Businessmirror august 31, 2017

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Thursday, August 31, 2017 Vol. 12 No. 322

@c_pillas29

merican businessmen are asking Manila and Washington to include a discussion on a “21st century free-trade agreement” (FTA) in the anticipated meeting between US President Donald J. Trump and President Duterte in Manila in November.

Also, American Chamber of Commerce of the Philippines (AmCham) officials want Duterte to c l a r i f y Tr u mp’s “A mer ic a First” policy.

“One of the things that AmCham

is hoping for is, since the US is out of the Transpacific Partnership [TPP], that a possible FTA could be discussed. Chances are slim [that it will be an immediate concern], as the US Trade Representative Office

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AmCham wants Duterte, Trump to jump-start FTA A

By Catherine N. Pillas

2016 ejap journalism awards

SDG 9 commits PHL to ‘inclusive, sustainable industrialization’

Hincheliffe: “One of the things that AmCham is hoping for is…that a possible FTA could be discussed…we’re hoping we could plant the seed for it, hopefully during the Trump administration.”

Rene E. Ofreneo

laborem exercens

T

he UN Millennium Development Goals (MDGs) sought to reduce poverty among UN member-states between 1990 and 2015. There were 10 MDGs. The most significant MDGs were the “halving” of poverty and inequality levels by 2015.

[USTR] have a lot on their plate, but we’re hoping we could plant the seed for it, hopefully during the Trump administration,” AmCham Executive Director David Hincheliffe told the BusinessMirror.

AmCham Senior Adviser John

Continued on A12

Continued on A12

PAL ready to build ₧20-B Naia Terminal 2 annex Housing superbody gets

Ledac nod, seen giving rise to new urban centers

By Lorenz S. Marasigan @lorenzmarasigan

T

he group of taipan Lucio C. Tan plans to venture into airport-terminal construction to allow legacy carrier Philippine Airlines (PAL) to expand its operations at the Ninoy Aquino International Airport (Naia).

Jaime J. Bautista, the airline’s president, on Wednesday said his group is proposing to construct a P20-billion annex building for the Naia Terminal 2, which is being used exclusively by PAL. The new building, which will be constructed on a 16-hectare area within the now-defunct Philippine Village Hotel, the former Nayong Pilipino complex and a property owned by the Philippine Amusement and Gaming Corp., will be able to handle as much as 15 million passengers per year.

This will bring the whole terminal’s capacity to as much as 26 million annual passengers.

Bautista said PAL’s proposal also includes the provision of aerobridges capable of serving 12 to 17 wide-bodied and single-aisle jets.

Aside from the passenger terminal, the complex will include multilevel parking for 1,000 vehicles, a new cargo terminal and ground-service facilities.

“This would help decongest the airport and provide PAL passengers muchdeserved space, amenities and modern conveniences,” he said.

The legacy carrier has been using the Naia Terminal 2 exclusively since 1999. It has since exceeded its maximum capacity, as it was originally built as a domestic airport during the Ramos administration.

In 2016 Naia Terminal 2 handled about 10.27 million passengers, only a few notches short of its 11.5-million capacity, government data showed.

“PAL is keen on the annex building project to consolidate its operations, and provide adequate room for its growing

By Cai U. Ordinario

T

@cuo_bm

he Housing and Urban Development Coordinating Council (HUDCC) assured that there will be no delays in the housing projects during its two-year transition into the Department of Housing and Urban Development (DHUD), which will also serve as a catalyst for urban development in the regions.

On Tuesday evening the Legislative-Executive Development Advisory Council (Ledac) approved the creation of the DHUD under the proposed rightsizing of the national government bill.

In an interview with the BusinessMir ror , HUDCC Cha ir-

A perspective view of the planned Ninoy Aquino International Airport Terminal 2 annex. fleet of jets and international and domestic passengers,” Bautista added.

From its current fleet of 87 widebodied and single-aisle jets, the airline expects its aircraft count to reach 96 by 2021. However, government support, according to Bautista, is also a key ingredient for this project to succeed.

“We also need the government to continuously invest in building, developing, enhancing and upgrading airport infrastructure, not just for the Naia, but all throughout the country, as PAL and other airlines put up more flights and open new routes in our race for a thriving economic future,” he said.

Aside from this proposal, there are

PESO exchange rates n US 51.1590

two other offers to build a new airport to replace the decades-old Naia.

On one hand, Solar Group-led All-Asia Resources & Reclamation Corp. and partners Belle Corp. and China Communications Construction Co. announced they plan to spend $20 billion to build an airport in an area in Sangley Point, Cavite.

Its plan involves the reclamation of 2,500 hectares of land near a naval and air base at Sangley Point. The project includes a new airport for up to 90 million passengers per year. The existing Naia airport will be replaced by new urban development.

According to a study conducted by Danish consulting engineering company

Ramboll Group, the new airport, when built, will have two parallel runways to secure future capacity, three terminal spaces, a reserved space for cargo and maintenance facilities.

San Miguel Corp.’s $10-billion proposal, on the other hand, involves the construction of a 1,600-hectare international gateway somewhere in the south of Metro Manila. The airport, which would have doubled the capacity of the Naia, would have included the construction of a low-cost carrier terminal, a train system and a dedicated tollway.

The Naia handled about 39.6 million passengers last year, way above its rated capacity of 30 million annual passengers.

HB 5707

The proposed Rightsizing the National Government Act, which will give birth to the Department of Housing and Urban Development

man Eduardo D. del Rosario said the creation of the DHUD will see the HUDCC and the Housing and Land Use Regulatory Board (HLURB) merging. As of press time, he said no other key shelter agency (KSA) has been added to the proposed merger.

Continued on A2

WTO chief calls for prudent use of nontariff measures

By Jasper Emmanuel Y. Arcalas

S

@jearcalas

ão Paulo, Brazil—World Trade Organization (WTO) Director General Roberto Azevêdo on Tuesday joined Asean member-nations in urging countries to reduce nontariff barriers (NTBs) to cut down poverty and improve growth in developing economies, such as the Philippines.

Azevêdo said global trade has been slowing down since 2011 due to various economic chal-

lenges, including the proliferation of NTBs across WTO membercountries.

He expects global trade this year to accelerate a little to a 2.4-percent growth, from last year’s roughly 1.3-percent increment, on the back of faster global expansion.

“However, despite this improvement, growth in trade will remain below 3 percent, and this is the sixth consecutive year that it is below 3-percent growth,” he said during his lecture at the opening

n japan 0.4662 n UK 66.1025 n HK 6.5382 n CHINA 7.7565 n singapore 37.7613 n australia 40.6561 n EU 61.2527 n SAUDI arabia 13.6424

See “WTO,” A2

Source: BSP (30 August 2017 )

A2 Thursday, August 31, 2017

BMReports BusinessMirror

www.businessmirror.com.ph

Housing superbody gets Ledac nod, seen giving rise to new urban centers Continued from A1

“We are given two years, once the bill becomes a Republic Act, to transition and really study what will happen to the other KSAs,” del Rosario said on Wednesday.

“There will be no delays whatsoever [with regard to housing projects at this time].”

Del Rosario noted that absorbing the KSAs into the DHUD could create conflicts in terms of the mandate of the agencies. He said the KSAs have corporate structures because they are governmentowned and -controlled corporations (GOCCs).

This means, he explained, that they cannot build houses without getting any payment. This is now contrary to the function of a line agency, which renders services for free.

Del Rosario said the two-year transition period will provide time for the DHUD to determine the

WTO. . .

Continued from A1

ceremony of Salão Internacional de Avicultura e Suinocultura here.

“That is unprecedented since the World War II. In this period of slow growth, we need to be careful in addressing economic challenges that are accompanied by political challenges,” he said.

T he W TO director genera l noted that there has been a growing antiglobalization sentiment across developing countr ies.

“Many people feel that advances in global economic trade, such as in technology, only benefited some at the expense of others. It is true, this trend is more visible

fate of the KSAs, especially those d irect ly involved in housing production, such as the National Housing Authority (NHA).

Until such time that this can be done, del Rosario said the change in function or amendment of any law involving the KSAs will be put on hold. “If it was up to me, if there was no violation of the law, I want to absorb all [the KSAs]. But if we will absorb all of them now, this will run in contrary to their corporate function where they build houses for a fee. This is not allowed if you are a line agency,” Meanwhile, del Rosario said the creation of DHUD will allow the government to focus on urban development through the creation of regional units.

This, he added, is why under the merger, the manpower of the HUDCC and HLURB will be retained—and could even increase— depending on the need and allowed number of staff and personnel.

Del Rosario said the DHUD will have regional offices nationwide to help local government units (LGUs) with urban planning and development. “We will be having regional offices that can function and conduct urban-development planning in tandem with cities and municipalities because that is the administration’s direction now,” del Rosario said.

This plan bodes well for the Philippines’s efforts to meet the Sustainable Development Goals (SDGs), particularly SDG 11, which aims to make cities and human settlements inclusive, safe, resilient and sustainable.

The targets include ensuring access to adequate, safe and affordable housing and basic services, as well as to upgrade slums; expanding access to public transport, particularly among women children and persons with disabilities; and promoting sustainable urbanizations and human-settlement planning

and managements, among others.

The housing backlog in the Philippines is estimated to be at 6.5 million. Some 1.4 million of these homeless Filipino families are considered informal-settler families (ISF).

To eradicate the number of ISF, the government needs to invest some P42 billion annually to build P300,000 worth housing units in the next 10 years. In a text message to reporters, Presidential Spokesman Ernesto C. Abella said the Ledac green lighted the creation of the DHUD. House Bill 5707, or the Rightsizing the National Government Act, intends to abolish executive offices whose functions are deemed to be redundant or antiquated.

The program also seeks to fuse or split agencies with conf licting functions, or establish new ones, as deemed necessary by the government.

The creation of the DHUD has

long been supported by the Duterte administration, citing the need for a housing superbody intended to streamline programs aimed at wiping out the housing backlog. Under the present setup, the HUDCC oversees the implementation of the government’s housing programs, but does not have a say in how budget for housing should be spent.

Aside from the creation of the DHUD, Abella said the Ledac also approved the appointment of George T. Barcelon, president of the Philippine Chamber and Commerce Industry, as representative of the private sector; Maria Laarni L. Cayetano, mayor of Taguig City, as representative of the local government units; and Cariza Y. Seguerra, chairman of the National Youth Commission, as representative of the youth sector.

On top of this, Abella said the Ledac drafted the common legislative agenda (CLA) of the administration, which listed 27 bills as

priority measures of the two chambers of the House. The CLA includes the Unified National Identification System Act, the Security of Tenure Bill, the Comprehensive Tax Reform Program, the National Land Use Act, amendments to the Agricultural Tariffication Act of 1996, the Ease of Doing Business Act and the Genuine Agrarian Reform Bill, among others.

According to the President’s spokesman, t he counci l a lso agreed “to let lawmakers study and review bills regarding the procurement process”. President Duterte in July issued Executive Order 34, which intends to streamline, expedite and make more efficient government procurement.

However, the creation of the Department of Culture and the Philippine Space Agency, which was initially part of the agenda, was not discussed, Abella said. The next Ledac meeting will be held on September 20.

in the developed countries, in the advanced central economies. This dissatisfaction [on free trade] is growing around the world.

Azevêdo pointed out that developing countries maintain a protectionist approach in trade, particularly when it involves their respective agriculture sectors. Azevêdo noted that these countries seek to be less dependent on imported goods and focus more on improving their domestic production as a way to improve the lives of their rural population.

“It is worth remembering that the adoption of more trade barriers do not help overcome domestic issues; the results are quite opposite. The trend to solve internal

problems by closing barriers does not help boost employment. This trend creates more problem than solve any,” he said.

“In case of food trade, things are complex because products themselves are extremely sensitive. The discussions involve concerns about guaranteed supply control, social tension, domestic migratory flows, and despite these considerations the risks of trade barriers in the food segment is extremely clear,” he added.

Azevêdo said nontariff measures (NTMs) should be scientifically based and should be anchored on international standards so as to avoid NTMs into becoming NTBs to trade.

Azevêdo noted that some of

NTMs imposed by WTO membercountries, such as protection to human health, animal health and preservation of natural resources, are legitimate because of scientific bases.

“The works done by international organizations are important for the industry to understand. The works at Codex [Alimentarius Commission] and the OIE [World Animal Health Organization] are established standards that are very important and these are the rules to anchor the work of, and the rules of, WTO,” he said.

“It is important that [membercountries] participate in all of that and not look into these things as technical issues as not valuable and do not have consequences.

They have huge consequences,” he added.

NTMs are based on science, such as sanitar y and phytosanitary (SPS) measures that are put in place to prevent disease and infestation, and protect the countr y’s livestock and f lora a nd fau n a. But t hese N T Ms can become NTBs if they could cause disruption in trade, such as increasing the costs of goods being traded.

The Philippine Institute for Development Studies (Pids) distinguishes between NTMs and NTBs in goods trade. NTBs do not necessarily imply illegitimate measures, nor are intended to have unnecessary restrictive implications on trade, as the WTO even

allows some form of NTMs in some circumstances. Not all NTMs are seen as “trade discriminatory” or “trade restrictive”, the PIDS pointed out.

