CHINA INVITED TO PHL PLEDGING SESSION FOR MARAWI RECOVERY By Rea Cu
@ReaCuBM
& Manuel T. Cayon @awimailbox
Mindanao Bureau Chief
T What was once one of Marawi’s main sections is a picture of total destruction in this file photo, after the five-month siege of the city by terrorists. The Philippine government has set a November pledging session for its recovery and rehabilitation. NONIE REYES
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HE Department of Finance (DOF) has extended an invitation to China, on behalf of the Philippines, to take part in the country’s pledging session set in November to drum up international support for the recovery and rehabilitation program for war-torn
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Tuesday, August 28, 2018 Vol. 13 No. 318
DTI: Manufacturers vow to keep prices ‘stable’
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By Elijah Felice E. Rosale
@alyasjah
ANUFACTURERS of basic necessities and prime commodities (BNPCs) have vowed to control the prices of their products during the preholiday season to allow consumers to cope, following a consumer group’s report that prices of such items rose by 11 percent over the past seven months.
Medal Tally As of 7 p.m. G
once again come under fire, this time from Davao businessmen. The head of the city’s chamber of commerce urged the Duterte administration at the weekend to move to ensure there is flesh in the financial commitments made by China and Japan. Beijing was singled out for its glowing promises following a Bloomberg special report that said nearly two years since making grandiose promises to boost Philippine development, China-supported projects have not taken off. See “China,” A2
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Marawi City in Mindanao. Finance Secretary Carlos G. Dominguez III extended the invitation to China during a meeting between a Cabinet-level Philippine delegation and officials of China’s Ministry of Commerce last week, as he expressed the Philippines’s “deep gratitude” for Beijing’s swift response in providing assistance for the reconstruction efforts in Marawi City. The Marawi assistance notwithstanding, China’s other promises of official development assistance have
S
B Total
1 China
81 60 40
181
2 Japan
43 35 54
132
20 14 27
61
5 iR iran
16 15 15
46
6 chinese taipei
12 12 17
41
7 dpr korea
11
6
7
24
8 Thailand
9
9
32
50
9 India
7
10 20
37
10 Uzbekistan
6
12 12
30
11 KAZAKHSTAN
6
8
28
42
12 Bahrain
4
3
2
9
13 Hongkong,china
3
8
15
26
14 UAE
3
6
3
12
15 mongolia
3
2
5
10
16 philippines
3
0
12
15
17 Malaysia
2
8
6
16
18 Kyrgyzstan
2
5
9
16
19 singapore
2
4
10
16
20 qatar
2
2
1
5
21 Jordan
2
1
8
11
22 kuwait
2
1
0
3
23 cambodia
2
0
1
3
Trade Undersecretary Ruth B. Castelo said BNPC producers gave their word they will stabilize the
New city needed to ease congestion Manny B. Villar
THE ENTREPRENEUR
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he congestion problem at the Ninoy Aquino International Airport and the slow traffic along Edsa, which were highlighted in newspaper headlines in recent days, point to one major factor—high population density in Metro Manila. Metro Manila, a highly urbanized area spanning 619.57 square kilometers, has a daytime population of around 15 million people. Over 2 million vehicles, excluding motorcycles, congregate along its roads daily, resulting in heavy traffic. Continued on A6
See “DTI,” A2
Neda rushing investment plan to guide Boracay rehab
By Bianca Cuaresma
By Cai U. Ordinario
@BcuaresmaBM
G
LOBAL investors looking for shortterm yield remained upbeat on Philippine prospects just before the onset of the so-called Ghost Month for the year, data from the Bangko Sentral ng Pilipinas (BSP) showed. The latest numbers on the country’s foreign portfolio investments from the BSP show that the Philippines registered its third-strongest weekly performance for the year, just before the formal start of the Ghost Month celebration. Investors, particularly Asians, are believed to be reluctant in investing during the Ghost Month, as it is believed to bring bad luck. The Ghost Month started on August 11 this year and will end on September 9. In 2017 the Central Bank blamed this investor belief for the resulting net outflow of FPI for the month. “Registered foreign portfolio investments in August 2017 [was] down by 34.7 percent and 46.7 percent from figures recorded the previous month and a year ago, respectively, as trading is thin during the Ghost Month [August] because of hesitancy to invest,” the BSP said in its report last year. This year, in the week ending August 10, however, investors were seen to be keen on putting investments into Philippine shores, as the week alone yielded a net inflow of $111.18 million. This is the third-largest net inflow for a week in 2018. Last year the August FPIs resulted in a net outflow of $57.52 million, reversing the previous year’s $427-million net See “Hot money,” A2
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Hot money flows strong just before Ghost Month
3Republicofkorea 28 32 40 100 4 INDONESIA
“No price moratorium, but we have requested manufacturers [of basic necessities and prime commodities] to hold price increases for at least the next three months. The response is very positive, and some even committed not to move prices for the next nine months.”—Castelo
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A
nipulation by rice traders and into the reported weevil infestation of the rice imported from Thailand and Vietnam. “We have already sent a letter to the NFA and DA to clear these issues before the committee,” the lawmaker said. The unnumbered resolution is expected to be included in the Order of Business and will be referred to the food and agriculture committee following the resumption of session on Tuesday (August 28).
MONTH before its expected reopening, the National Economic and Development Authority (Neda) is already in the thick of preparing the investment program for Boracay’s rehabilitation and recovery to guide future investments on the worldfamous island in the medium term. Neda Undersecretary for Regional Development Adoracion M. Navarro recently told reporters that the investment program will be similar to the one they did for Marawi City. Navarro said the Neda has three months to prepare the program, which will be based on the MediumTerm Boracay Action Plan Framework drafted by the Neda. “We’re coming up with an investment program for Boracay rehabilitation and recovery [since] we’re the vice chair of the NDRRMC [National Disaster Risk Reduction and Management Council] for recovery and rehabilitation [of Boracay],” Navarro said. “We delivered the first draft, but the details and cost are not yet for disclosure because it’s not yet approved. We’re doing the vetting again, the same thing we did for Marawi,” she added. The investment program will include public and private projects. Navarro said in the case of public projects, the Neda will help agencies determine which projects are necessary.
Continued on A2
See “Neda,” A8
A worker carries a sack of rice on his head at a rice store in Makati City. According to the owner, they are no longer selling NFA rice, since they cannot afford to pick up sacks of rice at the new warehouse in Novaliches. A congressional inquiry has been slated to look into the supply issues that have caused rice prices to keep spiking, despite recent importations of the staple. ALYSA SALEN
House panel sets probe of rice supply, prices By Jovee Marie N. dela Cruz
T
@joveemarie
HE House Committee on Agriculture and Food will investigate the country’s rice problem amid mounting calls to abolish the National Food Authority (NFA) as supply issues persist and prices of the staple keep rising. At a news conference on Monday, the committee’s chairman, Anac-IP Party-list Rep. Jose T. Panganiban, said the committee will summon officials from the
₧55-₧70 a kilo The range of rice prices in parts of Mindanao, where price manipulation is now the subject of a congressional inquiry NFA and the Department of Agriculture (DA) to enlighten Congress on the issues hounding the nation’s staple food. Panganiban and other lawmakers earlier filed a resolution to look into the reported price ma-
@cuo_bm
n japan 0.4806 n UK 68.5342 n HK 6.8139 n CHINA 7.7802 n singapore 38.9315 n australia 38.7414 n EU 61. 7305 n SAUDI arabia 14.2619
Source: BSP (24 August 2018 )
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A2 Tuesday, August 28, 2018
OFWs, geopolitics at heart of Israel trip, not health: DU30
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By Bernadette D. Nicolas
@BNicolasBM
RESIDENT Duterte denied on Monday that his Israel trip was for a medical purpose following Magdalo Party-list Rep. Gary C. Alejano’s claim that it has something to do with the President’s health. Duterte, who will be visiting Israel next month, said in a chance interview on Monday that he will be meeting the Filipino community there, and will bring with him some retiring military and police officers as some sort of an appreciation gift for their service to the nation. Malacañang earlier said the trips were meant to boost ties with all the peoples of the Middle East. In explaining the presence of retiring military and police officers in his delegation, the President said at the Libingan ng mga Bayani following the National Heroes Day commemoration rites, “That is my gift to them for serving the country well.” The President added that the
situation in Israel is “getting hotter,” referring to recent political developments in the region, which host over 1 million Filipino workers. From Israel, he will go next to Jordan where, he noted, there are 48,000 Filipinos, and something is brewing on the Lebanese front. “That’s why I am bringing Environment Secretary Roy A. Cimatu to prepare for that eventuality and just in case war breaks out there,” he said. Cimatu is a retired Filipino general who in 2002 was sent on a special mission by then-President Gloria Macapagal-Arroyo to oversee plans to evacuate, if necessary, the OFWs in the Middle East as the United States was preparing to invade Iraq under
“That’s why I am bringing Environment Secretary Roy A. Cimatu to prepare for that eventuality and just in case war breaks out there.”—Duterte
Saddam Hussein. Asked about his health condition following his pronouncements weeks ago that he is tired and Communist Party of the Philippines’ founder Joma Sison’s allegations that he is in coma, Duterte said: “ I am tired of listening to Maria Sison.” He once again hit back at Sison for making claims about his health. “Look at how degenerate he is. He has no ideology. He just keeps tabs on the sickness of people,” he said. Over the weekend, Malacañang dismissed Alejano’s remarks about the Israel trip being healthrelated. The Palace said the President has no serious illness and that the President has always been forthright about his condition. “What he is experiencing is typical of people of his age.
