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Friday, August 24, 2018 Vol. 13 No. 314

Import cover ‘OK’ amid 6-yr GIR low Medal Tally As of 8 p.m.

Country

S B Total

1 China

53 39 21

113

2 Japan

23 26 32

By Cai U. Ordinario

@cuo_bm

EAK exports and the decline in remittances have caused the country’s gross international reserves (GIR) to fall to a six-year low, but economists said the Philippines has enough import cover. In an EagleWatch br ief ing on Thursday, Ateneo de Manila University economists expressed confidence that the Bangko Sentral ng Pilipinas (BSP) will undertake necessary measures to ensure that import cover will not slide to the Asian financial crisis (AFC) level.

3 korea

15 20 27

4 Ir iran

5 indonesia

6 thailand

7 dpr korea

8 chinese taipei

9 Uzbekistan

10 India

11 mongolia

12 KAZAKHSTAN

13 Singapore

14 Vietnam

15 MAlaysia

Budget work to resume, compromise still vague

16 Hongkong,china

By Bernadette D. Nicolas

17 Lebanon

18 Macao, china

19 Philippines

20 Jordan

21 Kyrgyzstan

22 Turkmenistan

Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang said the country’s import cover, initially estimated at 12 months, declined to seven months. However, this was still higher than the level of below three months during the AFC in the late 1990s.

See “Budget,” A12

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SHORT-TERM INVESTMENTS TO FLEE, BUT F.D.I. WILL BE HERE TO STAY, SAYS MOODY’S By Bianca Cuaresma

@BcuaresmaBM

“If our import cover declines to below three months, interest rates will increase. This can cause panic. This is the reason for the need to maintain [a six- to seven-month import cover]. This is part of the other functions of the BSP, it has a sterilizing policy,” Ang told the BusinessMirror on the sidelines of the forum.

HORT-TERM investments from foreign investors will likely remain in the red for the Philippines and other emerging market economies for the year, but capital flows in search of long-term profit will remain on course for 2018. In its recent Global Macro Outlook, Moody’s Investors Service said global investors’ need for portfolio rebalancing has led to increased market pressure, particularly in emerging markets across the world. Moody’s quoted the Institute of International Finance as saying net capital flows to 19 emerging market countries, including the Philippines, as well as Argentina, Brazil, Chile, China, Colombia, the Czech Republic, Hungary, India, Indonesia, Korea, Mexico, Poland, Russia, South Africa, Thailand, Turkey and Ukraine, slowed to $11 billion in the second quarter, from $118 billion in the first quarter. Also, excluding China, this group saw net outflows of some $2 billion in the second quarter. In the Philippines, latest data from the Bangko Sentral ng Pilipinas (BSP) showed foreign portfolio investments (FPI) remain in positive territory but declined in July to a net inflow of $53.29 million against the $296.47 million in the same month last year. The seven-month total, however, saw an improvement to a net inflow of $455.74 million against last year’s $204.24 million net outlflow. FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms in the slight change of global and local sentiment.

See “GIR,” A2

See “Investments,” A2

“If our import cover declines to below three months, interest rates will increase. This can cause panic. This is the reason for the need to maintain [a six- to seve-month import cover]. This is part of the other functions of the BSP, it has a sterilizing policy.”–Ang

DA suspends SSG on onion imports to cut retail prices

@BNicolasBM

S the House of Representatives is about to resume budget deliberations next week, Malacañang on Thursday maintained that there is still “no compromise” to break the deadlock on the proposed 2019 budget. The statement came after the supposed meeting of Executive Secretary Salvador C. Medialdea and Budget Secretary Benjamin E. Diokno and Finance Secretary Carlos G. Dominguez III last week on the budget impasse. Diokno a lso confir med on Thursday that he will be talking

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A vendor attends to a customer at a market in Makati City on August 22. On Thursday Agriculture Secretary Emmanuel F. Piñol asked Customs Commissioner Isidro S. Lapeña to suspend the special safeguard duty on onion imports to cut retail prices, which rose 11.27 percent on the fourth week of August. ALYSA SALEN

HE Department of Agriculture (DA) has decided to temporarily suspend the special safeguard (SSG) duty on onion imports to cut retail prices of the spice and help ease inflation. Agriculture Secretary Emmanuel F. Piñol on Thursday wrote to Customs Commissioner Isidro S. Lapeña to request for the “temporary lifting” of SSG duty on onion “to cushion the impact of rising prices and mitigate the impact of soaring inflation.” Piñol made the decision following a meeting with onion industry stakeholders on August 23 to discuss the rising prices of the spice in the market. Based on the price monitoring report of the DA, the average retail Continued on A12

n japan 0.4830 n UK 68.9490 n HK 6.8024 n CHINA 7.8076 n singapore 39.0771 n australia 39.2240 n EU 61.9275 n SAUDI arabia 14.2368

Source: BSP (23 August 2018 )

News

BusinessMirror

A2 Friday, August 24, 2018

₧8.8-B fake goods seized in H1, more than 2017 total By Elijah Felice E. Rosales

@alyasjah

OUNTERFEIT goods captured by authorities in the first semester amounted to P8.8 billion, higher than 2017’s full-year total haul of P8.2 billion, according to the Intellectual Property Office of the Philippines (IPOPHL). Agencies under the National Committee on Intellectual Property Rights (NCIPR) seized P8.8 billion of fake products in the first half of the year, IPOPHL reported on Thursday. This was a whopping 530-percent increase from the P1.4 billion record during the same period last year. NCIPR figures credited the Philippine National Police with the li-

on’s share of the haul. It confiscated P6.3 billion of counterfeit goods from January to June, accounting for 72 percent. The Bureau of Customs, on the other hand, captured P2 billion, or 24 percent, of the total haul. The National Bureau of Investigation seized P266 million, while the Optical Media Board,P103 million, in the first half of the year.

Cigarettes and alcohol accounted for 78 percent of the confiscated goods, amounting to P6.8 billion. Fake pharmaceutical and personal-care products amounted to P1.2 billion; handbags and wallets, P450 million. “With this substantial take, we are reasonably optimistic that our goal to surpass the record high of 2014 of P13 billion worth of fake and counterfeit products is within reach,” IPOPHL Director General Josephine R. Santiago said. She added her agency and NCIPR are working double time to achieve this objective. Violations of intellectual-property rights, such as production and sale of counterfeits, result to industries getting injured and the government losing revenues, Santiago said. “Surpassing the full-year, 2017 seizure is a matter of course given IPOPHL and NCIPR’s intensified campaign to curb the spread of fake goods since the beginning of the year. Any form of piracy is damag-

ing not only to the local economy, but also to the industries we cultivate, as well as the investors with valuable intellectual property and the government which loses revenue with these fake goods,” Santiago explained. Apart from economic losses, she warned of the health and safety risks counterfeits could bring to consumers. The trade of fake goods has also been proven to be the source of funds of organized crime groups, she stressed. “Most important, reports have established that counterfeiting is used by organized criminal syndicates to fund their operations. With this P 8.8-billion seizure, we hope to make a dent on their sources of income and drive home the message to counterfeiters, dealers, and all those involved [in] pirated-goods trade that we continue to have a zero-tolerance policy on piracy and counterfeiting,” the IPOPHL chief added.

‘GDP growth shows PHL’s true economic potential’ By Cai U. Ordinario @cuo_bm

he latest GDP growth rate may have caused disappointment to a number of Filipinos, but the figure reflects the country’s economic potential, according to economists from the Ateneo Center for Economic Research and Development (Acerd). In an EagleWatch forum on Thursday, Acerd Director Alvin P. Ang shared the observation of an economist from the Asian Development Bank, Jesus Felipe, who said the country’s GDP growth potential was around 6.3 percent. Ang said this could explain the reason the country has not experienced any more of the boom-bust scenarios typical in previous years during and after elections. “If we’re growing at an average of 6 percent, 6.3 percent, that’s the reason we are coming back to that rate, because that’s our potential at the moment. So you need the infrastructure [buildup] to increase that potential,” Ang said. “If the potential is at that level, we are already maximizing it, we will always [grow] below that. We are not actually doing bad. [The figure] is in line with our potential growth. So you need to invest

GIR. . .

Continued from A1

The decline in the GIR, Ang said, was caused by the country’s weak export performance. While the Philippines’s Asean neighbors were seeing a healthy growth of their export

in infrastructure to grow faster,” he said. Ang said the country’s potential growth rate was not far from the 6 percent recorded in the first quarter and was actually the average GDP recorded in the first half. The figure is also within the expectations of Acerd. In 2018 they estimated the country’s GDP to grow by an average of 6.1 to 6.3 percent this year while, in 2019, GDP is expected to expand by 6.2 to 6.5 percent.

‘BBB’ or bust

Investing in infrastructure also means allowing more sectors to contribute to economic growth. This includes manufacturing, wholesale and retail sector, and financial sector. For the economy to grow faster, the Duterte administration has embarked on a P7.74-trillion infrastructure initiative under the “Build, Build, Build” (BBB) program, which includes 75 flagship projects and around 4,500 projects nationwide. Former Socioeconomic Planning Secretary Cielito Habito said, however, that veering away from private sector financing in funding these projects poses risks, such as a new debt crisis.

receipts, the country’s export performance was contracting. Ang said the country’s exports contracted to 5.5 percent in the first quarter of the year, while exports of other Asean countries were posting growth of near 10 percent or higher. Indonesia and Singapore posted an export

However, Habito said the country is still nowhere near debt crisis, thanks in part to the prudence exercised by previous administrations, which benefitted the country’s finances. The country’s external debt to GDP ratio remains healthy at 23 percent, significantly lower than its Asean neighbors. Habito said the external debt to GDP ratio of Asean countries like Singapore is 449.4 percent; Malaysia, 69.1 percent; Indonesia, 34.8 percent; and Thailand, 32.1 percent. Nonetheless, he said the threat remains. “The worry of course, because we are getting more debt, specifically from China, which is extending high-interest debt, are we heading towards another debt crisis? Maybe not yet,” Habito said. “But that will really change if we are irresponsible or reckless about the way we get into debt in the near future.”

Cheaper food

Habito said that, apart from investing in infrastructure, there is a need to lower food prices not only to give consumers some reprieve from high inflation but to prevent stunting. He said 1 in 3, or 33.5 percent, of children below 5 years old are stunted,

growth of 8.7 percent and 9.8 percent in the January-to-March period this year, while Vietnam and Malaysia saw double-digit growth of 25.1 percent and 19.8 percent. As a result, Ang said the country’s trade balance as a percentage of GDP was also the lowest in the region. The country’s trade balance as a percentage of GDP declined 11 percent in the January-to-March period this year. Its Asean peers, such as Singapore, Malaysia, and Vietnam saw trade balance as a percentage of GDP growth of 13.8 percent, 9.7 percent, and 6 percent, respectively.

Remittances

Apart from weak exports, Ang said the recent decline of remittances from overseas Filipino workers (OFWs) is a first for the Philippines. He said, while remittances were expected to slow, it was not expected to decline or contract. Ang noted OFW remittances declined almost 5 percent in June this year. The main reason was a 5-percentage-point drop to 24 percent in the remittances coming from the Middle East where the majority of OFWs were located. While deployment

and another 7 percent are wasted or underweight. This means they will suffer from being permanently impaired from reaching their full brain and physical development. Stunting will prevent children from fully contributing to the economy as working adults. Habito said this may make these children “mediocre” when they grow up, or become “unproductive” workers. While the Philippine population remains young, reaping the full benefits of the demographic dividend from now until 2050 means having a strong and capable labor force. If the working population are disadvantaged from a young age, the country’s demographic dividend could become a “demographic time bomb” instead. “If we don’t do something now, it could lead to a demographic time bomb rather than a demographic sweet spot,” Habito said. To cut food costs in the country, Habito said there is a need to pursue the tariffication of the quantitative restriction on rice and to veer away from rice self-sufficiency. This, he said, will cut commodity prices and free up public funds for other cash crops that have the potential to raise farmers’ incomes.

stayed healthy, Ang noted that one reason for the decline could be that those being deployed to these countries were lower-skilled individuals who were given lower salaries. “We know that its going to weaken because people are no longer—particularly the higher-income or the higher-skilled— going out...so they have a choice to work here. But the lower-income people are the ones leaving and the lowest skilled who are leaving are not getting higher pay, and, therefore, you already expect the remittances to go down,” Ang explained. “Even if there are more people leaving, it will go down. But I hope its just a blip otherwise it places a lot of pressure on the currency because this was our buffer for many years,” he added. Data from the BSP showed that cash remittances sent by land-based workers and sea-based workers rose by 2.5 percent and 3.4 percent to $11.2 billion and $3 billion, respectively. For June, however, total cash remittances fell by 4.5 percent year-on-year to $2.4 billion. The countries that registered the biggest declines in cash remittances in June 2018 are the United Arab Emirates, Saudi Arabia and Kuwait. “ Th e ove r s e a s Fi l i p i n o wo r ke r s repatriation program of the government may have partly affected the remittance flows for the month,” the BSP said in its statement on remittance data. The BSP said in the first two months of 2018, a total of 4,149 OFWs were repatriated from the UAE, Saudi Arabia and Kuwait. It added that, preliminary 2017 data from the Philippine Overseas Employment Administration (POEA) showed a decline in both land- and sea-based workers. The deployed land-based workers dropped by 3.28 percent, or 1.61 million LBWs year-on-year, while that of the seabased workers ell by 14.62 percent, or a decline of 378,072 SBWs.

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China lifts tourist arrivals by 9.7% in Jan-July 2018 By Ma. Stella F. Arnaldo

the tourism sector is projected to rise to 5.6 million this year. The DOT hopes this will help 556,000 poor beneficiaries. The DOT chief expressed optimism that “with the roll-out of a comprehensive branding campaign in the coming months and the scheduled reopening of a better Boracay on October 26, we will hit, or better yet, surpass our target of 7.4 million for 2018.” Substantial increases in visitor arrivals were also accounted for by Canada, which rose 12.21 percent to 138,467; Hong Kong, up 21.42 percent to 79,488; and India, up 15.15 percent to 74,039. Among the Philippines’s top source markets for tourists, Taiwan continued its downtrend, with the seven-month period this year showing a 3.31-percent dip to 145,593 arrivals. Other major tourism markets for the period in review were the United Kingdom, which accounted for 121,289 visitor arrivals (up 9.4 percent); Singapore at 104,880 (up 7.3 percent); and Malaysia at 84,698 (up 2.24 percent). In a bid to further encourage more foreigners to travel to the Philippines, the Tourism Promotions Board will be hosting the Philippine Travel Exchange (Phitex) 2018 from August 28 to 30 at the Marriott Hotel Grand Ballroom. Now in its 17th year, the biggest government-organized travel trade event in the country, will gather under one roof, international delegates to participate in business meetings with accredited Philippine tourism suppliers. In a news statement, the TPB said this year’s theme, “Tourism is our Business; Guarding O u r E nv i ro n me nt , R e l i v i n g Our Culture,” will highlight the importance of conserving the country’s natural resources. “As traveling significantly impacts our world, it is crucial to curb its negative effects to ensure longter m economic grow th,” said TPB Officer in Charge Arnold T. Gonzales. “Bringing culture to the forefront of exploration is also paramount to the country’s success. Through it, we gain a complete understanding of the nation’s identity that is essential to the betterment of our relations, especially with the world,” he added. Headlining the list of speakers are former Environment Secretary Regina Paz L. Lopez, who will conduct a seminar on sustainable tourism, and Cultural Center of the Philippines President Arsenio “Nick” J. Lizaso. who will talk about culture and tourism. “Advocating responsible touri sm, promot i ng c u lt u ra l e xchange and fostering sustainable practices to preserve the country’s attractions will all serve as points for discussion to encourage participation from all sectors to spur economic growth,” Gonzales averred.

