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Friday, December 1, 2017 Vol. 13 No. 51

Senate’s TRAIN version seen better for economy

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By Bianca Cuaresma

@BcuaresmaBM

n assessment made by an international bank showed that the Senate version of the Tax Reform for Acceleration and Inclusion (TRAIN) bill would likely yield better results for the economy than its House counterpart on many fronts. Credit Suisse, in the analysis of its research on the two versions, said the measure approved by the Senate earlier this week would have

less inflationary impact and is more supportive of higher consumption. The bank cited four factors that make the bill approved by

0.9 to 1.2

The projected range of percentage-point increase in inflation in 2018 if the House version of TRAIN is passed

the senators less inflationary. It noted in its previous analysis that the House bill would likely cause inflation to rise by around 0.9 to 1.2 percentage points in 2018 due to the tax changes. “Addition to CPI [consumer price index] will likely be lower in Continued on A12

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HOUSE, SENATE AGREE TO FAST-TRACK BICAM TALKS ON 2018 BUDGET By Butch Fernandez @butchfBM

& Jovee Marie N. dela Cruz @joveemarie

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he House of Representatives and the Senate on Thursday agreed to settle within 24 hours the differences between their respective versions of the proposed P3.767-trillion national budget, or the 2018 General Appropriations Act (GAA). In an interview following the first day of the bicameral conference committee meeting on the proposed 2018 GAA, Sen. Panfilo M. Lacson Sr. said lawmakers have decided to create two small groups to discuss the contentious provisions between

the Senate and House versions of the proposed 2018 budget. The two small committees will be headed by House Appropriations Committee Chairman Karlo Alexei B. Nograles of the First District of Davao City and Senate Finance Committee Chairman Loren B. Legarda. Lacson said lawmakers have at least 24 hours to scrutinize the output of the small groups. “There are several disagreeing provisions between the two versions of the 2018 budget that we have to reconcile,” Lacson said. Among the contentious provisions in the 2018 budget was the proposed P50 billion under Continued on A2

Tightening comes to Asia BMReports as other countries seen following SoKor’s path Two decades after theAsian financial crisis: Lessons, risks

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he global monetary-policy tightening cycle has arrived in Asia, with South Korea having the first major central bank in Asia to tighten since 2014. While others may be set to follow like the Philippines, the ascent will be gradual. South Korea, home to the world’s biggest maker of smartphones and memory chips and a powerhouse manufacturer of everything from cars to ships, raised its benchmark rate to 1.5 percent on Thursday. But Governor Lee Ju-yeol made it clear that he’s in no hurry to raise rates again, telling reporters that policy will remain accommodative. “So long as CPI [consumer price index] inflation stays benign—our base case—it should be a ver y gradual tightening cycle in Asia,” said Rob Subbaraman, chief economist for Asia at Nomura Holdings Inc. in Singapore. “With high domestic debt, many Asian countries’ domestic demand is more sensitive to rate hikes than before. It is important to note that this is reducing accommodation. Asian monetary policy is far from tight.” W it h debt le ve l s su rg i ng , policy-makers in the region are keen to use a period of faster economic growth to move interest rates from record lows. But those debt levels mean each rate increase could be painful, dictating a softly-softly approach. And the trend is likely confined to the small- and mid-sized Asian

NEUMANN: “The Bank of Korea kicked off Asia’s tightening cycle today. After a long stretch of highly accommodative monetary policy across the region, monetary officials are itching to push rates higher.”

economies for now. The world’s second- and third-largest economies, China and Japan, are probably some way off tightening, Tom Orlik of Bloomberg Economics said in an e-mail. The People’s Bank of China is focused on a campaign to rein in risk in the financial system rather than inflation, while the Bank of Japan remains a long way from its 2-percent inflation target. India, meanwhile, is focused on stoking growth. Still, a surge in trade fueled by demand for electronics goods has proved more durable than expected, sending Asian exports to record levels and boosting corporate profits and economic growth. If those trends are sustained into 2018, Asia’s central banks are set to start falling in line with a global shift toward higher borrowing costs. “The Bank of Korea move is a reminder that the recovery in global trade has changed conditions for Asia’s exporters,” Orlik said. As for who may be next in Asia to raise interest rates, there are two top contenders. See “Tightening,” A2

PESO exchange rates n US 50.3650

By Bianca Cuaresma @BcuaresmaBM

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Conclusion

SKED on the possibility of another financial crisis repeating in the region— especially in the face of global volatilities and political uncertainty across the world—Standard & Poor’s (S&P) A ndrew Wood said member-countr ies of the A ssociation of Southeast Asian Nations have learned their lesson and strengthened t hemselves to bet ter ha nd le such a situation. “ Sovereig ns i n t he reg ion are generally better prepared to stave off such an event than they were in the late-1990s,” said Wood, S&P’s Financial Services (S&P Global) associate director for the Sovereign and International Public Finance Ratings. “The possibility of a financial crisis emanating directly from Southeast Asia in the near future is, therefore, limited.” The region, however, is not without risks, the S&P expert warned. “ T he i ntercon ne c t iv it y of global markets, and the monumental rise in importance of the Chinese economy in the region, mean that linkages beyond the region have grown over the past 20 years,” Wood said. “In this sense, there is greater exposure to global economic and financial developments, meaning that extra-regional crises can also have a major impact in Southeast Asia.”