Magdalo Rep. Gary Alejano’s misinformation is certainly in aid of election. We hope the people will judge him accordingly,” Presidential Spokesman Harry L. Roque Jr. said in a statement. According to the Constitution, the public shall be informed about the state of the President’s health in case of serious illness. The Cabinet members in charge of national security and foreign relations and the Chief of Staff of the Armed Forces of the Philippines, shall not be denied access to the President during such illness. Last July the President was also previously rumored to have been rushed to the hospital, which Malacañang also debunked as a rumor. The President underwent a regular checkup the night before his third State of the Nation Address and was declared to be in good health. While on a flight from South Korea last June, the President admitted that he threw up. A side from migraines, the President also admitted to suffering from back problems, Barrett’s esophagus, which is a complication of gastroesophageal reflux disease, and Buerger’s disease due to heavy smoking in his younger years.
House panel sets probe of rice supply, prices Continued from A1
According to Panganiban, it is unacceptable that tons of rice were contaminated by weevil while people were scrambling to look for cheap NFA rice. The distribution of the cheaper rice had been stalled on account of bad weather, as the importers claimed they could not unload the rice from the ports. Earlier, lawmaker asked the NFA to look into the reported price manipulation by rice traders in Mindanao, where prices ranged from P55 to P70 per kilo. They also urged the agency to act on rising rice prices and the shortage of NFA rice in the market. House Committee on Appropriation Chairman Karlo Alexei B. Nograles also
China. . .
Continued from A1
Still, if only because of China’s quick assistance to the recovery of Marawi after being laid siege to for five months in 2017 by Islamic terrorists, Beijing is being invited to the November pledging session. “We acknowledge with deep gratitude that China was among the first countries to respond to our immediate requirements in our recovery and reconstruction efforts in Marawi City,” Dominguez said during the meeting in Beijing led by Commerce Minister Zhong Shan. The finance chief pointed out that the pledging session planned in the latter part of November would “support the implementation of the Bangon Marawi Comprehensive Rehabilitation and Recovery Program.” “Your government’s active support and participation would be highly appreciated,” he added. He also thanked Chinese Ambassador to the Philippines Zhao Jianhua for “responding quickly” to Manila’s request in July last year for assistance in Marawi’s recovery and rehabilitation. As a result of Ambassador Zhao’s efforts, Dominguez said China was able to deliver by October 2017 several units of heavy equipment for Marawi City, which helped in preparing the temporary shelters for the city’s displaced residents.
Task force Last week the DOF reported that
noted a “large spike” in rice prices in Cagayan de Oro after the NFA reduced the supply of NFA rice in Region 10 and diverted it to Region 9 to address the rice crisis in the Zamboanga Peninsula. Reports reaching lawmakers indicated these prices of rice in Region 9: Dipolog, Zamboanga del Norte, P55 to P60 per kilo; Pagadian, Zamboanga del Sur, P55 to P60 per kilo; Ipil, Zamboanga del Sur, P55 to P60 per kilo; and Zamboanga City, P60 to P68 per kilo. In Basilan rice prices are reportedly pegged at P60 to P70 per NFA rice is P27 a kilo and is the most affordable rice variety in the market. The NFA said the current scarcity of rice in the country is due to the spate of bad weather which
the Philippine interagency task force, tasked to closely monitor the preparation and processing of the country’s flagship infrastructure projects that are being rolled out with funding support from China, has been meeting regularly for several months now to address challenges in the implementation. During a high-level meeting with Chinese officials led by Commerce Minister Zhong Shan in Beijing, China, last Thursday, Dominguez pointed out that the China Projects Task Force created in April this year, “has been effective in monitoring and facilitating the preparation and implementation” of projects proposed for China’s official development assistance (ODA) financing. The meeting ended with a consensus to conclude quickly the signing of an agreement on the proposal to strengthen commercial ties between the two countries, on the establishment of an industrial park in New Clark City in Pampanga. On Wednesday last week Manila and Beijing affirmed their commitment to speed up the preparation and processes needed to ensure the timely implementation of the Duterte administration’s flagship infrastructure projects with financial support from China.
Where’s the ‘flesh’ in promise? Meanwhile, the business community in Davao has asked the Duterte administration to “put flesh” to the financial commitments from China and Japan on flagship projects, especially under its ambitious infrastructure program, to avoid complications in the expec-
Meanwhile, the Makabayan bloc in Congress challenged the government to decisively boost the capacity of the NFA to buy palay at P20 per kilo on a massive scale as the country enters harvest season, and make affordable rice available to retailers throughout the country. “Substantially raising the subsidy and support to Filipino farmer, not the abolition of NFA and rice importation, is an important solution to the rice crisis and the problem of food self-sufficiency,” the group said in a statement. It is important for the NFA to imme-
diately increase its buying price from the current P17 per kg to at least P20 per kg, it said. The group added the P7-billion subsidy for 2018 could procure 350,000 metric tons at P20 per kg of palay, to result in more than 4.5 million bags of milled rice. “Make locally procured NFA rice available to poor consumers at an affordable price in retail outlets throughout the country. Instead of abolishing the NFA, its budget for local palay procurement must be raised substantially,” the bloc said. It added the government should also impose rice price controls in Zamboanga and other areas to curb cartel manipulation.
tations of people. “We understand that ODA takes long to process, but right now, none of the commitments made by China and Japan have been introduced,”said Arturo Milan, president of the Davao City Chamber of Commerce and Industry Inc. The projects being undertaken now are those that were already funded before the commitments were made, he said. Due to the delays, many business leaders doubted the merits of pursuing projects through ODA funding, which has been compared with the much faster public-private partnership scheme, he added. However, many of the same projects supposedly listed were to be funded also by ODA funds. The Mindanao Business Conference to be held on September 13 in Tagum City, the capital of Davao del Norte, has invited the Department of Budget and Management, rather than the Department of Transportation “to allow us to take a peep at the funding of these projects.” “We want to know if there have been already allocation to the flagship projects, whether or not these were the projects promised to be funded by China or Japan, or by the national government,” Milan said. “We just want to know the status of the railway project for Mindanao, or the expansion of the airport terminal building, or the modernization of the Sasa wharf,” he added. While the ODA commitments may take “this long by now since it was committed last year”, Milan said it would also be good for the local business community to be updated “so that
there would be no false expectations”. He said the business community could not hold its reservation after seeing some road and bridge projects still being delayed despite assurance of adequate funding. Last month President Duterte told the Department of Public Works and Highways to crack the whip on contractors with project slippage in their highway construction, although none has been reported to have been penalized or told to explain the delays. Milan’s statement followed a report by Bloomberg, that “almost two years after China pledged $24 billion in investment to the Philippines, barely any projects have materialized.” “Of the 27 deals signed between China and the Philippines during Duterte’s visit to Beijing in October 2016, China originally agreed to provide $9 billion in soft loans, including a $3-billion credit line with the Bank of China, with a further $15 billion worth of direct investments from Chinese firms in railway, port, energy and mining projects. It didn’t specify a timeline,” the report added. The Philippines has completed“only one loan agreement with China worth $73 million to fund an irrigation project north of the capital, Manila,” the report said, quoting Socioeconomic Planning Secretary Ernesto M. Pernia in a news briefing that day. The process of securing loans from China “seems to be moving slower” compared to getting assistance from other countries such as Japan, Pernia was also further quoted as briefing reporters in Manila last month.
has affected both rice production and the shipment of the food staple.
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Private sector readying proposals for national ID; project on track–PSA By Cai U. Ordinario
T
@cuo_bm
HE Philippine Statistics Authority (PSA) is on track to bidding out the contract to design and develop the Philippine Identification System (PhilSys) IDs in October. National Statistician Lisa Grace S. Bersales told the BusinessMirror that the agency does not expect to encounter any problems that would significantly delay the project. Bersales also said the PSA has already received some proposals from private-sector firms and will formally accept these proposals this week. “I believe we are on track regarding the bidding. For now, the challenge that I see is that we will be doing the bidding fast. On opportunities, many are interested [in the project] so we expect to get the best for the government,” Bersales said. Bersales said the PSA is still finalizing the Terms of Reference (TOR) for the PhilID in coordination with the Department of Information and Communications Technology (DICT) and the National Privacy Commission (NPC). The details of the PhilSys implementation will all be included in the implementing rules and regulations (IRR) of the PhilSys Act or Republic Act 11055, which is expected to be made public next month. This will be followed by the dissemination of information on the bidding and procurement process for the PhilSys’s components, including the production and
DTI. . .
Continued from A1
prices of their goods for the next three months. The guarantee was made in the run-up to the holiday season—usually viewed as a golden opportunity to jack up prices just as demand for commodities is expected to go up. “No price moratorium, but we have requested BNPC manufacturers to hold price increases for at least the next three months. The response is very positive and some even committed not to move prices for the next nine months,” Castelo told the BusinessMirror. However, she said the government cannot force all manufacturers to contain their prices at the current level in December, just about the time when the demand traditionally surges. “Some manufacturers committed not to increase until next year,” Castelo added, but the government apparently can only rein them in up to a point. “It is Christmas season, so [the] demand is high. We cannot impose this on manufacturers, we can only appeal to them,” Castelo explained.