@akosistellaBM Special to the BusinessMirror

OREIGN tourists continue to make their way to the Philippines, boosting inbound arrivals by 9.74 percent to some 4.31 million from January to July 2018. Data from the Department of Tourism (DOT) also showed foreign visitor arrivals in July 2018 alone rising by 5.86 percent to 601,322. No data was made available for internal visitor receipts, however. South Korea continued to top the list of major tourism markets of the Philippines, contributing 937,227 tourists in the first seven months of the year. But this was only 1.08 percent higher than the number of South Koreans who visited in the same period in 2017. The data also showed the market share of South Korea shrinking to 21.76 percent in the first seven months of 2018, compared to its 23.62-percent share the previous year. Driving much of the inbound tourism traffic was China, growing by 40 percent to 764,094 arrivals from January to July 2018. The country is now the second largest source of tourists for the Philippines. The warming of relations between Beijing and Manila after President Duterte’s visit in October 2016, resulted in China lifting its travel ban to the Philippines. It has promised to send 1 million tourists a year to the country. Dropping to third place was the United States, which contributed 649,496 tourists to the Philippines, up 8.35 percent from the same seven-month period in 2017. Japan was in the fourth spot, sending 366,649 tourists to the Philippines, an increase of some 7.4 percent from the reference period last year. In fifth place was Australia, with arrivals up some 6.7 percent to 161,077 in the first seven months of the year. Tourism Secretary Bernadette Fatima Romulo Puyat attributed the substantial increases in foreign visitor arrivals this year “to the contributions of the private sector through the development of tourism products, and through their investments in the sector.” She added, “these figures indicate how tourism can help expand the economic opportunities for Filipinos, and narrow the gap of poverty and inequality in the country.” Under the National Tourism Development Plan of 2016-2022, the DOT is targeting 7.4 million foreign visitor arrivals, which will likely generate P407 billion in inbound tourism receipts this year. Along with the rise in domestic travelers to 76.3 million, and an increase in tourism receipts to P2.13 trillion, employment in

Investments. . .

Continued from A1

“We expect portfolio flows to emerging market countries to remain volatile as monetary policy accommodation in advanced economies is gradually withdrawn. But other flows, including FDI [foreign direct investments] and bank flows, will remain relatively strong overall,” Moody’s said. FDI are usually the type of investment that is more coveted, as it stays longer in the economy and creates job opportunities for locals. Latest data from the BSP also showed an improvement in the country’s FDI flows, with the May level hitting $1.645 billion, from the previous year’s $677 million. The five month FDI total was also a 49-percent improvement to $4.85 billion, from last year’s $3.25 billion.

Economists have also earlier expressed optimism on the country’s FDI prospects, with the latest being ING Bank Manila Joey Cuyegkeng. Cuyegkeng said in his recent research note on the Philippines that FDI net inflow could “rise and change market sentiment again like the fourth quarter of 2017 and lead [the peso] to end the year stronger than forecast.” He added, “A net inflow of more than $1 billion could see some strengthening of the peso but not as strong as last year’s peso strengthening on the back of foreign-acquisition related net FDI inflows.” In Cuyegkeng’s view, “A large net inflow may lead us to revise our year-end peso forecast from the current [54:$1] to within the prevailing trading range of 52.80 to 53.55.”

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DND chief explores possible PHL-Russia military exercise By Rene Acosta

@reneacostaBM

alikatan exercises with Russia? That may just be possible in the near future. The Armed Forces of the Philippines (AFP) may soon not just be holding military exercises with the United States, but maybe even with Russia in its effort to further beef up the training and operational readiness of Filipino troops. The possibility of a joint training with Russian forces was explored by Defense Secretary Delfin N. Lorenzana, who is still in Moscow to meet with Russian defense officials. The military is holding annually a joint training with American forces under the Balikatan, which is also being participated by other allies, including Japan, Australia and Southeast Asian countries. During a meeting with the deputy of Russian Defense Minister Sergey Shoygu, Lorenzana discussed the possibility of the Philippine military’s participation in Russian military exercises and vice versa. According to Lorenzana, the joint training was only among the military matters that was discussed during the meeting, which also delved into the military-to-military relations between the two countries. Defense officials considered Lorenzana’s visit to Moscow as a milestone in the defense relations between Moscow and Manila, and it comes under President Duterte’s recharted foreign policy. The defense chief reiterated Russia remains as the top candidate to deliver the submarine requirement for the Philippine Navy, although South Korea was also still being considered. The acquisition of submarine was elaborately discussed during the meeting, but Lorenzana said he still impressed upon Russian officials that the country is still shopping and is yet to decide for its source. “Korea is a candidate, too. But the Russian-made is better and more expensive,” he said, referring to the Russian Kilo class diesel-electric submarine South Korea is offering a Chan Bogo class diesel-electric submarine for the Philippine Navy, which is awaiting the delivery of two brand-new frigates in 2020. Russia has offered to provide the Navy with two submarines under a soft-loan agreement.

Impostor IC commissioner dupes woman of P700,000

By Rea Cu

@ReaCuBM

riminal charges have been filed against an impostor who impersonated Insurance Commissioner Dennis B. Funa to defraud an unwary victim of P700,000.

Jordan Alao Villanueva, a Pasay City resident, was charged on June 29, 2018, after the victim filed an estafa case before the Makati City Prosecutor’s Office. “The filing of the criminal case for estafa, as recommended by the Makati Prosecutor’s Office, is a welcome development in seeking justice, as well as preventing the further use of my name and of the Insurance Commission in fraudulent schemes,” Funa said. The case stemmed from a complaint filed by the victim who received a call from Villanueva who introduced himself as Funa. Villanueva was able to convince the victim that it was Funa who was actually speaking to her because of his intimate knowledge of the insurance agency. According to the victim, Villanueva extorted a total of P700,000, which, she said, was deposited in a bank account under Villanueva’s name sometime in August 2017. The amount was allegedly to be used by Villanueva for the purchase of a vehicle. The complainant, however, found out later on from Funa himself that the number used by the imposter and the bank account do not

belong to him. Based on the investigation conducted by the Anti-Graft Division of the National Bureau of Investigation (NBI), which included a review of the closed-circuit television (CCTV) footages provided by the concerned bank, it was confirmed that Villanueva, indeed, withdrew P700,000 from the bank account under his name. The NBI investigators noted that the face of the person withdrawing in the account was very similar to the picture attached to the Know- Your-Customer documents submitted to the concerned bank. In the proceedings before the Makati Prosecutor’s Office, Villanueva attended the preliminary investigation but failed to submit his counteraffidavit or any evidence. The Makati Prosecutor’s Office found that there is sufficient evidence to support the conclusion that Villanueva, being the owner of the bank account which was used to defraud the victim, committed estafa and recommended the filing of criminal case of estafa defined under Article 315 2(a) of the Revised Penal Code.

Editor: Vittorio V. Vitug • Friday, August 24, 2018 A3

briefs legislator to passengers: file class action suit vs. airlines AN author of a bill strengthening the Air Passenger Bill of Rights on Thursday urged the 136,000 passengers who were stranded following an airplane runway slip last week at the Ninoy Aquino International Airport (Naia) to file class action suits against the airlines. Bagong Henerasyon Rep. Bernadette Herrera-Dy said the chaos at the Naia was an unfortunate series of bad judgments of many people, saying, “We want to know who all these people were, so we can ascertain who should be pursued for administrative, civil and criminal liabilities. “I now call out to the 136,000 airline passengers who were stranded and whose flights were delayed and cancelled to file class action suits against the airlines that made them go through hell last weekend,” she said. Philippine aircraft accident investigators took the first flight to Singapore on Thursday bringing with them the so-called black boxes consisting of the flight data recorder and cockpit voice recorder for expert analysis. The Aircraft Accident Investigation and Inquiry Board of the Civil Aviation Authority of the Philippines is headed by Rommel Ronda and Renier Baculinao. Jovee Marie N. dela Cruz and Recto Mercene

magnificent 7 file impeachment case vs. 7 s.c. justices

Members of the Magnificent 7 on Thursday filed impeachment complaints against seven justices of the Supreme Court in connection with their decision to oust former Chief Justice Maria Lourdes A. Sereno. The complaints were filed by some members of the Magnificent 7 opposition bloc before the Office of the House Secretary General against Justices Teresita de Castro, Diosdado Peralta, Lucas Bersamin, Andres Reyes, Francis Jardeleza, Noel Tijam and Alexander Gesmundo. These 7 out of the 8 Supreme Court associate justices, who have voted to oust Sereno in a controversial petition for quo warranto, were charged with culpable violation of the Constitution and betrayal of public trust. Ombudsman Samuel Martires, who was one of the eight Justices who removed Sereno, was not included in the complaint because he is no longer an incumbent associate justice. Jovee Marie N. dela Cruz

A4 Friday, August 24, 2018 • Editor: Vittorio V. Vitug

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Free-trade pact with US key to revival of local garments industry–trade chief By Elijah Felice E. Rosales

@alyasjah

hat used to be a vibrant local garments industry could return to its heyday if the Philippines could be able secure a free-trade agreement (FTA) with the United States, the country’s trade chief said on Thursday.

At the sidelines of the 1st Philippine Garment, Leather Goods Industries and Fabric Expo, Trade Secretary Ramon M. Lopez said one reason the Philippines is keen for an FTA with the US is to revive the local garments industry. He argued a bilateral trade agreement with the United States will be critical in bringing the labor-intensive

industry back to activity. “Hopefully, [we can revive the garments industry] with the potential FTA with the US. We used to be one of the biggest exporters of garments in the world. We supply the US, but we lost that [a long time ago]. Hopefully, we can bring [it] back with an FTA,” Lopez said in a mix of English and Filipino.

The garments and textile export sector used to be valued at $3 billion and was considered a sunrise industry back in the 1990s, according to a news release by the Board of Investments (BOI). It was heavily relyiant on the Multi-Fiber Agreement (MFA), which allows clothing makers to export with preferential rates to developed countries. “Our garments industry used to be one of the top-performing sectors both locally and internationally. But, with the challenges brought by the end of the MFA, which grants preferential tariffs to the country’s exports of garments and textiles, we saw a decline in the sector’s general performance,” Trade Undersecretary and BOI Managing Head Ceferino S. Rodolfo Jr. said. The MFA prescribed quota allocations in identified garments and textiles that are for export to developed economies from developing

nations, including the Philippines, India and Vietnam. However, the industry’s dependence on the MFA ended in 1995 after it was replaced by the Agreement on Textiles and Clothing, which revoked numerous provisions of the MFA. This developed to the full adoption of the General Agreement on Tariffs and Trade and put the quota system to a conclusion in 2005. Lopez wants FTA talks with the US to begin the soonest possible, as he is keen to bargain for the elimination of tariffs on garments. Clothing is one product group that Washington still slaps with high import duty. Last year it imposed an average most favored nation rate of 11.6 percent on clothing, according to data from the World Trade Organization. It is also one of the four remaining product groups the United States still taxes at an average double-digit tariff, aside from beverages and tobacco, dairy prod-

ucts and sugars and confectionery. The BOI is currently in the process of helping garment and textile makers rise again, following the string of work force downsizing and factory closures they have to face when the MFA was terminated. “We focus on securing market access in key export markets, such as Japan, Europe and the United States, to FTAs and preferential trade agreements, including the Generalized System of Preferences [GSP] and the GSP+,” Rodolfo said. The BOI is also drawing up a road map for the industry, targeted to be released by the end of this year, to chart its growth prospect based on assessment of its present condition, economic performance and challenges. The agency has likewise conducted six focus group discussions with garment makers, other government units and national organizations since December of last year.

₧1.4-billion ‘GG’ import a band-aid solution to rising fish price–Atienza

band-aid solution. A poor supply side intervention. This was how a senior opposition lawmaker tagged the decision of the Department of Agriculture (DA) to bring in some P1.4 billion worth of galunggong (round scad) imports starting the first week of September, in a bid to suppress rising fish prices. “It is a band-aid solution that does not really address the problem of falling fish production. It is a miserable supply side intervention,” Buhay Rep. Lito Atienza, the senior deputy minority leader, said.

The 17,000 metric tons of imported galunggong is expected to have a landed cost of P75 to P80 per kilo and would be sold directly in local wet markets to help stabilize fish prices, the DA said. “What difference will 17 million kilos make? That is just equal to 17 million households consuming one kilo each in a day. Ubos na ’yan sa loob ng isang araw lang [The fish import will be consumed in a single day],” Atienza said. “The best way for the government to fight off rising fish or food prices for that matter is by enabling the

production of more fish and more food,” Atienza, former three-term mayor of Manila, said. “Historically, if we look at other countries that produce large food supplies, they tend to have relatively stable inf lation rates, regardless whether the price of crude oil is $50 or $100 per barrel,” Atienza said. Inflation soared to a new fiveyear high of 5.7 percent in July, mainly due to food and nonalcoholic beverages posting a 7.1-percent annual rate of increase. A t ie n z a e a rl ie r s a id t h at

Malacañang “ought to do a Boracay” on the municipal waters around Metro Manila and Luzon to revive fish production. “We cannot expect fish and other marine life to thrive abundantly in our highly toxic municipal waters,” Atienza said. “We’ve seen how marine life around Boracay has started to rush back within just a few months after the government closed it down for rehabilitation,” he added. Atienza blamed illegal fish cages, industrial waste, untreated sewage and unchecked land recla-

mation for the rapid decay of the waters around Metro Manila. In his first State of the Nation Address in July 2016, President Duterte himself expressed dismay over the deterioration of Laguna Lake, which used to supply one-third of Metro Manila’s fish consumption. The Chief Executive then vowed to give small fisherfolk greater rights over the resources of the lake, which he said had been taken over by powerful fish pen operators that includes generals, mayors, governor, or even congressmen. Jovee Marie N. dela Cruz

Stranded OFWs get more time to claim DFA aid By Recto L. Mercene

@rectomercene

HE Department of Foreign Affairs (DFA) said on Thursday that it will continue to release the P5,000 financial assistance to affected Filipino migrant workers at the three airport terminals until Friday, August 24, and at the Home Office until Friday next week, August 31, 2018. The DFA started giving out the cash in the wake of four-day closure of the country’s main gateway due to a disabled aircraft that figured in an accident last Friday. So far, 178 overseas Filipino workers (OFW) have availed themselves of the cash, going to the DFA Home Office in Pasay and at Naia Terminals 1, 2 and 3. “The DFA expects other affected overseas workers who were earlier able to depart Manila to avail themselves of the cash assistance at the nearest Philippine Embassy or consulate general abroad,” said DFA Undersecretary for Migrant Workers Affairs Sarah Lou Y. Arriola. The DFA was scheduled to release the financial assistance until 10 p.m. on Thursday to stranded OFWs at Naia Terminals 1, 2 and 3. It took 36 hours for airport authorities to remove the disabled Xiamen Airways B737 before hundreds of flights were allowed to resume operations.

Hurricane alert

Meanwhile, the DFA has advised the 375,000-strong Filipino community in Hawaii to make the necessary preparations for a powerful hurricane that is expected to hit the islands beginning on Thursday evening. The DFA said it is monitoring the progress of Hurricane Lane, a Category 4 storm packing sustained winds of between 74 to 100 mph, and is coordinating with the Filipino community through the Philippine Consulate General in Honolulu. In his report to the Home Office, Consul General Joselito A. Jimeno said a hurricane warning is in effect for the Big Island (Hawaii Island) and Maui, while a hurricane watch is in effect for Oahu, where Honolulu is, and Kauai Island. Jimeno said Gov. David Ige has issued an emergency proclamation for the entire state in order to mobilize emergency agencies ahead of the hurricane, which has been described as the most dangerous to hit Hawaii in 25 years. Jimeno said the Filipino community has been advised to prepare for the hurricane, which is expected to bring in torrential rains, lightning, tornadoes and floods. Filipinos were also told to take shelter in safe places as evacuation centers may not be enough to accommodate all residents.