According to the government think tank, some NTMs even encourage trade, as it bolsters consumer protection and strengthens certification. NTMs that are implemented with protectionist aims, however, are considered NTBs. A PIDS study noted that, while tariffs have been near zero in Asean, a rising trend has been noted in the use of NTMs. “To be sure, a majority of these NTMs are intended for justified reasons, such as sanitation and health, environment, security and consumer protection,” read the study, titled “Review of Intra-Asean Nontariff Measures on Trade in Goods”.

“However, there are also legitimate concerns that these NTMs are effectively mainly NTBs, which are more protectionists in nature,” it added.

In Apr i l, dur ing t he 30t h Asean summit, the Philippines supported the call of Asean leaders to reduce NTBs, which have hindered the expansion of trade in Southeast Asia, according to Trade Secretary Ramon M. Lopez.

Lopez affirmed the commitment of the Philippines to cut NTMs and NTBs, saying there should be guidelines or parameters in imposing these measures.

However, Lopez noted that sanitary and phytosanitary measures—a type of NTM that is usually imposed by Asean countries— are necessary to ensure the safety of consumers.

For his part, Agriculture Secretary Emmanuel F. Piñol said the government must first prepare “vulnerable economic sectors” before considering the removal of NTBs, such as import caps.

“I believe in fair trade [but] I also believe in empowering our agriculture and fisheries sector to prepare them for tough competition,” Piñol told the BusinessMirror in April.

Asean leaders had agreed to become more transparent in implementing NTMs and to reduce technical barriers to trade. “We strongly encouraged Asean to continue strengthening publicand private-sector engagement, promoting transparency of nontariff measures, streamlining and simplifying customs procedures, trade regulatory regimes and reducing technical barriers to trade while ensuring quality and building confidence in Asean products,” their statement read.

Economy

A4 Thursday, August 31, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

China outsourcing growth slashes PHL hiring–MEI

By Cai U. Ordinario @cuo_bm

T

he growth of outsourcing companies in China has caused online hiring activities in the Philippines to contract by 2 percent in July this year, according to the Monster Employment Index (MEI).

This was the first contraction in online hiring this year and ended the country’s six-month positive growth streak in hiring nationwide.

“With growing competition from China’s presence in the global outsourcing sector, outsourcing activities within the Philippines have eased, shaking the nation’s economy and contributing in part to the overall decline in hiring activity, where our MEI reported the country’s first dip this year,” said Sanjay Modi, managing director, Monster.com-Apac and Middle East.

“Additionally, weak remittances and trade deficits have weakened the peso value, seeing the currency plunge to an 11-year low and further affecting hiring confidence,” he added.

The data showed there were double-digit declines in online hiring in advertising at 17 percent, education at 11 percent, as well as engineering, construction and real estate at 10 percent. Other sectors that posted declines were health care with 6 percent and hospitality with a contraction of 3 percent.

Retail, meanwhile, remained the top sector in terms of online hiring with an 8-percent growth, followed by the banking, financial services and insurance (BFSI) and BPO sectors with a growth of 4 percent each.

In terms of occupations, human resource and admin continued to exhibit the steepest decline across all occupational groups, at a 16-percent year-on-year decline.

This was followed by purchase, logistics and supply chain with a decline of 12 percent; marketing and communication, 8 percent; and health care, as well as engineering, production and real estate with 7 percent each. The only occupation that posted a positive increase in online hiring was customer service with a growth of 5 percent.

“Despite being faced with multiple immediate uncertainties, economists remain hopeful about the Philippines’s growth ahead, and this suggests opportunities for foreign firms from the region, such as Singapore, to come in and tap on the nation’s solid resources and infrastructure for commercial activities. The

Philippines’s retail sector, in particular, is doing considerably well, and this trend will likely stick through for the months ahead,” Modi said.

The MEI is a monthly gauge of online job posting activity in the Philippines, recording the industries and occupations that show the highest and lowest growth in recruitment activity.

The data is based on a real-time review of millions of employer job opportunities culled from a large, representative selection of online career outlets, including Monster Philippines, the Monster Employment Index presents a snapshot of employer online recruitment activity nationwide.

Despite being faced with multiple immediate uncertainties, economists remain hopeful about the Philippines’s growth ahead, and this suggests opportunities for foreign firms from the region, such as Singapore, to come in and tap on the nation’s solid resources and infrastructure for commercial activities. The Philippines’s retail sector, in particular, is doing considerably well, and this trend will likely stick through for the months ahead.”—Modi

House leaders vow immediate okay of 2018 proposed budget

By Jovee Marie N. dela Cruz @joveemarie

T

he leadership of the House of Representatives on Wednesday defended its plan to hasten the approval of the proposed 2018 P3.7-trillion General Appropriations Act. At a news conference on Wednesday, Speaker Pantaleon D. Alvarez said there is no reason to prolong the approval of the 2018 budget as it only affects the passage of other important measures pending in the lower chamber.

“Let’s not prolong the approval of the 2018 budget. Instead, we should hasten its passage so that we could focus on other important measures,” Alvarez said.

“We still have a lot of things to do here in the House of Representatives not just the budget, which has already been deliberated on by the House Committee on Appropriations,” he added.

The lower chamber is expected to start the plenary debates of the budget on September 4 and end it on September 8. The leadership is eyeing September 21 as the date of its transmittal to the Senate after approving on third and final reading.

Rep. Edcel C. Lagman of the First District of Albay, for his part, said the lower chamber is sacrificing its power of the purse with the rush approval of the budget bill.

Party-list Rep. Tom S. Villarin of Akbayan supported Lagman’s view and said the swift approval of the budget should not be allowed, pending inquiries on lump-sum funds and major budget realignments in the national budget next year.

Meanwhile, Minority Leader

ALVAREZ

plenary next week.

“We’ve had extensive deliberations at the committee level, and we have also scheduled pre-plenary discussions for members of the House to further engage the heads of offices in debate of their respective budgets. The heads of departments and agencies are also committed to continue discussions about their budget with members of the House on the day of their scheduled budget defense, while the committee on appropriations will be defending the budget on

Let’s not prolong the approval of the 2018 budget. Instead, we should hasten its passage so that we could focus on other important measures. We still have a lot of things to do here in the House of Representatives not just the budget, which [has] already [been] deliberated on by the House Committee on Appropriations.”—Alvarez Danilo E. Suarez of Quezon said he will question in the plenary the departments that have low absorptive capacities, but still received higher allocations in the 2018 budget.

Currently, Rep. Karlo Alexei B. Nograles of the First District of Davao, chairman of the House Committee on Appropriations, said his panel is still scrutinizing the national budget, which is now under the pre-plenary deliberations, before this will be sponsored in the

the floor,” Nograles said.

“Given these three layers of budget discussions, I believe we are adequately exercising our power of the purse. Last year we were able to complete plenary debates in seven days, considering that it was the new President’s maiden budget. This year, this being President Duterte’s second budget, perhaps, we can finish this in five days,” Nograles said.

Meanwhile, the education sector will get the biggest chunk of the 2018 budget with a funding

of P691.1 billion broken down as follows: Department of Education, P613.1 billion; Commission on Higher Education, P13.5 billion; and state universities and colleges, P64.6 billion.

The economic services sector comes second with P1.15 trillion, 30.6 percent of the proposed budget.

The budget for economic services in 2018 gets a generous increase of 25 percent from the 2017 amount of P922 billion.

The other agencies with the highest budgetary allocations are the departments of Public Works and Highways,P643.3 billion; the Interior and Local Government, P172.3 billion; Health, P164.3 billion; National Defense, P145 billion; Social Welfare and Development, P138 billion; Transportation, P73.8 billion; and Agriculture, P54.2 billion; the Autonomous Region in Muslim Mindanao, P33.5 billion; and the Department of Environment and Natural Resources, P27.9 billion.

The proposed P3.767-trillion national budget for 2018 represents a 12.4-percent increase on the general appropriations in 2017 with P3.35 trillion. The projected fiscal program is expected to result in a fiscal deficit amounting to P524 billion, or 3 percent, of the gross domestic product.

The government will fund the deficit from domestic and foreign borrowings. Total borrowings for 2018 will amount to P888.2 billion, of which P524 billion will be used to finance the deficit. In sourcing the P888.2 billion, 80 percent, or P710.6 billion, will be sourced locally while 20 percent, or P176.3 billion, will be borrowed from international lenders.

New BOC chief Lapeña: No welcome gift for me please

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ewly appointed Bureau of Customs (BOC) Commissioner Isidro S. Lapeña endorsed citizens’ arrest on Wednesday against any group or person who will be using his name for their illegal activities.

In his acceptance speech at the turnover ceremony for the commissioner of Customs, Lapeña disclosed receiving information that some groups are collecting money to be given as

pasalubong, or welcome gift, for him.

“I am now using a stern warning to unscrupulous individuals who plan to use my name to collect money and/or ask favor/s to circumvent laws and regulations: I will get you. If anyone uses my name to facilitate unlawful activities, do not hesitate to apprehend them under citizen’s arrest and you will be given a reward. I will exercise zero tolerance against corruption in the bureau,”

Lapeña said. Lapeña replaced retired Marine Capt. Nicanor Faeldon as head of the BOC. Faeldon was appointed in May 2016

by President Duterte as the 38th commissioner of the BOC, perceived to be the most corrupt government agency.

Faeldon was forced to resign from his post, amid a congressional probe into the entry of P6.4 billion worth of shabu that passed through

the BOC’s green lane.

Sen. Panfilo M. Lacson Sr. also accused Faeldon of receiving P100 million as pasalubong when he assumed as BOC chief.

Lapeña told BOC officials and employees that his only marching order from the President is to stop corruption in the BOC and to find ways to increase customs revenues.

Joel R. San Juan and Rea Cu

news@businessmirror.com.ph

DOE eyeing faster, more transparent CSP scheme

by December, Cusi says

By Lenie Lectura

@llectura

T

HE energy department is eyeing to hold public consultations to meet its December target of conducting another oil and gas licensing round via competitive selection process (CSP).

“We may start it in December,” Energy Secretary Alfonso G. Cusi said. The agency, he added, must conduct public hearings first. “Part of government procedure is to have it bid out always,” he said. “Public hearings are part of the process and we will conduct one soon.”

The government, Cusi added, is veering away from the traditional Philippine Energy Contracting Round (PECR), in which the Department of Energy identifies possible petroleum exploration sites. The current system is meant to lure local and foreign oilexploration firms to submit bids to the agency, which will then evaluate the offers of these companies for at least 100 days. After which, the service contracts will be signed, approved and awarded by Malacañang.

The DOE wants to improve the current system, in a bid to fast-track the entire process.

Cusi said the agency would no longer identify the potential sites fit

for petroleum exploration. Instead, prospective investors are the ones who will identify the potential sites that interest them. Thereafter, they should submit a detailed exploration offer to the DOE, and wait for their proposal to undergo a CSP. “This will facilitate exploration process because work will be divided,” Cusi added, saying that the offer would be published in order to promote transparency.

The DOE launched in May 2014 the fifth PECR for petroleum.

A petroleum service contract has a seven-year exploration period, which could be extended to up to 10 years. Should this phase succeed, the contract will enter into a 25-year development or production period.

“The difference is that you would have to wait for the DOE for announcement that we are going to open this area for exploration for contracting. This takes long. Now, interested private companies will be the ones to identify and tell us which areas they want to explore. A CSP will take place. Overall, the entire process would be much faster,” Cusi stressed.

The exploration arm of the Philippine National Oil Co., Cusi said, can also participate in the new scheme.

Marawi siege heightened Filipinos’ concern on terrorism, survey shows

T

he Marawi siege has made Filipinos concerned about the threat of terrorism, according to the results of the latest Nielsen Consumer Confidence Survey.

When asked about their major concerns in the second quarter, Nielsen said terrorism became the Filipinos’ third top concern. The top two concerns were job security at 30 percent and health at 23 percent.

“While previously aware of the terrorism on a global level, the Marawi siege brought the threat of terrorism closer to the minds of Filipino consumers,” said Stuart Jamieson, managing director of Nielsen Philippines and Emerging Markets Southeast Asia Cluster leader.

Nielsen data also showed job optimism dropped two percentage points to 85 percent in the second quarter compared to the fourth quarter, and four points versus the second quarter last year.

Further, there was a dip in immediate-spending intentions at 58 percent, from 60 percent, in the fourth quarter of 2016. It also showed a decrease of three points compared to the same period last year.

Nielsen also said favorable sentiment about personal finances remains positive at 84 percent, but this represented a slowdown from 86 percent in the second and fourth quarters of 2016.

Despite these, Nielsen said Filipinos remained optimistic and had the highest consumer confidence in the world in the second quarter of 2017 with a score of 130.

In the second quarter last year, consumer confidence in the Philippines surged to No. 1 with a 13-point increase to 132 index score. During that time it was the biggest quarter-on-quarter increase among countries included in the survey.

The Philippines maintained this index score in the third and fourth quarters of 2016 before seeing a two-point decline in the second quarter of 2017.

“Consumers in the Philippines have always been in the

top three in the past number of years and to be the most optimistic globally for the second time is not surprising, given that the economy remains to be one of the strongest in Asia at 6.5 percent GDP growth rate in the second quarter,” Jamieson said.