Newly built high-rise buildings are seen in the horizon of Bonifacio Global City, a sign of renewed investor confidence in the ability of the economy to withstand shocks from another financial crisis like the one that swept Asia two decades ago. NONIE REYES

The China problem

CHINA’S role in the region and its influence to markets has raised eyebrows as to where its growing economic prominence will take Asean. Last year the International Monetary Fund (IMF) published a study whose main finding pointed out that the impact of China’s growth shocks on the Asean has risen since the global financial crisis in mid-2000s. The results of the report, titled “When China Sneezes Does Asean

Catch a Cold?” showed that a 1-percent decline in China’s economy implies a 0.3-percent reduction in growth for Asean emerging market economies. These numbers are double to how they were at the time of the Asian financial crisis due to stronger trade and increased financial linkages. “A slowdown in China, while having real effects, also has a financial impact via slower credit growth and lower equity prices,” the IMF said in its study published

in November 2016. “This is in line with the existence of both portfolio balance and signaling channels, in which Asean market participants absorb news on China economic activity as an indicator over domestic growth prospects.” Several economists have also flagged China for presenting fresh risks to the region 20 years after the Asian financial crisis. They said the “danger of repeat” is in the Continued on A2

n japan 0.4519 n UK 67.2574 n HK 6.4544 n CHINA 7.6248 n singapore 37.4238 n australia 38.2522 n EU 59.6473 n SAUDI arabia 13.4299

Source: BSP (29 November 2017 )

A2 Friday, December 1, 2017

BMReports BusinessMirror

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Two decades after theAsian financial crisis: Lessons, risks Continued from A1

hands of the rising economic powerhouse, making mention of China’s credit boom, high debt levels, as well as its aspiration to control its exchange rate and monetary policy simultaneously.

Economic shortcomings

S&P’s Wood acknowledged China’s economic shortcomings of late, resulting in a credit downgrade for the country recently from “A+” to “AA-”. “The downgrade reflects our assessment that a prolonged period of strong credit growth has increased

China’s economic and financial risks,” Wood said. “Since 2009 claims by depository institutions on the resident non-governmental sector have increased rapidly. The increases have often been above the rate of income growth.”Other credit watchers also downgraded China’s ratings this year by a notch. “Although this credit growth had contributed to strong real GDP growth and higher asset prices, we believe it has also diminished financial stability to some extent,” the S&P expert added. The IMF also flagged the rapid loan expansion in China in their

latest World Economic Outlook report, saying minimizing the risk of a sharp slowdown in China will require the Chinese authorities to intensify their efforts to rein in the credit expansion. IMF’s projection is for China to grow by 6.8 percent in 2017 but would slow down by 6.5 percent next year. China’s strong growth is miles stronger than the average 2.2-percent projection of growth in advanced economies at 2.2 percent this year and 2 percent next year.

Local impact

EARLIER this year, the Bangko

Sentral ng Pilipinas (BSP) also said China’s growth developments may pose risks to the local economy, especially in the light of the current administration’s pivot toward its alliances with China. “The rebalancing of growth sources in China has continued but vulnerabilities in the financial system remain due to the rapid expansion of its credit. Adverse developments in China have the potential to generate negative spillovers for the Philippines given the increasing bilateral relations between the two economies in recent years,” the BSP said in a report.

While the Philippines has been expanding its economic and political linkages with China, the country’s growth portfolio is still seen to provide the country cushion from risks arising from the regional economic giant. “The Philippines is relatively well-diversified in terms of its trading partners and, again, enjoys a strong external position. Of course, it’s not possible to fully mitigate any potential risks stemming from developments in the region’s largest economy,” Wood said. “Never theless, the Phi lip -

HOUSE, SENATE AGREE TO FAST-TRACK BICAM TALKS ON 2018 BUDGET Continued from A1

the Department of Public Works and Highways (DPWH). Lacson has moved to cut in the Senate 2018 GAA version the said budget following the issues of right-of-way (ROW) acquisitions. According to Lacson, ROW acquisitions are one of the sources of insertion and realignments by lawmakers. He said it is also one of the main reasons for underspending by the DPWH, saying “unless the issues involved in the ROW are resolved no civil works can commence.” Lacson said the ROW issue “accounts for the huge unused appropriations” in the annual budget due to continued unresolved rows in the construction of roads. Another issue to be resolved is the P900-million allocation for Oplan Double Barrel under the 2018 budget of the Philippine National Police (PNP). The budget was approved by House of Representatives but was realigned by the Senate for the housing projects of members of the PNP and Armed Forces of the Philippines (AFP). President Duterte is now considering the return to the PNP of his war against illegal drugs. Moreover, Nograles said the Senate and House of Representatives have un-

til December 13 to ratify the 2018 budget and submit it to President Duterte on December 19 for signature. Congress is expected to go on a Christmas break on December 13. “Ideally, we have to ratify this before Congress goes into a break on December 13. That way, [by] December 19, as scheduled, [it will be transmitted to the Palace for signature],” Nograles said. The Senate approved on final reading the proposed 2018 national budget on Wednesday and the House passed its version on September.

‘Defend Senate version’

The Senate leadership, soon after passing the P3.7-trillion 2018 national budget, gave marching orders to a nine-member panel to “defend” their approved version of the annual money measure, when Senate and House members convene to hammer out a final version of the 2018 budget bill set for ratification before Congress adjourns for Christmas recess on December 14. Sen. Joseph Victor Ejercito, a member of the bicameral panel, confirmed their marching orders to ensure adoption of the Senate version of the budget bill in upcoming marathon

bicameral conference committee meetings starting Thursday. Aside from Ejercito and Legarda, other senators named to sit in the bicameral panel were Senate President Pro Tempore Ralph G. Recto, Minority Leader Frank Drilon, Sens. Cynthia M. Villar, Miguel F. Zubiri, Nancy S. Binay, Panfilo M. Lacson and Juan Edgardo M. Angara. “We [Senators] discussed the matter with the Senate leadership and the Senate’s representatives to the bicam, and it was agreed that the Senate panel will be defending our version,” Ejercito said. For instance, he cited a Senateapproved amendment adding P900million budget for the maintenance and operating expense (MOOE) of all police stations, initially intended for the administration’s Oplan Tokhang antidrug campaign. Legarda confirmed an additional P500 million was realigned for housing projects for members of the AFP and the PNP. Ejercito told Senate reporters that the amendment, suggested by Lacson, is expected to “increase per-capita allowances of each police officer.” Under the Senate version, P51 billion was also alloted for the government’s free college, education

programon top of the P10-million allocation for state universities and colleges. At the same time, the Senate approved separate allocation of P327 million for the free wi-fi access to be provided by the Department of Information Communications Technology to State colleges and universities. For subsidized health services, the Senators approved P6.5-billion supplemental funding for PhilHealth, also known as the Philippine Health Insurance Corp., while allocating over P80 billion for the Department of Social Welfare and Development’s (DSWD) conditional cash-transfer program for indigent beneficiaries, in addition to a separate allocation of P3 billion for DSWD centers’ operations all over the country.

