7.27, which qualified it to be among the world’s top 20 migrant-friendly countries. “[Around] 77 countries score higher than this average, while 61 score lower. A majority worldwide [54 percent] say immigrants living in their countries is a good thing. Slightly fewer— but still half, at 50

percent—say an immigrant becoming their neighbor is a good thing, and 44 percent say an immigrant marrying a close relative is a good thing,” Gallup said. In terms of demographics, the most accepting of migrants completed four years of education after high school and/or earned their college degrees. The least accepting were those who only received primary education or less. Gallup said in terms of generations, the GenZers who were born 1997 or later were the most accepting, while Baby Boomers, or those born between 1946 and 1964, were the least accepting of migrants. Those living in urban areas are more accepting of migrants, as well as those who are part of the richest 20 percent of the population. Based on the 2010 Census of Population, there are 177,365

July interest payment widens budget deficit

NORTH KOREA HINTS IT IS DEVELOPING MORE ADVANCED MISSILES

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orth Korea’s state news media released a photog raph on Wednesday suggesting that the North was working on a more powerful solid-fuel ballistic missile and said the country’s leader, Kim Jong Un, had ordered the production of more rocket engines and warheads. Unlike liquid-fuel rockets, solid-fuel missiles do not have to be loaded with fuel just before launching, a process that can take as long as an hour and make the missile vulnerable to a preemptive strike. Such missiles are also easier to transport and hide. Kim gave his order to bolster the country’s missile arsenal during a visit to the Chemical Material Institute of the Academy of Defense Science, the North’s official Korean Central News Agency said, without disclosing when the visit took place. It said the institute was responsible for producing fiber and carbon compound materi-

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Office], acting in good faith, wishes to state that Chen is an out-and-out economic criminal, which has nothing to do with politics. The facts are that Chen was issued a circular order of arrest on January 14, 2014, by Taiwan Taipei District Court during the Kuomintang [KMT] Administration to which Chen belonged and he was a KMT member. The order was not issued by the current Democratic

HE national government (NG) has reported a P50.5billion fiscal deficit for July this year as collections went to interest payments, the Bureau of the Treasury (BTr) said on Wednesday. According to the BTr, the Philippine government has recorded a cumulative budget deficit of P205 billion from January to July this year, which widened by 20 percent compared to the deficit recorded for the same period a year ago amounting to P171 billion. The wider deficit was despite an expansion of total revenues for July that reached P194.6 billion. The figure is a 14-percent (P24.4 billion) expansion from the July 2016 collection of P170.3 billion. Year-to-date collections amount to P1.371 trillion, an 8-percent increase over the comparable p e r io d l a s t y e a r at P 1. 2 7 1 trillion. Revenues from tax collections comprised 90.7 percent of total revenues. Howe ver, h igher spend i ng failed to maintain the surplus the NG recorded in the first half of last year.

See “Taipei,” A2

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Kim Dong-yub: “It appears that the North is trying to tell the world that its reentry and solidfuel technologies are no longer experimental but have reached the stage of mass production. Though whether that’s credible is another matter.”

als used to build high-power rocket engines and so-called reentry vehicles for ballistic missile warheads. Building a reliable reentry vehicle, which allows a warhead to survive the intense heat and friction of reentering the atmosphere, is one of the most difficult hurdles to clear in building an intercontinental ballistic missile (ICBM). Kim said his country had proved its mastery through recent missile tests, including two ICBM launchings last month. Continued on A2

foreign nationals living in the Philippines as of May 2010. They comprised 0.2 percent of the total household population. Three in 10 foreign citizens (31.1 percent) were residing in the National Capital Region (NCR) at the time of the census. Those resid i ng i n t he Autonomou s Reg ion in Musl im Mind anao made up 22.3 percent of the total foreign citizens. Region 3 had 9 percent, Region 4A had 8.4 percent and Region 7 had 6 percent of the total foreign citizens. Region 9 had the least proportion at 0.5 percent. The largest number of foreign citizens in the countr y came from the US (29,959 persons). The next largest numbers came from China (28,750 persons), Japan (11,583 persons) and India (8,963 persons).