When it comes to having cash to spare after paying for the essential living expenses, saving money still tops the list for Filipino consumers at 58 percent, a six-point decrease compared to the last quarter of 2016.

Nielsen also said consumers indicated increased willingness to allocate spare cash to new clothes, up nine points to 33 percent.

Holidays or vacations come in next with 30 percent, a threepoint increase compared to the end of the quarter of 2016.

Investment in shares of stock increased to 29 percent but spending for home improvements declined to 27 percent.

“Consumers with a positive outlook about their finances, job prospects and spending intentions tend to have an open mindset toward indulgences, such as clothes and travel,” Jamieson said.

Globally, consumer confidence showed signs of continued improvement with an index score of 104, up three points from the fourth quarter of 2016.

After the Philippines, India posted a 128 index score, declining by eight points, while Indonesia follows with a 121 index score, gaining a percentage point.

The United States slipped by five points to an index score of 118, while confidence level in Vietnam is on the ascent with a five-point percentage gain to 117 index score.

Established in 2005, the Nielsen Consumer Confidence Index is fielded quarterly in 63 countries to measure the perceptions of local job prospects, personal finances, immediate spending intentions and related economic issues of real consumers around the world.

Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism, respectively. Cai U. Ordinario

A6

TheBroa

Business

Thursday, August 31, 2017

Malaysian firm shares engineered landfill system as PHL grapples with

garbage crisis An unidentified man crosses a sea of garbage at a dump in Cavite. Antonio Oquias | Dreamstime

By Butch Fernandez Dennis Estopace | Senior Editor & Claudette Mocon | Correspondent

M

ETRO MANILA’S solid waste-management problems are legendary, with images of Payatas and Smokey Mountain cited most frequently for reference.

There were efforts, through legislation, to outlaw open dumps and encourage sanitary landfills, as well as mandate home- and village-based segregation, but enforcement has been dismally lax.

Is it possible to dispose of a large metropolis’s solid waste—tons of garbage daily from millions of people—without causing environmental damage and pollution, public nuisance from the stink and hazards to people? A Malaysian company that has been operating for nearly 12 years an award-winning engineered sanitary landfill—one of Southeast Asia’s biggest and most successful—has proven it’s possible, and is now looking to make a footprint in the region.

One of the most promising of such potential projects, in fact, is an envisioned sanitary landfill—following the template that handles the trash of Kuala Lumpur

(KL) and Selangor—in Naga City in Cebu province.

Actually, “Manila is in the same situation as Kuala Lumpur.

People need to do [household waste] segregation,” an official of KUB-Berjaya Enviro Sdn Bhd (KBE) told Manila journalists during a recent media tour at KBE’s Bukit Tagar Sanitary Landfill (BTSL) in Selangor. The admission that KL households have not yet achieved 100-percent segregation notwithstanding, the metropolis has been able to handle its garbage disposal efficiently and cleanly, thanks mainly to the well-planned, engineered approach of the BTSL.

The sprawling complex just off the expressway nearly an hour from central KL—with the access built by the same KBE from funds it received from the government for setting up and operating the landfill—is a model in seamless integration of sol-

id waste disposal, pollution control and energy generation.

Eye on overseas ventures

A joint-venture company established between Berjaya Corporation Berhad and KUB Malaysia Berhad, BTSL officers of the two conglomerates listed in the Malaysia Stock Exchange are looking at overseas opportunities to participate in waste management.

Managing Director Chok Eng Tan says they are open to doing joint trash management disposal arrangements in neighboring countries, like the Philippines, but prefers “longterm concessions” as this would also require long-term investments that must be recouped.

In the case of Metro Manila, for instance, he estimates it would need transfer stations and three or four landfill sites to accommodate over 4,000 tons of garbage disposed of by four to five million households.

According to the National Solid Waste Management Commission (NSWMC), more than 90 percent of the more than 1,600 local government units (LGUs) in the country generate residual waste from 1 ton to 75 tons per day.

Berjaya Philippines is already in the midst of negotiations with local officials of Naga City in Cebu province on the possibility of hosting a landfill site. They intend to build on land bought by Berjaya Philippines.

Berjaya Philippines Inc. President Wong Ee-coln said their general manager for technical operations at BTSL has been to Cebu and nearby areas several times for ocular inspections and exploratory talks with officials and experts.

Their GM, an engineer named Peter Wong, said they also checked out the location and geohazard profile of potential sites.

The site that Berjaya Philippines wants to set up in Naga City, Cebu, is expected to accommodate 100 tons of trash a day from Naga City itself, plus 1,000 tons more from surrounding cities.

Chock notes that Naga, Cebu, is listed as an industrial area with “quite a number” of businesses.

“Their industrial waste can be used as landfill. Also, there is a cement plant that produces industrial waste, as well as ports that are known to be another source of solid waste.”

The Naga-Cebu project is meant to hew closely to the BTSL model, which was premised on construction and operation agreements with the Malaysian government under the supervision of its Ministry of Urban Wellbeing, Housing and Local Government.

Developed on a 700-acre land with a buffer zone of 1,000 acres comprising undeveloped land, the BTSL dumping site is billed as a fully engineered Level IV landfill

“with full HDPE membrane liner, leachate collection and treatment systems.” Comprehensive ground and surface water monitoring systems have been installed to guard against contamination.

The BTSL, with a capacity of 120 million metric tons, is estimated to provide up to “60 years solution to solid waste management” in the Central Region of Selangor and Kuala Lumpur, as BTSL was designed to accommodate municipal solid waste, as well as nontoxic waste. At the rate they are going, according to Chock, it could be extended for a few decades more. Bukit Tagar gets over 2,500 tons of municipal solid waste daily from Kuala Lumpur and Selangor.

BTSL officials point out that the “tipping” rate, or the cost per ton for dumping waste at Bukit Tagar, is, at 49 Malaysian ringgit, among the cheapest for sanitary landfills around the world.

The estimated 1,100 tons that Berjaya Philippines expects to handle from Naga City, Cebu, and surrounding cities and towns would thus be well within the group’s proven capacity for waste management.

Metro Manila, however, remains a tough nut to crack, so this might explain why BTSL officials and engineers, interviewed separately, all sounded cautionary about taking on any project in the National Capital Region.

Naga experience

AN environmental assessment report by the Provincial Government of Cebu in 2010 classified Naga City as the industrial arm of the province.

“It plays a major role in the economic growth and development at the southern part of the island.

It is the site of many industries and currently functioning as a highly urbanized center that focused more on industrial development.”

Located in the southeastern part of the province of Cebu, Naga is 22 kilometers from Cebu City, the capital of the province. Naga has a total land area of 9,298.45 hectares comprising of 28 barangays. The urban land area encompasses 494 hectares, or roughly 5 percent of the total land area.

The urban areas comprise the barangays of Central, East, North, South and West Poblacion and the Tinaan, Langtad, Inoburan, Colon, Tuyan and Inayagan villages. The rural areas comprise 95 percent of the land area of the municipality.

The provincial government of Cebu undertook the assessment in 2010 in view of putting up a secured landfill facility in Naga.

Legal mandate

THE establishment of landfills is mandated by law, according to the Environmental Management Bureau (EMB) of the Department of Environment and Natural Resources

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(DENR). The DENR-EMB cited Republic Act 9003, which mandates the closure and rehabilitation of all dumps and their replacement with sanitary landfills (SLFs).

SLFs are disposal facilities with impermeable liners to prevent liquid discharges from polluting ground and surface waters. It should also have a gas management system to reduce risks of burning or explosion, a regular soil cover to minimize odor, and other environmental protection features.

Controlled dump sites, which were required to meet basic waste management guidelines, should have been phased out in 2006 in favor of SLFs. According to the NSWMC, the country had only two sanitary landfills—located in Capas, Tarlac, and Inayawan, Cebu City—in 2004.

About 35 LGUs built their sanitary landfills in 2007 from only 10 in 2006 when the deadline for operation of controlled dumps took effect. By 2010, a total of 81 SLFs were either undergoing construction or were already operational.

The NSWMC said the capacity of the landfill site should be able to sustain operations lasting from 10 to 15 years.

“Therefore, clustering of disposal facilities and adoption of alternative technologies for residual wastes are better options,” the NSWMC said in its NSWMC Strategy for 2012 to 2016.

MMDA plans

INTEREST on extracting resource from waste has not escaped the Metropolitan Manila Development Authority (MMDA).

According to MMDA Chairman Danilo Lim, the agency is

considering the establishment of a waste-to-energy facility to address the garbage woes in the metropolis.

“This kind of technology is being used in other countries, why can’t we?” he said. “Actually, there’s money in garbage. So, that is one of our thrusts that we want to pursue. We will coordinate with other agencies [that] have know-how on this.”

Included in the MMDA’s mandate is the formulation and implementation of policies, standards, programs and projects for proper and sanitary waste disposal. This mandate also involves the establishment and operation of SLFs and related facilities and the implementation of other alternative programs intended to reduce, reuse and recycle solid waste.

However, Lim is not keen on continuing with the current SLFs.

Why should we tolerate dumping in landfills when the waste can be used further, he said in Tagalog.

According to Lim, Metro Manila generates 10,000 tons of garbage every day.

“And that [tons of garbage] is too much.”

Still, MMDA Assistant General Manager Jojo Garcia dismissed reports of a garbage crisis.

Payatas reopening?

GARCIA, who is also Lim’s chief of staff, said SLFs in Navotas and Rizal province can still accommodate garbage from Quezon City despite suspending the use of the Payatas temporary landfill.

He said in an interview that the two disposal facilities will be serviceable until 2037. Quezon City hauls at least 2,800 tons, or 200 trucks, of

www.businessmirror.com.ph | Thursday, August 31, 2017 garbage to Payatas area.

“There is no need to panic yet.

The two other landfills can accommodate Metro Manila’s garbage for the next 15 to 20 years,” said Garcia after the operation of Payatas was shut down.

According to him, Manila Mayor Joseph Estrada had agreed to allow trucks to transport garbage from Quezon City going to Navotas via the Manila pier area during window hours of 11 p.m. to 5 a.m.

Garcia, however, said the MMDA is still awaiting word from the DENR on when and if the Payatas dump site could be reopened.

“We have to follow the DENR. We are still waiting for its go signal, [or] if the DENR will issue a temporary permit.”

He acknowledged the transportation of garbage from Quezon City to two other alternative sites would be delayed and would cost more. However, Garcia said, “Lim will not compromise the safety of the communities that thrive around the Payatas dump site.”

The Quezon City government has been asking the DENR to reopen the Payatas dump site and allow it to continue operating until the end of the year to avert a possible garbage crisis.

On July 27 the MMDA ordered the temporary shutdown of the Payatas dump following heavy rains citing concerns over safety, a move affirmed by the EMB-DENR.

Complete system

THE BTSL in Selangor, Malaysia, is equipped with a “complete environment protection system.” It installed four system components:

• a surface management plan

• leachate management plan

• environmental monitoring

• early warning and emergency containment system.

BTSL officers said the state-ofthe-art leachate treatment plant— put in place to treat leachate output, or the liquid that oozes out as solid waste is broken down—from the landfill, is based primarily on biological reaction. That is, chemicals are introduced to achieve the required leachate treatment standards. The plant, equipped with four sequential batch reactor (SBR) lagoons, 24 aerators, chemical storage and dosing system, balancing tanks, sludge thickener and a dissolved air flotation plant, has a treatment capacity in excess of 1,000 cubic meters per day for methanogenic (key word: methane, the primary gas produced by garbage) leachate.

Meanwhile, a surface water management system is in place, so that storm water run-off is diverted away from the still-active landfill phases and diverted to drains toward open water courses, silt traps and detention ponds.

If one wonders why there is zero stench from the landfill, it is because the solid waste is covered almost immediately with loam as soon as it is dislodged by the trucks.

Earth cover is applied daily over compacted waste to prevent infiltration of rain water into the leachate collection system and avoid formation of excess leachate, according to briefing materials given by BTSL. To maintain surface water quality, desilting silt traps are regularly carried out.

Apart from daily monitoring, weekly and fortnightly tests are done to track parameters of both

raw and treated leachate, which are carried out at lagoons to ensure successful treatment.

BTSL’s landfill operation is being run and maintained by an experienced team using trucks, compactors and earth movers—all on three shifts from Monday to Sunday. Specialized compactors are deployed in the application of earth cover to maintain hygiene, prevent odor and achieve maximum air capacity.

Energy from waste

A vital component of the BTSL landfill operations is a modern integrated system for collecting methane from waste and feeding the gas into the energy grid.

BTSL engineers installed a comprehensive system whereby landfill gas is treated and managed by way of flaring, thus generating green energy from its 4.4MW gas engines fueled by methane produced by solid waste treated in the landfill.

The green energy produced through the gas engines is then fed to the national grid via Tenaga Nasional Berhad (TNB) under the Feed-In-Tariff arrangement.

The efficiency level in collecting methane from the trash is perhaps manifested best by the fact that nearly 40 percent of the collected methane gas cannot be used by the grid yet under the current arrangement. Excess methane is thus burned—flare stacks jut out at the site—as this is the nonhazardous means for disposing of it.

Engineers explained that if methane is allowed to leak into the air, it absorbs the sun’s heat, warming the atmosphere, causing damage much like carbon dioxide.