Additional fund

Labor Secretary Silvestre H. Bello III on Thursday asked Congress for an additional P1.1 billion to help distressed overseas Filipino workers (OFWs). In an interview with reporters at the House of Representatives, Bello said more money is needed to bring home OFWs, particularly in Middle Eastern countries. “We have requested for additional budgetary allocation because we are aware of the situations in Qatar,

situation in the diplomatic relations with the Middle East countries, and also in case of Lebanon and [Kingdom of ] Saudi [Arabia],” he said. “Our labor attaché [in, Middle Eastern countries] have contingency plan which may have to be implemented in case the situation worsen, but right now, the situation is not critical but there is a cause to prepare for this,” Bello added. The labor secretary said there are 240,000 documented OFWs in Qatar alone. “We also [have problem] on undocumented OFWs, so we are requesting to Congress to give us P850 million for possible repatriation expense, and another P200 million to P300 million for reintegration,” Bello said. “We cannot afford to leave them unassisted so we need to provide them financial and livelihood assistance, although we’re not discounting the possibility of giving them employment,” he added. According to Bello, both chambers of Congress is “open” to the Department of Labor and Employment’s proposal. “[But if they rejected our request] we have to rely on the resources of the department or assistance from the Office of the President,” he said.

pines’s external buffers and sound fiscal position would provide the sovereig n w it h a deg ree of latitude in managing such an event,” he added. The Philippines is projected to clock in a growth rate of 6.6 percent for the year, according to the IMF, on the back of continued robust domestic demand driven by investment and consumption and fiscal policy that is supportive of growth. With such figures, the country may have learned much from a contagion that shocked the cub from growing into an economic tiger.

DOT. . .

Continued from A12

“Working Towards Sustainable Tourism and Building Partnerships Through Appreciation and Recognition.” During the summit, the DOT’s Bring Home A Friend (BHAF) campaign in the Calabarzon region was also launched. “Invite your friends to visit the country and take the first trip to Calabarzon. Bring them over to see what the regions have to offer,” Teo said. The BHAF program, encourages all Filipinos and Filipino expatriates living abroad to invite foreigners to the country by giving them the chance to win raffle prizes, which include a Megaworld Eastwood Le Grand condominium unit, a brand-new Toyota Vios and a P200,000 gift certificate from Duty Free Philippines Corp. Foreign visitors who make the trip on invite of their Filipino friends also have the opportunity to win trips to select destinations in the country, with free air tickets, and hotel/resort accommodations. In an previous interview with the BusinessMirror, Teo said she hoped to attract an additional 500,000 foreign visitors to the Philippines through the BHAF campaign. The program is also being simultaneously launched abroad, as well as in several parts of the country. The program is slated to last for six months from its recent launch in October, but Teo said the DOT may just keep the program going. She said the program encourages Filipinos here and abroad to become tourism ambassadors for the Philippines. In 2018 the DOT is targetting an increase in foreign visitors to 7.5 million from this year’s official target of 6.5 million.

Tightening. . . Continued from A1

Malaysia

A booming economy has prompted some economists to predict that Bank Negara Malaysia may raise interest rates as early as its first meeting of 2018 on January 25, even as inflation remains contained. A recovery in exports and strong growth in consumption fueled the economy’s 6.2-percent expansion last quarter, the fastest pace since 2014. Governor Muhammad Ibrahim has said any adjustment would be a “normalization” rather than a tightening.

The Philippines

GDP rose 6.9 percent in the third quarter from a year ago, exceeding even the most bullish forecast in a Bloomberg survey of economists. The International Monetary Fund has warned that the Philippines must be ready to tighten. The other factor Asia’s central bank chiefs must weigh: How many times will the Federal Reserve (the Fed) raise in 2018 after a widely anticipated move in December. While Asia had managed to decouple from the Fed’s moves since late-2015, that may not be the case next year. “The Bank of Korea kicked off Asia’s tightening cycle today,” said Frederic Neumann, cohead of Asian economics at HSBC Holdings Plc. in Hong Kong. “After a long stretch of highly accommodative monetary policy across the region, monetary officials are itching to push rates higher.” Bloomberg News

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Soon to be released EO declares NPA as a ‘terror’ group

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resident Duterte is nearing to issue an executive order (EO) branding the communist-led New People’s Army (NPA) as “terrorists,” his spokesman revealed on Thursday. According to Presidential Spokesman Harry L. Roque Jr., Malacañang is now crafting an EO placing the NPA under the terror watch. “[There is] no date, but the President will do that,” Roque said in a phone interview. This came a day after the President announced he will be preparing an EO, declaring the NPA as terrorists. Peace talks with the National Democratic Front, the negotiating arm of the communists, has been terminated by the government, saying it had enough of attacks from communist rebels. “I am preparing now. They are preparing the executive order declaring them to be terrorists, and they will be afforded the treatment of being criminals,” Duterte said on Wednesday. The President added he already cut ties with the NPA, which he formerly considered bringing into the government. He said the communist rebels “are not really serious” in talking peace with the government, and are “just biding their time” to destabilize the Duterte administration. “They do not have the second echelons to carry the fight, and they just want to be comfortable,” Duterte added. The government also intends to arrest activists alleged of conniving with the communists rebels, such as members of leftleaning groups. This, however, has drawn flak from human-rights groups, saying it might lead to a brutal crackdown, like the war on drugs. Elijah Felice E. Rosales

The Nation BusinessMirror

Editor: Vittorio V. Vitug • Friday, December 1, 2017 A3

No need for revolutionary government, Palace says

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By Elijah Felice E. Rosales

@alyasjah

ith President Duterte’s open declaration that he has no plans of declaring a revolutionary government, Malacañang on Thursday told administration critics to try again and look for another issue to dangle against the Chief Executive.