Consumer report
In August 13 consumer group Laban Konsyumer Inc. reported prices of 93 BNPCs increased by as much as 11 percent, or P1.95, since January. To this end, the group called on the Department of Trade and Industry to roll out a moratorium on any price hikes until the open-
Hot money. . . Continued from A1
inflows and the $206-million net inflows seen in the previous month. FPI are known as “hot” or “speculative” money because they are easily pulled in and out of the local platforms with the slight change of global and local sentiment. In June this year, the BSP said it was projecting the Philippines would incur a $900-million net outflow of FPI by the end of the year. From the start of the year up until August 10, however, BSP data show FPI
issuance of the identification card, the PhilID. Earlier, Neda Undersecretary for Policy and Planning Rosemarie G. Edillon said once the PhilSys is fully implemented, Filipinos can say good-bye to their other government-issued IDs. IDs that could be invalidated include the Unified Multi-Purpose ID (Umid) issued by the Social Security System (SSS) and the Government Service Insurance System (GSIS). Other IDs that could be invalidated are the Tax Identification ID, Postal ID, and PhilHealth ID, among others. Only the driver’s license, Professional Regulation Commission (PRC) ID, and passport will not be replaced by the PhilID. The PhilID shall streamline and expedite applications for the availment of, among others, social welfare and benefits from t he gover nment; t a x-re l ated transactions; opening of bank accounts; and transactions for employment purposes. Under the law, the PhilID will contain the registrant’s biometric information, along with seven demographic data, such as full name, sex, date of birth, place of birth, blood type, address, nationality, and three optional information, specifically, marital status, mobile number and e-mail address. The PhilSys Act requires that said personal information be kept in a resilient data system to ensure that the people’s right to privacy, confidentiality and other basic rights, such as those guaranteed by the Data Privacy Act of 2012, are upheld.
ing quarter of next year. Laban Konsyumer argued that pressures on supply and demand could trigger another round of price hikes with the Christmas period approaching, which in Philippine tradition would usually begin in September. With the word from manufacturers, Castelo said there is no need for now a governmentimposed price moratorium. Trade Secretary Ramon M. Lopez, on the other hand, said it is within the government’s prerogative under the Price Act to place a price ceiling if there is a need to. “If we see the range [is] 20 percent higher than what is should be,” Lopez said in a text message, when asked what is his precondition before advising President Duterte to impose a price ceiling on certain BNPCs. He specified fish, chicken and pork as the items that trade and agriculture officials are currently monitoring for probable price manipulation. “They [prices] are the same, but we monitored the farm-gate prices going down. So the P140 per kilo for chicken should be about P130 already,” he explained. “Pork is stable at around P220 to P230 per kilo, but should be around P230 already. Prices, nonetheless, are sticky downward,” Lopez added. He said the government is in close coordination with livestock raisers and traders to ensure prices are stable the coming months. “We will continue to talk to them and pressure them to reflect the downward movement in farm-gate prices,” Lopez said. performing better than last year, with a net inflow of $569.73 million during the period, compared to the same period last year that saw a net outflow of $152.75 million. Just last week, Moody’s Investor Service warned of volatile inflows in short-term investments for the Philippines for the year. “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.
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Editor: Vittorio V. Vitug • Tuesday, August 28, 2018 A3
House vows expeditious resolution of impeach raps vs 7 SC justices
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By Jovee Marie N. dela Cruz
@joveemarie
he leadership of the House of Representatives on Monday assured the public the impeachment process against seven justices of the Supreme Court will not affect the legislative agenda of the chamber.
At a news conference, Hou se Com m it tee on Ju st ice C ha ir ma n Pau l ino Sa lvador C . L eac hon of O r ient a l M i ndoro s a id t he lower c h a mber w i l l e x ped ite t he impeac hment
process, a s t here a re se vera l pr ior it y mea su res t h at need to be t ac k led , i nc lud i ng t he 2019 n at ion a l bud get. Leachon said the committee will consolidate the seven complaints
against the justices as these are “similarly situated parties, same facts and same issues.” “We can make the consolidation to expedite the proceeding,” Leachon said. “We will resolve this issue as soon as we can,” he added. Besides the 2019 nationa l budget, Speaker Gloria Macapaga l-A r royo sa id t he lower c h a mb e r w i l l pr ior it i z e t he passage of the second package of the Duterte administration’s tax-reform measures or the proposed Trabaho law, the bill creating the disaster-management department and the proposed Charter change. Congress is expected to resume its session today (Tuesday) after a two-week break. However, it will
briefs comelec schedules vcm source code review by sept The Commission on Elections (Comelec) will start its crucial preparations for the 2019 midterm polls next month with the scheduled public review of the source code for its vote counting machines (VCMs). But unlike its preparations in the previous automated election in 2016, the poll body said, it will now only conduct one public review of the VCM source code. The source code is the “human-readable” operational instructions for the VCMs. Comelec Spokesman James B. Jimenez said they decided to skip the base code review this time and go directly to presenting the “customized” source code for public scrutiny. Samuel P. Medenilla
c.a. okays forfeiture proceedings vs. local oil company
THE Court of Appeals has affirmed its decision giving a trial court the green light to proceed with the trial of the civil forfeiture case filed by the Anti-Money Laundering Council (AMLC) against a local oil company accused of illegal importing of petroleum products amounting to P10.4 billion, and fraudulently securing the issuance of tax credit certificate in its favor. In an eight-page decision penned by Associate Justice Manuel Barrios, the CA’s Former Special Eight Division denied the motion for reconsideration filed by Cross Country Oil and Petroleum Corp. (CCOPC) seeking the reversal of its decision issued on December 21, 2017. The oil firm argued that since the Department of Justice had already ruled that there is no probable cause to indict the oil firm and one of its major stockholders, Aleli Arellano, for criminal charges, the Regional Trial Court in Makati City should already dismiss the civil forfeiture case. Joel R. San Juan
a.f.p. eyes trilateral military exercise with indonesia, malaysia
The Armed Forces of the Philippines (AFP) is eyeing to hold a trilateral military exercise with Indonesia and Malaysia as it continuously train and equip in its effort become a modern military organization. Defense Secretary Delfin N. Lorenzana said the country’s exercise with two of its neighbors should be a good sequel to the ongoing counterterrorism and anti-piracy operations with them at sea. “We also have this trilateral exercise, naval patrols with navy, with Indonesia and Malaysia, not only maritime patrol, but also aerial patrol. So maybe we could also go into naval exercises with them in the future,” he said on Monday during the arrival ceremony for the contingent that participated in the Rim of the Pacific (Rimpac) exercise in Hawaii. Lorenzana said that as the world faces growing maritime security challenges, there is a need for navies to work together to increase familiarity and exchange best practices as what the Filipino sailors have learned from the Rimpac. Rene Acosta
cavite farmers get land titles under carper
A total of 163 farmers from various Cavite towns recently received land titles from the government through the Comprehensive Agrarian Reform Program Extension with Reform (CARPer) last Friday, August 25. Secretary John R. Castriciones of the Department of Agrarian Reform (DAR) said certificates of land ownership awards (CLOAs) covering a total of 112.32 hectares from the municipalities of Naic, Tanza, Trece Martirez City, Dasmariñas, Magallanes and Indang, Cavite, were distributed by the DAR in simple ceremonies in Silang, Cavite. Castriciones said the distribution is part of the stepped-up effort of the DAR to distribute lands and provide support services to CARP farmer-beneficiaries. Jonathan L. Mayuga
Martha Alegre, 93 The Alegre family of Sorsogon announces the passing of Dr. Martha “Neneng” Alegre-Mogol due to cardiorespiratory arrest on August 21, 2018. She was 93. Dr. Alegre-Mogol was a career official at the Department of Education, Culture and Sports with over 40 years of service. She was also vice chairman at the Philippine Regulatory Commission, president of the
Girl Scout of the Philippines and president of the National Organization of Professional Teachers Inc. Her remains lie in state at the Alegre ancestral home in J. S. Reyes Street, Bitan-O, Sorsogon City. A mass will be held at 9 a.m. on August 29 at the Saints Peter and Paul cathedral in Sorsogon. Interment will follow at the Sorsogon Sampaloc cemetery. Prayers for the eternal repose of her soul will be appreciated.
Relief operation for AEtas
Former President and now House Speaker Gloria MacapagalArroyo leads the distribution of relief goods to some 475 Aeta families affected by the recent monsoon rains in Barangay Camias’s Sitio Pascul, Kuyukut, Liplip and Patul 178 Sentro in Porac, Pampanga. Jerry Carual
again adjourn on October 12 for the halloween break and resume on November 12. Meanwhile, Leachon said the deliberations of the complaints will start on September 4. The impeachment complaints lodged against the seven justices, who have voted to oust former Chief Justice Maria Lourdes A. Sereno in a controversial petition for quo warranto will be included in the Order of Business on Tuesday (today) and will be referred to the justice committee the same day. Earlier, Arroyo said she wants to expedite the impeachment proceedings so that it would not affect the legislative agenda of the lower chamber. T he compl a i nt s were f i led
b y some members of t he M a gnif icent 7 opposit ion bloc a g a i n s t J u s t i c e s Te r e s i t a Leonardo -de Castro, Diosd ado M. Pera lta, Lucas P. Bersa min, A nd res B. R e yes Jr., Fra nc i s H . Ja rde le z a , Noe l G. Tija m a nd A le x a nder G. G esmu ndo. The complainants said that the Supreme Court decision dated May 11, 2018, which ousted Sereno by granting the quo warranto petition “is not only errant, it is also malevolent. It is not only bereft of constitutional anchorage, it is also a blatant subterfuge, an orchestrated charade.” They said the seven justices committed culpable violation of the Constitution because they are fully aware that impeachment is the only mode or process of removing
impeachable officials. Meanwhile, after deliberations at the justice committee, members of the panel will vote to determine the sufficiency in form and in substance of the complaints. Then the approved committee report and the accompanying Articles of Impeachment will be sent to the Committee on Rules which will then decide, within 10 session days, when to calendar the matter for plenary deliberation. Once in the matter is in the plenary, the House has 60 session days to finally vote on whether to send the impeachment to the Senate for trial. A vote of at least one-third of the lower chamber is needed to sent the impeachment complaint to the Senate-impeachment court.