A self-initiated effort, the

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standards implemented in the landfill gas management system at BTSL are said to have exceeded State-issued requirements imposed by the Environment Department, earning the distinction of operating the largest grid-connected biogas renewable energy facility under Malaysia’s Feed-In-Tariff program, apart from being cited as having the most Certified Emission Reduction (carbon credits) issued for a landfill project in Southeast Asia under the Clean Development Mechanism (CDM) scheme.

Besides the energy from methane gas, BTSL engineers are experimenting with developing solar energy as a means of maximizing their sprawling land area.

The company is developing a 125-kilowatt pilot solar project at the advance phase consisting of landfill cells that “allow full optimization of resources” at the landfill site. The long-term vision: energy produced from the solar project will also supply the national grid under the Feed-in-Tariff scheme.

Time will tell

IN sum, the local cliché “may pera sa basura” (there’s money in trash) has long been warped by the deplorable failure of Philippine authorities—national and local—to find long-term solutions to solid waste disposal, one that addresses environmental, health, energy and cost considerations. Several local officials face pending lawsuits over their failure to enforce the solid waste management act.

Can KUB-Berjaya’s success story, if duplicated at a smaller scale in Cebu, finally show some rational way out?

Only time will tell.

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Banking&Finance

Thursday, August 31, 2017 • Editor: Jun B. Vallecera

BusinessMirror

news@businessmirror.com.ph

Data-recovery site declared a white elephant

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he Department of Finance (DOF) has uncovered a P50-million stateof-the-art disaster-recovery (DR) site in the Visayas as back up to critical operations of the Bureau of the Treasury (BTr) in Manila.

But Fi n a nce Sec ret a r y C a rlos G. Dominguez III declared the project a white elephant left behind by the past administration, mainly because it is in a place without installed high-speed broadband connectivity networks to support its system’s requirements.

The facility was also declared too costly to operate and maintain, as it needs to run at full capacity 24 hours a day, seven days a week, and requires security personnel to guard the property. On top of that, the BTr has no technical capability to run the data-recovery center.

Treasury officials convening at a recent executive-committee meeting learned of the project when the vendor informed them that it was ready to be turned over to the agency.

The project includes the supply, delivery, installation and commissioning of various information and communications technology equipment, including the supply of labor, services and materials in support of Treasury operations in Manila from the remote location in the Visayas.

According to National Treasurer Rosalia V. de Leon, the data-recovery site’s remote

Dominguez

location is not ideal for the Treasury’s critical systems and that telecommunications facilities, such as high-speed fiber cables, have not yet been set up by either PLDT or Globe Telecom in the area, defeating the purpose of setting up the cutting-edge ICT facility.

“I want you to get to the bottom of this and find out who was behind this project,” Dominguez said upon learning of the mul-

timillion-peso structure.

According to de Leon, no funds have also been allocated for the maintenance and operation of the data-recovery site under the 2017 national budget. The BTr’s main office is at the Ayuntamiento de Manila building in Intramuros, Manila.

“We also have no budget under the 2017 GAA [General Appropriations Act] to maintain and operate the DR. as our current maintenance costs for the Ayuntamiento’s unified communications system is only about P28 million annually,” de Leon said.

According to the BTr, 80 percent of the contract amount was already disbursed to the project supplier, Multi-Fold Links Inc. The project was initiated on August 16, 2016, when de Leon was not yet the National Treasurer and the Duterte administration was still less than two months in office. Its turnover or end date was originally set on February 12 but was moved to July 15.

Dominguez has instructed De Leon to find ways to put the project to good use and to hire a private service provider to ensure the site runs efficiently.

The DR Site consists of a structure that houses precision air-conditioning units, a cold aisle containment system, uninterruptible power supply, an FM200 fire suppression system, access raised floor, tempered glass enclosures, acoustic ceilings, wall claddings, generator sets, variable refrigerant f low indoor units, a closed-circuit television (CCTV) system, door access system that includes scanners, and temperature, humidity and water leak detection systems. Rea Cu

Accelerated lending forces BSP to cut term deposit offer T

he Bangko Sentral ng Pilipinas (BSP) on Wednesday reduced the volume of offering in its 28-day term deposits to address persistent undersubscription at the facility.

The BSP said it scaled back the offer size from the present P140 billion down to only P110 billion starting the first Wednesday of September. The volume offer for seven-day term deposit facility (TDFs), meanwhile, remained unchanged at P40 billion.

BSP Governor Nestor A. Espenilla Jr. said the reduction was an operational refinement recognizing the demand for 28day deposits best illustrated by persistent undersubscription.

On Wednesday auction results reflected this development as 28-day deposit tenders covered only 78.5 percent, or 109.86 billion, of the P140 billion offered. The 28-day facility has consistently reported undersubscribed since the March 22 auction this year.

In May the BSP made similar volume adjustments, reducing the 28-day facility

from P150 billion to P140 billion and increasing the seven-day facility from P30 billion to its current P40-billion level.

No changes were made for the seven-day TDFs in August.

BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo told reporters the reduced volume offering for the 28-day TDF was based on the recognition that the country’s “sustained economic expansion has also given rise to higher demand for credit”.

“Banks are now lending more to their clients instead of placing their excess funds with the BSP. Corporates are also using their peso funds in the banks to buy foreign exchange for their import requirements; some of them have also been investing outside the Philippines. Some are prepaying their external obligations,” Guinigundo said.

“Thus, it is the excess liquidity of the banks that has declined recently and not the domestic liquidity per se. The BSP, therefore, does not have to do as much mopping up as before because funds are being used

for productive uses instead of just being parked with the BSP. The volume of offering is also based on our liquidity forecasts that remain consistent with our inflation and growth forecasts,” he added.

ING Bank Manila economist Joey Cuyegkeng said the undersubscription at the BSP auctions were indicative of the banks’ preference to deploy funds for more productive endeavors and not a measure of tighter liquidity conditions in the country.

“Undersubscribed weekly TDF awards and tenders may indicate that banks would rather utilize their excess liquidity for lending not only for balance sheet and taxposition adjustments [but] raising profitability in an economy, expected to continue to post 6-percent to 7-percent annual gross domestic product growth in the next fiveand-a-half years,” Cuyegkeng said.

O n Wed nesd ay subsc r ipt ion for seven-day TDFs covering only 81.1 percent, or only P32.44 billion, of the P40 billion on offer. Bianca Cuaresma

Central banks can’t ignore the cryptocurrency boom

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he claim of official approval highlights how the boom in cryptocurrencies and their underlying technology is becoming too big for central banks, long the guardian of official money, to ignore. From speculative betting to trading solar power, digital money is proliferating.

Until recently, officials at major central banks were happy to watch as pioneers in the field progressed by trial and error, safe in the knowledge that it was dwarfed by roughly $5 trillion circulating daily in conventional currency markets. But now as officials turn an eye toward the increasingly pervasive technology, the risk is that they’re reacting too late to both the pitfalls and the opportunities presented by digital coinage.

“Central banks cannot afford to treat cyber currencies as toys to play with in a sand box,” said Andrew Sheng, chief adviser to the China Banking Regulatory Commission and distinguished fellow of the Asia Global Institute, University of Hong Kong. “It is time to realize that they are the real barbarians at the gate.”

Bitcoin—the largest and best-known digital currency—and its peers pose a threat to the established money system by effectively circumventing it. Money, as we know, it depends on the authority of the state for credibility, with central banks typically managing its price and/or quantity. Cryptocurrencies skirt all that and, instead, rely on their supposedly unhackable technology to guarantee value.

China’s lead If they don’t get a handle on bitcoin and their ilk, and more people adopt them, central banks could see an erosion of their control over the money supply. The solution may be in the old adage, if you can’t beat them, join them.

The People’s Bank of China has done trial runs of its prototype cryptocurrency, taking it a step closer to being the first major central bank to issue digital money.

The Bank of Japan and the European Central Bank have launched a joint research project which studies the possible use of distributed ledger—the technology that underpins cryptocurrencies—for market

infrastructure.

The Dutch central bank has created its own cryptocurrency—for internal circulation only—to better understand how it works. And Ben Bernanke, the former chairman of the Federal Reserve (the Fed) who has said digital currencies show “long-term promise”, will be the keynote speaker at a blockchain and banking conference in October hosted by Ripple, the start-up behind the fourthlargest digital currency.

Russia, too, has shown interest in ethereum, the second-largest digital currency, with the central bank deploying a blockchain pilot program.

In the US both banks and regulators are studying distributed ledger technology and the Fed officials have made a couple of formal speeches on the topic in the past 12 months, but have voiced reservations about digital currencies themselves.

Policy issues THE Fed Governor Jerome Powell said in March there were “significant policy issues” concerning them that needed

Fiduciary duties of association boards

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ontinuing from my August 10 column, “Traits of High-Performing Association Boards”, let me share the fiduciary duties of association boards that I learned from the extensive knowledge resources of the American Society of Association Executives (Asae), of which I am a member. These principles are universal and applicable in the Philippine association setting.

A “fiduciary duty” is defined as “a legal obligation of one party to act in the best interest of another”. In the context of Philippine associations, the elected members of the Board of Trustees (BOT) act in the interest of their members. It is the responsibility of the BOT to see to it that they collectively work for the benefit of their association and its members. Here are the three fundamental fiduciary duties of the BOT: n Duty of Care—Requires taking care and exercising judgment that any reasonable and prudent person would exhibit in the process of making informed decisions, including acting in good faith, consistent with what you, as a member of the board, truly believes is in the best interest of the association.

Examples of duty of care include preparing for and attending board meetings regularly, voting independently, paying attention to organizational activities and operations and delegating only to responsible individuals and following up conscientiously. n Duty of Loyalty—Calls for consideration and action in good faith to advance the interests of the association.

Simply put: board members will not authorize or engage in transactions except those in which the best possible outcomes or terms for the association can be achieved. This standard constrains a board member from participating in board discussions and decisions when they, as an individual, have a conflict of interest. Examples of duty of loyalty are putting interests of the association before personal and professional interests and divulging any conflict of interest and not participating in related transactions. n Duty of Obedience—Requires obedience to the association’s mission, bylaws and policies, as well as honoring the terms and conditions of other standards of appropriate behavior, such as laws, rules and regulations. Examples

Association World Octavio Peralta of duty of obedience are living the association’s purpose and mission, complying with all applicable laws and the association’s governing documents, and insuring that approved and valid decisions are implemented.

Under Philippine laws, associations fall in the nonprofit-organization category of the Corporation Code with distinct provisions, as opposed to for-profit companies covered within the same Code. It may help that board members study the applicable section of the law.

Being a board member is not at all about enhancing one’s biodata and increasing visibility in press releases and photo opportunities. It is a serious matter and, while being confronted with a legal case is quite remote, this is not unlikely if fraud and other malfeasance happen in the course of exercising one’s duty as a board member.

As an advocacy to strengthen association governance in the country, the Philippine Council of Associations and Association Executives (PCAAE), through its PCAAE Academy, conducts governance courses for boards of associations and other nonprofit membership-based organizations.

The column contributor, Octavio “Bobby” Peralta, is concurrently the secretary-general of the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP) and the CEO and founder of the Philippine Council of Associations and Association Executives (PCA AE). The PCA AE is holding the Associations Summit 5 (AS5) on November 22 and 23 at the Philippine International Convention Center (PICC), which is expected to draw over 200 association professionals here and abroad. The two-day event is supported by ADFIAP, the Tourism Promotions Board and the PICC. E-mail inquiries@adfiap.org for more details on AS5.

Case clippings

By Justice S J Ranada Jr.

SHERIFFS–simple neglect of duty A clerk of court/ex oficio sheriff is administratively guilty of simple neglect of duty where she fails to take a more decisive action against a deputy sheriff’s unwarranted refusal to enforce a court decision; instead of taking the sheriff’s stance that a resurvey should be conducted on the subject property, she should have firmly reminded him of his mandated ministerial task of implementing writs promptly and expeditiously.

Geronilla v. Montemayor 05 June 2017

further study, including vulnerability to cyber attack, privacy and counterfeiting.

He also cautioned that a central-bank digital currency could stifle innovations to improve the existing payments system.

At the same time, central bankers are obviously wary of the risks posed by alternative currencie—including financial instability and fraud. One example: The Tokyo-based Mt. Gox exchange collapsed spectacularly in 2014 after disclosing that it lost hundreds of millions of dollars worth of bitcoin.

But for all their theoretical tinkering, official-money guardians have largely stood by as digital currencies have taken off. The explosion in initial coin offerings, or ICOs, is evidence. Investors have poured hundreds of millions of dollars into the digital currency market this year alone.

The dollar value of the 20 biggest cryptocurrencies is around $150 billion, according to data from Coinmarketcap. com. Bitcoin itself has soared more than 380 percent this year and hit a record—

AM P-17-3676 Perlas-Bernabe, J

but it’s also prone to wild swings, like a 50-percent slump at the end of 2013.

“At a global level, there is an urgent need for regulatory clarity given the growth of the market,” said Daniel Heller, visiting fellow at the Peterson Institute for International Economics and previously head of financial stability at the Swiss National Bank.