Lawmaker bucks reenacted 2019 national budget

ongress is determined to pass the 2019 national budget since a “reenacted budget is bad policy as it fails to reflect changes in needs of our people and does not respond to our economic imperatives.” Albay Rep. Joey S. Salceda made this assertion, stressing that “foremost in our mind is that a reenacted budget will endanger the increase in salaries of military and civilian workers, the 2019 elections, hosting of the Southeast Asian Games, the expansion of college scholarships to private schools and deprive us of safety nets against inflation.” Fears were aired earlier by some sectors that the Duterte administration will end up with a reenacted budget due to snags and delays in the deliberation in the Lower House on the proposed cash-based P3.757trillion 2019 budget. Salceda, a respected economist and the House focal person on economic and fiscal policy concerns under the Gloria Arroyo speakership, explained that “our people, not Congress, will be the biggest losers in a reenacted budget” under which government agencies will simply operate on the basis of the previous year’s budget. A reenacted budget sends a wrong signal to investors about the ability of the Philippines to maintain the reform momentum, said Salceda, who also singled out the “military and uniformed personnel, among other sectors, who will lose much in terms of benefits, amounting to P158 billion in 2019.” He explained that, a reenacted 2018 budget “cannot authorize the P84 billion in salary increases of military and uniformed personnel [MUP] as provided by House-originated Joint Resolution No.1.” “Moreover, the 2018 budget does not provide an item for the pension indexation of MUP which would amount to P40 billion and another P33.8 billion for arrears in the indexation [although lodged in the unprogrammed funds which may be unlocked by new revenues],” Salceda said in a news statement. Our 1.2 million civil servants, Salceda said, also stand to lose as the 2019 National Expenditure Program provides for the fourth Tranche of the Salary Standardization Law, which amounts to P58.1 billion. A reenacted budget will also “jeopardize the conduct of the 2019 national and local elections, the heart of democratic process, which would require P6 billion, as proposed by the 2019 NEP, he added. The 2018 budget specifically allocated only P11.8 billion for “Preparatory Activities.” Salceda said a reenacted budget will also endanger the hosting of the 2019 SEA Games as the 2019 NEP seeks P6-billion budget for it, since there is no item in the 2018 GAA for such expenditures. With it, tourism is also bound to lose. The proposed 2019 NEP, likewise, provides an additional P11 billion for the implementation of free tertiary education (UAQTE or Republic Act 10931) funding. This can be augmented but it is far better for Congress to seal such funding commitment, he added. The proposed 2019 budget also provides P36 billion for the unconditional cash transfers to cushion the inflation impact of the Tax Reform for Acceleration and Inclusion or TRAIN, on the lowest 50 percent or 12 million families, which includes the additional monthly P100 (total P300/ month) for them. He noted that, while the Executive may draw from its 2018 authorization of P3.767 trillion to fit its P3.757 trillion 2019 NEP, it can only augment existing items but it would need Congressional authorization for new items. Salceda also pointed out that the 2019 P776 billion in capital outlay represents a decent growth with the Department of Public Works and Highways at +P114 billion (versus lowered 2018 program) and the Department of Transportation by P35.9 billion (versus lowered 2018 adjusted program) may be needed to boost productive capacity and achieve the country’s growth target.

Agriculture/Commodities BusinessMirror

www.businessmirror.com.ph

Editor: Jennifer A. Ng • Friday, August 24, 2018 A5

Senators seek shake-up of ‘unproductive’ NFA

By Butch Fernandez

@butchfBM

enators on Thursday came down hard on the National Food Authority, denouncing the “consistent failure” of NFA officials to fulfill their mandate amid allegations of irregularities hounding the agency. In separate statements, Sen. Sherwin T. Gatchalian sought the NFA’s abolition to “spare taxpayers from the burden of subsidizing its inefficient and unproductive” operations, while Sen. Francis N. Pangilinan pressed for a top-level revamp of the embattled agency. “First things first: Fire the top management of NFA,” Pangilinan

said, citing the rice crisis in Zamboanga as “proof” that reforms put in place under the Aquino administration “have been overturned by greed, incompetence and corruption.” Gatchalian, who chairs the Senate Economic Affairs Committee, said that the NFA has become “a liability to the government” given its continously plunging annual revenues.

Chicken egg production up 8% in April-June–PSA

he country’s chicken egg output in the second quarter expanded by nearly 8 percent to 131,100 metric tons (MT) from 121,450 MT recorded in the same period last year, according to the Philippine Statistics Authority (PSA). The PSA attributed the increase to the expansion of commercial layer farms in Luzon and in Mindanao due to higher demand for table eggs. “Better egg-laying efficiency and expansion of layer commercial farms were noted in the Cordillera Administrative Region, Ilocos region, Central Luzon, Calabarzon, Bicol region, Western Visayas, Central Visayas, Eastern Visayas and Zamboanga Peninsula,” the PSA said in a report recently. “In Soccsksargen, the continued increase in chicken egg production was in response to market demand for table eggs in some parts of Mindanao,” it added. Calabarzon region remained as the top producer of table eggs during the April-to-June period as it accounted for 29.27 percent of the total output. The region produced 38,370 MT of chicken eggs, 2.27 percent higher than the 37,517 MT recorded a year ago. “This was followed by Central Luzon with 24,950 MT, and Northern Mindanao with 13,080 MT,” the PSA said. “These three [3] regions accounted for 58.28 percent of the chicken egg production,” it added. Due to a higher volume of production, farm-gate prices of table eggs during the threemonth period fell by 7.18 percent year-on-year. During the April-to-June period, the average quotation of chicken eggs at the farm level was at P4.35 per piece, compared to the P4.69 per piece average recorded a year ago. “From 2016 to 2018, the highest recorded increment in chicken egg farm-gate price was in 2017 with P4.69 per piece, or 6.76-percent growth rate,” the PSA said. The country’s total laying flock population in the second quarter reached 53.93 million birds, 6.03 percent higher than the 50.87 million birds recorded in the same period last year. “Of the total inventory of laying flock, 58.06 percent were foreign strain layer chicken and the rest were native/improved chicken,” the PSA said. The country’s layer flock inventory as of July 1 expanded by 8.25 percent to 31.31 million birds, from 28.92 million birds a year ago. Native/improved laying flock inventory grew by 3.09 percent to 22.62 million birds, from 21.94 million birds last year. During the three-month period, duck egg production rose by almost 5 percent to 12,903 MT, from 12,310 MT on the back of higher balut demand. “There was improved egg laying efficiency ratio in duck farms in Calabarzon, Mimaropa region, Bicol region, Central Visayas, Zamboanga Peninsula and Soccsksargen,” the PSA said. “Sustained demand for balut-making was reported in Zamboanga Peninsula and Davao region,” it added. The country’s total inventory of laying flock as of July 1 expanded by 2.6 percent to 5.84 million birds, from 5.69 million birds during the same period last year. Jasper Emmanuel

Y. Arcalas with Mauro Alfonso S. Mendoza & Nina Rakel C. Maaghop, Interns

He said financial data obtained by his committee confirmed NFA’s revenue “shrank 38 percent to P17.93 billion in 2017, from P29.3 billion in 2016. But NFA’s losses had swelled to P150 billion.” Gatchalian also pinned the blame for the insufficient supply and rice price hikes on NFA operations. At the same time, Gatchalian took note of a Bureau of the Treasury report that the NFA was the biggest recipient of subsidies provided to government-owned and-controlled corporations (GOCCs) in June 2018. “Record shows that the treasury department allocated P5.2 billion of the total P9.72 GOCC subsidy released that month for the NFA’s food security program,” the senator said, adding the Commission on Audit called out the NFA for using GOCC subsidy funds to settle outstanding debts, as the funds were intended “specifically to stabilize price and

supply of rice and corn.” Gatchalian said taxpayers continue to shoulder the losses of the NFA “despite its consistent failure to fulfill its mandate to stabilize the market price of rice so that every Filipino family will be able to put enough rice on their plates. It’s time to abolish this unproductive agency and put taxpayers’ money to better use.” The senator signaled support for the suggestion of Duterte administration’s economic managers to let market forces determine rice prices instead, agreeing this would “make the country’s foremost staple food more affordable for all.” He confirmed plans to enlist wide support for early passage— when Congress resumes session next week—of Senate Bill 1839, that Gatchalian filed to replace quantitative restrictions on rice with a “reasonable” tariff to make the country’s rice-producing provinces more

competitive. Early enactment of the remedial legislation is expected to give President Duterte elbow room to adjust tariff rates on imported rice, to regulate rice exports, and “impose special rice safeguards to ensure food security for Filipinos.”

Rice crisis

This developed as Pangilinan expressed apprehension over the brewing rice crisis in the South. “I am afraid the rice crisis in Zamboanga City today is a combination of both corruption and incompetence by top government officials in cahoots with wealthy private players in the rice industry taking advantage of the rising prices to profit handsomely,” he said. “Powerful and influential forces both in and out of the government are making a killing in manipulating both the availability of NFA rice stocks in particular, and the rice

importation and procurement processes in general,” Pangilinan added. Recalling his stint as NFA chairman in 2014, Pangilinan said the next NFA administration must see to it “that NFA rice is available in the market, and not diverted and rebagged.” Pangilinan proposed that both the NFA bureaucracy, as well as unscrupulous traders, should also be made to account for their acts. “We filed cases against both NFA managers in Bicol, Pampanga, Iloilo, and Surigao and private rice traders there to stop the diversion. We also increased supply of NFA rice by 78 percent in NCR within a two-week period to dissuade private traders from keeping prices up,” he added. The senator suggested the need to put in place an “NFA Council-led open, transparent and discretionfree” government-to-government rice importation process.

DA expands veggie farms to boost supply By Jasper Emmanuel Y. Arcalas @jearcalas

he Department of Agriculture (DA) said it is cultivating 10,000 hectares for vegetable production in Bukidnon to stabilize prices of high-value vegetables such as broccoli and lettuce in the domestic market. Agriculture Secretary Emmanuel F. Piñol made the pronouncement in a post on his Facebook page on Thursday. Piñol said the government is prepared to assist vegetable farmers in the province to expand their output. “The DA will extend funding, resources and technical support to a group of vegetable farmers in Talakag, Bukidnon, to develop an estimated 10,000 hectares of high-elevation fertile lands overlooking Lake Lanao,” he said. Piñol said the DA will partner with private seeds company Harbest Agribusiness Corp., which is owned by Arsenio Barcelona, to train farmers on modern farming technologies. He said Harbest will also provide them with vegetable seeds. “The discovery of the vast area with potentials for vegetable production happened two weeks ago when a group of vegetable farmers from the town participated in the TienDA Bohol Fish Market launching in Tagbilaran City,” Piñol said. “Passing by the booth of the farmers where they sold large broccolis and lettuce heads as large as cabbages, I was amazed at the quality of vegetables that they were selling,” he added. Piñol said the farmers sought the help of DA to expand their farms to 10,000 hectares. At present, he said the Bukidnon-based

Photo shows a stall in the Baguio City Market selling various highland vegetables, such as cabbage and broccoli. The Department of Agriculture is expanding vegetable farms in Bukidnon where Metro Manila markets could source high-value vegetables. MAU VICTA

vegetable farmers are cultivating about 1,000 hectares. “In response to the request of the farmers, I have directed DA officials to deliver the needed support and inputs,” he said. “Small tractors with rotavators will be dispatched to the area to immediately start the development of the new vegetable farms.” The agriculture chief said the Agricultural

Credit Policy Council will also extend loans to farmers. However, Piñol did not disclose any amount or figure. “By mid-2019 the Talakag area is expected to be a new major source of high-value vegetables needed to stabilize the price and assure sufficient supply in the market,” he said. Data from the Philippine Statistics Authority showed that as of August 21, the price

of high-value vegetables being sold in Metro Manila, such as cabbage and carrots, recorded double-digit increases on an annual basis. PSA figures showed that the price of cabbage went up by 25 percent to P100 per kilogram, from P80 per kg recorded on August 22, 2017. Carrots were also more expensive as the prevailing price rose by 50 percent to P120 per kg, from P80 per kg recorded a year ago.

Heavily pork-reliant China battling African swine fever Carabao production slid

to 38,470 MT in 2nd quarter

EIJING—China, the world’s largest producer of pork, is battling an African swine fever outbreak that could potentially devastate herds. The disease, which only affects pigs and wild boar, has been detected in at least three locations across the vast country. Thousands of pigs have died or been culled in an effort to curb the spread of the highly contagious viral disease. The appearance of the disease comes as China seeks to shift pig rearing from farmyards to vast breeding operations where waste and the spread of disease can be better controlled. China produces as many as 600 million pigs annually and pork is a staple of the Chinese diet, accounting for more than 60 percent of animal protein consumed. The fluctuating price of the staple meat is highly sensitive and the government maintains a large frozen supply to release when prices rise too high. Soaring demand for more meat and richer diets over recent years have brought massive profits to large firms able to harness the latest technology for improved efficiency. In the eastern city of Lianyungang, 15,000 pigs have been culled

In this December 19, 2014, photo, a worker digs in a fermentation bed at an organic pig farm in Handan in northern China’s Hebei province. Chinatopix via AP

after an outbreak was detected last week, according to the Ministry of Agriculture. Inspectors found 615 pigs had been infected and 88 died. Measures are also being taken to disinfect contaminated areas and block the disease’s spread to other farms. Earlier this month, Shenyang in the northeast reported China’s first outbreak of the disease, with 47 pigs infected, all of which died, the ministry said. Infected pigs were also found last week at a slaughterhouse in the city of Zhengzhou, where they had been

transported from Jiamusi in the far north. Authorities were looking into the source of that outbreak in which all 30 of the infected pigs died. African swine fever outbreaks have also been reported in the European Union, chiefly in the Baltics, Poland and Romania. Denmark plans to erect a 70-kilometer (43.4-mile) fence along the German border to keep out wild boars, in the hope of preventing the spread of African swine fever, which stands to jeopardize the country’s valuable pork industry. AP

he country’s carabao production in the second quarter declined by 3.08 percent to 38,470 metric tons liveweight, from 39,690 MT liveweight recorded in the same period last year, the Philippine Statistics Authority (PSA) said in a report. “Lower liveweight of carabao disposed for slaughter was noted in Cagayan Valley and Western Visayas,” the PSA said. “There were also reports of lower volume of stocks available for slaughter in CAR and Davao region.” The PSA noted that some stocks in the Ilocos region, Mimaropa and Eastern Visayas were reserved for breeding purposes and as draft animals. “Eight regions reported decreases in carabao production relative to their respective levels in 2017,” it said. “These regions contributed 60.95 percent to the national output.”

The PSA said the country’s carabao population as of July 1 declined slightly to 2.878 million heads, from 2.883 million heads recorded a year ago. “Likewise, the inventory in both backyard and commercial farms decreased by 0.16 percent and 2.84 percent, respectively,” it said. Carabao population held by backyard farms, which accounted for 99.6 percent of the total inventory, reached 2.867 million heads. Backyard farms had 2.872 million carabaos on July 1, 2017. Commercial farms held 10,724 heads of carabaos during the same period, compared to the 11,037 heads recorded last year. The PSA said the average farm-gate price of carabao for slaughter in the April-toJune period rose by nearly 10 percent to P93.43 per kilogram, from P85.14 per kg average quotation last year. Nina Rakel C. Maaghop & Mauro Alfonso S. Mendoza

Friday, August 24, 2018

The World BusinessMirror

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

Trade war escalates as US, China Fed minutes signal rate hike likely at raise tariffs on billions of products September meeting

EIJING—The United States and China imposed more tariff hikes on billions of dollars of each other’s automobiles, factory machinery and other goods on Thursday in an escalation of a battle over Beijing’s technology policy that companies worry will chill global economic growth.