A4 Tuesday, August 28, 2018 • Editor: Vittorio V. Vitug
Economy BusinessMirror
Despite decline in farm-gate price, retail, wholesale quotations of yellow corn rises By Jasper Emmanuel Y. Arcalas
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@jearcalas
he average farm-gate price of yellow corn declined for two straight weeks in August, but the commodity’s wholesale and retail quotations continue to increase, the Philippine Statistics Authority (PSA) report showed.
In its recent price monitoring report, the PSA said the average farmgate quotation of yellow corn in the second week of August fell slightly to P14.19 per kilogram (kg) from the previous week’s P14.21 per kg. This is the second consecutive week that yellow corn farm-gate price declined since the fourth week of July, when the commodity was pegged at P14.44 per kg. However, despite the slight decrements since end-July, the farm-gate price of yellow corn was still 26.47
percent higher than the P11.22 per kg recorded price level in August 2017. Furthermore, both the average wholesale and retail price levels of yellow corn in mid-August sustained increments. Wholesale prices of yellow corn grew 1.22 percent to P20.73 per kg from the P20.48-per-kg price level recorded in the first week of August. The latest farm-gate quotation is 18.01 percent higher than its yearago average of P18.01 per kg. During the second week of Au-
₧14.19 kg The average farm-gate quotation price of yellow in second week of August compared to P14.21 the previous week. Despite slight decrements since end-July, the farm-gate price of yellow corn was still 26.47 percent higher than the P11.22 per kg recorded price level in August 2017 gust, the average retail price of yellow corn breached the P25-per kg price level as it grew 2 percent from its previous week’s level. Yellow corn was sold at the retail level at an average of P25.49 per kg, P0.50 centavo lower than the P24.99-per-kg recorded quotation at the start of August. The figure was
DICT eyes UNDP aid for free Wi-fi program By Lorenz S. Marasigan @lorenzmarasigan
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ecause the government failed to invest in telco infrastructure over the past decade, the rollout of the free public wireless connection had to encounter some form of delay, as contractors still had to rely on the existing infrastructure of the two giant telcos that only built their networks in places that are economically viable. Hence, the Department of Information and Communications Technology (DICT) is now looking at solving this problem by seeking aid from the United Nations Development Programme (UNDP), which could help bring in the technical know-how in building a nationwide infrastructure that could help bridge the digital divide through free Internet access. DICT chief Eliseo M. Rio Jr. issued the statement in response to a query that Sen. Juan Edgardo M. Angara posted over the weekend, questioning the slow-paced deployment of free Internet access to public places, particularly in state-owned universities and colleges (SUCs). The Cabinet official explained that the supposed delay stems from the fact that contractors for the free Wi-fi program of the government — dubbed as Pipol Konek — rely on the existing infrastructure that the two incumbent telcos have. Connections, he said, are limited because PLDT Inc. and Globe Telecom Inc. only build their commercial pointsof-presence (POP) in areas that are commercially viable, hence, reaching only a “very small percentage” of the government’s target access points (AP). “It is now clear that our local telcos can’t presently cope with our demand for Free Wi-fi APs. It is for this reason that we are pursuing another approach to implement the Free Wifi Law using the DICT 2018 budget for this,” Rio said. Officials from the two telcos said both need to “check the facts” first before issuing an official statement. The said approach, Rio noted, in-
volves tapping foreign expertise to fix the problem on the buildup. To fund this, the department plans to use the 2018 budget allocated through the general appropriations act. “We are seeking the help of the UNDP to bring in foreign companies and technology to set up a National Free Wi-Fi Network, to train our people and telcos on roll-outs done in other countries with very successful free Wifi programs,” Rio explained. This, he said, “will fast-track our 2018 and 2019 implementation of the Free Wi-fi Law, especially in SUCs.” The same approach will be done even with the cash-based budget for 2019, he added.
‘Not enough last mile’
“The lessons learned here is that at present, our commercial telcos, especially the giants Globe and PLDT/ Smart are not geared to providing Wi-fi hot spots with sufficient bandwidth in public places,” Rio said. Pierre Tito M. Galla, who cofounded consumer group Democracy. PH, noted that the issue is not really in the last mile, but on the fact that there are only two providers that have national backbones. “So, two things: one, if the duopoly won’t supply to the last mile players—or overcharge and make it economically nonviable, which is the same thing—then those last mile players cannot connect the schools, and; two, it illustrates the need for the immediate enactment of the Open Access in Data Transmission Act, so that alternatives to the middle mile and backbone will have less barriers to entry,” he said. Internet Society of the Philippines Chairman Winthrop Y. Yu, agreed with Galla on the need for legislation on open access, adding that the problem just reflects the immense need for a national backbone and middle-mile infrastructure. “This emphasizes the importance of backbone and middle-mile infrastructure, which lack can be addressed by both the government and more
private-sector players,” he said. Rio noted that the government is now working toward the creation of a national backbone though several initiatives including the tripartite agreement with the National Grid Corp. of the Philippines and National Transmission Corp. for the use of dark fiber, the National Broadband Plan and the Luzon Bypass Infrastructure. The backbone from the power companies, on the other hand, was secured sometime in June, when the two companies signed a tripartite agreement with Rio’s office for the use and access in certain spare fiberoptic cores, vacant lots, tower spaces and related facilities. Combined, two energy companies’ dark fiber facilities span 6,154 kilometers across Luzon, the Visayas and Mindanao. Meanwhile, the National Broadband Plan will spell out the needs for a National Broadband Network, which will include the development and deployment of a mixture of several Internet connectivity, technologies, such as fixed line and mobile data, among others, all over the Philippines—including missionary areas. On the other hand, the Luzon Bypass Infrastructure, being constructed by the Bases Conversion and Development Authority in partnership with Facebook, will be a 250-kilometer cable network corridor that will provide a terrestrial bypass route for international submarine cable owners. It will have a capacity of two terabytes per second, which is almost equal to the combined capacity of PLDT and Globe. The government has also signed a memorandum of understanding with the National Electrification Administration so that the government can put up its own POPs in all provinces and municipalities, that it would be within reach of all Internet service providers. “With all these in place by 2019, and with the help of UNDP, we will be able to implement the free Wi-fi law much faster and more efficiently,” Rio said.
also 14.66 percent higher than the P22.23-per-kg price level recorded in August 2017. Industry stakeholders told the BusinessMirror that the farmgate price of yellow corn, which is a vital component of animal feeds, increased this year due to erratic production in some parts of the country. In fact, feed millers have requested the government to allow them to import yellow corn at zero tariff to augment local supply and ease the price of animal feed. However, the request received criticisms from local corn growers and was eventually thumbed down by the Department of Agriculture. Philippine Maize Federation Inc. (PhilMaize) President Roger V. Navarro told the BusinessMirror there is a “disconnect” between the farm-gate price of corn and its retail price. Furthermore, Navarro said the production costs of corn farmers have gone up, as well, particularly their expenses on labor, fuel and other inputs.
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Senators remain divided on what to do with NFA By Butch Fernandez @butchfBM
S
enate leaders are divided on calls to abolish the National Food Authority (NFA), amid raging controversies hounding the agency. Senate President Vicente C. Sotto III indicated he is not inclined to readily join the mounting clamor to close down the NFA for alleged failure to deliver on its mandate until after a hearing on the pros and cons of the food agency’s abolition. “I will listen first,” Sotto said on Monday when asked if he would support calls to abolish the NFA. Senate Minority Leader Franklin M. Drilon, however, affirmed support for the NFA shutdown option. “Yes, it [NFA] is a total failure,” Drilon said in a text message to the BusinessMirror. Sen. Francis N. Pangilinan, Drilon’s ally in the minority bloc, however, took the opposite view when asked the same question. “No. We still need an agency that will ensure we have rice buffer stocks from which we can draw [our] rice needs in times of natural and man-made calamities or disasters.” “We cannot rely on the private
sector to do this,” Pangilinan added. But Sen. Richard J. Gordon, who chairs the Senate Committee on Public Accountability and Investigations (Blue Ribbon), suggested there may be a need to consider a leadership revamp at the NFA to ensure it delivers on its mandate. “Maybe change the [NFA] director,” Gordon said. But Sen. Gregorio B. Honasan II told the BusinessMirror the policymakers must first obtain “timely and accurate information” before making a decision to abolish the NFA. “What does the data [about] NFA’s historical performance tell us? Are the problems systemic or institutional? Are the variables related to production, supply, distribution, pricing, importation and even smuggling controlled by the NFA?” Honasan asked, adding “we need complete, timely and accurate information to make an informed policy decision beyond abolition.” In an earlier interview during an out of town sortie, Sen. Cynthia A. Villar, who chairs the Senate Committee on Agriculture, indicated lawmakers are poised to pass a tarrification bill, as the government is on the verge of liberalizing of rice importation.