Rather than trying to regulate the world of virtual currencies, central banks are mainly warning of risks and attempting to garner some advantage from distributedledger technology for their own purposes, like upgrading payments systems.

Carl-Ludwig Thiele, a board member of Germany’s Bundesbank, has described bitcoin as a “niche phenomenon” but blockchain as far more interesting, if it can be adapted for central-bank use. In July Austria’s Ewald Nowotny said he’s open to new technologies but doesn’t believe that will lead to a new currency, and that dealing in bitcoin is effectively “gambling”. Bloomberg news

www.businessmirror.com.ph

The World BusinessMirror

Thursday, August 31, 2017

Harvey deepens Texans’ soggy misery

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OUSTON—Five days after the pummeling began—a time when big storms have usually blown through, the sun has come out, and evacuees have returned home—Tropical Storm Harvey refused to go away, battering southeast Texas even more on Tuesday, spreading the destruction into Louisiana and shattering records for rainfall and flooding.

Along 300 miles of Gulf Coast, people poured into shelters by the thousands, straining their capacity; as heavy rain kept falling, some rivers were still rising and floodwater in some areas had not crested yet; and with whole neighborhoods f looded, others were covered in water for the first time.

Officials cautioned that the full-f ledged rescue-and-escape phase of the crisis, usually finished by now, would continue, and that they still had no way to gauge the scale of the catastrophe—how many dead, how many survivors taking shelter inland or still hunkered down in flooded communities and how many homes destroyed.

For everybody, it was another head-shaking day: n L oca l of f icia ls in Te x as said 30 deaths were believed to have been caused by the storm through Tuesday, up from eight a day earlier. The dead included a Houston police officer, Sgt. Steve Perez, 60, who was caught in f looding last Sunday while trying to report for duty.

“I expect that number to be significantly higher once the roads become passable,” said Erin Barnhart, the chief medical examiner for Galveston County. n The city of Houston imposed a curfew from midnight to 5 a.m., continuing until further notice.

The curfew was requested by the Houston Police Department, partly in response to reports of “small-scale looting” and other crimes, Chief Art Acevedo said at a news conference Tuesday evening.

He added that the curfew would help search and rescue teams get around without interference. n Parts of the Houston area broke the record for rainfall from

51.88 inches The volume of rainfall in parts of Houston, which broke the record for rainfall from a single storm in the United States a single storm anywhere in the continental United States, with a top reading on Tuesday afternoon, since the storm began, of 51.88 inches in Cedar Bayou, east of Houston, the National Weather Service reported.

The previous record was 48 inches in Medina, Texas, from Tropical Storm Amelia in 1978, and with the rain still falling along the Gulf Coast, Harvey could top the 52 inches recorded in Kauai, Hawaii, in 1950 from Hurricane Hiki. n Houston officials had at first limited the city’s main shelter, the George R. Brown Convention Center, to 5,000 evacuees, but by Tuesday morning it had swelled to more than 9,000, with more arriving by the hour, Mayor Sylvester Turner said.

By the evening, evacuated residents were setting up cots in corridors because they said the main dormitories were uncomfortably crowded.

One of the people bunking at the convention center, Keimaine Percel, a mechanic, had not seen his home since it flooded, but he was trying not to think about it.

“I heard it was real bad,” said Percel, 35. “I don’t know unless I get back.”

The Red Cross said that in Houston alone, 17,000 people began their day on Tuesday in

shelters, and the numbers were rising there and in inland cities that had taken evacuees such as Dallas, San Antonio and Austin.

Turner said Houston would create new shelters. Dallas opened its convention center on Tuesday as a shelter for 5,000 people, and Fort Worth said it would open shelters, as well.

In the Kingwood neighborhood of Houston, people waved towels from apartment windows and yelled “we’re here” and “family of three needs help,” hoping to draw one of the volunteers piloting fishing boats, inflatable rafts and kayaks.

O n Tue s d ay mor n i n g w a ter was approaching the front door, and on the other side of the house, Memorial Drive was a raging river.

“I used to worry about fire,” he said. “I’ve never seen anything like this.”

Two flood-control basins on the western edge of Houston, Addicks and Barker reservoirs, reached their capacity on Tuesday and spilled into adjoining neighborhoods that had not previously

been under water, flooding more than 3,000 homes.

Water a lso bega n pou r ing over Addicks Reservoir’s emergency spillway, a f low that will increase to 4,500 cubic feet per second by Thursday, f looding streets in another neighborhood, said Edmond Russo Jr., deputy district engineer for the Army Corps of Engineers.

Engineers did a controlled release of 8,000 cubic feet of water per second through the dams that hold back the reservoirs, but it was not enough to keep up with the rainfall and runoff pouring in. The reservoirs are intended to prevent f looding on the Buffalo Bayou, which runs through central Houston, but the bayou has spread far above and beyond its banks, and the discharge from the reservoirs will add to that f looding.

The Houston police and fire departments, and the Harr is County Sheriff ’s Office, reported that they have rescued about 7,000 people since the storm began, many of them from the tops of houses and cars, in addition to

those taken by volunteer boaters.

President Donald Trump visited the southern edge of the storm-affected area, arriving at a Corpus Christi firehouse and then traveling to Austin for a meeting with officials involved in the disaster response.

“It’s a real team, and we want to do it better than ever before,” Trump said to state and federal officials in Corpus Christi. “We want to be looked at in five years, in 10 years from now as, this is the way to do it.”

The severity and scope of the emergency daunted aid efforts.

Houston’s fire chief, Samuel Peña, said on Tuesday that the water was so high around some fire stations that firefighters had been unable to leave for days, either to go home or to help others.

Federal Emergency Management Agency trucks full of supplies and provisions left from a staging area near San Antonio, but some of the hardest-hit areas remained unreachable, their roads under water, washed-out, or blocked by abandoned vehicles.

New York Times News Service

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“t he world is united aga inst North Korea.”

She hinted at a possible US response, saying that “the United States will not allow this lawlessness to continue.”

President Donald J. Trump said in a statement earlier on Tuesday, “All options are on the table.”

North Korea’s leader, Kim Jong Un, has authorized more than 80 missile tests since taking power almost six years ago. But all those missiles landed in nearby waters because they were of limited range or fired at a sharp angle, high into space, so they would splash down without going too far.

On Tuesday the North abandoned that restraint, lobbing an intermediate-range ballistic missile at a normal angle and sending it over Hokkaido, into a spot in the Western Pacific almost 1,700 miles away.

In doing so, Kim may have been trying to show that he can hit a faraway target, for the first time conducting a more realistic test of the type of missile he had threatened to use to strike near the US territory of Guam.

Indeed, Kim warned that his

briefs May seeks to preserve gains from E.U.-Japan trade deal for U.K.

Prime Minister Theresa May said she’s keen for the United Kingdom to keep any benefits from a potential trade deal between the European Union (EU) and Japan after its scheduled departure from the bloc in March 2019.

“There’s obviously a number of trade deals that the EU has with other countries, and we are looking at the possibility of those being able to be brought over certainly as initial trade deals with the United Kingdom,” May told reporters on Wednesday on a flight to Japan ahead of a three-day trip. “That I think will give business certainty, which is what business wants at the point at which we leave.”

Her lofty goal of convincing the world’s third-biggest economy to use its trade deal with the EU as a basis for a future agreement with Britain comes as North Korea sours the mood with its latest missile tests.

Japan is in the final stages of brokering a free-trade agreement with the world’s largest trading bloc, from which the UK is breaking away. That puts May in a difficult position, as her own predecessor hailed it as a landmark that would add an annual €5 billion ($6.5 billion) to the UK economy. Bloomberg News

China and India rivalry looms over BRICS meet

BEIJING—China and India may have ended a tense border standoff for now, but their long-standing rivalry raises questions about the possibility of meaningful cooperation at an upcoming summit of major emerging economies.

The annual summit of the BRICS grouping encompassing Brazil, Russia, India, China and South Africa gets under way this weekend in the southeastern Chinese city of Xiamen, hoping to advance its vision of an alternative to the Western dominance of global affairs.

The leaders of all five nations are expected to attend, offering the best opportunity for Chinese President Xi Jinping and Indian Prime Minister Narendra Modi to talk since the border tensions flared in June. While both their countries view BRICS as a significant forum for progress, their rivalry for global influence and fears of containment by the other threaten to overshadow those aspirations.

The two countries’ militaries are “prowling the same spaces” along their land borders, in the Indian Ocean and western Pacific Ocean, said Sreeram Chaulia, dean of Jindal School of International Affairs in the Indian city of Sonipat. Even beyond the region, they are vying in Africa and Latin America “for the leadership of the developing world,” Chaulia said. AP Susie Williams, a volunteer from Memphis, Tennessee, speaks with a young girl at a temporary shelter at the George R. Brown Convention Center in downtown Houston on August 27. Last Sunday Harvey, now a tropical storm, pounded the region with torrential rains, and the National Weather Service forecasts additional rainfall of 15 inches to 25 inches through Friday with as much as 50 inches in a few areas. Alyssa Schukar/The New York Times

Qatar crisis shakes E. Africa, a home to Gulf militaries

UN condemns N. Korea’s latest missile tests but takes no action

EOUL, South Korea—The United Nations Secur it y Council on Tuesday condemned North Korea’s recent missile tests, including one that sent a ballistic missile soaring over Japan, as “outrageous actions.” But it gave no indication that it was prepared to take tougher measures against Pyongyang, which called the latest launch a “curtain-raiser.”

The 15 members of the Security Council met for nearly four hours in an emergency session to discuss a response to the North’s latest test, which sent an intermediate-range ballistic missile over the Japanese island of Hokkaido on Tuesday. They unanimously adopted a statement condemning that launch and three others last Saturday, calling them “not just a threat to the region but all UN member states.”

But nothing in the statement suggested the council was ready to further toughen the eight sets of sanctions it has imposed on the North, and it was unclear what additional action, if any, might be taken.

Nikki R. Haley, the United States ambassador to the UN, said the statement showed that

A9

government could conduct more missile tests in the Pacific, North Korea’s state-run news media reported on Wednesday.

While attending the launching of the missile, a Hwasong-12, on Tuesday, Kim said North Korea needed to conduct “more ballistic rocket-launching drills with the Pacific as a target in the future,” according to the North’s official Korean Central News Agency.

Kim called the test on Tuesday “a meaningful prelude to containing Guam” and “a curtain-raiser” of the North’s “resolute countermeasures against” the joint military exercises that the US and South Korea began last week.

Kim added that North Korea would continue to “watch the US demeanors as already declared and decide its future action according to them.” The 11-day military drills by Washington and Seoul, which North Korea has vehemently condemned as a rehearsal for war, are scheduled to end on Thursday, a potential excuse for North Korea to de-escalate.

Because of North Korea’s location—squeezed between China and South Korea, with Japan to

the east and southeast and Russia to the northeast—there is essentially no way that the North can test missiles on normal trajectories, as it did on Tuesday, without sending them over another nation.

“If the previous launchings were for testing technologies, this one was a realistic demonstration of an intermediate-range ballisticmissile capability,” said Chang Young-keun, a missile expert at Korea Aerospace University near Seoul. “In this test, the North’s missile actually flew at a realistic angle and trajectory.”

North Korea rattled the Trump administration last month by launching two intercontinental ballistic missiles, the second of which demonstrated the potential to reach the contiguous US. But officials and analysts doubted that the country had mastered the technology needed to protect a nuclear warhead from intense heat and friction as it re-entered the atmosphere from space.

Tuesd ay ’s test might have been most important for the development of more dependable inter mediate-range missiles. But experts say it could

a lso prov ide infor mation for the cr ucia l re-entr y technology needed for a warhead on an intermediate-range missile to survive the fiery plunge back into the atmosphere.

It is less clear whether that information could help the North pursue the especially difficult goal of developing the reentry technology needed to build a nuclear-tipped longer-range missile that could hit the mainland US. Those warheads would reenter more quickly, producing much higher heats.

The Hwasong-12 is an intermediate-range ballistic missile that the North says is designed to carry a large nuclear warhead. After the launch on Tuesday, the Japanese government sent a text alert to its people, advising them to take protective cover in case the test went wrong.

Japan said it did not try to shoot the missile down because it did not detect a threat to its territory. But analysts said the test nevertheless underlined some uncomfortable questions about the possibility of defending against such missiles.

New York Times News Service

DUBAI, United Arab Emirates—Though far-removed from the Gulf, East Africa has been shaken by the Arab diplomatic crisis gripping Qatar.

In recent years both Qatar and the other energy-rich nations arrayed against it have made inroads in the Horn of Africa by establishing military bases, managing ports and showering friendly nations with foreign aid.

As the rivalry heats up, with Saudi Arabia, Egypt, the United Arab Emirates and Bahrain seeking to isolate Qatar, East African nations stand to gain or lose from an increasingly fierce competition for influence. And with Saudi Arabia and its allies mired in a war just across the Red Sea in Yemen, the area has never had more strategic value. AP

Torrential rains bring India’s financial hub to a halt

MUMBAI, India—Torrential monsoon rains paralyzed India’s financial capital Mumbai for a second day on Wednesday as the streets turned into rivers and people waded through waist-deep waters.

On Tuesday the city received about 5 inches (127 millimeters) of rain, and it’s already hamstrung infrastructure collapsed. Public transport stopped and thousands of commuters were stranded in their offices overnight.