In a phone interview, Presidential Spokesman Harry L. Roque Jr. said the President is nowhere near declaring a revolutionary government, and that the opposition should hold its horses on trying to force the issue. “While it is true that there are some of the President’s allies who want a revolutionary government, he appreciates the suggestion, but he has repeatedly said there is no basis and there is no need for a revolutionary government,” Roque said. In time for Bonifacio Day, supporters of Duterte gathered in pocket rallies, calling on the President to declare a revolutionary government. This was countered with protests by militant groups opposing Duterte’s crackdown on left-leaning organizations, which the President has alleged of conniving with the communists.

“There is no need for a revolutionary government…and I think it’s the last issue that the opposition can use against the President,” Roque added. To the administration critics, Roque has this to say: “Wala na ba kayong isyu pagdating dito sa revolutionary government dahil umano ayon sa [inyo], ngayong araw daw magdedeklara ng revolutionary government [Are there no other issues you have aside from revolutionary government because, according to you, a revolutionary government will be declared today (Thursday)]?” The Palace official added there is nothing for the opposition to worry about, and should just move on and find another issue to shove down the throat of the Chief Executive. “Move on na po tayo. Sa oposisyon, maghanap na po kayo

ng ibang isyu [Let us move on. To the opposition, just go and look for another issue,” Roque said. In an interview with reporters, Vice President Maria Leonor G. Robredo said it is alarming to witness supporters of the President calling on him to declare a revolutionary government. Robredo argued placing the country under revolutionary government would mean sidelining the 1987 Constitution, and this, for her, is nothing more but leading toward dictatorship. “Ito, nakababahala ito, kasi kapag sinabi kasing revolutionar y gover nment, gusto mong isantabi iyong Konstitusyon. Laban ito sa mga existing na batas, kaya nakababahala na [This is alarming because, when you say revolutionary government, it means you intend to neglect the Constitution. This is against our existing laws, and it is really alarming],” Robredo said. Robredo called on supporters of Duterte to understand the implications of declaring a revolutionary government. She added it was the 1987 Constitution that put her and the President in power, and it is, therefore, the duty of the citizens to uphold the highest law of the land. The vice president also said she is hoping Duterte would stick true to his words that he will not place the country under a revolutionary government, much less martial law.

Army ready to serve nation like ‘great plebeian’ Bonifacio

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ike the Great Plebeian Gat Andres Bonifacio, the Philippine Army (PA) is always ready to serve the people and protect the land. Army Spokesman Lt. Col. Ray Tiongson said Bonifacio, who commemorated his 154th birth anniversary on Tuesday, is always a hero to the PA due to his efforts to secure nation’s freedom and setting up an example on how to use it well. “Gat Andres Bonifacio is a hero to all of us not only because he fought for our freedom but because he also taught us to use that hard-won freedom in the best interest of the country and people,” he added in a message to the Philippine News Agency. Tiongson said the PA is more than willing to emulate the example of the “great plebeian.” “We are always ready to go beyond our call of duties and responsibilities as we serve the people and secure the land,” he added. Around 8 a.m. on Thursday, as part of the commemoration rites to honor the Kataas-taasang Kagalang-galang na Kapitunan na Anak ng Bayan (KKK) founder, a simple wreath-laying ceremony was held at the Bonifacio Monument in front of the Tutuban Center. Activities were led by officials and representatives of the Tutuban Properties Inc. and National Historical Commission of the Philippines. Bonifacio, born on November 30, 1863, in Tondo, Manila, was the founder and later supreme leader of the KKK movement, which sought to free the Philippines from Spanish colonial rule. PNA

Economy

A4 Friday, December 1, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

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DOTr’s Tugade warns ‘stiff’ sanctions vs striking PUJ drivers and operators

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he Department of Transportation (DOTr) has warned anew that jeepney operators and drivers may face cancelation of their franchise and license if they join the transport strike that will be conducted by the Pinagkaisang Samahan ng ng Tsuper at Operator Nationwide (Piston) on December 4 and 5 to protest the public-utility vehicle modernization program (PUVMP).

Transportation Secretary Arthur P. Tugade reminded the franchise holders of their responsibility to provide transport services to commuters and not to disrupt public convenience because of the protest actions. “We have invited Piston to dialogues but, still, they insisted on holding strikes. Other transport groups sat down with us, and we discussed the program together. Why can’t Piston do that? I am positive that, when they do, they will under-

stand, and they will agree that it is time to overhaul the public-transportation system,” Tugade said in a news statement issued on Wednesday. The transportation secretary directed the Land Transportation Franchising and Regulatory Board and the Land Transportation Office (LTO) to pursue the cancellation of the franchises and licenses of the PUV operators and drivers who would participate in the transport strike.