The increases came as envoys met in Washington for their first high-level talks in two months. They gave no sign of progress toward a settlement over US complaints that Beijing steals technology and its industry development plans violate Chinese free-trade commitments. The 25-percent duties, previously announced, apply to $16 billion of goods from each side including automobiles and metal scrap from the United States and Chinese-made factory machinery and electronic components. In the first round of tariff hikes, US President Donald J. Trump imposed 25-percent duties on $34 billion of Chinese imports on July 6. Beijing responded with similar penalties on the same amount of American goods. The Chinese government criticized Thursday’s US increase as a violation of World Trade Organization rules and said it would

file a legal challenge. Beijing has rejected US demands to scale back plans for state-led technology development that its trading partners say violate its market-opening commitments and American officials worry might erode the United States’s industrial leadership. With no settlement in sight, economists warn the conf lict could spread and knock up to 0.5 percentage points off global economic growth through 2020. A head of t he Wa sh i ng ton talks, Chinese state T V mocked Tr ump w it h a sarcastic v ideo p oste d on t he YouTu b e a nd ot her soc i a l- med i a pa ges of its inter nationa l ar m, China Globa l Telev ision Net work. “You are great,” said a presenter on the nearly three-minute-long English-language clip, reading a letter that pays a satirical tribute to Trump. “On behalf of doctors, thank

An online video about US-China trade tensions produced by China’s state television broadcaster plays on a computer screen in Beijing, China, on Thursday. The United States and China imposed more tariff hikes on billions of dollars of each other’s automobiles, factory machinery and other goods on Thursday. Ahead of trade talks in Washington, Chinese state TV mocked President Donald J. Trump with a sarcastic video posted on the YouTube and other social-media pages of its international arm, China Global Television Network. AP/Mark Schiefelbein

you for pointing out the need to wean off American goods like bourbon and bacon,” the presenter says, referring to products on which China imposed retaliatory tariffs. The video appeared to have been removed on Thursday from CGTN’s social-media accounts. Trump also has proposed another possible round of tariff hikes imposing 25-percent increases on an additional $200 billion of Chinese goods. Beijing issued a $60 billion list of American imports for retaliation if Washington goes ahead with that.

That smaller target list ref lects the fact that Beijing is running out of American goods for retaliation due to their lopsided trade balance. C h i n a’s i mp or t s f rom t he Un it e d St at e s l a s t y e a r t o t a led about $130 bi l l ion. T h at le ave s a b out $20 bi l l ion for pen a lt ies a f ter t a r i f fs a l ready i mposed or pl a n ned on a tot a l of $110 bi l l ion . Chinese authorities have said they will take “comprehensive mea su res,” wh ic h compa n ies worry could mean targeting operations of American businesses in China for disruption. AP

Putin says latest US sanctions senseless

OSCOW—US eco nomic sanctions aga inst Russi a a re senseless, President V lad imir Putin said on Wednesday, voicing hope that Washington will eventually agree to a constructive dialogue. Speaking after talks with Fi n n i sh cou nte r pa r t S au l i Niinisto in Sochi, Putin described last month’s Helsinki summ it w it h US President Donald J. Trump as positive, but blamed Trump’s administration for continuing to hit Russia with sanctions. “As for our meeting with Trump, I view it as positive and useful,” Putin said. “No one expected that all disputed issues could be settled during a two-hour meeting, but a direct conversation and exchange of opinions are always useful.” Even as Trump has sought closer ties with Putin, his administration has intensified economic pressure on Moscow over its actions in Ukraine and Syria, as well as Russia’s alleged efforts at meddling in the 2016 US presidential election and disrupting other western democracies. Putin noted that, “ it’s not just the position of the US president, but that of the socalled establishment, the ruling class in the broad sense of the word which matters.” He said the US restrictions are “counterproductive and senseless, especially against such country as Russia,” adding that Moscow expects Washington to realize their uselessness and engage in constructive cooperation. T he Tr u mp a d m i n i s t r a tion added to its growing list of sanctions against Russia

on Tuesday, blacklisting two companies and two individuals suspected of trying to circumvent earlier US sanctions imposed in June in response to cyberattacks, and sanctioning two Russian shipping companies for suspected trade with North Korea. Commenting on the prospective Germany-bound Nord Stream 2 natural gas pipeline that the US has threatened to target with sanctions, Putin said that Europe needs the project to satisfy its energy needs.

Putin and other Russian officials have noted that the US opposition to the new pipeline stems from its desire to remove a powerful competitor and promote supplies of its own more expensive liquefied natural gas to Europe. “Russia is the optimum supplier for the European economy,” Putin said. “We are ready to compete with anyone, but we expect a fair competition in line with international norms.” Putin also noted that Russia has to respond to the North

Russian President Vladimir Putin gestures during his joint news conference with Finnish President Sauli Niinisto following their meeting in the Bocharov Ruchei residence in the Black Sea resort of Sochi, Russia, on Wednesday. Putin said that Russia is ready to enhance security of military flights over the Baltic, but claimed that Nato has stonewalled Russian proposals regarding the issue. AP/Pavel Golovkin

Atlantic Treaty Organization’s deployments near its borders. He emphasized that Moscow is ready to discuss ways to increase mutual trust, such as the security of military flights over the Baltic, but claimed that Nato has stonewalled Russian proposals on the subject. “I don’t think that the idea of reducing the degree of confrontation and increasing the level of security in the Baltic is dead,” Putin said. “Just the other way round, it has become even more acute.” AP

A S H I NG T ON — Fe d eral Reserve (the Fed) officials earlier this month said that a strengthening economy meant that it would “ likely soon be appropriate” to boost their benchmark interest rate, a strong signal that rates will be going up in September. But minutes of their discussions released on Wednesday also revealed deepening concerns that escalating trade wars could hurt the economy. The CME Group’s tracking of investor expectations put the likelihood of a September rate hike at 96 percent. Many economists believe another rate hike will follow in December. “A not her i nterest-rate h i ke f rom t he Fe d i s com i n g ne x t mont h ,” Pau l A shwor t h , c h ief US e conom i st at C apit a l E co nom ic s, s a id i n re a c t ion to t he m i nute s. The Fed has raised rates seven times since late-2015 to make sure the lowest unemployment in nearly 50 years does not trigger unwanted inflation. The Fed raised rates in March and June, pushing the federal funds rate to a level of 1.75 percent to 2 percent. The rate remained at a record low near zero for seven years from late-2008 to late-2015 as the central bank tried to combat the worst recession since the 1930s with low rates to encourage more borrowing by consumers and businesses. The minutes, released after the customary three-week delay, covered the July 31 and August

1 meeting. At that session, Fed officials left rates unchanged while releasing a policy statement that focused on a “strong” economy with solid growth and low unemployment. The minutes, however, showed growing worries about the impac t of P resident Don a ld J. Trump’s get-tough trade policies, which have imposed tariffs on billions of dollars in imports, triggering China and other trading partners to retaliate with tariffs on US goods. “Participants observed that if a large-scale and prolonged dispute over trade policies developed, there would likely be adverse effects on business sentiment, investment spending and employment,” Fed officials said. The minutes listed a number of potential threats from disruptions in business supply chains to potentially triggering “a severe slowdown” in emerging-market countries. Fed Chairman Jerome Powell will deliver a key policy address on Friday at the Fed ’s annual gathering in Jackson Hole, Wyoming. Investors are watching to see if he signals any possible change in the expected course of interest rates because of the threats posed by a w idening trade war. The minutes said that, if the economy remains strong as Fed officials are forecasting then “it would likely soon be appropriate to take another step” to raise rates with “further gradual increases” following. AP

Oil trades near $68 on bigger-than-forecast US inventory draw

il in New York traded near $68 a barrel following a five-day winning streak after US crude inventories declined more than forecast. Front-mont h f ut ures were little changed after posting their longest consecutive run of gains since April. Nationwide stockpiles declined 5.84 million barrels last week, more than double what was expected in a Bloomberg sur vey of analysts. T he dollar, which had helped buoy oil prices after a five-day slide, climbed 0.3 percent on Thursday. Oil has regained some of its losses this month on easing fears over trade tensions between the US and China, with negotiations resuming in Washington after a monthslong standstill. Also, renewed US sanctions aimed at curbing Iranian oil exports from November could tighten global supplies, leading investors to focus on Organization of the Petroleum Exporting Countries’s output levels and worldwide crude stockpiles. While a decline in US inventories helped prices rise, “it remains unclear whether China will compromise with the US on trade,” Jun Inoue, a senior economist at Mizuho Research Institute Ltd., said by phone from Tokyo. Another important thing is “whether Saudi Arabia and Opec can manage their supplies as the impact of US sanctions on Iranian exports could start to appear as early as next month.” We s t Te x a s I nt e r m e d i at e ( W TI) cr ude for October delivery traded 6 cents lower at $67.80 a barrel on the New York

Mercanti le Exchange at 2:31 p.m. in Singapore. The contract added $2.02 to settle at $67.86 on Wednesday. Front-month futures posted their longest streak of gains since April 13 through Wednesday. Total volume traded was about 39 percent below the 100-day average. Brent for October settlement traded at $74.56 a barrel on the London-based ICE Futures Europe exchange, down 22 cents. Prices climbed $2.15 to $74.78 on Wednesday, the highest level in three weeks. The global benchmark crude traded at a $6.76 premium to WTI.

American stockpiles

Futures for December delivery rose 0.7 percent to 508.1 yuan a barrel on the Shanghai International Energy Exchange. The contract climbed 1.7 percent on Wednesday. In the United States the crude stockpile decline last week was more than a 2-million barrel drop forecast in the Bloomberg survey. The EIA data also showed gasoline and distillate stockpiles increased, while supplies at the Cushing, Oklahoma, storage hub rose for a second straight week. As concerns over global output mount ahead of the Iranian oil sanctions, America’s emergency supplies have also come under the spotlight. The Trump administration will offer 11 million barrels of crude from its reserves, an amount that may be too little to offset the impact of the sanctions. US total petroleum stockpiles including the strategic reserves slid last week for the first time in four weeks, EIA data showed. Bloomberg News

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

Australia’s P.M. Turnbull digs in as rival Dutton seeks leadership

ustralia’s embattled Prime Minister Malcolm Turnbull is digging in for a fight, saying he will only step aside if his chief rival can prove he has enough support to unseat him. Amid a flurry of ministerial resignations on Thursday, Turnbull said he would call a special meeting of the governing Liberal party at noon on Friday only if right-wing populist Peter Dutton can gather enough signatures on a petition. Turnbull said he’d step down if lawmakers decide to hold another leadership vote, with reports saying Treasurer Scott Morrison and Foreign Minister Julie Bishop would challenge Dutton. Turnbull came out swinging at a press briefing on Thursday afternoon in Canberra, saying he was seeking legal advice on Dutton’s eligibility to sit in parliament. He also criticized the attempts to force yet another change of leadership in a nation that’s switched prime ministers five times in a little over a decade. “A minority in the party room, supported by others outside the parliament, have sought to bully, intimidate others into making this change of leadership,’’ Turnbull, 63, told reporters. He warned of a “very deliberate effort to pull the Liberal party further to the right.” The crisis has started to hit the nation’s financial markets, with the local dollar weakening as much as 0.9 percent against the greenback on Thursday. No Australian prime minister has served a full term since 2007. Australia’s latest political upheaval has been driven by infighting between moderates and conservatives in the ruling Liberal party as its poll numbers fall ahead of an election due by May. The main opposition Labor party led by 10 percentage points in a poll released on Monday. The potential change of leadership adds more uncertainty for businesses in the world’s 13th-largest economy, amid repeated policy missteps and flip-flops over the past decade. The political dysfunction has contributed to policy paralysis across areas such as taxation and energy. Turnbull declined to comment when asked who he would support if Dutton manages to force a leadership vote. Morrison is preparing to contest the ballot, Sky News repor ted, while Australian Broadcasting Corp. said Bishop would also run, arguing that her high approval ratings would boost the party’s chances in the next election. “Turnbull is holding to power by his fingernails, but his goose looks cooked,” said Zareh Ghazarian, a Melbourne-based political analyst at Monash University. “On his way out the door, he seems to want to frustrate his enemies and perhaps help install a successor more to his liking than Dutton.” Turnbull himself came to power in 2015 in a party coup before winning an election the next year with a razor-thin majority. Amid internal party dissent, he abandoned signature policies this week designed to restore energy security and give tax relief to big businesses. Dutton, a 47-year-old former policeman, is seen as a leader of the party’s right wing. As the minister in charge of immigration he rose to prominence as a staunch supporter of the government’s hard-line policy of detaining asylum-seekers in offshore camps. In interviews this week he outlined a populist policy manifesto that includes removing a tax on electricity bills for families and pensioners, a wide-ranging investigation into energy companies blamed for spiraling prices, and cuts to immigration. Dutton on Thursday called speculation that he may be ineligible to remain in parliament “spurious and baseless.” The Labor Party has said he may have breached constitutional law by being a beneficiary of a trust that owns a child-care company and receives government subsidies. Turnbull said the solicitor general is due to announce a decision on this on Friday morning. Should the solicitor general decide Dutton’s eligibility is in doubt, the case will be referred to the High Court—a decision that may take months to be reached. Turnbull’s troubles have come even as polls show he’s more popular among the general public than any of the potential candidates to replace him. That includes the challengers within his own party, as well as opposition leader Bill Shorten. Bloomberg News

The World BusinessMirror

Friday, August 24, 2018

With White House stung by Cohen accusation, Trump fires back

ASHINGTON—President Donald J. Trump accused his former lawyer Michael Cohen of lying under pressure of prosecution Wednesday, as his White House grappled with allegations that the president had orchestrated a campaign cover-up to buy the silence of two women who claimed he had affairs with them. Confronting mounting legal and political threats, Trump took to Twitter to accuse Cohen of making up “stories in order to get a ‘deal’” from federal prosecutors. Cohen pleaded guilty on Tuesday to eight charges, including campaign finance violations that he said he carried out in coordination with Trump. Behind closed doors, Trump expressed worry and frustration that a man intimately familiar with his political, personal and business dealings for more than a decade had turned on him. Yet, his White House signaled no clear strategy for managing the fallout. At a White House briefing, Press Secretary Sarah Huckabee Sanders insisted at least seven times that Trump had done nothing wrong and was not the subject of criminal charges. She referred substantive questions to the president’s personal counsel Rudy Giuliani, who was at a golf course in Scotland. Outside allies of the White House said they had received little guidance on how to respond to the events in their appearances on cable news. And it was not clear the West Wing was

assembling any kind of coordinated response. Trump himself publicly denied wrongdoing, sitting down with his favored program Fox & Friends for an interview set to air Thursday. In the interview, he argued, incorrectly, that the hush-money payouts weren’t “even a campaign violation” because he subsequently reimbursed Cohen for the payments personally instead of with campaign funds. Federal law restricts how much individuals can donate to a campaign, bars corporations from making direct contributions and requires the disclosure of transactions. Cohen had said on Tuesday he secretly used shell companies to make payments used to silence former Playboy model Karen McDougal and adult-film actress Stormy Daniels for the purpose of influencing the 2016 election. Trump has insisted that he only found out about the payments after they were made, despite the release of a September 2016 taped conversation in which Trump and Cohen can be heard discussing a deal to pay McDougal for her story

President Donald J. Trump speaks during a rally on Tuesday at the Civic Center in Charleston West Virginia. AP/Tyler Evert

of a 2006 affair she says she had with Trump. The White House denied the president had lied, with Sanders calling the assertion “ridiculous.” Yet, she offered no explanation for Trump’s shifting accounts. As Trump vented his frustration, White House aides sought to project a sense of calm. Used to the ever-present shadow of federal investigations, numbed West Wing staffers absorbed near-simultaneous announcements on Tuesday of the Cohen plea deal and the conviction of former Trump campaign chairman Paul Manafort on financial charges. Manafort faces trial on separate charges in September in the District of Columbia that include acting as a foreign agent. That Cohen was in trouble was no surprise—federal prosecutors raided his offices months ago—but Trump and his allies were caught off-guard when he also pleaded guilty to campaign finance crimes, which, for the first time, took the swirling criminal probes directly

to the president. Both cases resulted, at least in part, from the work of special counsel Robert Mueller, who is investigating Russia’s attempts to sway voters in the 2016 election. “ The only thing that I have done w rong,” Trump tweeted late Wednesday, “ is to win an election that was expected to be won by Crooked Hillary Clinton and the Democrats. The problem is, they forgot to campaign in numerous states!” Meanwhile, Cohen’s lawyer, Lanny Davis, said on Wednesday that Cohen has information “that would be of interest” to the special counsel. “There are subjects that Michael Cohen could address that would be of interest to the special counsel,” Davis said in a series of television interviews. Davis also said Cohen is not looking for a presidential pardon. Tr u m p, i n t u r n , p r a i s e d Manafort as “a brave man!” raising speculation the former campaign operative could become the recipient of a pardon.