Commuter trains shut down, buses were half-submerged under water and even the deluged airport had to divert flights to other cities. By Wednesday morning, most trains were running, but traffic remained chaotic. AP

A10 Thursday, August 31, 2017 • Editor: Angel R. Calso

Opinion

BusinessMirror

editorial

Cleansing Customs once and for all

‘H

ell is empty and all the devils are at the Bureau of Customs [BOC],” according to a senator who attempted to describe the impunity of corruption at the bureau. President Duterte said, “The Bureau of Customs has a rotten system.” More than a hundred million Filipinos agree with them that corruption is deeply entrenched in the BOC’s culture and system that changing the chief and firing a few officials will no longer solve the problem. So, how can Duterte cleanse the BOC of corruption and end smuggling once and for all?

We say abolish the bureau, get rid of all the corrupt officials and employees and privatize some of the agency’s functions. Any less stringent measure will not suffice to stamp out corruption and smuggling. No topdown cleansing will succeed in a system rotten to the core. To stop corruption and smuggling, the President must replace the BOC with a professional institution run by qualified private individuals. That’s the best way to professionalize its functions and keep it free from the influence of politicians.

Experience has shown that Customs reform is not just about chopping off the heads of erring officials because the frontline employees are the ones who have the power to perpetuate corruption at the bureau. As we said in this space earlier, by simply turning a blind eye to smuggling and drug trafficking, a BOC employee can enrich himself. What’s more, corrupt Customs officials allow members of syndicates or dummies of smugglers to top the auctions at the bureau, thus, allowing the forfeited goods being auctioned to go back to the smugglers.

Currently, smugglers are cheating the government of potential revenues to the tune of hundreds of billions of pesos. The Federation of Philippine Industries said more than P904.6 billion worth of products have been smuggled into the Philippines from 2011 to 2015.

The prevailing belief is that even if the Chief Executive appoints an honest person to lead the agency, weeding out corruption is still very challenging because the Bureau of Customs (BOC) is completely rotten.

That’s why there is a need to abolish the BOC to insulate it from political interference. Sadly, the BOC is being perceived as a fund-raising agency for the powers that be.

By abolishing Customs, Duterte will pave the way for efficient and honest collection of duties and taxes. He will also have eliminated political interference in its operations. Then he can start privatizing some of its functions by identifying the areas that could be privatized. That’s how the President can professionalize BOC operations. That’s how he can institute the practice of meritocracy instead of the padrino system where politicians and other influential individuals can dictate who gets appointed to what position.

Then the President can explore ways to modernize collection of duties and taxes. For example, he can tap the services of global firms like the Societe Generale de Surveillance, a multinational company headquartered in Geneva, Switzerland that provides inspection, verification, testing and certification services. There are other reputable companies he can employ, such as Bureau Veritas, Intertek, TÜV, DNV GL and Cotecna. These companies can help provide services in the inspection and verification of the quantity, weight and quality of traded goods. With the correct information on all imports, the government can efficiently collect the right duties and taxes, which can help fund the Duterte administration’s “Build, Build, Build” program and other projects.

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BusinessMirror A broader look at today’s business

Modern ‘astrology’ John Mangun

OUTSIDE THE BOX

I

f you want to make a lot of money, become an economist, particularly an academic economist who teaches. In the US you can make well above $100,000 per year. You might even get to work for the government and bump your income to seven figures.

Some of the perks include being frequently quoted in the press, television interviews and will probably never have to buy yourself lunch or dinner again.

But it was not always that way. Astrologers used to enjoy the same lifestyle.

Astrology depended on mathematics. “An astrologer” is, in fact, the Oxford English Dictionary’s second definition of “mathematician”. But from a genuine mathematical science of cycles, the craft evolved into a belief that those cycles influenced more than just naturally occurring events, like the tides and seasons. While continuously debunked as early as ancient Greece, astrology was thought by many to able to forecast the future and determine—not just

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on were completely false.

Politicians and their economists tell us that government spending will stimulate the economy. Research from George Mason University showed that government spending had a multiplier effect ranging from +3.7 to -2.88. In other words, a $1 increase in government spending produces $2.70 of private-sector growth, or reduces private growth by $3.88, or anything in between, depending on the economic model used.

The new astrology is that economic models can be dangerous to a nation because the models are mostly useless and cannot predict the future. Directing the economy based on them would be effectively, like flying blind, perhaps in the wrong direction.

On a personal note, I will be holding a private and exclusive luncheon limited to 15 participants. The topic will be high-profit stock-market opportunities for the next six to nine months.

E-mail me if you are interested to join.

I promise that economic models will not be discussed.

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

Death economics 101, according to Pernia

✝ Ambassador Antonio L. Cabangon Chua Publisher

influence—human behavior.

Evangeline Adams was a turn-of-the20th-century astrologer whose clients included the president of Prudential Insurance, two presidents of the New York Stock Exchange, the steel magnate Charles M. Schwab and banker J.P. Morgan.

Astrology builds a vast database of precise information as possible and then creates models. For example, according to astrology and my birth sign, I am overconfident, undiplomatic, have a wicked sense of humor and love to prove people

wrong. All right, perhaps that is all true.

But maybe they just got lucky with me.

Modern astrology in the form of economic models is not as lucky.

Christina Romer is a professor of economics at the University of California, Berkeley, and former chairman of the Council of Economic Advisers in the Obama administration. The model Ms. Romer put together during the height of the Great Recession concluded that unemployment could go as high as 8.8 percent without the economic stimulus bill. With the stimulus, unemployment actually went over 10 percent.

In April 2014 a survey of 67 economists yielded 100-percent consensus that interest rates would rise over the next six months. Instead, the 10-year US Treasury Bond interest rate fell from 2.63 percent to 2.20 percent (a drop of 16 percent). By the end of 2014, rates had fallen further down to 2.11 percent.

Ancient Greek mathematician (and astrologer) Claudius Ptolemy created a model of the universe that put the Earth at the center. For over a thousand years European and Islamic astronomers assumed it was correct. The geocentric model of the universe was an incredibly detailed mathematical achievement. It was completely wrong because the assumptions it was built

T

he death of 17-year-old Kian de los Santos in the hands of the police during antinarcotic operations in Caloocan City on August 16 must have somehow tweaked President Duterte’s treatment of his police in the conduct of the government’s inexorable war on drugs.

In an unreliable admission that state forces may have committed a rubout, Duterte—who had previously defended the police in the performance of his marching order to end the drug hazard— commiserated with Kian’s family, even affording his parents an audience in Malacañang and an assurance (with financial and security assistance) that justice for Kian will be served accordingly.

We may never know how Duterte’s mind processed the events after his police shot dead a schoolboy executionstyle (as attested by the Public Attorney’s Office), and discarded his corpse next to a pigsty.

But Kian’s death ignited a once placid community to flock by the thousands during his funeral, turning the occasion into a rare display of outrage against the president’s widespread, yet controversial, drug war. So far, Duterte’s police have reported killing 3,500 people in antidrug operations, with thousands (many of them young and innocent) slain over drug-related crimes and in mysterious circumstances.

But one soul in the president’s

economic team believes that these deaths are but a “necessary evil” that would even bring about economic prosperity. I have never expected and was not prepared to hear such myopic and skewed view from Socioeconomic Planning Secretary Ernesto M. Pernia, who claimed that Duterte’s drug war will usher in “peace and order in the country and lure investments”.

According to Pernia, “If we have peace and order, then investments, the investment climate will definitely, substantially improve and many will be rushing to the Philippines to invest.”

Unfortunately, Pernia seems way too detached from reality. The countries that the Philippines traditionally rely on for investments (except China) are averse to these killings without due process and have, in fact, voiced out their opposition to such.

He justifies the killings as self-defense on the part of the police. But how can one vet that state forces are indeed liquidating only drug suspects who put up a fight? The Senate and even the Department of Justice (initially) found

conspiracy among policemen charged in the killing of Albuera, Leyte Mayor Rolando Espinosa at a subprovincial jail in November 2016. What about the killings of Ozamiz Mayor Reynaldo Parojinog and his wife? And the scores who were waylaid in the government’s so-called oplan “One Time Big Time”? We will never know because their lips have been sealed along with their respective graves.

We do not and will never condone the proliferation of drugs and their adverse effects on our society. But we will, likewise, not keep our peace when blood spills on the streets almost on a daily basis on the pretext of a drug war, which the president himself admitted could never be won.

Jochen-Martin Gutsch and Juan Moreno of Der Spiegel, who wrote a fivepart series about lessons learned from the failed war on drugs, discovered conceivable solutions to a campaign that has had “devastating consequences for individuals and societies around the world.”

Helping them put out the series is Pablo Escobar’s former security chief, Jhon “Popeye” Velásquez, who facilitated Escobar’s mass production of cocaine which grabbed control of 80 percent of the global cocaine trade.

When Der Spiegel asked how people like him could be stopped, Velazquez said: “People like me can’t be stopped.

It’s a war. They lose men, and we lose men. They lose their scruples, and we never had any…you will never [any government] win this war when there is so much money to be made. Never.”

But in the Philippines, drug lords like Escobar have never been the target.

Those killed are mostly suspected couriers and users who, unlike drug lords, have no guns to fight back. In the eyes

of those who applaud Duterte’s flawed drug war, those killed, mostly from the poor sector of society, deserve to die.

Der Spiegel notes that since US President Richard Nixon declared war on drugs on July 17, 1971, the estimated annual volume of drugs produced worldwide—about 40,000 tons of marijuana, 800 tons of cocaine and 500 tons of heroin—had remained constant, while the cost of the drug war has increased more than thirty-fold.

In an opinion piece published on February 8 and entitled “President Duterte is repeating my mistakes”, former Columbian President Cesar Augusto Gaviria Trujillo (1990 to 1994) writes: “Illegal drugs are a matter of national security, but the war against them cannot be won by armed forces and law-enforcement agencies alone.”

He adds, “Using force in fighting the war does not work [it only worsened] and created a host of other problems.”

Known in Latin America as a conflict mediator, advocate of democracy, staunch supporter of regional integration and defender of human rights, Gaviria states: “Tens of thousands of people were slaughtered in our antidrug crusade.

Many of our brightest politicians, judges, police officers and journalists were assassinated. At the same time, the vast funds earned by drug cartels were spent to corrupt our executive, judicial and legislative branches of government. The war on drugs is essentially a war on people.”

Duterte, however, castigated Gaviria and branded him an “idiot”. It is worthy to note here, though, that it was under Gaviria’s rule that Pablo Escobar, the founder of the Medellin cartel, was killed

See “Villanueva”, A11

Opinion

BusinessMirror

opinion@businessmirror.com.ph

The Reform the Armed Forces Movement Cecilio T. Arillo

database Part Four

Martial-law declaration was in the air

T

WELVE other teams from Honasan’s and Kapunan’s groups under Maj. Arsenio Santos and Lt. Andy Gauran would launch diversionary operations nearby, blowing up gasoline tanks, buildings and hangars.

One of the Reform the Armed Forces Movement (RAM) officers involved in the planning was Lt. Col. Rey Rivera.

In the evening of February 21, Rivera received a call from Honasan who told him that martial law might be declared within the next 48 or 72 hours. He was also informed that arrest orders for RAM members had been signed by the President.

Rivera was scheduled to leave the next day for the United States to undergo schooling on comptrollership at Sheppard Air Force Base in Texas. Honasan called to tell Rivera to proceed with his trip and leave the concerns of the movement to the rest of the guys.

“We prepared for this a long time and you’re telling me to go? No way!” Rivera barked his defiance.

Honasan was insistent, but Rivera was equally determined not to go. To abort his trip, Rivera had his right foot cast in plaster to make it look like he had sprained an ankle during a tennis match.

At 6:30 p.m., while Enrile and Ramos were announcing their breakaway from Marcos, Rivera was with Kapunan, Maj. Renato Ramos, Capt. Pompeo Limbo, Capt. Roberto Damian and Lt. Marcelino Mendoza in the ministry’s conference room planning an escape route for Enrile in case Camp Aguinaldo was attacked.

They assumed that Malacañang would employ a minimum of two battalions from the Presidential Security Command (PSC) so they organized 12 teams of four men to match the PSC force. Each team was assigned an M-60 machinegun, four Galil rifles (caliber 5.56), plastic explosives, one sniper rifle, two M79 grenade launchers, four Browning pistols and ammunition.

With their training, Kapunan and Rivera figured that the ratio would be 15 to 1 in favor of the rebel camp.

At that time, the total strength of the Defense Ministry security force was only 320 officers and men, including Colonel Gador’s Cagayan 100, plus 12 teams from the RAM civilian component, which acted as spotters outside the camp.

The contingency plan was to extricate Enrile and Ramos from Camp Aguinaldo in a bulletproof van, to be escorted by six 6 by 6 Army trucks and three bulletproof cars. Two routes were chosen as exit points from Camp Aguinaldo: via the Logistics Command gate at the back of the ministry building or via Gate 1 on Santolan Road, depending on the situation.