FOODIES CROSSING Spoons, forks, wine glasses and bottles replaced the drab white lines in pedestrian lanes at the Araneta Center in Cubao, Quezon City. Araneta Center is increasingly becoming popular among foodies as it features a number of restaurants. ALYSA SALEN

Taipei asks Manila to deport fugitive Taiwanese investor

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he Taiwanese government has alerted the Philippines to be vigilant about the “notorious fraudulent economic criminal fugitive You Hao Chen’s highly risky investment projects.” Taiwan also urged the Bureau of Immigration (BI) to deport Chen back to Taiwan for justice. According to a recent report, the Philippine Economic Zone Authority is delighted to welcome what was said to be “the largest investment in

the Philippines” to be made by Chen, the founder and the chief executive of Xianglu Dragon Group in China. The proposed investment includes generating $360 billion to develop a 3,000-hectare mixed-use special economic zone in Pangasinan and spending P12 billion to build a 85-story information-technology building on Roxas Boulevard in Manila. “On behalf of the government of the Republic of China [Taiwan], the Teco [Taiwan Economic and Cultural

PPPs no longer exempt from full project scrutiny Continued from A1

it would have to go through the entire ICC evaluation process. PPP was the mode preferred by the Aquino administration in upgrading the state of infrastructure in the country. So in 2014 a memorandum circular issued to then-PPP Center Executive Director Cosette Canilao by former Neda Director General Arsenio M. Balisacan said project appraisal for PPPs would no longer go through the ICC Technical Board but through a Technical Working Group, which would evaluate PPPs in just 10 working days. The recommendation then would go straight to the secretary-level ICC Cabinet Committee. Critics of this measure, however, expressed concern that the reduction of the number of days for

evaluation has compromised the quality of PPP projects. It can be noted that since the 2014 memorandum circular, several PPP projects have suffered delays and underwent rebidding. These projects include the Light Rail Transit Line 1 South Extension and, more recently, the Laguna Lakeshore Expressway Dike Project. Both were initially approved by the ICC and Neda Board in 2014. Other PPPs that have encountered problems were the Davao Sasa Port project and the Cavite-Laguna Expressway, which were also approved in 2014. Pernia did not say if he would issue another circular to withdraw the order of his predecessor. Pernia, however, assured stakeholders that the Duterte administration has no plans of abolishing the PPP Center, and that PPP

continues to be an option for infrastructure development. This is despite the shift of preference to the “Build, Build, Build” scheme that calls for more financing and government budget in funding projects. BBB projects need to go through the entire evaluation process also. “We are still experimenting with different combinations of financing,” Pernia said. “[These projects will be evaluated by the] ICC Technical Board [and] go through the ICC Cabinet level.” But an industry official, who asked not to be named, said the change in policy would just drag the process further. “An additional layer will tend to delay the much-delayed process.” The official noted that the PPP projects that suffered delays and underwent rebidding are those implemented under the BOT law and

not other modalities. “The rules of the BOT law must be amended to reflect the new process.” Pernia also said the government still plans to retain the use of the Project Development and Monitoring Facility (PDMF) as a resource for the preparation of PPP projects. The PDMF is a revolving fund used to procure consultants and technical advisers, as well as conduct prefeasibility studies for PPP projects. After a PPP project is awarded, the winning bidder is required to reimburse the cost to the PDMF only if the project awarded to them received financing from the fund. “So far, no [need to use the PDMF for non-PPP projects]. There are available funds to conduct the FS [feasibility studies] for other projects,” Pernia said.

The Metro Manila Skyway Stage 3, a project under the public-private partnership (PPP) scheme, is a 14.82 kilometer, six-lane elevated toll road and is the last of the three stages of the Metro Manila Skyway (MMS) System. It is intended to connect South Luzon Expressway in Alabang to Balintawak in Quezon City. The National Economic and Development Authority told the BusinessMirror that PPP projects are no longer exempted from the evaluation of the Investment Coordination Committee Technical Board. NONIE REYES