Manafort, Trump wrote, had “tremendous pressure on him and, unlike Michael Cohen, he refused to ‘break.’” Sanders said the matter of a pardon for Manafort had not been discussed. A mon g Tr u mp a l l ie s , t he back-to-back blows were a harbinger of dark days to come for the president. Democrats are eagerly a nt ic ipat i ng ga i n i ng subpoena power over the W hite House—and many are openly d iscussing t he possibi l it y of i m p e a c h i n g Tr u m p — s h o u l d they retake control of the House in November’s midterm elections. And even Trump loyalists acknowledged the judicial proceedings were a blow to the GOP’s chances of retaining the majority this year. “They have survived the Russia thing, but no one knows what’s next,” said former campaign aide Barry Bennett. Debate swirled inside and outside the White House about next steps and how damaging the legal fallout was for the president. Allies of the president stressed an untested legal theory that a sitting president cannot be indicted—only impeached. Former White House Communications Director Anthony Scaramucci argued that “at the end of the day it will be up to the House and the Senate to decide on the president’s presidency.” Former George W. Bush Press Secretary Ari Fleischer stressed that the revelations may be sordid but do not meet the constitutional bar of “high crimes and misdemeanors.” “Having an affair and lying about it with a porn star and a Playboy bunny is not impeachable,” Fleischer said, “it’s Donald Trump.” AP

With no place to run, people in Hawaii brace for hurricane

ONOLULU—Hawaii residents emptied store shelves on Wednesday, claimed the last sheets of plywood to board up windows and drained gas pumps as Hurricane Lane churned toward the state. The Category 4 storm could slam into the islands on Thursday with winds exceeding 100 mph (161 kph), making it the most powerful storm to hit Hawaii since Hurricane Iniki in 1992. Unlike Florida or Texas, where residents can get in their cars and drive hundreds of miles to safety, people in Hawaii are confined to the islands and can’t outrun the powerful winds and driving rain. Instead, t hey must stay put and ma ke sure they have enough supplies to outlast prolonged power outages and other potentia l emergencies. “Everyone is starting to buckle down at this point,” said Christyl Nagao of Kauai. “Our families are here. We have businesses and this and that. You just have to man your fort and hold on tight.” Living in an isolated island state also means the possibility that essential goods can’t be shipped to Hawaii if the storm shuts down ports. “You’re stuck here and resources might not get here in time,” Nagao said. The National Weather Service said Lane is expected to make a gradual turn toward the northwest on Wednesday, followed by a more northward motion into the islands on Thursday. “The center of Lane will move very close to or over the main Hawaiian Islands from Thursday

This image provided by Nasa on Wednesday shows Hurricane Lane as seen from the International Space Station. The National Weather Service says the hurricane will still pack a wallop for Hawaii on Thursday before gradually slowing over the next two days. Early Wednesday, the hurricane was 320 miles (515 kilometers) south of Hilo on Hawaii Island and moving northwest toward other islands. NASA via AP

through Saturday,” the weather service said. The Big Island was already starting to see Lane’s first effects on Wednesday, Gov. David Ige said at a news conference. T he hurricane’s outer rain bands were bringing showers to some parts of the island, said Matt Foster, a meteorologist with the National Weather Service. The eastern side of the island picked up nearly 3 inches (7.62 centimeters) of rain in three hours, while there was light rain in other areas, Foster said. “Heavy rain in Hilo right now,”

Hawaii County Managing Director Wil Okabe said of the east side town. But on the west side, “nothing. It’s a nice day.” Public schools were closed for the rest of the week and loca l gover nment workers were told to stay home unless they’re essentia l employees. Shelters were being readied to open on Oahu, Maui, Molokai and Lanai. Officials said they wou ld open shelters on ot he r i s l a nd s whe n ne e de d . Officials were also working to help Hawaii ’s sizable homeless population, many of whom live

near beaches and streams that could f lood. Maui County officials warned that those needing to use Molokai ’s shelter should get there soon because of concerns that high surf could make the main highway on the south coast of the island impassable. Hawaii Emergency Management Agency Administrator Tom Travis said there’s not enough shelter space statewide. He advised those who are not in flood zones to stay home. Many residents were trying to reinforce older homes made with

single-wall construction. “We’re planning on boarding up all our windows and sliding doors,” Napua Puaoi of Wailuku, Maui, said after buying 16 pieces of plywood from Home Depot. “As soon as my husband comes home— he has all the power tools.” Molokai real-estate agent Pearl Hodgins said she expected the island’s two stores to soon run out of bottled water and batteries. Melanie Davis, who lives in a suburb outside Honolulu, said she was gathering canned food and baby formula. “We’re getting some bags of rice and, of course, some Spam,” she said of the canned lunch meat that’s popular in Hawaii. She was organizing important documents into a folder—birth and marriage certificates, Social Security cards, insurance paperwork—and making sure her three children, all under 4, have flotation devices such as swimming vests—“just in case.” Meteorologist Chevy Chevalier said Lane may drop to a Category 3 by Thursday afternoon but that would still be a major hurricane. “We expect it to gradually weaken as it gets closer to the islands,” Chevalier said. “That being said, on our current forecast, as of the afternoon on Thursday, we still have it as a major hurricane.” Puaoi said Home Depot opened at 6 a.m., and employees reported there was already a line around the building. “We are fully stocked,” she said. “We have about nine cases of water because we’re having family stay with us as well, so one case per person.” AP

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Banks affected by typhoon get regulatory relief from BSP By Bianca Cuaresma @BcuaresmaBM

ENDERS affected by the recent Typhoon Josie will be subject to less strict regulatory measures on loans and, in turn, can provide debt relief to their borrowers, the Bangko Sentral ng Pilipinas (BSP) said. The BSP this week announced that banks operating in key areas in Regions 1,2,3, 4A, 4B, 6, as well as in the Cordillera Administrative Region and the National Capital Region, will be granted temporary regulatory and rediscounting relief measures in view of the damages and livelihood disruption caused by the weather condition. The BSP has previously granted similar such relief to areas affected by severe conditions, the most recent of which was in January, when the Central Bank issued the same set of regulatory relief to aid banks operating in war-torn Marawi City. Under the relief package, all banks are allowed to provide financial assistance to their officers and employees affected, even if the purpose of such assistance is not identified as eligible for credit accommodation under their existing BSP-approved Fringe Benefit Programs. All rediscounting banks are also granted a six-day grace period to settle the outstanding rediscounting obligations as of July 21 this year. Banks are also, on a case-by-case basis, allowed to restructure the outstanding rediscounted loans of their end-user borrowers affected by the tropical cyclone. For affected thrift banks, loans of borrowers will be excluded from the computation of past due loan ratio provided that appropriate and prudent operational control measures are adopted. The BSP is also suspending the imposition of penalties on the smaller banks’ legal reserve deficiencies, and is giving a moratorium without penalty on monthly payments due to the BSP for banks with ongoing rehabilitation programs. No monetary penalties will also be imposed for delays incurred in the submission of all supervisory reports from banks affected.

Banking&Finance BusinessMirror

Without more loans, private financing, govt hard-pressed to fund infra push

By Cai U. Ordinario

@cuo_bm

HE national government would be hard-pressed to finance its “Build, Build, Build” projects without additional loans and private financing, according to local economists. In an EagleWatch briefing on Thursday, Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang said based on their estimates, the government needs an additional P500 billion to P1.3 billion to finance its infrastructure projects in the medium term. The estimate was derived from comparing the nominal compounded annual growth rate of the economy to the government’s infrastructure requirements. Ang said even if real CAGR were used, the result would be as substantial when using the nominal data. “You must understand that infrastructure is actually very expensive and we need to really catch up with international competition and with the condition we are in right now, we will be forced to borrow whether we move toward increasing our collection, we will still borrow because of the huge financial requirements,” Ang explained. Former Socioeconomic Planning

Secretary Cielito F. Habito agreed and said the government should rethink its position when it comes to using private financing for the BBB. Habito said the government’s infrastructure agencies must also “shape up” to hasten the implementation of the projects, while adhering to global standards. Early into the Duterte administration, the President’s economic team said public-private partnership projects took longer to undertake. In order to fast-track project implementation, the economic managers decided to take on more official development assistance (ODA) financing. Three years into the current administration, the National Economic and Development Authority (Neda) said 35 infrastructure flagship projects (IFPs) have already been approved by the Neda Board. Of this number, 16 are estimated to be completed by 2022 and the remaining 19 will extend beyond 2022. The latest tally of Neda Board-

‘A

I is not only artificial intelligence, [but] it can also be association intelligence,” said Christian Britto of rasa.io, a USbased company that uses artificial intelligence to increase member engagement in associations. So what is artificial intelligence? “Think of AI as intelligent computer programs that try to mimic human intelligence. These programs analyze data, discover patterns, make decisions, and handle tasks as humans would but they do it more quickly and accurately,” said Britto. He added: “The most common type of AI is applied [or narrow], which is designed for a specific task, e.g., recognizing facial images, operating a vehicle, or trading stocks. Actually, we already experience AI in our daily lives—Facebook tags, Google search, a book recommendation from Amazon, or a film suggestion from Netflix.” How does AI relate to associations? One of the “pain points” of associations is member engagement (see my column on October 11, 2017, “Association Pain Points”). Too often, Britto said, “Engagement means one thing to an association and a

Workers put the finishing touches to the foundation of a government construction project. Economists warned on Thursday that, without more loans and private financing, the government may be in a bind in funding the ambitious “Build, Build, Build” infrastructure program. NONOY LACZA

approved IFPs is almost double last year’s list of 18 Neda Boardapproved projects included in the 75 IFPs. “The government must seriously consider relying on PPP again because its one way to relieve the fiscal pressures that would be building up,” Habito, however, told reporters. Ang said apart from the flagship projects, the Neda also mentioned that there are over 4,500 other infrastructure projects that By Justice S J Ranada Jr. will be undertaken. In total, the governSTATUTORY CONSTRUCTION—more detailed law applies ment will be spend Penal laws are crafted by the legislature to punish certain acts, and when ing P7.74 trillion until two (2) penal laws may both theoretically apply to the same case, the law 2022. Ang said almost which is more special in nature, regardless of the time of enactment, should 40 percent of the budget prevail. Thus Republic Act No 8353, which amended Article 266-A of the that has been approved Revise Penal Code, being more detailed, prevails over Section 5(b) of Rewill be rolled out in the next few years. public Act No. 7610. Ang said a third of the budget will be used People v. Ejercito GR No 229861 for roads, bridges and 02 Jul 2018 Perlas-Bernabe, J airports. However, airport projects account for

Case clippings

AI: Association Intelligence Association World Octavio Peralta

Friday, August 24, 2018 A8

number of different things to its members. How do you realistically engage members with all their different needs and interests, and different ideas about how they want to be engaged?” “Until now, an association’s ability to engage with a member has been limited. One-to-one communication has been impossible. Traditional engagement efforts center on activities like conferences or volunteering, which happen infrequently or require a high commitment of time and/or money on the member’s part,” he added. “Online communities are seen as a way to engage more members on a more frequent basis, but they have limitations, too. If members participate at all, they’re usually ‘lurkers’. Only a tiny fraction is active community members, maybe 3 [percent] to 5 percent on a good day.” So what do you do? How do you give members an association experience that’s personally appealing and relevant, and an experience they can’t get elsewhere? Britto suggested: “Help them develop an association habit. Get them hooked on you. Become indispensable. Habits aren’t easy to develop, but once they become part of a person’s lifestyle, they’re transformative. An association habit is most likely to take hold through frequent episodes of engagement—engagement on your members’ terms. Find a way to become a small part of their

lives every day. Regularly provide membership value in a way that doesn’t require a high commitment of time or money.” This is where AI comes in. AI taps into the untapped potential of your association’s data—the data in your member relations system, as well as e-mail marketing and marketing automation platforms. For example, AI can use data to discover correlations and patterns and then predict what a member would want to read every morning. It can look at a member’s past behavior and social graph to recommend webinars or conference sessions they’d want to attend. It can suggest publications or online learning programs to purchase. It can identify members who’d want to connect with each other for a mentoring program, peer discussion group, or mastermind group. AI isn’t a technology of the future, it’s here now, and within your asso-

ciation’s reach!

The column contributor, Octavio Peralta, is concurrently the secretary-general of the Association of Development Financing Institutions in Asia and the Pacific, and CEO and founder of the Philippine Council of Associations and Association Executives. PCAAE is holding its Sixth Associations Summit on November 23 and 24, at the Subic Bay Exhibition and Convention Center. The event is hosted by the Subic Bay Metropolitan Authority and supported by the Tourism Promotions Board. PCAAE enjoys the support of ADFIAP, TPB, and the Philippine International Convention Center. E-mail obp@adfiap.org.

a small amount of the infrastructure budget. Still, he said, the government’s intention to address unequal infrastructure development nationwide is evident in the distribution of road projects. Around 9.78 percent of the government’s total budget for infrastructure will go to projects located in Mindanao. Ang added that around 10 large inter-regional road projects make up almost 60 percent of the budget.

Challenges

“What are the biggest challenges? It is right-of-way, it is supply bottlenecks and also technical manpower bottlenecks, you don’t have the engineers, the people who will do it, they’re all in the Middle East,” Ang said. “By the way, Japan is also requiring a lot of people to build their stadium for 2020 Olympics and they can pay more. That’s why they’re not lending us money in the meantime because they have a lot of expenditures, as well. So that’s

why its only China who can lend us money and they also have the manpower. So this is the big challenge,” he added. In May the Neda admitted that a labor shortage is one of the possible threats to the government’s massive BBB program. Socioeconomic Planning Secretary Ernesto M. Pernia said this is a threat but the government is confident there will be enough workers for the P8 trillion to P9 trillion worth of infrastructure push until 2022. However, Pernia said a number of overseas Filipino workers (OFWs) are keen on coming home to take on positions that require technical skills. Public Works Secretary Mark A. Villar also said that the government is helping OFWs and Filipinos in the country look for these jobs through the recently launched Jobs, Jobs, Jobs portal. Villar said the portal already had 11,000 job postings on the day of the launch and more jobs are being posted as projects get implemented.

UnionBank ties up with SAP to streamline operations with cloud-based solution

NTERPRISE application software provider SAP announced on Wednesday that UnionBank of the Philippines has tapped its cloud solution to streamline its operations and meet business requirements. According to UnionBank Chairman and CEO Justo A. Ortiz, the move to “transform the bank for the digital economy”is the most revolutionary and gigantic step their company has taken in enabling customers. “We wanted to create a core banking system that will help us to decentralize our functions for booking, establish a shared services framework to support our HR [human resource] functions, and automate our operations focused on enterprise GL, planning and budgeting, procurement and analytics. This development is vital for us to meet the ever-changing needs not just of our customers but also our employees,”he said. Prior to its partnership with SAP, the Aboitiz-led universal bank faced challenges in financial management, manual Excel-based processes, budget tracking, account and product profitability reports, Reimbursement and Disbursement System (RDS), and Project Management, among others. Now with S/4 HANA hosted out of HANA Enterprise Cloud (HEC), UnionBank can reduce its business complexity with minimum human error and intervention, thus, allowing it to boost productivity and efficiency. Being a private cloud offered by

SAP, HEC assists customers to deploy HANA applications such as S/4 HANA, a real-time enterprise resource management suite that supports various lines of business run simple in the digital economy. With this, UnionBank can now focus on solution breath and simplified user experience that will help it lean toward the digital shift. “We want to further establish our position as the most innovative and pioneering bank in the country to advance its operation in the S/4 HANA hosted on HEC as we take on a cloud-first strategy with the help of SAP,” said Henry Aguda, chief technology and operations officer and chief transformation officer of UnionBank. He added that they see this as an opportunity to “streamline processes and meet business needs in a secure, safe, scalable and robust cloud environment.” For SAP Philippines Managing Director Edler Panlilio, going digital can lead to change in today’s business environment, particularly with the way banking is carried out by UnionBank. “We hope that by running live with S/4 HANA hosted through HEC and with our expertise in digital technologies, UnionBank can operate and deliver more value to their customers in a seamless and engaging way,” he said. HEC and SAP’s Application Management Services allow for different industries to transform their business by leveraging on its ability to free up

customer’s resource and information technology staff, lessen the required capital, and to reduce and avoid energy and data center costs. These, in turn, enable organizations to drive value creation activities, focus on business innovation and bolster revenue. SAP considers the unique industryspecific needs of UnionBank in a tightly regulated industry and understands the pivotal role of technology in shifting the dynamics of success. The multinational believes that this solution is the cornerstone of future innovations, as UnionBank begins to explore blockchain technology, InMemory Computing and Big Data. Through this, UnionBank can see that the system is ready to support new technologies and solutions in the market. Founded in 1982, it was among the first of its peers to start the first bank web site, online banking and first electronic savings account in the country. German firm SAP empowers organizations of all sizes and industries to run better. From back office to boardroom, warehouse to storefront, desktop to mobile device, it allows people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. All the applications and services offered by this multinational enable over 404,000 business and public-sector customers to operate profitably, adapt continuously and grow sustainably.