From Camp Aguinaldo, Enrile and Ramos would transfer to a car at the vicinity of the Labor Hospital on Katipunan Road, a kilometer from the camp, and be taken to the RAM base in Bataan, escorted by six of the 12 civilian component teams. Meanwhile, the Reformist troops would engage the loyalists in a delaying action in and around the vicinity of the camp, while awaiting reinforcements.

Kapunan and Rivera estimated that the other RAM contingents at Fort Bonifacio, led by Brig. Gen. Rodolfo Canieso, at Villamor Air Base, headed by Capt.

Fernando Manalo with reinforcements from the PC Training Command under Colonel Fabic and the Navy headquarters troops of Captain Proceso Maligalig, should be able to react and reinforce the

Villanueva. . . continued from A10

in a government operation in 1993.

Using the lessons from Columbia’s unsuccessful drug war, global experts are now belatedly restrategizing about how to combat the menace more humanely.

In April 2016 incumbent Colombian President Juan Manuel Santos told the United Nations that there should be a “more effective, lasting and human solution” to the problem that would address

Crame contingent before daybreak the following day.

Another support unit, the 200-man Special Action Force (SAF), was to split into two groups, with one led by Lt. Col. Rey Velasco, the SAF commander joining Enrile and Ramos in Bataan. The other group would link up with Colonel Honasan and his remaining forces at a rendezvous point in Metro Manila from where they would launch a surprise attack on Malacañang. Honasan would attack the Palace via the Pasig River aboard two hijacked patrol craft fast (PCF) with the help of RAM men in the Navy. Alternate commanders had been named during the planning to replace key officers who may become casualties.

Honasan had estimated that in the actual fighting, only 30 percent to 40 percent of the loyalist troops would engage the Enrile-Ramos forces, considering their lack of moral commitment to fight. To guard against any possibility of mistaken identities, Kapunan devised a visible countersign for rebel forces.

A miniature Philippine Flag patch to change position every day, starting with the sun pointed up. Kapunan had used the patch during their training and had stocked more than 5,000 of them. They would come in handy for the assault on Malacañang.

While Kapunan, Rivera and the other officers planned the escape route, seven RAM officers, including Col. Jose Almonte, Col. Vic Batac, Navy Capt. Felix Turingan, Navy Capt. Rex Robles, Col. Ramon Martinez and Maj. Noe Wong, discussed in another room a plan to harness the National Unification Movement on the side of the Enrile-Ramos camp.

The movement was born a week before the February 7 snap election when RAM launched Kamalayan ’86 (Awareness ’86) to help ensure clean, orderly and honest elections. It enlisted the participation of retired generals who, in turn, formed their own Senior Cavalier Reform AFP Movement, civic organizations, like Lions, Rotary, Kiwanis and Jaycees; religious groups and the business sector.

It was time to contact the leaders of these organizations for support to Enrile and Ramos. And the job was assigned to Col. Cesar Bello and two other RAM officers.

The first to be contacted was Agapito “Butz” Aquino, a brother of the late Sen. Benigno S. Aquino Jr. and head of the August Twenty-One Movement, an umbrella organization for moderate and radical groups protesting the assassination of Senator Aquino.

Butz met Enrile in Camp Aguinaldo, Businessman-activist Jaime Ongpin, Jose Concepcion and other officers of the National Movement for Free Elections were also contacted.

A chain reaction ensued. By 10:30 p.m., as Marcos appeared on TV reacting to the Enrile-Ramos revolt, some 50,000 people gathered around Camp Aguinaldo and formed a human barricade to protect the gutsy duo.

To be continued

To reach the writer, e-mail cecilio.arillo@ gmail.com.

the issue at the root causes, and expand the fight beyond enforcement.”

As Gaviria explained, “We could not win the war on drugs through killing petty criminals and addicts.… We started making positive impacts only when we changed tack, designating drugs as a social problem and not a military [or the police] one.”

Pernia’s death economics could therefore be considered pure hogwash.

For comments and suggestions, e-mail me at mvala.v@gmail.com.

Thursday, August 31, 2017 A11

Following in the passion of Jesus Msgr. Sabino A. Vengco Jr.

Alálaong Bagá

W

E saw Peter expressing faith in Jesus as the Messiah.

That faith entails the commitment to take care of and serve the Church against the forces of evil and death.

Thereafter, Matthew narrates how Peter has difficulty with the fact that Jesus is to undergo his passion (Matthew 16:21-27).

A crucified Christ A turning point in the gospel is the announcement of Jesus about his approaching suffering and death in the hands of His enemies. The violent reaction of Peter to this information was understandable. How could the Messiah, the Son of the living God, be subjected to ignominious suffering and even death, and at the hands of the religious leaders of the people, and in the holy city of Jerusalem?

How could one who has shown His power and authority in His teachings and deeds be assigned such a terrible end?

This scandalous reality may

actually not sound so shocking to us today because we do not really dwell on it, except perhaps once annually during the Holy Week. In our world so violent with its culture of death we can easily be inured to the cross of Jesus, so much so that it no longer makes any impression on us. A movie on it comes around and it jolts us into some renewed awareness.

Otherwise, the cross is everywhere as part of the décor or a piece of jewelry.

A satanic idea

Peter took Jesus aside and rebuked Him, “God forbid, Lord! No such thing shall ever happen to You.”

Although Jesus must have felt that His friend’s reaction was out of love for Him, nonetheless He found it unacceptable. It reminded Him of Satan in the desert who cunningly tried to make Him deviate from the path in accord with the Father’s will by suggesting that He thinks of himself first of all and above all (Matthew 4:1-11). Jesus brooked no compromises when it comes to doing His Father’s will. There is only one place for Satan and anything satanic: behind Him and out of His way. Nothing, no friendship can be allowed to be an obstacle to Him in His mission. Peter had not yet comprehended that Jesus would be the Messiah, not in a political and worldly manner, but as the obedient and suffering servant of God. “You are thinking not as God does, but as human beings do.” Of course, Peter was only human. But someone who has received God’s revelation about the Messiah and has entered into a special communion of faith with him is expected to be taken up by something more than just what is human. His thinking, as well as his values, now needs to transcend merely human aspirations and vested interests. Peter

and the faithful must become Jesus Christ’s kadiwa (one in spirit) in his total submission to God. Alálaong bagá, having faith in Jesus’ way and life means to identify with Him and to make His announced passion one’s destiny. To love God above all and even to offer one’s life if need be in order to be true to Him is what the cross symbolizes for the followers of Jesus. “Whoever wishes to come after me must deny himself, take up his cross, and follow me.” The standard of our faith is to be cross-carrying. For what do we live? Jesus has shown us the way to union with God, as it goes through suffering and death. We hesitate and are diffident to go that way; we instinctively try to hang on to this life and play it safe according to the ways of the world. And we are inattentive to what Jesus says, “Whoever loses his life for my sake will find it.” By our lives and actions we really proclaim whether we are children of this world or, one with Jesus, the children of our heavenly Father.

Join me in meditating on the Word of God every Sunday, from 5 to 6 a.m. on DWIZ 882, or by audio streaming on www.dwiz882.com.

Situs of local taxes in case of boundary dispute Atty. Esther M. Weigand

Tax Law for Business

E

very prudent business owner would know that securing a mayor’s permit is a prerequisite to carry on a business within a particular locality. Different cities and municipalities will have their own procedures for the issuance of such permits, but they all require renewal on or before January 20 of every year. Renewal shall, likewise, be accompanied by the payment of local business taxes to the local government unit (LGU) where the business is being conducted. But, to which LGU should business taxes be paid in case there is a boundary dispute between LGUs covering the property where one’s business is being conducted?

Similar to the boundary dispute involving Makati City and Taguig City over the coveted Bonifacio Global City, a boundary dispute had previously arisen between Pasig City and Cainta. Such Pasig-Cainta boundary dispute had already settled the question above posed.

In the Supreme Court case of Municipality of Cainta v. City of Pasig (GR 176703 and 176721), Uniwide stopped paying local

business taxes to Pasig City and started paying such taxes to Cainta, when the latter filed a petition with the regional trial court for the settlement of a boundary dispute with Pasig City. The boundary dispute covered the property owned by Uniwide where its business was being conducted. Because Uniwide stopped paying local business taxes to it, Pasig City filed a collection case against it.

Uniwide, in turn, included Cainta in the collection case, asking for reimbursement of the taxes paid to it, in the event that the court holds that the taxes should be paid to Pasig. In determining which LGU is entitled to the local business taxes of Uniwide, the Supreme Court ruled that the same should be paid to the LGU that has jurisdiction over the location where the taxpayer’s business is conducted. In the said case, the local business taxes of Uniwide should have been paid to Pasig City, since the properties of Uniwide are covered by titles, which show on their face that they are situated in the said city.

A taxpayer, such as Uniwide, should be able to rely on what is stated in the title over its properties considering that a certificate of title is conclusive not only of ownership of the land but also its location. And, without any court order directing the amendment of the subject titles with regard to the location stated therein, the location stated in the titles are presumed correct and subsisting for the purpose of determining which LGU has taxing jurisdiction over the subject properties. This is in line with the rules and regulations implementing the Local Government Code, which states that in case of a boundary dispute, the status

of the affected area prior to the dispute shall be maintained and continued for all purposes.

What then happens to the payments made by Uniwide to Cainta? The Supreme Court ordered Cainta to return the taxes erroneously paid to it by Uniwide. In turn, Uniwide must pay Pasig City the local business taxes it failed to pay, from the time of nonpayment until present.

A taxpayer is thus free to rely on his or her title, without regard to any extraneous boundary dispute occurring between LGUs. What is indicated in one’s title should hold since title over property is indefeasible, and the location stated therein should be followed until amended through proper judicial proceedings.

The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of WTS Global.

The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter.

Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at esther.weigand@bdblaw.com. ph or call 403-2001 local 340.

With generals in Trump’s ear, America gets tough Ricardo Saludo

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DIPLOMASIA

magine if Vladimir Putin, Donald J. Trump and Xi Jinping all put retired generals in charge of their presidential offices.

Actually, with one of them, no imagination is needed. Trump has not just one, but two retired Marine generals, plus an active Army three-star general wielding probably the most influence in the United States government, at least as far as global security matters are concerned.

In recent months, Defense Secretary James Mattis, 66, has been rattling sabers across Asia, with allied bombings against Islamic State (IS), the new US buildup in Afghanistan, the Seventh Fleet’s sailings near Beijing’s reclaimed islands in the South China Sea, and last week’s military exercises with South Korea, amid continued frictions over the North’s ballistic missile tests.

Mattis is the highest-ranking retired general to lead the Pentagon. US Army Lt. General Herbert Raymond McMaster is national security adviser. And Mattis’s fellow Marine John Kelly has made his own history across town.

This month the erstwhile homeland security secretary moved to the White House to replace Reince Priebus, Trump’s first chief of staff. That makes Kelly the first military man to hold the hugely influential post in four decades, and one of only three ex-soldiers among 30-odd appointees since then-President Harry

Truman named the first in 1946.

So, while the Donald pledged in his campaign to pull back America from conflicts and defense commitments abroad, the man overseeing US forces and the one managing the White House are battletested vets, while his top security adviser is still in army service. Guess what that may do to American foreign policy and force deployment.

‘Hawk-in-Chief’

For Washington Post foreign affairs writer Adam Taylor, it’s nothing short of role reversal: from “Donald the Dove” to “Hawk-in-Chief”. Already, Trump has done the opposite of two things he said he would do during last year’s election campaign.

Trump had warned then-President Barack Obama against attacking Syria.

But in April, while hosting Chinese leader Xi at the Trump Group’s Mar-a-Lago resort in Florida, Trump swiftly ordered

missile strikes against a Syrian airbase over a reported gas attack against a rebel town. The US-led coalition has since intensified its military action against IS in Syria, tripling the civilian deaths from its attacks.

In Afghanistan, meanwhile, Trump’s promised US pullout has turned into a major buildup, as he gave Mattis the go-ahead to add 3,900 more soldiers to the 8,400 US troops, and granted more autonomy for commanders.

Plus: Washington is pressing Islamabad to close bases on the Pakistan-Afghanistan border used by the extremist Taliban fighting the Kabul regime.

Perhaps, the first sign that Trump was not a dovish president was his $54-billion boost to the Pentagon’s budget, while cutting other government spending. For a time, he sought to rein in North Korea’s ambition to build a nuclear-tipped intercontinental ballistic missile (ICBM) able to hit the continental US by pressing Xi to wag the finger at Kim Jong Un in Pyongyang.

But when Kim recently launched two ICBMs with range reportedly encompassing North America, Trump toughened sanctions against Chinese and other firms dealing with Pyongyang in violation of UN sanctions.

North Korea warned of firing missiles at the waters around the US base in Guam, and Trump threatened Kim with “fire and fury like the world has never seen”. Pyongyang canceled the missile launch, but warned it could still go ahead if America committed aggression.

Scared already? There’s more.

When Venezuela erupted in turmoil this month after controversial polls

elected a new assembly empowered to change the Constitution, Trump said he would not rule out US military intervention to address the crisis.

Russia opposed external intervention in Venezuela. But more than Trump’s Venezuela comment, Moscow is far more disturbed by Mattis’s remarks on his visit to Ukraine last week.

Raising an option the Obama administration nixed as too provocative to Russia, Mattis spoke of possibly providing defensive weapons to Ukraine. It has been under Russian pressure since Moscow seized the Crimean Peninsula in 2014, and sent arms and secret troops to ethnic Russian separatists battling the Kiev government.