Risk assessments–the important art of compliance programs
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By Henry J. Schumacher
T is important to recognize that successful compliance programs rest on a foundation of meaningful risk assessments.
Yet, performing effective risk assessments that provide compliance teams with actionable results can be a difficult art to master. As a result, companies fail to take a comprehensive, integrated approach to risk management and rely on stand-alone exercises, internal audit and other formats to conduct risk assessments. However, since these assessments need to be tailored to your company’s specific risk tolerance, it makes good sense to have a look at a new risk management tool. Now, you can take a customized approach that fits your organization’s risk process. The risk management tool I am describing enables compliance managers to make strategic, data-driven decisions based on a holistic, dynamic, and real-time view of all compliance-related activities across multiple lines of business and entities.
The management system not only compliments your annual risk assessment but it also enhances the functionality of other compliance functions. For example, the due diligence becomes more powerful when used in conjunction with the risk management tool. This enhancement brings your program one step closer to reaching regtech nirvana, connected compliance. When your risks evolve, so should the mitigation actions your team takes. Change is inevitable and by taking a flexible risk-based approach you are able to respond to those changes faster and more efficiently than ever before. The new risk management tool will help you take a proactive approach to your compliance program. The risk management tool includes a risk library, the ability to easily create and filter risks and an activity log to keep track of all changes. The tool gives compliance teams the ability to make changes over time and stay focused on mitigating risks rather than trying to understand which ones are present. With the risk management tool, compliance teams can: Easily map and manage all risks across the company in a centralized library, along with any related controls and action plans. Design customized risk rating scales and matrices that fit your organization. Drop manual, paper-driven, siloed processes for a simple and user-friendly solution. Track compliance risks in real time using a heat map that enables you to instantly react to critical changes to any risk throughout the business. Automatically update risk assessments based on changes to the business. Ensure that actionable next steps are being executed and easily check on progress. Above are just a few ways that real-time risk management not only automates previously complex datacollection projects but elevates your legal and operational compliance program by giving you insights into ever-changing risks. They provide additional insight into how to establish a risk-assessment process that works for your company by ensuring you have the right framework in place to gather relevant information and then act on it. The tool is available in the Philippines. The software that allows this to happen and is capable to guide you throughout the journey of data-privacy protection is called “Data Protection Management System” or short DPMS. We would love to help you design a fully risk-based approach to compliance. Contact me at schumacher@eitsc.com.
Group hits DA chief for ‘trivializing’ opposition to round scad importation
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ishermen belonging to the Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) on Monday criticized Agriculture Secretary Emmanuel F. Piñol for “trivializing” the group’s opposition to the massive importation of round scad, or galunggong. “Clearly, the statement of Ag-
riculture Secretary Emmanuel Piñol…that traders are the ones who oppose the importation of round scad was a tactic to trivialize the opposition of Filipino fisherfolk and to downplay the adverse effects of importation to our livelihood,” Fernando Hicap, Pamalakaya national chairman, said in a news statement.
A former party-list representative, Hicap was reacting to the statement of Piñol on Friday that those who “spread the news that imported round scad may be contaminated with formalin” are no one but the fish traders who reject the importation. Fish importation, in this case galunggong, is a move to increase
the supply of the local fish whose prices went sky high over the past few weeks along with other food products. Local galunggong sells from a low of P160 per kilo to as high as P200 per kilo in the market depending on the size. It was not immediately known what would the impact of import-
ed fish to the price of galunggong in the market, but Pamalakaya warned that importation may lead to flooding of the market with fish induced with formalin, a highly toxic chemical, to preserve the fish species’ “freshness.” Under the Fisheries Administrative Order 195 of the Department of Agriculture (DA),
the country will import 17,000 metr ic tons of galung gong to direct market sale from China, Vietnam and Taiwan starting on September 1. The importation of galunggong will kill the livelihood of local food producers, such as small and municipal fishers, said Hicap. Jonathan L. Mayuga
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BusinessMirror
Tuesday, August 28, 2018
A5
A6 Tuesday, August 28, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Trains, toilets and tourism
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e can evaluate a country’s development in a number of ways, but perhaps one of the true measures of progress can be found in the state of its public toilets, particularly those found in its transportation systems—its airports, seaports, bus and train stations. This is something the government must pay attention to and spend for, particularly as part of its strategy to support the growth of the tourism sector.
Currently, there is a general lack of available restrooms and proper facilities for users of mass transportation in the country. For instance, a viral post circulated in social media recently showed a picture of the deplorable state of toilets in the train stations of the Philippine National Railways. We featured this in a story, written by our reporter Lorenz S. Marasigan (See, “John’ problem in PNR commuter stations may have to stay awhile,” in the BusinessMirror online, August 1, 2018). The toilets in the PNR train station, based on the picture shared on Facebook by Ehm Diolata, lacked proper washing facilities and even partitions for each bowl. It was bad enough there were no partitions to separate each bowl and provide users the most basic privacy; worse, the sign outside tags it as a unisex toilet, with the male and female icons posted. So everyone has to do their thing in full view of everyone else, is that how it is? Junn B. Magno, PNR general manager, told the BusinessMirror that they are finding it hard to complete the 20 toilet facilities in the stations of the commuter rail due to legalities pertaining to procurement. He blamed the previous administration for having tapped multiple contractors for the different supplies and manpower requirements for the toilets. “What they did is they auctioned off the parts and pieces of the contract to different contractors—meaning, we have a different deal for the structure, another for the furnishings, another for the part of the toilet—instead of one,” he said. Based on documents from the Department of Transportation, the previous management decided to chop the toilet-construction contract into six. The six contracts are part of the larger toilet-improvement program—dubbed as Kayo ang Boss Ko Toilet Facilities—for the different offices and facilities owned and/or operated by the transportation department—including airports ports and regional offices. In total, the whole program costs about P143.14 million. The project for the PNR was priced at P7.03 million. At such an exorbitant cost, commuters should have been using Japan-quality toilets by now, but only in the Philippines can constructing toilets for train stations turn into such a protracted, convoluted bureaucratic mess. Not one toilet in 20 stations was finished. They were all abandoned. The lack of decent toilets in our mass transit systems is not a trivial matter. Indeed, the lack of public toilets and the poor condition of existing ones, even in highly urbanized Metro Manila, have been raised not only by foreign visitors but even local residents over the years. Many Filipinos have at one time or another, taken the “open roadside option” to answer the call of nature simply because they have no choice. Sometimes, even when there is a public toilet available, doing it outside is better because public toilets are often clogged, with no running water, or are magnets for muggers and other criminals. Foreign tourists, of course, are often appalled. Never mind the embarrassment or impropriety, many of them also come from countries where relieving yourself in public is illegal and can get you jailed. Good public toilets are important to tourism. Having good toilets in tourist spots all over the country will encourage visitors to linger, look around, spend more time and money. By “good” we mean clean, comfortable and safe restrooms, with washbasins, running water, flushing toilets, with no fees required and separate facilities for both men and women. There should also be a minimum number of toilets according to the number of people who visit or use a particular location or facility. The construction of toilets to serve the public, and tourists should not just be the responsibility of the government. Local governments, through simple but strictly implemented city and municipal ordinances, can also mandate businesses to provide decent toilets to help with the sanitation and tourism efforts. We should, once and for all, do away with the image of public restrooms as dirty, deficient and even dangerous.
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THE Entrepreneur Continued from A1
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fficial figures from the Philippine Statistics Authority show the metropolis had 12.9 million residents as of August 2015, a figure that has been growing 1.6 percent annually. This number excludes transients, workers from surrounding provinces and foreign and local tourists. Using the official figures, Metro Manila had a population density of 20,785 persons per square kilometer as of 2015, making it one of the most congested urban areas in the world. This was much higher than the national average of 337 persons per square kilometer. We can only surmise that the figures are higher today. Manila, the capital city, was the most densely populated area with 71,263 persons per square kilometer in 2015. This puts Manila in the company of the most congested cities in the world like Dhaka and Mumbai. The government is trying to ease congestion in the metropolis by building more roads and bridges
and by implementing policies, such as the number-coding scheme and, recently, the restriction against “driver-only” vehicles along Edsa. These efforts, however, will not be enough to manage the movement of millions of Metro Manila residents, especially with the rise of the middle-income families who have the capacity to buy new vehicles. Thus, we need to move the metropolis to a new place. The solution lies outside Metro Manila: Clark. Luzon needs a new government, economic and financial center that will relieve Metro Manila of its many congestion problems. A modern and well-planned commercial business district in Clark can
PHL in the big picture
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New city needed to ease congestion
John Mangun
OUTSIDE THE BOX
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here is always the question: “What does this mean for the Philippines?” That is a valid concern. However, realize that nobody cares about the Philippines, but we already knew that. Also, everything must be taken in context.