Roderick L. Abad

The Regions BusinessMirror

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DOLE has funds to help 4,000 displaced by Boracay closure By Samuel P. Medenilla @sam_medenilla

Duterte assures Mindanao executives of fair share under federal government By Manuel T. Cayon

NOTHER 4,000 displaced workers from Boracay Island could still avail themselves of the financial assistance program of the Department of Labor and Employment (DOLE). In a news conference on Wednesday, DOLE Assistant Secretary Benjo M. Benavidez said they still have enough funds to accommodate more workers in their Boracay Emergency Employment Program (BEEP). “Our budget is good for 17,735. But as we speak, only 13,000 [beneficiaries] plus have availed of it. We are still looking for the 4,000 plus workers,” Benavidez said. Labor Undersecretary Joel B. Maglunsod said interested qualified workers could still go the nearest DOLE regional office in their area to apply for the BEEP. “Our profiling [of the displaced workers in Boracay] is still ongoing so we could extend the interventions of the Department of Labor and Employment,” Maglunsod said. Qualified beneficiaries of the BEEP will be entitled to a financial support worth 50 percent of the prevailing daily minimum wage in Western Visayas equivalent to P4,205.50 per month. It will be given for a duration of six months. “For those who will avail themselves of the program] now, will give them the differential starting May up to August or September,” Benavidez explained. The DOLE launched BEEP in May to help workers who were affected with temporary closure of Boracay Island on April 26. It allocated P448 million for the said program. President Duterte ordered the temporary closure of the island-resort for its rehabilitation. It is scheduled to reopen to the public on October 26, 2018.

Baghay

MEANWHILE, the Philippine Chamber of Commerce and Industry (PCCI)Aklan announced the institutionalization of an antidrug abuse initiative it supported and calls “Bagong Buhay [new life or Baghay].” PCCI-Aklan President Ramel Buncalan said the two-year-old Baghay lures volunteers and supporters from all over the province, hoping to give drug dependents a chance. The Baghay was created as a local version of Tokhang of President Duterte. The Baghay was institutionalized after it earned certification from the Securities and Exchange Commission. A Sangguniang Panlalawigan resolution also adds up to the institutionalization of the group, according to Buncalan. “Aside from the business community, the organizations now involved tourism stakeholders, academe, the media, youth and the Provincial Prosecutors Office,” said Buncalan, who also currently heads the Baghay multisectoral council. The Baghay, according to Buncalan, was able to raise P162,000 from various donors. He added about P30,530 was used for the community-based rehabilitation program of Persons Who Used Drugs, or PWDs. The institutionalization of Baghay and the call for workers to avail themselves of financial assistance came at a time when the Tourism Infrastructure and Enterprise Zone Authority (Tieza) announced the rollout of its long-term solution for Boracay Island. In a statement on August 23, the Tieza said it is on track with its commitment for the period of closure to establish a temporary discharge pipe at the Bulabog Beach to address the controversial drainage pipes. “With two months to go until Boracay Island opens on October 26, Tieza is fully committed to complete not only the short-term interventions but more so the long-term engineering solutions to the problems that beset Boracay,” Tieza COO Pocholo D. Paragas was quoted in the statement as saying. With Jun N. Aguirre

Editor: Dennis D. Estopace • Friday, August 24, 2018 A9

@awimailbox Mindanao Bureau Chief

AVAO CITY—President Duterte on Wednesday assured Mindanao’s local government executives of fair sharing once the country shifted to a federal form of government.

FRESH CATCH

Residents of Barangay Ticala, San Pablo, Zamboanga del Sur, grill their fresh catch of the day. Citizens have turned to the sea as the province posted a decline in freshwater marine resource production due to several typhoons. Bernard Testa

Solon seeks primary health-care services for indigenous peoples By Jovee Marie N. dela Cruz @joveemarie

ITH limited to zero access to affordable health care, a leader of the House of Representatives is pushing for the passage of a bill providing primary health-care services for the country’s 17 million indigenous peoples. In House Bill (HB) 7859, Camarines Sur Rep. Luis F. Raymund Villafuerte Jr. wants the Department of Health (DOH) to train tribal health workers on new and emergency primary health-care management, as well as the use of new and emerging herbal medicines. HB 7859, or the proposed Tribal Health Workers Act, mandates that every tribal group within 10 kilometers from a barangay center appoints a designated health worker from its community. The bill calls them tribal health workers (THWs), who are “tasked to provide primary health care to members of the tribes.” “Each of them is also responsible for assisting, if needed, sick persons to the nearest clinic or hospital,” Villafuerte said. Under the measure, every THW must have undergone health-care training by either the government or a nongovernment organization (NGO). There should be one THW for every 30 tribal families, according to the bill.

Herbal medicines

VILLAFUERTE said the bill also recognizes the importance of adopting health practices that respect and incorporate the beliefs and tradition of the country’s indigenous peoples. This is why the bill recognizes the use by tribal communities of herbal medicines and mandates the THWs to establish herbal gardens in their respective community, he said. “Our country takes pride in its diverse and colorful population. It honors every indigenous group that makes up our distinct identity as a nation, and endeavors that they are not left behind in all aspects of progress,” Villafuerte said. “Through this bill, we shall ensure that government welfare services are inclusive and responsive to all—most especially to those who need it the most.” Citing his staff’s data, the lawmaker said the Philippines has about 14 million to 17 million indigenous peoples of whom 33 percent are in the Cordillera Administrative Region (CAR), 61 percent in Mindanao and the rest in the Visayas. Indigenous peoples are some of the poorest in the country, with limited to zero access to affordable health care, which is reflective of the status of indigenous groups worldwide, Villafuerte said. “This dire situation has compelled us to take urgent steps to protect our people in indigenous communities

from health hazards and conditions, most of which are initially preventable and easily treatable, but could be fatal without early detection and quick treatment,” he said.

Same benefits

The bill said THWs are entitled to the same benefits enjoyed by barangay health workers, such as Philhealth insurance coverage and hospitalization in case of work-related injury or sickness; free tuition in public high schools and universities for either the THW or his or her children; continuing training from the DOH; and free legal services for concerns in connection with the exercise of one’s duties and responsibilities as a THW. Under HB 7859, the tribal chief appoints the THW, taking into account the traditions of the tribe. The tribal chief then submit his or her name to the local health board. The local health board is tasked to register the THW and furnish a copy of the THW list to the DOH, which, in turn, shall maintain a national list of tribal health workers. The barangay, the municipal local government unit and the City Environment and Natural Resources Office of the Department of Environment and Natural Resources are required to provide assistance to the THW in establishing his/her herbal garden.

Indonesia to build hospitals, schools in PHL

AVAO CITY—Indonesian Ambassador Sinyo Harry Sarundajang said his country would construct schools and hospitals in the country as he also disclosed Indonesia’s intent to participate in the reconstruction of wardamaged Marawi City. Sarundajang paid a courtesy call on President Duterte on Wednesday, at the Matina Enclaves, the alternate Presidential office here. Sarundajang expressed his gratitude to Duterte for extending his warm welcome where he conveyed to the President the Indonesian government’s intent to build schools and hospitals in the Philippines. Duterte said he was interested in partnering with the Indone-

sian government to improve the health and education situation in the country. Duterte also assured the ambassador of the Philippine commitment to strengthen bilateral relations with Indonesia, saying that Indonesia was a “good friend and neighbor.” The Philippines and Indonesia has a standing cooperation on border security and Duterte assured him of the Philippine government’s security forces to jointly enhance the security measures of both countries. The Indonesian ambassador also commended Duterte for his peace efforts, particularly in Mindanao, and where he said his government also intended to extend assistance

in developing Mindanao and in the rehabilitation of Marawi City. Sarundajang was accompanied by his secretary Freddy Lengkong and Indonesian Consul General Berlian Napitupulu. On the Philippine side were P reside nt i a l A dv i ser on t he Peace Process Jesus G. Dureza, National Security Adviser Hermogenes C. Esperon Jr.; Department of Foreign Affairs Undersecretary Ernesto C. Abella; DFA Assistant Secretary Robert O. Ferrer Jr.; Department of National Defense Undersecretary Cardozo Juan C. Luna; and Department of Transportation Assistant Secretary Fernando Juan C. Perez. Manuel T. Cayon

Duterte met several Moro government chief executives in an almost hourlong meeting at the Matina Enclaves, the alternate Presidential office in Mindanao, the Presidential Communications and Operations Office (PCOO) said. The President cited the merits of federalism, the platform to stamp out the cycle of war among the Moro population. He said the federal form of government he was pushing would to put an end to the decades-long dispute in Mindanao. “We don’t intend to leave anybody behind so things can move forward,” he said. He allayed fears that a federal type of government would cause an unfair distribution of power in local governments, saying he will ensure equality and fairness once the federal form of government pushes through. He said he would continue to study this matter and prioritize the best interests of the country. Among those he met were former Sulu Gov. and Royal Council of the Sulu Sultanate (RCSS) Special Envoy Datu Shahbandar Abdusakur Tan, Jolo Mayor Kerkhar Tan, Pandami Mayor Hatta Berto, Kalingalan Caluang Mayor Peping Halun, Lugus Mayor Hadar Hajiri, Parang Mayor Madzhar Loong, Pata Mayor Anton

Burahan, Omar Mayor Hadji Hussein Mohammad, former Patikul Mayor Kabir Hayudini, Siasi Mayor Arthur Muksan and Old Panamao Mayor Al Frazier Abdurajak. The PCOO said Moro leaders expressed “sincere interests” for change and peace in Mindanao “mainly through a federal type of government,” and agreed that a federal system was the best alternative because it would allow the Moro community to integrate, rather than be divided by religion. Tan said he hoped that a federal type of government would end the “generations after generations” of dispute in Mindanao, citing the struggle waged by the Moro National Liberation Front (MNLF) and the Moro Islamic Liberation Front (MILF). Duterte said he would do all that he could in his term to pave the way for change in Mindanao. He said a new autonomous state of Mindanao was necessary and that the country “should absorb a federal type of government for sectors to achieve autonomy.” “I’ve always wanted peace. Ang akin talaga [Mine] is peace at all costs,” he said. Duterte earlier met with MNLF Chairman Nur Misuari in a private meeting, the PCOO said.

Negros Oriental eyes more RE opportunities

OLLOWING the issuance of a board resolution that bans coal as an energy source, the province of Negros Oriental continues to look for more renewableenergy (RE) opportunities. To date, a total of 222.5 megawatts (MW) of electricity is being produced by Negros Oriental’s two geothermal-power plants that is owned and operated by Lopez-led Energy Development Corp. (EDC) in the municipality of Valencia. Negros Oriental Gov. Roel R. Degamo said during the recent State of Nature Conference that the generated capacity of the geothermal plants is currently more than enough to supply the power demands of the province. “Due to interconnectivity, our power requirement is not standalone,” Degamo said. “It is included and dependent on the power requirements of the whole Visayas grid.” As such, he vowed to keep exploriing more RE opportunities. Degamo recognized the need to tap other RE sources, despite having relied on geothermal energy for the past 30 years. A 213,292-square-meter solarpower plant in Bais City was inaugurated in 2016, generating 24,205 MW of electricity annually and supplying more than 10,000 households in the region. According to Degamo, the solar plant saves up to 14,838 tons of carbon-dioxide emissions every year. In 2015 Silliman University in Dumaguete City entered into a partnership with a Filipino-American energy group for what was dubbed as “the largest school-based solarpower project in Southeast Asia” that

powers the 62-hectare campus with 1.2 MW of solar power. Degamo also bared the Department of Energy’s upcoming hydroelectric-power projects in Negros Oriental—three separate facilities in the municipality of Amlan with a total capacity of 5.5 MW, with target testing and commissioning date of the first two in December 2020 and the final one in December 2025. The annual conference brought together stakeholders from various sectors, such as civil society, private business, academe, as well as the government to address vital environmental issues. During his speech, Degamo reiterated his province’s stance against fossil fuels in power generation. He reiterated Executive Order 9, which he signed in March this year, which mandated the use of clean and renewable energy in all 19 municipalities and six cities of Negros Oriental. “This means that our local government will no longer issue any permit, authorization or endorsements that support development and operation of coal-fired and fossil-fuel power plants,” he explained. “The province is committed not to use coal as an energy source because of its impact on the environment, on health and global climate.” Degamo issued his strongest statement yet against coal, saying it is “incredibly dirty.” Referring to opposition that his move toward RE has received: “Their argument is true and simple: Coalfired [power] is cheap. My answer is truer and simpler: Environmental destruction is so expensive. It is never negotiable,” stated Degamo. Lenie Lectura

A10 Friday, August 24, 2018 • Editor: Angel R. Calso

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The Swiss challenge

arlier this year, President Duterte said he wanted to do away with public bidding for government projects. Instead, he batted for the Swiss challenge system. Supporters agreed with the President’s contention: “Let’s not have biddings anymore, because it’s slow.” Detractors countered that the Swiss challenge method is not necessarily faster, and that if it is faster, “haste makes waste”. The traditional way for a government to provide public-works development is to put forward the project itself. That is, the government identifies what is needed and puts a detailed and hopefully complete proposal out for public bidding. The process for awarding the bidding is equally detailed and complete. The Swiss challenge method differs substantially. The government identifies what the nation needs—a major infrastructure project like a new airport or something on a smaller scale, like new stations for an existing railway system. Based on this, a company can do its own feasibility study, decide costing and profits, and submit its proposal to the government. If the project proposal is reasonable and is initially accepted, the government offers the opportunity for other companies to challenge and perhaps beat the original proponent. You will not find this method used in most developed countries. India, in particular, has used the Swiss challenge for some of its infrastructure development with mixed results. The truth is that “public” bidding and the “private” awarding of government contracts have been subject to substandard completion and corruption. The award usually goes to the lowest bidder, which often cuts corners after submitting an unrealistically low bid just to get the deal. While the awarding process is supposed to be transparent and honest, we know that is not always—maybe often—the case. In the Swiss challenge, the first company that offers the proposal is sometimes reimbursed for the cost of the feasibility study, particularly if it failed to get the project. This is being done in Chile and South Africa. The Philippines and South Korea do not do this. Other countries would buy the original study and then put the project out for competitive bidding. There is no set formula for this kind of business. India is actually the model for the Swiss challenge, as the local and national governments have already used this method. Experience has shown that, the bigger the project, the more problems happen with the Swiss challenge. India has had good success, for example, with projects like the renovation of 400 railway stations. Its ambitious plan for 19,000 kilometers (km) of expressways was a failure because no single bidder felt confident enough to plan and bid for the entire project. Further, there were not enough companies that could even think to make a “challenge.” The government relented and broke down the highway proposal to 16 more manageable pieces. In addition, some of the highway building was put on top priority, such as the 135-km Eastern Peripheral Expressway, the 66-km Delhi-Meerut Expressway and the 400-km Vadodara-Mumbai Expressway, which did not use the Swiss challenge. Global experience, though, has shown that this method of infrastructure building can be more effective and efficient than the traditional “sealed-bid” process. Initially, it can tap into the private sector’s creativity, as government has a tendency to lack imagination and innovation. The “challenge” part of the process also allows other companies to come up with ideas that could improve on the proposed project. However, caution must be exercised to ensure that a company does not try to “bite off more than it can chew” with a concept that is too ambitious. Also, local governments have had better overall success, maybe because local businesses know better what the local areas need.