Closer to home, the Korean cauldron got hotter last week, when Pyongyang launched several short-range missiles amid US-South Korea military exercises.

Secretary of State Rex Tillerson condemned the launches, but still sought talks with Pyongyang.

And Beijing?

US Navy vessels have staged freedom-of-navigation sailings near artificial islands reclaimed by China. For its part, Beijing announced it will continue with long-range air force drills, which cause concern, if not alarm, in Taipei and Tokyo.

Trump’s tougher military posture may be partly an attempt to shore up popular support amid mounting domestic political woes. But whatever the reason, whether generals in the White House or domestic and foreign troubles, the Donald’s saber-rattling abroad cannot but rattle countries and markets.

And it looks set to get worse.

2nd Front Page BusinessMirror

A12 Thursday, August 31, 2017

www.businessmirror.com.ph

Ledac green lights shift to federal system as TWGs formed to draft new Charter

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By Jovee Marie N. dela Cruz

@joveemarie

egislative and Executive officials have agreed to start the process of changing the form of government to federal system from a unitary one through a constitutional overhaul.

In a news conference, Speaker Pantaleon D. Alvarez said the shift to federal system was discussed during the Legislative-Executive Development Advisory Council (Ledac) meeting on Tuesday. “[During the Ledac meeting, we agreed that] we must start to tackle federalism now. We will meet with the Senate leadership to decide when we could convene as a constituent assembly [Con-ass].

Perhaps [we would convene as a constituent assembly] early next year, but we have already begun with the committee hearings [in the lower chamber],” Alvarez said.

Villafuerte: “We welcome this inspired move by the House Committee on Constitutional Amendments to create TWGs that would work on drafting a proposed federal constitution. This will certainly help speed up the process.”

Last week the House Committee on Constitutional Amendments has created four technical working groups (TWGs), composed of

its members, which will draft the Philippine Federal Constitution.

Each of the four groups will h a nd le s p e c i f ic a re a s to b e covered in the drafting of the new Federal Constitution.

TWG 1, chaired by Rep. Corazon N. Nuñez-Malanyaon of the First District of Negros Oriental, will handle the provisions on the Executive-Legislative (Articles VI and VII); New article on Federal and Regional Powers, Numbers of States; and Local Government and Taxation/Allocation of Resources (Article X).

T WG 2, chaired by Deputy Speaker Fredenil H. Castro) will draft the provisions on the Judiciary (Article VIII); Amendments or Revisions (Article XVII); Suffrage (Article V ), Citizenship (Article IV); and Bill of Rights (Article III).

TWG 3, chaired by Rep. Alfredo Benitez of the Third District, of Negros Occidental, will prepare the Preamble; National Territory (Article I); Declaration of Principles and State Policies (Article II); General Provisions (Article XVI); and Tran-

sitory Provisions (Article XVIII).

Last, TWG 4 chaired by Rep. Vicente SE. Veloso of the Third District of Leyte, will handle Social Justice, Labor and Others (Article XIII); Education, Science and Others (Article XIV); National Economy and Patrimony (Article XII); New article on the Bill of Duties; Accountability of Public Officials (Article XI); and Family (Article XV).

Rep. Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur said the creation of TWGs will hasten the shift to a federal system of government.

The TWG in charge of the provisions on the National Economy and Patrimony, he added, should st rong ly con sider propos a l s to relax the restrictions on foreign ownership so the country could regain its competitive edge among other Asian economies in attracting long-term foreign direct investments (FDI) that would create more jobs, especially in the countryside.

“We welcome this inspired move by the House Committee

on Constitutional Amendments to create TWGs that would work on drafting a proposed federal constitution. This will certainly help speed up the process of shifting to federalism and enable us to scrutinize recommendations in an organized fashion,” Villafuerte said.

Jonathan Malaya, executive director of the PDP Federalism Institute, turned over to the lower chamber the draft “Constitution of the Federal Republic of the Philippines”, for consideration by the various TWGs created by the House panel.

T he draft Federa l Charter was prepared by PDP Federalism Committee Group, which is composed of individuals from various sectors, including academe, civil society and the legal profession.

The TWG members agreed to finish their work by November this year and submit the draft new Federal Constitution to the committee for final discussion and approval.

They also agreed to submit the final draft of the Philippine

Federal Constitution to the House committee on rules, chaired by Majority Leader Rodolfo C. Fariñas of the First District of Ilocos Norte, by December this year.

Deputy Minority Leader Party-list Rep. Eugene Michael B. de Vera of Arts and Business Science Professionals and Rep. Aurelio Gonzales Jr. of Pampanga have also moved to change the 1987 Constitution through the filing of his Resolution of Both Houses 8, which seeks to constitute the Senate and the House of Representatives into a constituent assembly to propose revisions to the 1987 Constitution by adopting a federal form of government and for other purposes.

Meanwhile, Philippine Const it ut ion A sso c i at ion P resi dent Martin Romualdez said the proposal to shift the presidentialunitary form of government to a parliamentary-federal system by convening Congress into a Con-ass would help change the character of the country’s politics to create fertile ground for true reforms.

AmCham wants Duterte, Trump to jump-start FTA Continued from A1

CHOPPER CHAPS This photo shows Airbus Helicopters Inc. Head of Sales for Southeast Asia & Pacific Fabrice Rochereau (left) and Airbus Helicopters Philippines Managing Director Lionel de Maupeou beside one of two new helicopter models the company presented to Philippine media on August 30 at the Airbus Helicopters’s hangar in Pasay City. De Maupeou said they remain optimistic in sales as the Philippines remains one of the most active markets in Southeast Asia. He added six new helicopters are on track for delivery to customers by the end of the year. Story on B1. NONIE REYES

D. Forbes said Manila should be ready to negotiate high-level commitments in trade in goods and services because Washington would not settle for anything less than a “21st century trade deal”. Forbes said as conceptualized by the Obama leadership, this means a trade agreement that incorporates modern, pressing issues brought about by a globalizing world, such as crossborder communications, intellectual property rights and e-commerce.

“We don’t see any reason the US will do a traditional FTA, the world has changed,” Forbes noted.

The government, through the Department of Trade and Industry, has been open to the idea of expanding the two countries’ existing Trade and Investment Framework Agreement into a full-scale FTA. This appears to be also the only route to gain an expansive preferential access to the US market, as the Western state has already pulled out of the TPP.

Part of the Trump administration’s trade policy is negotiating trade deals on a bilateral basis, contrasting with former President Barack Obama’s route of regional or plurilateral FTAs. “The Philippines is still interested in further enhancing market access to the US; that has always been a key objective, whether it was within the context of generalized system of preferences, or the TPP,” Trade Undersecretary Ceferino S. Rodolfo said in a previous interview.

Another matter significant to American businesses is the trumpeted “America First” policy since Trump assumed the US presidency.

Even as the administration had repor ted ly shelved t he borderadjustment tax—aiming to impose a 20-percent levy on imports from certain countries—the principle of the motto is still stirring unease among American businesses.

“A lot of our members are in business-process outsourcing, and when there was talk of this tax, there was

definitely concern. That has now died down. But now some of the large, multinational manufacturing corporations want to be able to clear this up,” Hincheliffe added.

In addition to getting a clearer perspective on the policy implications, the “America First” motto may be sending a negative impression on trading partners.

“With America First, it sounds like when it comes to negotiations, anyone you’re negotiating with will at least come in at No. 2. You don’t want to come in in a discussion as a loser and be at second place. That America First could be explained and the image refined,” the AmCham executive director pointed out.

According to the USTR’s 2017 Trade Policy Agenda, “every action taken with regard to trade will be designed to increase economic growth, promote job creation in the US, promote reciprocity with trading partners, strengthen the manufacturing base, and expand agricultural and service industry exports”.

SDG 9 commits PHL to ‘inclusive, sustainable industrialization’ Continued from A1

The Philippines failed to achieve both. The National Economic and Development Authority (Neda) admitted, in the Fifth MDG Progress Report (2014), that inequality barely changed—from 0.48 Gini coefficient in 1991 to 0.47 in 2012. In fact, some commentators even assert that inequality has worsened, with some 40 richest Filipino families lording over a nation of over 100 million. As to the poverty reduction goal, the Neda reported that poverty incidence decreased from 34.4 percent in 1991 to 25.2 percent in 2012. For 2015, it went down further to 21.6 percent.

However, the latest per-capita poverty rate of around P60 is way too low. Had the Philippine Statistical Authority used a more realistic $2-per-capita yardstick, the number of poor Filipinos would likely swell to a higher percentage.

Nonetheless, the poverty level had indeed gone down (not halved) in the MDG target period. There were also some positive results on the MDG front, especially on the following: “[1] providing universal access to primary education; [2] providing educational opportunities for girls; [3] reducing infant and under-five mortality; [4] reversing the incidence of malaria;

[5] increasing tuberculosis detection and cure rates; and [6] increasing the proportion of households with access to safe water supply.”

But the Neda also reported that “there is a need to exert greater effort to accelerate progress on the following areas where we are lagging behind: [1] elementary education in terms of completion rate; [2] maternal mortality; [3] access to reproductive health; and [4] HIV/AIDS. On education, the participation rate has significantly improved but the completion rate at the elementary level has declined. On health, the increase in maternal mortality ratio indicates that the target of 52 deaths per 100,000 live births has a low probability of being met.”

Now the MDGs have been replaced by the Sustainable Development Goals (SDGs), as approved by the UN General Assembly in 2015. This time, the SDGs are more ambitious, with zero hunger and zero poverty targets by 2030. The SDGs are collectively called the “2030 Agenda for Sustainable Development”. They were obviously framed in the context of the sustainability challenge hanging over the heads of policy-makers around the world—the sustainability of the environment given the global warming crisis and the sustainability of the global economy

in the wake of the global financial crisis.

Then UN General Secretary Ban Ki-Moon declared that “we don’t have plan B because there is no planet B”.

The 10 MDGs have been replaced by 17 SDGs, namely: ■ No poverty; ■ Zero hunger; ■ Good health and well-being; ■ Quality education; ■ Gender equality; ■ Clean water and sanitation; ■ Affordable and clean energy; ■ Decent work and economic growth; ■ Industry, innovation and infrastructure; ■ Reduced inequalities; ■ Sustainable cities and communities; ■ Responsible consumption and production; ■ Climate action; ■ Life below water; ■ Life on land; ■ Peace, justice and strong institutions; and ■ Partnership for the goals.

If realized, the above SDGs, indeed, are likely to transform the world into a stable, peaceful and environmentally and economically sustainable one. In a divided and conflict-ridden world, how can the SDG vision then be achieved? The quick answer: it will

not be easy and the fight on the different fronts will be uphill.

However, one of the goals can also be an instrument for the realization of the other SDGs. This is SDG 9, which commits nations to “build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation”.

According to Dr. Manuel Montes of the South Centre in Geneva, SDG 9 reintroduces industrialization as a goal in the UN development agenda (see Montes, “Industrialization, inequality and sustainability”, Policy Brief 44 of South Centre, August 2017). This requires pro-active industry policies and a revival of “state leadership over key economic actions”, for examples, controls over speculative portfolio capital flows and bold reforms in “rigidified” and unequal social and economic structures.

In short, this is “industrial policy” of a higher kind, to promote inclusive and sustainable growth among disparate developing countries in a highly uneven global economic order. So what kind of industrial policy is needed?

Montes suggests the following: ■ First, industrial policy must create the economic space and means for new economic activities and livelihoods to grow. For example, it is not enough

for a developing country to link its national growth to the export market by participating in the global value chains (GVCs) of the multinationals of developed countries. The value added and job creation in this set-up can be extremely limited because the GVCs are naturally skewed in support of those who set up the GVCs. Developing countries, while participating in the GVCs and the global export market, must find ways to develop national technology, upgrade skills and diversify their economy.

■ Second, industrial policy must nur ture domestic innovation and productivity across all sectors—industry, agriculture and services. This includes growing new “industries” in these sectors and looking for ways to grow these industries despite the restrictive patent regime erected by the big private corporations from the developed countries through the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS). The high cost of producing and distributing patented medicines in the Philippines easily comes to mind.

■ Third, industrial policy must address development questions related to the choice of appropriate technology and the efficient scale of production. For example, small-scale farming

can be made more productive, environmentally friendly, job-creating and commercially viable.

■ Fourth, industrial policy must enable the rise of a strong domestic enterprise sector that can compete with foreign investors in a level playing field and supply the requirements of a growing domestic market. This is important for a country like the Philippines, which has a large population and enjoys a huge amount of overseas Filipino workers remittances. The country’s trade deficit has been growing because of its continuing dependence on imports, many of which can easily be produced at home at the same level of quality and price with those of the imported.

■ Fifth, industrial policy must promote policy coherence and coordination among different agencies. For example, the rice-tarrification issue pending in Congress requires discussion not only on issues of trade but also of agricultural modernization, agrarian reform and food security and sovereignty both in the short and long terms.

As amply articulated by Montes in the case of SDG 9, the SDGs can be a weapon for growth and sustainability.

The point is how to fulfill the SDGs through a more pro-active and forwardlooking national development program.