“Shouldn’t we be concerned about the US Federal Reserve raising interest rates?” I suppose that question is reasonable since there is no Pacquiao fight on the immediate horizon, which is much more interesting. Understand that the Fed is one of the most politically motivated institutions on planet Earth. Not in the sense that it works to protect any US president, administration or political party. The Fed does whatever is necessary—in the best tradition of every politician—to protect its interests and power. Being on the Fed Board of Governors or head of one of the Federal Reserve Banks is the “Lifetime
Achievement Award” for every banker/economist. This is where the real money is made because, after your term ends, the speaking engagements begin. Former Fed Chairman Ben Bernanke will gladly talk to your business group—or even at your daughter’s debut—for a mere $200k/$400k plus expenses. Former Chairman Janet L. Yellen is hot right now, so if you have to ask how much she charges, you cannot afford her. The Fed said earlier this year that, positively, there will be two more interest-rate hikes this year. But the Fed—like a good politician—only takes credit for its policy successes and never the blame for failure.
serve as a magnet to attract businessmen, workers and tourists away from the metropolis. The good thing is that Clark already has the infrastructure to support the massive migration of people to Pampanga and Tarlac, where the former American airbase was located. Clark International Airport, just 92 kilometers from Manila, can gradually replace Ninoy Aquino International Airport as the country’s main gateway. It is accessible by North Luzon Expressway, and future projects, such as the North-South Commuter Railway. This will be complemented by new toll roads in Metro Manila, such as the Skyway extension to Balintawak, the expansion of Nlex to Port Area in Manila, the Metro Manila Subway and other projects planned by the Department of Public Works and Highways and the private sector. We need a new city—one that is well planned to avoid the current problems besetting Metro Manila. It needs to have a spacious airport, wide roads with sewerage system and a master plan for development. The logical choice is Clark in Central Luzon because of its strategic location, available vast land and proximity to Metro Manila. The government also considers it as the next growth area and even pushes for the development of New Clark
City, a 9,450-hectare property in Capas, Tarlac, just outside the current Clark Freeport Zone in Mabalacat, Pampanga. Under the plan, the state-run Bases Conversion and Development Authority, the same agency behind the transformation of Fort Bonifacio in Taguig City, will develop five districts in New Clark City for government, business, education, agriculture and recreation. The Department of Transportation already began transferring its offices to Clark Freeport Zone, and other government agencies are expected to move their offices to Clark over the next two years to drum up interest in the area and show the government’s resolve to create a new center of economic activities. Once fully developed, New Clark City is envisioned to employ more than a million workers. This, of course, is not going to happen overnight. What will be crucial is the support of the private sector behind this vision of the government. Beyond easing the congestion problem in Metro Manila, a new city will spread development to other parts of the country, generate jobs for our people and help the economy achieve a sustainable growth.
Therefore, the various members of the Fed are out playing good cop/ bad cop with one telegraphing there may be no more rate hikes and another with “we will raise rates.” All possibilities must be covered. For the Philippines, whatever scenario plays out, we will adjust. Our own Bangko Sentral will cover its back end. The recent local interestrate hikes have done little except to potentially increase bank profits. And by justifying any more rate hikes based on what the Fed does, any failures will be “the Fed’s fault.” The Philippine economy, the stock market and the current price of my Don Papa rum is dependent on a dozen other more significant factors than where interest rates go in the United States. The Philippine peso has depreciated against the US dollar by about 7 percent in 2018. The local “bright boys” that print “Economist” on their business cards are wailing that even with a weaker peso, our merchandise exports have not increased. They once learned in college that a weaker currency should increase exports. But for a country like the Philippines and a currency like the peso, it does not work that way.
Two research papers—in 2015 on Nigeria and in 2016 on India— found that in the age of globalization, changes in the exchange rate did affect a nation’s imports but not its exports. A depreciated currency lowered the amount of nonessential imports but did nothing to increase exports. Unless the currency was depreciated artificially—as China has done—the amount of exports did not go higher. However, a depreciated peso does have a significant negative impact by increasing local prices. As ordinary people, we can do nothing about interest rates or the peso. We can buy locally made goods with a low import component. We can limit buying nonessential imported goods. We can pray the government will someday focus on increasing agricultural production. In the meantime, we can hope maybe Pacquiao will finally fight an opponent good enough that we can make some real money betting on him.
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China’s tech growth is getting more expensive By Tim Culpan Bloomberg Opinion
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hina’s consumer growth is a key plank underpinning the investment thesis for many of the country’s big technology companies. But the torrent of revenue from domestic customers is getting expensive, forcing the likes of Tencent Holdings Ltd., Alibaba Group Holding Ltd. and Sina Corp. to pony up more cash just to keep the numbers humming along at the accustomed pace. As a result, margins are being squeezed and old assumptions need to be reevaluated. In some cases, managements are blaming one-time items for weaker earnings, almost as if to paper over changes in structural profitability. Alibaba’s second-quarter numbers, released last week, are a case in point. Revenue grew 61 percent, in line with recent averages. However, 12 percentage points of that growth came from consolidation of two units. At the same time, the company blamed its weaker bottom line on investments. Executives want us to notice the upside— strong revenue—and ignore the costs: the purchase of unprofitable businesses. That’s like telling us not to talk to that weird uncle at the dinner table, and forgetting to mention he’s the guy who brought all the holiday gifts. Don’t worry about that massive hit to operating profit, Alibaba told investors; it was just because of share-based compensation for Ant Financial, in which Jack Ma’s flagship company finally bought a stake after years of denying it was even a subsidiary. Alibaba is very happy to take the boost from Ant, which is why it made the investment, after all. And the company says that impact may be repeated. Investors are going to have to learn to take the good with the bad, and at some point executives will need to fess up that there can actually be a downside to all that spending. Let’s not even dare whisper the word “goodwill.” Sina has its own tale to tell. The Internet portal and owner of microblogging service Weibo trumpeted 50-percent growth in sales for the latest period: We had another good quarter … Weibo continued to record healthy growth in both user base and monetization despite more intensified competition. The press release included references to growth rates in various units, but failed to point out that sales and marketing expenses climbed by 120 percent—more than double the rate of revenue growth. That wasn’t a one-time effect: Sina’s
There’s nothing the least bit wrong with spending more on marketing, or investing idle funds in new and growing businesses. That’s exactly what savvy managers should be doing. But investors who buy into the China growth story need to understand that things have changed, and rapid growth now comes with higher costs. marketing budget has outpaced revenue for each of the past four quarters. Were it not for the promotional push, it’s arguable whether Sina could keep sales looking so hot. Over at NetEase Inc., China’s second-largest games company, e-commerce is becoming a growing component of revenue. That’s helped the top line, but the company had to offer incentives and discounts to get there, raising the cost of revenue. Marketing expenses also climbed over the past year, peaking at 18 percent of revenue in the first quarter as NetEase pushed its online game offering. If you take a four-quarter average of marketing spending and combine it with the cost of revenue, you can see that the expenses incurred to drive that top line are 23 percentage points higher than where they were three years ago. The inevitable result is a continued erosion in NetEase’s operating margin. Then there’s Tencent. It’s popular to blame a halt in new game licenses for revenue disruption. That looks like a smokescreen for structural issues at the games and socialmedia company. Cracks started appearing back in the December quarter, well before its struggles with bureaucracy. In fact, the company had just announced it would bring the popular “PUBG” mobile game to China, helping developer Bluehole Inc. get around regulatory hurdles: No sign of any licensing struggles then. At the time, I noted that gross margin hit a record low, and Tencent was spending more on marketing than it was on R&D. That problem hasn’t eased, with marketing growth exceeding revenue growth for the past two quarters. T here’s not hing t he least bit wrong with spending more on marketing, or investing idle funds in new and growing businesses. That’s exactly what savvy managers should be doing. But investors who buy into the China growth story need to understand that things have changed, and rapid growth now comes with higher costs.
PHL communist insurgency, ‘the most brutal in the world’ Cecilio T. Arillo
database Part Three
Corruption abounds in the Aquino government
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HILE the insurgency situation worsened in 1988, “corruption abounds” in the Aquino government. Joaquin “Chino” Roces, publisher and one of the owners of The Manila Times, in the course of receiving an honor award from Mrs. Aquino, said:
“It was not rice, roads, bridges, water, electricity and other mandated things that people expected of us, but rather a moral order best seen in the government’s response to graft and corruption in public service.” Roces went further and dejectedly said, “we cannot afford a government of thieves unless we can tolerate a nation of highway men.” Foreig ners a re somet imes shocked at the depth of corruption in Philippine society. It has become endemic in a country where teachers must struggle to educate children without classrooms or books and where judges get paid a little to make decisions that promise to bring death threats from communist guerillas or goons, wrote Joseph Reaves of the Chicago Tribune. Amid that controversy, 13 of the 15 Philippine Supreme Court justices have been accused of graft and corruption, and the Anti-Graft League of the Philippines attempted to impeach them. In Honolulu, Hawaii, a Filipino leader, Jose Lazo, wrote a letter to
the Honolulu Advertiser to react to their editorials insinuating that “Aquino is not personally involved in graft and other misdeeds.” Lazo’s letter read in part: “The statement that Mrs. Aquino is not personally involved is not quite true. There are evidences that she is deep into it. One of those is the check from Philippine Amusement and Gaming Corp.—the corporation in charge of Philippine casino operations— amounting to P2.8 million issued under her name.” The Philippine Commission on Audit, Lazo continued, in its report said that “casino profits (amounting to P3 billion annually) were under Mrs. Aquino’s personal control without audit and supervision. This was resorted to in total disregard of the law under the guise of the need for an expeditious distribution of funds. A rather lame excuse, lamented Roces, newspaper publisher and one of the most ardent supporters and sponsor of Mrs. Aquino, now turned critic.” Lazo further wrote: “The side
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apan’s population is shrinking. There are about 127 million people in the country today, but by the year 2050, this is projected to drop to about 102 million—and to keep falling thereafter.