For her part, DOTr Spokesman Assistant Secretary Leah Quiambao said that the freedom of expression and assembly does not provide an excuse for transport groups to stage strikes that will inconvenience commuters. “To be clear, we are not prohibiting jeepney operators and drivers from staging a protest rally and exercising their right to organize and assemble. What we are against is when their protest is in the form of ‘tigil pasada’ where they inconvenience the riding public,” Quiambao explained in a text message to reporters. “To hold a franchise is not a right, but a privilege granted by the state. Among the conditions upon the grant of franchise is that the PUVs will not abandon their routes or lines and prejudice our commuters. Hence, ‘tigil pasada’ is among the grounds for revocation of franchise,” she added. Meanwhile, Undersecretary for Road Transport and Infrastructure Thomas M. Orbos appealed to protesters to always consider the interests of the riding public. “It is high time for them stop prioritizing their own interests, and start considering the interest of the riding

public, which, for the longest time, has been clamoring for a safe, convenient and environment-friendly system of public transport,” Orbos said. The PUVMP has gained the support of major transport groups namely the Federation of Jeepney Operators and Drivers Association of the Philippines, Alliance of Concerned Transport Organizations, Pangkalahatang Sanggunian Manila and Suburb Drivers Association Nationwide Inc., Land Transportation Organization of the Philippines, Alliance

of Transport Operators and Drivers Association of the Philippines, as well as the majority of provincial transport cooperatives nationwide. Under the said program, jeepney units that are 15 years old will be replaced with Euro 4 engines or electrically powered engines with solar panels for roofs. These will also be equipped with closed-circuit television cameras, a GPS navigation system, an automatic fare-collection system, speed limiters, dashboard cameras and Wi-fi. PNA

We have invited Piston to dialogues but, still, they insisted on holding strikes. Other transport groups sat down with us, and we discussed the program together. Why can’t Piston do that? I am positive that, when they do, they will understand, and they will agree that it is time to overhaul the publictransportation system.”—Tugade

Philhydro seeks FiT retention for run-of-river hydropower

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he Philhydro Association Inc. is asking the Joint Congressional Power Commission (JCPC) to endorse the continuation of the feed-in tariff (FiT) for run-ofriver hydropower until the original 250-megawatt (MW) installation target has been met. “Philhydro remains concerned that the expiration of the FiT will send a strong, albeit wrong signal to current and prospective investors and stakeholders of the renewableenergy [RE] sector,” Philhydro President Jose Silvestre Natividad said. Subscription to the FiT installation target for biomass and run-of-river hydro is set to expire by year-end. The group’s position was in reaction to earlier pronouncements of Energy Secretary Alfonso G. Cusi, who is not keen on extending FiT allocation for biomass and run-ofriver technologies. “It’s difficult for us to be giving subsidy or FiT, especially when we want to bring down our energy tariff,” the energy chief said. During a Senate hearing on Wednesday, Cusi said the matter is still under review. “I have to study it. We are reviewing it.” Cusi also added the National RenewableEnergyBoard(NREB)hassubmitted its recommendation. However, he has yet to read the report. “I was told the NREB has submitted it. I have yet to read it. I think it was submitted [on Tuesday],” the energy chief said. The NREB is the advisory body tasked with the effective implementation of RE projects in the Philippines. Philhydro also said its members were advised by the Department of Energy (DOE) to look for off-takers because the FiT is set to expire on December 31, implying that, FiT, as a mechanism will no longer be available. The group said this will put the projects of all run-of-river hydro

developers in peril, as the financial feasibility and the investment decisions were based on the assumption that the FiT mechanism is available until the installation targets have been fully subscribed. Based on Philhydro’s computation on the impact of all the hydro projects coming online by 2020 to the FiT allowance at the current digressed rate of P5.87 per kilowatt-hour (kWh), allowing an extension of the hydro FiT and allowing hydropower developers to complete the 250-MW installation target will only have a P0.01034 per kWh impact to the FiT-All by 2020. The DOE commenced the awarding of hydropower service contracts in 2009. As of end-June, 445 hydro power projects have been awarded service contracts. To date, only four run-of-river hydropower facilities with a capacity of 26.6 MW have reached construction, successful commissioning and have been endorsed under the FiT system. “Despite over 787 MW of potential hydropower capacity, only 26.6 MW have achieved commissioning,” Philhydro said. Based on its own study, the main cause for delay has been the difficulty in securing permits from various national and local government agencies, in particular, the water permit and FPIC [free and prior informed consent] with the indigenous people. “The most of the three years allotted for the FiT installation target are already consumed by the permitting process alone,” Philhydro said. Given the current status of the projects, time to complete the permitting requirements and construction period, Philhydro foresees a total of seven projects with potential capacity of 117.90 MW would be on stream by end 2017. In 2018 a total of projects with a capacity of 9.7 MW would be completed. Lenie Lectura

Bamboo revolution

A bamboo pole can be a valuable material for making fishing rods, fish traps, utensils, a house and, these days, even bicycles and motorcycles, according Dr. Stanley Malab, former director of Ilocos Agriculture, Aquatic and Resources, Research and Development Consortium during a powerpoint presentation at the First Bamboo-Seaweeds Fiesta (Farms and Industry Encounter through the Science and Technology Agenda) at Iba Pa...held at Mariano Marcos State University in Batac, Ilocos Norte, on Tuesday. PNA/Ben Briones

IFC urges PHL to pass legislation for wider MSME access to finance

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he World Bank’s corporate arm, the International Finance Corp. (IFC), has urged the Philippines to prioritize the passage of legislation that will increase access to finance micro, small and medium enterprises (MSMEs) and make doing business easier for them. Yuan Xu, IFC country manager for the Philippines, said that securedtransactions reform could effectively promote greater financial inclusion. “If the Philippines truly wants to increase access to finance to MSMEs and increase its competitiveness in doing business, this bill needs to be prioritized so that a sound institutional framework will be in place to give financial institutions more confidence to lend to MSMEs,” she said. Xu was referring to the securedtransactions bill, which is now mov-

ing toward the second reading in both the Senate and Congress. She cited the example of China, where the implementation of comprehensive secured-transactions reform mobilized $3 trillion initially to MSMEs. Secured-transactions reform entails strengthening the legal framework to enable financing based on movable assets, establishment of a modern centralized registry for both movable assets held as collateral and credit information and institutionalization of systems for dealing with insolvencies. Gay Santos, senior financial sector specialist at IFC World Bank Group, said the passage of such legislation could help boost the Philippine ranking in ease of doing business. “[This] aligns well with the 10-point socioeconomic agenda on

focus on rural finance, MSMEs, as well as increasing competitiveness in doing business. This is already a priority legislation under the PDP [Philippine Development Plan] but not at the Neda [National Economic and Development Authority] level yet,” she said. The country on Wednesday hosted the Fifth Financial Infrastructure Development Network (FIDN) Conference, which tackled on how the region can move forward after setting up foundations for a financial environment supportive of MSME and agricultural development. FIDN is composed of Asia-Pacific Economic Cooperation (Apec) member-countries, IFC, APEC Business Advisory Council; SME Finance Forum and the Organization for Economic Co-operation and Development. PNA