No James Jimenez

spox

t seems only logical that in order to say you’ve moved on from something, you must have first had that thing happen to you. At the very least, you should have been around when that thing happened. How can you move on from something if you’ve never had a personal experience with that thing? That’s like saying I’ve moved on from caviar when I’ve never even tasted the stuff, or that I’ve gotten over my relationship with Natalie Portman when she doesn’t even know I exist. So, to say (or at least imply) that millennials—a very specific group of people who were born from around 1982 to 2002—have moved on from martial law is disingenuous at best, because that thing had already ended before they were even born. In fact, even if we were to say that the millennial age range should actually be reckoned from 1980, it would still be wrong because, well, infants. To be charitable, let’s assume that martial law was not what millennials are supposed to have moved on from, but the conflict between two political families. Within this context, would

it now be accurate to say that millennials have moved on? My answer would still be no. As with martial law, the question really is, did the person or persons have any personal expe-

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rience of any sort with the dynamic between these two families? That would be unlikely because, again, the people we call millennials now would have been just children back then, and, without social media to force feed grown-up political drama into their young minds, those children would have had better things to worry about. How, then, can they have moved on from something they were probably never too aware of to begin with? Rather than say the millennials have moved on, therefore, it would perhaps be more accurate to say that many—not all—millennials simply do not know enough about those dark years to be able to form an opinion one way or the other. In fact, I suspect that some millennials probably don’t care about either martial law or political family feuds at all. Sadly, there’s no disagreeing with that possibility. The truth of the matter is, this kind of apathy isn’t unique to our here and now. Indifference to the lessons of experience actually seems like the default human condition. As for the follow-up

conomic managers today use the concept of GDP as a primary measure of their country’s economic success. In the Philippines, discussions on the performance and the general outlook for our economy focus heavily on whether GDP growth rates remain among the fastest in the world. Early pioneers of the GDP concept include Nobel laureate Dr. Simon Kuznets, who delivered a 1937 report to the US Congress on a way of measuring a nation’s economic activity using a single metric. Many others eventually innovated on Dr. Kuznets’s initial work. But the basic idea gained global dominance after World War II because it was used by the World Bank and the International Monetary Fund (IMF) as the main lens for viewing and understanding a country’s economy. Countries had to follow suit, especially if they wanted to receive support for their postwar rehabilitation efforts. Essentially, GDP measures the market value of final goods and services produced by a country in a given year—with this “output” believed to be the definitive sign of an economy’s health. Some economic experts, like Prof. Diane Coyle from the University of Manchester, say this empha-

sis on production and output stems from the fact that GDP was “invented to prepare nations better for warfare.” In her book, GDP: A Brief, but Affectionate History, Prof. Coyle explains that GDP’s early origins can be traced to British scientist William Petty who, in the 1660s, aimed to measure the assets of England and Wales to assess their capability to fight wars. John Maynard Keynes, the great British economist who established the modern definition of GDP, once made a plea during World War II for better figures on the British economy’s capacity to produce ammunition, guns, tanks and airplanes. Many experts now challenge the applicability of the metric in the 21st century. The Organization for Economic Cooperation and Development argues that GDP provides no holistic measure of the well-being of the country and its population. Even IMF Chief Christine Lagarde called for the creation of a new

index to measure overall economic success in current times. In a 2016 briefing, The Economist summed up the critiques perfectly, noting that “[GDP] was [and is] a measure for production, not of welfare.” Stewart Wallis, former executive director of the New Economics Foundation (NEF), wrote in a 2016 World Economic Forum article that GDP “is like a speedometer […] useful, but doesn’t tell you everything you want to know.… It won’t tell you whether you are overheating, or about to run out of fuel.” Wallis then cited a 2015 NEF report, which proposed five indicators said to be more effective than GDP: 1) good jobs or the proportion of well-paying jobs versus jobs with minimal wages; 2) well-being or life satisfaction; 3) environment and climate change; 4) fairness and income equality; and 5) health and the quality of interventions. Other countries have already started using other indicators as the basis for their policies. For instance, in 2008, the Bhutanese government started employing Gross National Happiness as the main measure for both the economic and noneconomic welfare of their country. Such a metric takes into account health, education, time use, cultural diversity, living standards and good governance. Meanwhile, some economists advocate the use of the Genuine Progress Indicator, which measures other factors, such as the cost of commuting, transportation, noise pollution and depletion of nonrenewable

insinuation, however, that because the young people don’t care, the rest of us shouldn’t either—well, that’s just wrong. There is a great deal of information about those dark days, many of them sourced from the testimonies of survivors of torture and enforced disappearances themselves. Some material comes from those who outlived victims, mostly their relatives and friends; and yet other sources include the recollections of those lucky enough to have simply lived through the night without directly coming into contact with the things that went bump in it. These memoirs may not directly prove the actual numbers of victims, but they certainly capture the oppressive atmosphere of fear their authors experienced. The entirety of this great record reveals the story of a wrong so great that our fundamental sense of fairness tells us it cannot be made right simply by the passage of time, or the forgetfulness of succeeding generations. So, no. There can be no moving on.

energy sources that contribute to the well-being of a citizen. Even the United Nations joined the fray when it started using in 1990 the Human Development Index formulated by Pakistani economist Mahbub ul Haq. The HDI is a composite of a country’s life expectancies, education and per-capita income indicators—in a bid to measure how well an economy supports (and spends for) its human capital. Perhaps it’s time the Philippines follows suit. That isn’t to say, however, that GDP should be disregarded altogether. In fact, it should remain among our “big-picture” metrics. But we would do well if we employed more resources to better track and understand aspects of our economic life other than final output—such as wealth disparity, environmental impact, access to economic opportunity, and even mental health and well-being. Even one of GDP’s pioneers, Dr. Simon Kuznets, once said: “Distinctions must be kept in mind between quantity and quality of growth, between its costs and return, and between the short and the long term. Goals for more growth should specify more growth of what and for what.”

Sen. Sonny M. Angara was the representative of Aurora province for nine years before he was elected senator in 2013. He is now the chairman of the Senate committees on local government and ways and means. E-mail: sensonnyangara@yahoo.com| Facebook, Twitter and Instagram: @sonnyangara.

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Friday, August 24, 2018 A11

Differentiate political Who’s afraid of mandatory standard? economy from governance Dr. Jesus Lim Arranza

MAKE SENSE

Leonardo A. Lanzona Jr.

EAGLE WATCH

roponents of the proposed “Bayanihan” Constitution of the Duterte administration argue that under federalism, the widening wealth gap in the country will be reduced. To achieve this, regional governments shall be created and empowered to address the specific needs of the communities with constitutionally mandated distribution of resources. The mechanism is twofold. First, the proposed constitution requires the Federal Government to allocate 50 percent of its collected taxes to the regions, which, in turn, will each receive an equal from this fund. This ensures that the regions will receive a higher share of all collected tax than the present Internal Revenue Allocation system. Second, an equalization fund is to be established and to be distributed to the more depressed regions through the supervision of a Federal Inter-government Commission (FIC) that will “formulate programs and policies in regard to grants-in-aid and fund transfers that will address the specific economic needs of the regions.” The proposed constitution, thus, recommends an additional layer in the governance structure to deal with poverty and wealth distribution. Because effective execution requires a host of activities, governance is both costly and difficult. Unfortunately, the extra layer of governance in the proposal—the regional bureaucracy—makes governance even more costly and difficult to implement. Many economists, including members of the administration’s economic management team, have pointed out the huge costs of this proposed constitution. The main challenge then for its proponents is to prove that this additional cost, running into billions of pesos, is necessary or justified. Consider, for example, the current Conditional Cash Transfer (CCT) Program that was designed under the present Constitution. This originates from the national government and is managed by its agency, the Department of Social Welfare and Development. In this program, no major element, specifically the funds, are coursed through the local government units. Instead, the transfers have been given directly to the beneficiaries who had been chosen objectively by means of econometric model that estimated the household’s income. Because the program is run directly by the DSWD, without any LGU intervention, the program has been sustained over a number of years, and, based on varied monitoring and evaluation studies, has achieved their long-term objectives. This program, with roughly 2 million beneficiaries, survived without any major corruption and is generally free of unnecessarily large administrative costs. Under the proposed constitution, programs with governance structures like the CCT will be considered unconstitutional. Any transfer program of the prospective Federal Government will first have to be approved by the FIC, and the regional government. Usually, the greater the bureaucracy involved, the greater the transaction costs, and the greater the costs will be. In addition, the greater the transaction costs, the greater room there will be for corruption and extortion. Under the proposed constitution, all executive programs relating to poverty and distribution will, by law, have to pass through the regional government and other associated agencies. This will create

a greater impasse as programs that were run previously independently and broadly by executive departments with adequate budgets will now have to be transferred to the regional governments, thereby creating a bigger burden to regions with limited resources. Nevertheless, proponents of federalism argue that the changed governance structure will create a new set of incentives that will reduce political opportunism and corruption. Presumably, the dynasties at the local level existed because they did not have to compete with other dynasties from other provinces in the region. With the establishment of regional governments, greater competition between parties and within parties will be expected. In effect, political economy issues can be handled better if a regional government were to manage the politics of the local governments, instead of a distant national government. This then constitutes the main benefit of the proposed constitution. The main problem is that political economy is driven, not by competitive individuals, but by the uncoordinated selfish behavior of persons who use their privileged control over resources. A wide range of political economy strategies can be at play—including rent-seeking interests, inadequate political capacity (e.g., unwillingness or inability to push for difficult reforms), clientelist structures, state capture, as well as more micropolitical factors such as the relationship between particular stakeholders. Frequently, the strategies for maintaining corrupt local governance arrangements are related to wider sociopolitical interests. For example, the kickbacks generated from public procurement may be used to finance election campaigns; or regulation of the financial sector remain weak because members of the governing coalition enjoy informal privileged access to credit, which, in turn, is part of the elite arrangements which help to maintain political stability. Therefore, the varied problems of political economy cannot be solved with new governance rules of another constitution. As seen in the CCT governance structure, the presence of a committed unitary government was a key to limiting the choices and strategies of political dynasties. This limitation forces them to cooperate for the country as whole and share in what may be perceived as an “inefficient” system but which, in turn, can prove to be beneficial for the system as a whole. The ills of political economy are best solved through legislation, executive orders and specific programs that work within a proper context, not by a permanent change in constitutional provisions. The Constitution should last forever, and its governance provisions should be flexible enough for the country to respond to new challenges here and abroad.

Leonardo A. Lanzona Jr. is professor of economics at the Ateneo de Manila University and a senior fellow of Eagle Watch, the school’s macroeconomic research and forecasting unit.

n my July 12, 2018, column, I discussed the issue on the need to place flat glass back on the list of items under mandatory standard, after it was temporarily removed from the list by the Department of Trade and Industry (DTI) at the height of port congestion at the country’s two major ports several years back. Apparently, our call for the DTI to reconsider their standard compliance requirements for flat glass, after reports of cheaper but lower-quality imported flat glass being sold in the local market reached us, coupled with our concern for consumer safety because of fatal glass-related accidents happening all over the world, may have caused alarm to some interest groups, claiming that putting back flat glass in the mandatory standard list is restrictive and is aimed at controling the market by a local glass manufacturer. As chairman of the Federation of Philippine Industries (FPI), I would like to emphasize that while our advocacy is to promote consumer safety and enhance competition, we strongly oppose cartels and monopolies. Let me state for the record, that,

even before the creation of the Philippine Competition Commission, we already filed the first anti-cartel case that was given due course by the Department of Justice (DOJ), with hearings still ongoing both at the MTC and RTC of Pasig City. These are practically the reasons that compel us to call on the government, particularly the DTI, to put back flat glass in the mandatory standard list. Putting back flat glass in the mandatory standard list will not restrict the importation of flat glass, but rather, it is to protect consumers. In fact, mandatory standards are applied to both imported and locally manufactured flat glass. The country has only one flat glass manufacturer. Providing direct and indirect employment opportunities to our countrymen, the

country’s glass industry is threatened by the entry of important flat glass. Already, there have been reported incidents of entry of substandard flat glass into the country, which endanger the safety of our countrymen and compete unfairly with locally produced flat glass. Under the current DTI policy, imported flat glass is only subjected to voluntary standard certification. Meaning, it is up to importers to subject their flat glass importations to mandatory standard or not. It worries us to know that, even during the years when flat glass was still included in the mandatory standard list, uncertified flat glass were already being brought into the local market illegally. How much rampant would this be, now that flat glass is only under voluntary standard? What puzzles me though is the opposition by some importers to put back flat glass in the mandatory standard, when Chinese glass manufacturers themselves placed an ad in one of the major newspapers, saying that Chinese-manufactured flat glass are of best quality and compliant to international product standards. I am, therefore, amused, if not confused, what these importers are afraid of. Unless, they have doubts on the claim of Chinese glass manufacturers as published in a major newspaper. I am also surprised why those

70 years of diplomatic relations between the Philippines and Argentina By José Néstor Ureta

Ambassador of the Argentine Republic in the Philippines

his year we celebrate 70 years of diplomatic relations with the Philippines that have seen, particulary since the recovery of democracy in both our countries, a path of constant growth in the ties between our peoples. Since August 27, 1948, Argentina and the Philippines have held numerous agreements on cultural cooperation, sports, trade, investment, political consultations and cooperation between both diplomatic academies. Other agreements are also in advance stages like educational cooperation, exchange in tax matters and agricultural cooperation. The Philippines is a special friend in Southeast Asia. The affinity between our countries goes back to the common colonial history; Hispanic culture and the Catholic faith continue to act in the idiosyncrasy and values of our peoples, notwithstanding the geographic distance that separates us. We consider culture and education to be vital tools to promote mutual knowledge and bilateral cooperation. This year our Embassy in Manila develops an important cultural agenda with various activities in the areas of film, dance, literature, photography and music. Argentina gives great importance to South-South Cooperation. In this respect, we celebrate the excellent relationship between both countries, which has materialized in different and successful technical cooperation projects in recent years in the agricultural, forestry and livestock sectors, through the Argentine Fund

for South-South and Triangular Cooperation. We hope to expand this cooperation in areas such as child mortality, gender-related violence and natural disasters. We celebrate the excellent cooperation in agricultural sector. We must continue to work closely and explore new fields, such as production of organic rice, milk, dairy products and ecological fishing. Economic cooperation and commercial exchange, although important, have not yet reached their full potential. There is plenty of room to increase and diversify trade flows between both countries. We give importance to the relationship between our respective diplomatic academies, materialized from the cooperation agreement between our “Instituto del Servicio Exterior de la Nación” (Argentine Foreign Service Institute) and the Philippine Foreign Service Institute, signed in 2011. We promote the reciprocal diffusion of academic articles under the current agreement and we consider, first and foremost, the exchange of young diplomats from both countries. We also consider sports cooperation as a tool to promote greater knowledge among our peoples and increase exchanges of sports tech-

nicians, athletes and also promote a positive agenda that can encourage work opportunities related to sports, within the framework of the bilateral memorandum of understanding signed on September 14, 2012. The promotion of soccer for children in peripheral regions of Manila developed by the Argentine Embassy is an example of the value we give to foster understanding and the development of activities that bring us closer in this area. Tourism is one of the most important areas to raise awareness among our cultures and increase personal contacts. Even when our destinations are unknown to the general public; among the Asean countries, the Philippines is the largest source of tourists in Argentina and the flow of Argentine tourists in the Philippines is increasing. We must continue our efforts to impart to each other the exceptional natural beauty, architectural and cultural properties of both countries. We consider Asean a key region in the growth dynamics of Asia in recent decades. Through a diverse, fruitful and mature relationship maintained with its member-countries, Argentina identified a wide margin to advance in the relationship with Asean, both in terms of international policy issues and in relation to the increase and diversification of our trade with the region. In this regard, Argentina is particularly grateful for the support of the Philippines for signing my country’s accession to the Treaty of Amity and Cooperation in Southeast Asia in Singapore on August 2, 2018.