This will cause all sorts of problems. A shrinking population is also an aging one—a smaller base of workers supporting a larger number of retirees means lower living standards for everyone. An older population also tends to be less productive. Additionally, a shrinking population means a shrinking domestic market, decreasing the incentive for companies to invest in the country. It could also reduce the natural rate of interest, forcing the Bank of Japan to keep quantitative easing running forever in order to keep the country out of a liquidity trap. And it will certainly reduce Japan’s power and importance in the world. So there are many reasons to want to stabilize the Japanese population.
There are two ways to do this: immigration and higher fertility. Under Prime Minister Shinzo Abe, Japan has been admitting a lot more immigrants. But while this will help cushion the blow of population decline, it won’t solve it, for several reasons. First, the sheer numbers required to prevent population decrease would be enormous—Japan is not accustomed to being a nation of immigrants, as America or Canada is, and tens of millions of newcomers would be likely to provoke a dangerous political backlash. Second, relatively low salaries and the language barrier mean that Japan has lots of trouble attracting high-skilled permanent residents, meaning that too much of
remark of corruption under the Marcos administration carries with it the pervasive effort to convict him by publicity.” He added that, “in various occasions, the governments of the United States of America, Japan, and the Philippines had cleared President Marcos of various charges of corruption.”
US Military Facilities in the Philippines
Under the military bases agreement and two other subsidiary treaties signed between the Philippines and the United States, the latter was allowed to maintain 23 bases and reservations in the archipelago after independence. Some of these bases dated back to colonial times. For instance, Clark Air Base in Pampanga province, 82 kilometers north of Manila, was Fort American Horse Cavalry; Subic Naval Base in Zambales province on the China Sea coast northwest of Manila, a Spanish naval station in the 19th century, is an old anchorage for the Asiatic Fleet; and generations of the American military had spent their leave at Camp John Hay in Baguio City, in the highlands of Northern Luzon. Other bases were set up for the Allied counteroffensive against the Japanese during World War II, while still others are navigational stations for the American air-defense network set up all over the Western Pacific during the Cold War. The Clark Air Force base is the center of logistic and combat support for the operation of the US air forces in the Southeast Asian region. On the other hand, the Subic Naval Base has the primary mission of supporting the operating units of the 7th fleet. The base is composed of eight major commands and 40
smaller units and detachments. Clark and Subic are the largest US air and naval installations in Asia. For the first time since the end of the Second World War, the US found itself facing a credible naval challenge in East Asia. Soviet maritime forces have access in four naval bases in Vietnam and Kampuchea. Soviet submarines, missile capable battle cruisers and light aircraft carriers have used these port facilities, and 20 Soviet naval combat and support vessels regularly use Camranh Bay. These maritime forces are supported by seven major airfields in Laos and Vietnam. Soviet aircraft make reconnaissance sweeps over the South China Sea east of Philippine airspace. At the same time, growing Soviet contacts with Kiribati, Vanuatu and Papua New Guinea— and the recent events in Fiji—all suggest that the strategic balance in the South Pacific is under considerable pressure. To offset this soviet presence and maintain a deterrent balance in the region, the US must have access to local onshore support facilities. For that purpose, the Philippine bases have always been critical. Because the United States lost access to the facilities in the Philippines, it moved its forces to the east and north, and to Tinian, Palau and Saipan, places with some considerable distance from the critical ship passages of the South China Sea and where facilities were constructed while labor and supplies have to be imported at very high cost, compared with those already available at Subic and Clark in the Philippines. To be continued To reach the writer, e-mail cecilio.arillo@ gmail.com.
In world’s ‘happiest’ countries, signs of a happiness gap By Martin Selsoe Sorensen New York Times News Service
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OPENHAGEN, Denmark— The Nordic countries regularly appear at the top of an annual list of the world’s happiest nations, but their reputation as “happiness superpowers” masks the difficulties of a significant part of the population, a new analysis shows. Finland, Norway, Denmark and Iceland led the 2018 ranking of the World Happiness Report, and Sweden wasn’t far behind, placing ninth. But in the five Nordic countries, an average of 12.3 percent of the population is “struggling” or “suffering,” according to a report by the Nordic Council of Ministers and the Happiness Research Institute in Copenhagen. “Something doesn’t rhyme,” said Michael Birkjaer, an analyst with the Happiness Research Institute and an author of the report, titled “In the
Shadow of Happiness,” referring to the uneven distribution of happiness across the Nordic countries. “It’s the youth driving the inequality to the highest degree.” The report, based on research conducted from 2012 to 2016, asked people to assess their satisfaction with life on a scale of zero to 10. Those who answered seven or higher were categorized as “thriving,” those who responded five or six were classified as “struggling,” and those who said four or lower were deemed to be “suffering.” Most respondents in the Nordic countries reported satisfaction of seven to nine. The Nordic states have a sophisticated social net that means that young people face less pressure regarding education, health or jobs than do many of their peers elsewhere. The countries have some of the world’s highest taxes, but schools and hospitals are free, parental leave is generous, and unemployment benefits and care for the elderly help
Japan’s baby bust is an opening for experimentation By Noah Smith| Bloomberg Opinion
Tuesday, August 28, 2018 A7
its immigration is of the low-skilled guest-worker variety. So a rise in fertility would be a very good thing for Japan. The rate has risen, in fact, from a low of 1.26 children per woman in 2005 to 1.46 in 2015. But that’s still well below the 2.1 required for long-term population stability. The bad news is that birth rates are very hard to raise with government policy. Almost all rich countries have sub-replacement fertility. The most successful country has probably been France, which has promoted work-life balance and provided generous subsidies for childcare. Japan is now seeking to emulate that model, providing cheaper childcare and trying to push companies to give employees more time at home. Those are good ideas, but it’s unlikely that they’ll be enough to stabilize the population. Fortunately, Japan is in a highly innovative mood in term of policy. Although many rich countries turn inward and retreat into either nostalgic populism
The bad news is that birth rates are very hard to raise with government policy. Almost all rich countries have sub-replacement fertility. The most successful country has probably been France, which has promoted work-life balance and provided generous subsidies for childcare. or reflexive conservatism, Japan has experimented with unconventional monetary policy, increased immigration, new corporate governance strategies and other bold moves. So the Land of the Rising Sun might be the perfect place to try out new ideas for increasing fertility rates — ideas that, if successful, could be exported to all the other developed nations that are in a similar boat. One idea would be to promote suburban living. More than 94 percent of Japan’s population lives in cities, and that number has actually risen in recent years. Though home
those no longer working. But with that security and help come expectations to do well, and pressure to be as happy as one’s peers. The leading factors in the region associated with well-being are general health, mental health, income and employment, the report concludes. “General as well as mental health is much more closely associated with inequality in well-being than other circumstances of life, such as employment or income levels,” the analysis says, adding that the Nordic countries had observed a rise in poor mental health, particularly among young people and women. The trends highlighted in the report appear to be backed up by various national studies conducted in the region. In Sweden the number of people with depression increased 20 percent in 10 years, the national board on health and welfare said last year, a rise that was particularly pronounced among the young.
In Denmark people ages 16 to 24 are more lonely than are people in their grandparents’s generation, a national survey of 180,000 people conducted this year by the Danish Health Authority showed. Birkjaer of the Happiness Research Institute noted that a performance culture and the growing use of social media contributed to depression, loneliness and stress. “These problems are difficult to solve,” he said. “Let’s say social media are a major cause, then what do we do? Ban them? Something else would come in their place.” The consequences go far beyond the individual, however. “Unhappiness is very costly for society,” the report notes. “That a growing number of people are struggling or suffering has socioeconomic consequences. The problem is particularly associated with absence from work due to illness, low productivity and the consumption of health services.”
sizes have been rising, urban apartments and houses still tend to be small places, unsuitable for larger families. That may be one reason fertility rates tend to be higher in suburbia. Japan, with its excellent rail networks and flexible zoning laws, is great at density, but it might be time to reconsider the all-urban focus. Cheaper roads and gasoline would help make car-centric suburban life more feasible in Japan. Japan could also leverage its large population of old people, as well as teenagers, to provide cheap, accessible childcare. Many able-bodied retirees in Japan might enjoy turning their homes into small day-care centers to inject some energy and life into their days, and teenagers could be certified to become babysitters — something that is still rare in Japan. A third idea is to encourage young people to live in communal housing, in order to facilitate social activity and marriage. In Japan, most people still want to get married before having kids, but the anomie and isolation
of urban life can prevent them from finding spouses. Communal living is becoming slightly more popular among the country’s youth, as noted in the reality TV show Terrace House. But government encouragement could accelerate the trend. A final strategy would be to leverage popular culture. There is good evidence that Brazilian soap operas depicting small families had the effect of reducing fertility rates in that country. Japan’s government might prevail upon its producers of television, comics and other media to depict larger families living in typical modern Japanese settings, as a way of spreading higher-fertility norms. These ideas are all fairly speculative. But when nothing works, it’s time to go try something bold and unconventional. With its highly effective government and its newfound tolerance for out-of-the-box thinking, Japan is perfectly positioned to be a laboratory for approaches toward stabilizing population in rich countries.