Disaster-resiliency measures in place, Meralco exec says By Lenie Lectura

@llectura

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top official of the Manila Electric Co. (Meralco) said the utility firm is already implementing various resiliency measures to prepare its power facilities in the event that a disaster takes place. “It’s something that we are already doing. We started doing that about three years ago,” Meralco President Oscar S. Reyes said when asked to comment on a proposed policy of the Department of Energy (DOE) that seeks to require industry stakeholders to submit their respective resiliency plans. Reyes said the utility firm continues to work on weather and storm hardening projects for improved resiliency. “We implement new design standards for our network to be resilient, to cope up, for example, with wind speed.” Meralco recently told the DOE that the adoption of resiliency measures will require additional capital expenditures and operational expenditures. As such, distribution utilities (DUs) would need to be allowed to recover the expenses consequent to these resiliency measures within a reasonable period. REYES: “It’s something that we are already doing. We started doing that about three years ago.”

“In the case of regulated entities, such as DUs, the recovery of capital and operational expenses is subject to the approval of the Energy Regulatory Commission,” Meralco said in a position paper submitted to the DOE last week. Reyes said he could not quantify the amount needed to implement additional resiliency programs. “It will entail additional spending, but this is part of the norm.” The energy-resiliency policy, dubbed as the “Adoption of Resiliency Planning and Program in the Energy Industry to Mitigate Adverse Effects Brought About by Disasters,” is anchored to President Duterte’s directive to heighten disaster resilience. Among others, the proposed policy seeks to strengthen the existing energy infrastructure and systems; institutionalize the build back better principle; improve existing disaster resilience operations; and develop resiliency practices, systems and standards. “With this policy, we are building with the industry players a structure on how to plan and address human-induced disasters that compromise existing powerfacilities,” Energy Secretary Alfonso G. Cusi earlier said. Cusi added that the issuance of this policy will cement the DOE’s commitment to mainstream disaster risk reduction to increase the reliability of energy systems and reduce their vulnerability to disasters. “We are fast-tracking the issuance and implementation of the energy resiliency policy as this would guide us, especially in rebuilding Marawi City,” Energy Secretary Alfonso G. Cusi said.

DTI eyes import substitution to rev up manufacturing sector T he Department of Trade and Industry (DTI) is eyeing to adopt an industrial policy of import substitution to rev up the country’s manufacturing sector. Trade Secretary Ramon M. Lopez said this is one of the approach being eyed by the government to allow local industries to expand their domestic market base. At the Manufacturing Summit on Thursday,

the Trade and chief said, “We’re studying a policy to encourage developing local manufacturing base for products being imported.” He added: “This is something we’d like to reestablish, for example in the pharmaceutical [sector]. A local manufacturer of a foreign brand can set up a manufacturing cooperation where so we can reduce some kind of import substitution. It can be a win-win strategy. We won’t do any tariff

protection but working out better collaboration with foreign brands.” Lopez said the pharmaceutical sector is one area where import substitution could be applied to offer more affordable medicine to the public. As a way to incentivize the manufacturers, there could be some form of technical assistance or joint research and development, Lopez added. The DTI chief said that aside from import sub-

stitution option, the establishment of domestic economic zones is also another initiative they’re keen to develop. In a previous interview, Trade Assistant Secretary for Industry Development Rafaelita M. Aldaba, said the department wanted domestic catering industries to be on a par with those managed by the Philippine Economic Zone Authority (Peza), or

export-oriented companies. Aldaba added this was also one way to raise the competitiveness of domestic industries, amid the influx of cheaper imported goods at zero tariff, particularly those coming from China and Asean member-countries, due to the region’s economic integration. “Ideally, we want to give the same incentives to domestic ecozone locators as those

given by the Peza; domestic manufacturers face the same competition anyway. This can be done, especially for small and medium enterprises that can supply raw materials or intermediate components to enterprises inside the zone, so we can really intensify the linkage between the ecozone and the domestic economy,” Aldaba said in a previous interview. Catherine N. Pillas

Agriculture/ Commodities BusinessMirror

Editor: Jennifer A. Ng • Friday, December 1, 2017

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Rice prices to go down soon–NFA

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By Jasper Emmanuel Y. Arcalas

@jearcalas

he retail and wholesale prices of rice would decline starting this month with the arrival of imports bought by the private sector via the so-called minimum access volume (MAV) scheme, according to the National Food Authority (NFA).

“The NFA believes that rice prices will eventually settle down to its previous levels when private-sector imports via MAV start arriving in December,” the food agency said in statement released on November 29. The NFA said the increases in rice prices are not due to a supply shortfall but because of the high farm-gate price of paddy. “We have adequate volume of industrywide rice inventories at this time. The country’s rice stocks, at 1.944 million metric tons, would last for 61 days based on the average national daily requirement of 31,462 metric tons,” the NFA said. “The rice varieties, whose prices were observed to have increased by P1 to P2 per kilogram (kg), were of premium, special and aromatic rice, or those with 5-percent to 15-percent brokens, and not the regular- and well-milled varieties traditionally consumed by the majority of consumers,” it added. The food agency said traders and retailers have started to mill and sell the low-priced stocks they have accumulated. “Traders are now milling and starting to sell their newly harvested stocks bought at higher ex-farm prices. This harvest season, for example, traders were buying palay from P18 to P24 per kg. Thus, when processed into rice, the higher wholesale and retail prices will be passed on to retailers and consumers,” the NFA said. Also, the food agency said rice prices usually go up once the main harvest starts to peak. “A review of the past three years showed that rice prices, indeed, tend to