China policy levers jammed in Trump’s flip-flop world By Shuli Ren Bloomberg Opinion

aught unwillingly in a trade war, China’s economy is faltering. But those expecting a repeat of the stimulus during the global financial crisis a decade ago will be sorely disappointed. Rather, the country is sliding into a state of policy paralysis. The latest sign of desperation came in a state media report on Monday that the Ministry of Finance is asking the China Banking and Insurance Regulatory Commission (CBIRC) to allow banks to lower their risk weighting on local government bonds to zero percent from 20 percent. Under this proposal, municipal notes would be considered as safe as the

ministry’s own debt. Since local government securities offer higher yields, banks would swarm to buy them. The plan could easily be construed as another big-ticket stimulus item— and indeed it would be, if implemented. There’s the rub: It’s unlikely to happen, and the manner in which the idea was aired betrays the extent of infighting and lack of policy cohesion within the Chinese government. Changing the risk weighting on local government bonds would free up as much as 3 trillion yuan ($438 billion) of capital, according to Goldman Sachs Group Inc. estimates, enabling banks to buy more corporate bonds and extend more loans. The Ministry of Finance needs local authorities that are responsible for 90

percent of infrastructure projects in China to be able to spend again. Local government bond issuance in the first seven months totaled 792 billion yuan, just 36 percent of the ministry’s annual quota. There’s hardly any new cash coming in: In the first quarter, all local government issues were “swap bonds,” or legacy debt in a new form, says Moody’s Corp. Local governments’ funding gap already ballooned to more than 8 trillion yuan last year, and there are reasons to believe they are even more short of cash now. Land sales, an important source of revenue, are slipping. Amid Beijing’s drive to cool China’s property market, developers have become hesitant to bid for new land. In the second quarter, there

were 226 unsuccessful land auctions, the most since 2012, according to Deutsche Bank AG. Most of those failed deals occurred in tier three cities. The stumbling block for the ministry’s plan is Guo Shuqing, chairman of the banking regulator, who can hardly be expected to play along. Beijing merged the banking and insurance watchdogs to create the CBIRC earlier this year for the precise purpose of reining in credit risk. Equating notes issued by troubled rust-belt provinces such as Liaoning to the ministry’s own debt promises to land commercial banks with even more bad assets. Tension among China’s economic ministries has been bubbling into public view. One month ago, the Ministry of

Finance and the People’s Bank of China had a rare spat over their roles in inflating China’s debt pile. In an article in China Business News, the central bank’s research head accused the ministry of failing to control local-government spending. In turn, the finance ministry blamed the PBOC for lax regulation. At issue is a government torn between GDP growth and deleveraging. China entered the year with a tough stance, aiming to prevent its own Minsky Moment. But as trade friction with the US escalates, Beijing is starting to relent. It’s become clear that China’s economy isn’t as resilient as some thought: Manufacturing indexes have weakened, consumer confidence is sliding, and stocks are in a bear market.

opposing our call to put back flat glass in the mandatory standard came out only after Japanese-controlled Asahi Glass, the only flat glass manufacturing company in the country, was bought by a ChineseFilipino-owned company and is now named Pioneer Flat Glass Manufacturing Inc. Is this not a classic example of Filipino crab mentality, where Filipinos themselves pull down a rising Filipino company? What we are asking from the government is a measure to promote consumer safety and to enhance competition. So long as imported flat glass are certified under the government’s mandatory standard, we are not against the importation of flat glass. But we will be watching the local market, if only to secure the safety of consumers and to promote competition in the local glass industry. By the way, I’m not aware of any law in the Philippines that restricts or prohibits investments in the manufacturing of flat glass in the country, nor laws that ban or restrict the entry of imported flat glass. This means that the flat-glass market in the Philippines remains contestable. Dr. Arranza is the chairman of the Federation of Philippine Industries and Fight Illicit Trade, a broad-based, multisectoral movement intended to protect consumers, safeguard government revenues and shield legitimate industries from the ill effects of smuggling.

At the same time, I would like to highlight the special importance that Mercosur gives to Asean. Both regional blocs have worked hard to intensify interregional dialogue through the exchange of information and points of view of their respective integration processes. We need to deepen common efforts to identify areas of common interest for our future dialogues. Another framework that finds us united with the Philippines in our joint cooperation is FOCALAE (FEALAC). Argentina considers FOCALAE (FEALAC) as a forum of great relevance in its relationship with the Asia Pacific, in particular to promote dialogue between two geographically distant regions and that present a great cultural diversity. We are strongly committed in continuing to cooperate at both the public and private levels in the different subjects dealt with by the various working groups, as well as in the identification of new projects of interest. The Philippines is a nation that we feel very close to, with which we share a similar aspiration and determination to build a better and fairer future for our peoples, within a framework of peace, prosperity and international security. Argentina is firmly on the path to strengthen bilateral ties, so I reaffirm our country’s commitment to intensify our best efforts so that this cooperation can be transformed into a deep partnership based on trust, solidarity and complementarity. The conditions are given, we must take advantage of them for the benefit of our peoples.

Having been blindsided once already, the government seems unable to figure out how long this trade war will last. In May talks between President Xi Jinping’s top economic adviser Liu He and Treasury Secretary Steven Mnuchin ended with a positive-sounding joint statement, only for President Donald J. Trump to announce a 25-percent tariff on Chinese imports days later. If the US midterm elections bring a change, perhaps China can weather the storm and deleveraging will remain its top economic priority. But if we are talking about two more years, helicopter money is perhaps warranted. There’s a temptation for investors to construe any “easing” headlines as signs of the end of the deleveraging campaign.

2nd Front Page BusinessMirror

A12 Friday, August 24, 2018

Bank accounts tied to ₧2-B drug hoard convict frozen

By Joel R. San Juan

@jrsanjuan1573

HE Court of Appeals has maintained the freeze order it issued on two bank accounts allegedly being used to launder millions of pesos coming from a now-convicted drug lord the government tagged earlier in a P2-billion shabu haul in Olongapo City.

In a three-page resolution penned by Associate Justice Rosmari Carandang, the CA’s Former Special Third Division denied the motions for reconsideration filed by Jeffrey Su Go, Jean Pearl Yana Go and Jin Zhang of its decision issued on June 16, 2017. T he appe l l ate cou r t re i nstated the freeze order covering Banco de Oro Account Number 4898009067 jointly owned by Jeffrey and Jean; and Metrobank Account Number 7640028854 owned by Jin. It held that the Regional Trial Court in Manila City erred in lifting the provisional asset preservation order (Papo) it issued on January 5, 2017, when the RTC gave weight to the respondents’ claim that the funds were meant to pay for casino-related loans. The CA said the lower court should not have ruled out the pos-

We emphasize the finding of probable cause that funds deposited in private respondents’ accounts are sourced from Albert Chin’s involvement with illegal drug trafficking.” —Court of Appeals sibility that the money came from illegal drug activities of convicted drug lord Albert Chin. Chin was the leader of a group charged by the Department of Justice before the RTC of Olongapo City in 2013 for illegal possession of illegal drugs in connection with a raid by the Philippine National Police Anti-Illegal Drugs Special

Operations Task Force (PNP-Aidsotf) that resulted in the seizure of around 432 kilos of shabu worth P2 billion. During the operation, authorities confiscated several items, including a transaction slip for the deposit of P3.68 million to the Go couple’s account and a P4million manager’s check payable to Zhang. Subsequent investigation by the Anti-Money Laundering Council (AMLC) showed that Chin transferred a total of P18.31 million to the Gos from September 2012 to August 2013. Chin, along with five other coaccused, was convicted in September 2016 by the RTC in Olongapo. In their motion for reconsideration, the Go couple and Zhang insisted that the Papo over their bank accounts should not have been reinstated considering the failure of AMLC to present proof that these are connected with Chin’s illegal drug activities. They added that the reinstatement of the Papo violates their constitutional right to equal protection. They noted that the AMLC discovered during their investigation several fund transfers to and from the account of a certain company called Travellers International Hotel Group Inc. (TIHI). However, the bank account of said company was not included

among those accounts subject to the Papo. Still, the CA said the respondents’ arguments were not sufficient to warrant the lifting of the Papo. “We emphasize the finding of probable cause that funds deposited in private respondents’ accounts are sourced from Albert Chin’s involvement with illegal drug trafficking,” the CA said. “In view of said finding, the issuance of the Papo against the accounts of private respondents Go, among others, is to give the government the necessary time to prepare its case without having to worry about the possible dissipation of the assets that in any way may be related to the suspected illegal activity,” it explained. With respect to TIHI, the CA said the company can be impleaded by the AMLC in another proceeding for purposes of forfeiture of the proceeds of said account. “Said company is not an indispensable party to the instant case without whom no final determination can be had of an action,” the CA pointed out. On the other hand, the CA denied Zhang’s motion for reconsideration outright for having been filed beyond the prescribed period. Conc u r r i n g i n t he r u l i n g were Associate Justices Ramon Paul Hernando and Maria Elisa Sempio Diy.

Go: Let the people judge Duterte in next election

PECIAL Assistant to the President (SAP) Christopher Lawrence “Bong” Go said on Thursday it is the Filipino people who will ultimately judge the administration of President Duterte and that they will do so through the election. Go was responding to statements made by former President Benigno S. Aquino III, who had urged those who do not like the administration to campaign for the candidates of the opposition in the 2019 midterm elections. “Hayaan na lang po natin na ang tao ang humusga [Let’s just let the people judge for themselves],” Go told broadcaster Erwin Tulfo in a radio interview over Radyo Pilipinas. “Mararamdaman niyo naman po siguro. Maglakad kayo sa kalye, kung safe po ang inyong mga anak, kung may pagbabago kayong nararamdaman. Hindi na po kailangan ipagmalaki kung ano po ang nagawa ng administrasyon ni Pangulong Duterte. Let the people judge [I think you feel it. Walk on the streets, see if your children are safe, if there are improvements. We don’t need to boast about the accomplishments of Duterte administration. Let the people judge],” he said. He urged the public not to dwell on the negativity of the opposition but on the positive changes Duterte has initiated. Go also addressed Aquino’s insinuation that the President is not in good health and that Malacañang should issue a medical bulletin. “In fact, kitang-kita niyo naman kahapon, napakasigla at dalawang

DA suspends SSG on onion imports to cut retail prices

Budget. . .

price of red onion in Metro Manila as of the fourth week of August-

with Medialdea and Dominguez on Friday afternoon regarding the budget issue. House Majority Floor Leader Rolando G. Andaya Jr. said last week that the House will resume its budget deliberations after reaching a “compromise” with the Palace, adding that the President even promised to talk to Diokno and Dominguez to see if a compromise could be struck to break the impasse. Contrary to the claim of Andaya, Presidential Spokesman Harry L. Roque Jr. said it is “good” that the budget hearing will resume, but stressed that he was not aware of any deal or agreement made by Diokno on a possible compromise. “As far as I know, nothing has changed on the budget. It’s still the same budget that we submitted,” Roque told reporters in a chance interview. Sought for clarification if the House will be discussing a cashbased budget, Roque said: “They will be discussing the budget as submitted by Malacañang.” The Executive submitted a cashbased budget for 2019 on July 23 on the day of the President’s third State of the Nation Address. Due to the House’s opposition to the cash-based budgeting system, the House Committee on Appropriations temporarily suspended the deliberations for the proposed P3.757-trillion national budget.

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reached P108.33 per kilogram. The figure was 11.27 percent higher than the P97.36 per kg average quotation

recorded in the first week of July. On an annual basis, the recent quotation of red onion sold in

Metro Manila was 64.19 percent higher than the P65.98-per-kg price level recorded in the endweek of August 2017. On the other hand, average Metro Manila prices of white onion in end-August rose by 4.5 percent to P114.19 per kg, from the P109.28 per kg average quotation recorded in the third week of the month. The figure was also P31.47 higher than the P82.72-per-kg average retail price of white onion in Metro Manila at the start of July. Piñol said due to the SSG, the retail cost of imported onion is high as the landed cost of the spice is only about P33 per kg, way below the P74.21-per-kg trigger price level. The entry of onion imports without SSG would slash the retail prices of both white onion and red onion by half in two weeks’ time, according to Piñol. “The industry stakeholders said without the SSG the price of white onion could be brought down to P55 per kg, while red onion would be at P65 per kg,” he told reporters in an interview on Thursday. “So I agreed that in two weeks’ time, we would expect the prices of onion in the market to really go down,” he added. Onion traders and importers sought a two-week window time as they would still have to sell their remaining stocks bought abroad with SSG, according to Piñol. The agriculture chief did not disclose any figures on how many onion imports would come in to the country after the lifting of the SSG. Piñol said the price of spice during this time is really high as the production is in lean season. “[The temporary suspension of SSG] will last until I won’t be seeing any changes of the prices in the market,” Piñol said. “That means if the retail prices of onion after two weeks upon the effectivity of this order will not go down, then we will reimpose the SSG,” Piñol added. Jasper Emmanuel Y. Arcalas

www.businessmirror.com.ph

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‘Hybrid’

However, Andaya said last week that the Palace and the House of Representatives have agreed that the 2019 General Appropriations Act (GAA) will adopt a “hybrid” of cash-based and obligation-based budgeting system. Earlier, Andaya also said the House is awaiting the original budget proposals from government agencies to find out the projects that were removed by the Department of Budget and Management due to the shift to a cash-based budgeting system in 2019. According to the schedule released by the House Press and

oras siya nagsalita kahapon. Inorasan ko nga e, dalawang oras siya nagsalita sa entablado. At nasabi niya lahat [You saw him yesterday, he was very healthy. He delivered a two-hour speech. I timed it, he was on-stage for two hours. And he was able to say everything he needed to say],” he said. Duterte was in Cebu City on Tuesday to speak at a meeting of the League of Municipalities of the Philippines. In his speech, the President even chided Communist Party of the Philippines (CPP) founding chairman Jose Maria Sison for reporting that he was in a coma. Go debunked the allegation by posting a photo of him with the President, and then a live Facebook video feed showing the President dining in Davao. Go also took a jab at Sen. Antonio F. Trillanes IV, who had said that instead of being terminally ill, Duterte would live long because he was the proverbial “masamang damo [unwanted weed].” “Ako naniniwala na si Duterte, masamang damo ‘yan. Matagal mamamatay ‘yan [I believe that Duterte will not die easily because he is like unwanted weed],” Trillanes had said in an interview. Go responded by saying Duterte was not perfect and, like everyone else, makes mistakes. “Sa sinabi naman ni Senator Trillanes, kung sa tingin niya matagal mamatay, totoo po ‘yun [Regarding what Senator Trillanes said, if he thinks he (President Duterte) will not die easily, he’s right],” he said.

Public Affairs Bureau, the allocation for the Departments of Trade and Industry and of Education will undergo scrutiny on August 28. The schedule released by the House also indicated that the hearings on the budgets of the Office of the President, Office of the Vice President, Departments of the Interior and Local Government and of National Defense will be held on August 29. Budget deliberations for the Departments of Labor and Employment and of Foreign Affairs is also scheduled on August 30. The budget hearings for the Departments of Information and Communications Technology and of Health (DOH) are set on September 3; Civil Service Commission, Commission on Human Rights, Department of Science and Technology, and the Judiciary on September 4; and the Presidential Communications Operations Office and the Department of Transportation on September 5. Last week Roque said in a briefing that Medialdea and the economic managers were in discussion. Although he was made aware of Andaya’s statements, Roque has since said nothing has changed on the position of the Executive and the economic managers to keep the cash-based budgeting system. Diokno has also defended the revolutionary shift from obligationbased budgeting to cash-based budgeting as being necessary to fasttrack the completion of projects. Under a cash-based budgeting system, the projects listed in the budget must be fully delivered, inspected and accepted by the end of the fiscal year. Payment should also be done within the fiscal year and up to a three-month extended payment period after the fiscal year for goods and services accepted by December 31 of the fiscal year. On the other hand, under obligation-based budgeting system, contracts awarded within the fiscal year can be delivered even after the end of the year. Inspection, verification and payment can also be done within and beyond the end of the fiscal year.