2nd Front Page BusinessMirror
A8 Tuesday, August 28, 2018
Workers’ alliance warns govt inflation, TRAIN fuel unrest By Samuel P. Medenilla
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ON HEROES DAY: DU30 BACKS BID TO RENAME AIRPORT ‘LAPU-LAPU’ By Bernadette D. Nicolas
@sam_medenilla
ABOR groups warned on Monday that the country’s industrial peace is now under threat because, they said, the government continues to ignore the workers’ plight amid the impact of inflation and the slow campaign to end illegal contractualization.
“With the inf lation rate hitting 6 percent this August and the TR AIN [Tax Reform for Acceleration and Inclusion] law in full swing, coupled with the DTI’s [Department of Trade and Indu st r y] wea k en forcement of price control, workers have been left by government to fend for themselves,” Partido Manggagawa (PM) Chairman Renato Magtubo said in a statement on Monday. He expressed dismay over the apparent inaction of President Duterte on the said issues. The concurrent spokesman of the labor coalition Nagkaisa also noted that contractualization is still widespread despite the government’s campaign against it.
@BNicolasBM
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Labor groups march along España Street in Manila on Monday, National Heroes Day. The protest took off from the University of Santo Tomas to Mendiola, about a hundred meters from Malacañan Palace. NONOY LACZA
Latest data from the Philippine Statistics Authority showed that inflation reached 5.7 percent in July. Federation of Free Workers (FFW) Vice President Julius Cainglet said they foresee high inflation to persist long after the government’s projection that it will peak by next month. “It could be beyond this year, as factors other than TRAIN may come in effect. Oil prices will still rise, and the peso will continue to weaken,” Cainglet said. FFW called on Duterte to address this by revoking TR AIN, granting workers a significant wage hike, and removing the barriers for workers to unionize so
they could negotiate for better benefits with their management. Magtubo said they could only tolerate so much work-related woes, and warned that such problems, unresolved, will lead to the “escalation of labor unrest.” “Notices of strikes and actual strikes are on the rise, especially in the last several months,” Magtubo said in a statement. PM said the government’s “curtailment of basic trade union and human rights” is only making this worse. It said these violations are even more pronounced in economic zones. “The pictures of organizers and union leaders are posted at the gates of some eco zones with the word
‘Wanted,’” Magtubo said. Kilusang Mayo Uno (KMU) Chairman Elmer Labog called for the end of what he described as harassment of union leaders, and demanded that those behind it be held accountable. “Big capitalists remain scot free and are not made accountable for the violence they inflict and for defying orders to regularize their workers,” Labog said. KMU and members of the labor coalition Nagkaisa, which includes PM and FFW, held their National Heroes Day protest action in Manila to raise these concerns. The event was also joined by members of the Church-Labor Conference and other labor advocates.
Neda. . .
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SOUTHWEST MONSOON AFFECTING NORTHERN AND CENTRAL LUZON as of 5:00 pm - August 27, 2018
In terms of the kinds of investments that will be allowed on the island, Navarro said this will be based on the findings of the study on the carrying capacity of the island made by the Department of Environment and Natural Resources (DENR) and the University of the Philippines Los Baños. In a statement last week, the DENR said the carrying capacity of the island had been breached, and this led to the“generation of too much waste and the deterioration of water quality, among others.” “On restrictions, it will depend on the carrying capacity of the island, but we were told it’s DENR who should talk about that,” Navarro told the BusinessMirror on Monday. Based on the Boracay Action Plan Framework, the long-term vision of the government when it comes to Boracay is to make it a world-class tourism destination with a climate-resilient economy. The aim is to anchor Boracay’s growth on“the sustainable development of its innate natural resources.” This will also help achieve the long-term societal goal for Boracay, which is to protect its inhabitants from risks and make them resilient to unfortunate events. In the medium-term framework, there are four theme outcomes needed to be met, which are enforcement of laws and regulations; pollution control and prevention; rehabilitation and recovery of ecosystems; and sustainability of island activities. The last theme means that infrastructure must be reliable, adequate, affordable, resilient and compliant with global standards, and social services, such as health, education and housing, must be responsive to the needs of the community. The last theme also means that economic activities, particularly livelihood and tourism, must be inclusive, socially equitable and sustainable.
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RESIDENT Duterte is keen on changing the name of Mactan airport to LapuLapu airport, as suggested by the National Historical Commission of the Philippines (NHCP), in order to popularize here and abroad the Filipino chieftain who vanquished the conquistador Ferdinand Magellan. In a chance interview on Monday after he led the National Heroes Day commemoration rites at the Libingan ng mga Bayani, Duterte said, “You know, Magellan was the first invader to set foot here in the Philippines, and it was Lapu-Lapu who fought them. Why would I name it [after] someone who is not from our race?” NHCP Chairman Rene R. Escalante said in a speech that their suggestion to rename the Mactan airport is just one of the steps they wanted to take to give Lapu-Lapu the welldeserved and overdue recognition. Escalante agreed with the President that Lapu-Lapu is a great hero whose feat could surpass the achievement of some heroes of the Philippine revolution, since he did not die while fighting the Spaniards and won the battle of Mactan without assistance from any foreign power, among others. “It is just unfortunate that, despite all these achievements, we don’t honor Lapu-Lapu with a national holiday, and he remains among the least appreciated and studied heroes of our country,” he said. Besides renaming the airport, the NHCP is also proposing the
creation of a national monument and park for Lapu-Lapu in Cebu and for the President to declare April 27, 2021, the 500th anniversary of the battle of Mactan, as a national nonworking holiday. “I just hope that these initiatives will be supported by the President and the Filipino people,” Escalante said. In his speech, Duterte honored both the recognized and the unnamed heroes and urged Filipinos to emulate their selflessness and live up to their examples. “Today, we honor not just those heroes whose statues proudly stand along hallways and pedestals, or whose portraits are embedded in our currency and history books. Instead, we honor our unnamed heroes who, in their own little ways, have made a huge difference in the lives of those they have touched,” he said. Among the unnamed heroes the President cited were the brave troops, volunteers, dedicated police officers, educators and overseas Filipino workers. “Today, let us honor ordinary Filipinos who, despite the challenges that come their way, continue to work for the well-being [of ] their families, the betterment of their communities and the advancement of our nation. These are our [everyday] heroes that we need our youth to emulate and look up to,” he said. “Let us all become worthy heirs to their legacy so that we may leave behind to the succeeding generations of Filipinos a nation that they will also proudly give up their lives for,” he added.
Gas, diesel, kerosene prices going up anew
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IL companies are set to implement another round of oil-price increases. They said prices of gasoline will go up by P0.10 per liter and diesel by P060 per liter. Kerosene prices, likewise, will increase by P0.45 per liter. Total Philippines, PTT Philippines and Phoenix Petroleum Philippines said that their respective price adjustments for gasoline and diesel will take effect at 6 a.m. on Tuesday, August 28.
Seaoil Philippines will also implement its price increase for gasoline, diesel and kerosene on the same day. Other oil firms are e xpected to follow suit. On August 14 oil firms increased gasoline prices by P0.15 per liter and diesel by P0.25 per liter. Local pump prices are mainly influenced by the crude prices in the world market, the peso-dollar exchange rate and taxes. Lenie Lectura
IRR release signals deployment of caregivers to Japan under TIT
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HE deployment of Filipino caregivers under Japan’s Technical Intern Training (TIT) is expected to finally start soon, following last week’s release of the program’s implementing rules and regulations. Philippine Overseas Employment Administration (POEA) Administrator Bernard B. Olalia said they are targeting to send the first batch of caregivers through the TIT next month. “September 1 will be the official start of the application,”Olalia said in a text message to the BusinessMirror. On August 24 Labor Secretary Silvestre H. Bello III issued Department Order (DO) 188-B containing the TIT guidelines. The issuance states applicants must have a care-giving national certificate II from a training center accredited by the Technical Education and Skills Development Authority (Tesda) to qualify for the program. They should also be holders of a bachelor’s degree in any four-year health carerelated course and hurdle the necessary multiple Japanese proficiency language exam before application and during their training. Applicants must also be at least 18 years old and have at least one year of experience as care worker here or abroad. Qualified applicants will be deployed
in facilities of “supervising organization” in Japan, which has been accredited by the POEA and Japan’s Organization for Technical Intern Training. As of Monday, Olalia said, they have accredited 188 sending organizations for the program. These listed facilities include those involved in Child Welfare Law Services; Comprehensive Support for the Daily Lives and Social Lives of Persons with Disabilities; Law on Social Welfare for the Elderly and Long-Term Care Insurance Law; Public Assistance Law; other social welfare; and hospitals and clinics. The supervising, organizing will regularly pay for the allowances of the Filipino caregivers, as well as provide for their mandatory medical and health insurance in Japan; and pay for their two-way transportation to Japan, including their mandatory vacation and termination of employment. DO 188-B took effect on August 24, 2018. The TIT will now allow Filipino caregivers to work in Japan via its private sector. Prior to the program, Filipino caregivers could only be employed in Japan through the government-to-government track of the Philippine-Japan Economic Partnership Agreement. Samuel P. Medenilla