register a slight increase at this period, although this year’s increase is lower compared to those observed in previous years.” “In November 2014 the prices of regular-milled and well-milled rice were at P40.74 per kg and P43.63 per kg; in 2015 P38 per kg and P42 per kg; in 2016 P35.97 per kg and P41.80 per kg. This month the average retail prices for regular and wellmilled varieties are at P37 per kg and P40 per kg,” it added. In its weekly monitoring report published on November 28, the Philippine Statistics Authority (PSA) said the average farm-gate price of palay in the third week of November inched up to P18.56 per kg, from the previous week’s quotation of P18.47 per kg. Increases were also noted both in the prices of well-milled rice and regularmilled rice. The wholesale price of regularmilled rice rose to P35.71 per kg, from the previous week’s P35.64 per kg, while retail price went up to P38.02 per kg, from last week’s P37.97 per kg. “Quoted at P39.21 per kg, the average wholesale price of well-milled rice inched up from a-week-ago level by 0.15 percent. Compared to the previous year’s quotation of P38.08 per kg, it was, likewise, expensive by 2.96 percent,” the PSA report read. “Similarly, the average retail price of well-milled rice recorded growth of 0.02 percent from previous week’s level. This week’s average retail price of P42.19 per kg was also higher by 1.89 percent compared with the previous year’s level of P41.41 per kg,” it added.

PHL dairy output up 9% in Jan-Sept–NDA

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he country’s dairy production in January to September expanded by nearly 9 percent to 17,130 metric tons (MT), from last year’s 15,730 MT, according to the National Dairy Authority (NDA). In its quarterly report, titled “Performance of the Philippine Dairy Sector,” the NDA said production increases in Luzon and Mindanao boosted national dairy output during the nine-month period. “According to the Philippine Statistics Authority [PSA], the significant uptrend of milk production was noted in South Luzon and Mindanao areas during the period, thus, dairy posted an expansion in production at 8.9 percent,” the NDA said in its report published recently. The NDA, an attached agency of the Department of Agriculture (DA), said the local milk sector grossed around P607 million, at current prices. The value was 15.84 percent higher than last year’s P523.80 million. The report noted that two-thirds, or about 12,290 MT of total milk output in the January-to-September period came from NDA-assisted dairy projects. T he attached agenc y of t he DA noted that the dairy sector registered the highest increase in volume and value of production among all subsectors of the livestock sector during the period. “Based on the latest report of the PSA, the livestock production value [current prices] amounted to P206.18 billion

was 12.23 percent higher compared to the same period last year,” the NDA report read. The DA is planning to import some 6,000 heads of Girolando cattle from Brazil as part of its plan to ramp up local milk production to meet at least 10 percent of annual domestic requirement by 2022 and reduce the country’s reliance on imports. The DA is allotting at least P1 billion for the live cattle-importation program. “Our target is to bring in 500,000 heifers by the end of the term of the President. As to whether we will have the money to procure the cattle, the answer will largely depend on the performance of the first batch of heifers,” Agriculture Secretary Emmanuel F. Piñol said in an earlier interview. “If the performance [of the program] is excellent, then we will be able to convince our economic managers that this program is worth the government’s investment,” Piñol added. Philippine milk production this year could expand by nearly 4 percent to 22,000 MT, from 21,160 MT recorded last year, according to a Global Agricultural Information Network (Gain) report published in October. The Gain report, which was prepared by the United States Department of Agriculture’s Foreign Agricultural Service in Manila, attributed the increase in output to growing demand for fresh milk. Jasper Emmanuel Y. Arcalas

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Friday, December 1, 2017

The World BusinessMirror

Editor: Lyn Ressureccion | www.businessmirror.com.ph

Pope heads to Bangladesh where the Rohingya crisis is looming large

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ANGON, Myanmar—Pope Francis wrapped up his visit to Myanmar on Thursday with a Mass for young people before heading to neighboring Bangladesh where the Muslim Rohingya refugee crisis was expected to take center stage.

Francis has so far refrained from speaking out about Asia’s worst humanitarian crisis in decades out of diplomatic deference to his hosts in Myanmar, who consider the Rohingya as having illegally migrated from Bangladesh and don’t recognize them as their own ethnic group. T he Vat ican has defended Francis’s silence, saying the pope wants to “build bridges” with the predominantly Buddhist nation. But human-rights groups and Rohingya themselves have expressed d isappointment that Francis, an advocate for refugees and the world’s most marginal, refrained from condemning what the United Nations has said is a textbook case of ethnic cleansing. Va t i c a n s p o k e s m a n G r e g Burke said Francis took seriously the advice given to him by the local Catholic Church, which urged him to toe a cautious line and not even refer to the “Rohingya” by name during his trip. “You can criticize what’s said, what’s not said, but the pope is not going to lose moral authority on this question here,” Burke told reporters on Wednesday. Rohingya have faced persecution and

discrimination in Myanmar for decades and are denied citizenship, even though many families have lived there for generations. The situation grew worse in August, when the army began what it called clearance operations in northern Rakhine state following attacks on security positions by Rohingya militants. More than 620,000 Rohingya have since poured into refugee c a mp s i n n e i g h b o r i n g B a n gladesh, where they have described indiscriminate attacks by Myanmar security forces and Buddhist mobs, including killings, rapes and the torching of entire villages. Burke stressed that Francis’s diplomatic stance in public in

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Myanmar didn’t negate what he had said in the past, or what he might be saying in private. In the past, Francis has strongly condemned the “persecution of our Rohingya brothers,” denounced their suffering because

You can criticize what’s said, what’s not said, but the pope is not going to lose moral authority on this question [Rohingya crisis] here.” —Burke

Europe’s Muslim population to grow, migration or not–study ER LIN—Europe’s Muslim population will continue to grow over the next several decades even if all immigration to the continent shou ld stop, according to a study published on Thursday. The Pew Research Center report modeled three scenarios for estimating the number of Muslims who would be living in Europe by 2050. All three used a mid-2016 estimate of 25.8 million as a baseline, but assumed different future migration rates. Under t he “zero m ig rat ion” scena r io, a n est imated 3 0 m i l l ion Mu s l i m s wou ld ma ke up 7.4 percent of Europe’s popu l at ion by 2050, compa red to t he 4.9 percent t hey compr ised l ast yea r, t he repor t projected. The researchers said that is most ly because Muslims are on average 13 years younger than other Europeans and also have a higher bir th rate, the Pew researchers said. The study estimates 58.8 m i l l ion Mu sl i m s wou ld account for 11.2 percent of the population in a “medium migration” scenario that has migration maintaining a “regular speed ”—defined by the Pew researchers as migration motivated by economic, educational and family reasons—but not for seeking asylum as a refugee. In the “ high migration” scenar io, the study projects that the record f low of migrants who came to Europe bet ween 2015 and 2016 would continue indefinitely, resu lting in 75 mil lion Muslims in Europe, a 14 -percent increase, by the

Pope Francis poses for a group photo with children as her arrives at Saint Mary’s Cathedral for a meeting with the bishops of Myanmar in Yangon, Myanmar, on Wednesday. The pontiff is in Myanmar for the first stage of a weeklong visit that will also take him to neighboring Bangladesh. AP/Andrew Medichini

midd le of the centur y. Eve n w it h t he most i m m i g r at io n , Mu s l i m s w ou l d “sti l l be considerably sma l ler t ha n t he popu l at ions of bot h C hr ist i a ns a nd people w it h no rel ig ion in Eu rope,” t he resea rc hers conc luded. Musl im immig ra nts have been a pol it ic a l ly sensit ive topic in Europe following the influx of newcomers in 2015 and 2016. Some countries have seen backlashes that have included populist parties campaigning on anti-Islam messages. The study was based on census and survey data, populat ion reg isters, immig rat ion data and other sources. The 30 countries it covered include the 28 European Union members, plus Norway and Switzerland. Not a l l countr ies wou ld be affected evenly by f uture immigration, according to the Pew repor t. In the high-migration scenario, Germany and Sweden wou ld have t he big gest increases because both countries took in the most asylum seekers during the height of the refugee crisis two years ago. W h i le Musl ims made up 6 percent of Ger many’s populat ion l ast yea r, t heir propor tion would go up to 20 percent by 2050. Sweden’s Musl ims, who were at 8 percent in 2016, wou ld accou nt for 31 percent of the population in that same scena r io. Meanwhile, some countries that had comparatively few Muslim residents in 2016 would continue to have few by 2050 in all three scenarios. AP

of their faith and called for them to receive “full rights.” While he called in his first major speech on Tuesday for all of Myanmar’s ethnic groups to have their human rights respected, his failure to specify the Rohingya crisis on Myanmar soil drew criticism from Amnesty International, Human Rights Watch and Rohingya themselves. On Wednesday Myanmar Bishop John Hsane Hgyi suggested that reports of atrocities being committed against the Rohingya were not “reliable” or “authoritative,” and that those who criticized Myanmar’s response to a complex situation should “go into the field to study the reality and

history” to obtain “true news.” The government has barred independent groups from traveling to northern Rakhine state. In his final event in Myanmar, Francis celebrated Mass in Yangon’s Saint Mary’s Cathedral for young Catholics. The young worshippers, many dressed in the traditional clothing of their ethnic groups, leaned out to touch or kiss Francis’s hand as he slowly walked by. During the Mass, Francis told them to not be afraid to make their voices heard. “Do not be afraid to make a ruckus, to ask questions that make people think,” he told them. “Make yourselves heard.” AP

Record $19B in investments shows Europe tech is just fine E

uropean star t-ups are on pace to col lect a record $19 bil lion from investors this year, despite concer n s t he Un ited K i ngdom’s depar ture from the European Union (EU) w il l weigh on the reg ion’s technolog y industr y, according to an annua l repor t by the London-based venture capita l fir m Atomico. T he UK remains the largest destination for capita l invested in Europe, w ith $5.4 bil lion year-to-date, according to the repor t. Ger many fol lows w ith $2.5 bil lion and then France at $2.1 bil lion. T he UK also held on to it s s pot a s No. 1 dest i n at ion for s k i l l e d t e c h w or k e r s t o mig rate to w it hin Europe, but ceded some of it s sh a re to Fra nce a nd G er m a ny com pa red w it h pre v iou s yea rs. Si nce Br it a i n’s vote to leave t he E U a nd P r i me M i n i s t e r T heres a M ay ’s for m a l request to begin divorce proceedi ngs, sig n if ic a nt at tent ion h a s b e e n p a id t o t he f ut u re of lo c a l i nv e s t me nt a nd a c cess to t a lent . Atom ico s a id it w a s c l e a r t he s e p a r at ion w a s w e i g h i n g on i nv e s t or s . T he Un ite d K i ngdom w a s t he mo s t p e s s i m i s t i c a b out t he f ut u re of t he Eu rop e a n t e c h n o l o g y i n d u s t r y, w i t h 18 percent of res pondent s — wh ic h i nc luded t hou s a nd s of fou nders a nd i nvestors — s ayi ng t he y were less opt i m i st ic t h a n t he y were a yea r ea rl ier. O ver t he l a st 12 mont h s it ’s a lso become ha rder for Br it ish

st a r t -ups to ra i se ne w f u ndi ng , accord i ng to 32 percent of fou nd e r s q u e s t ione d .T he UK gover nment responded i n pa r t b y a n nou nc i ng pl a n s to double t he nu mber of Tier 1 v i s a s it i ssues to people of “e xce pt ion a l t a lent ,” to 2,0 0 0 a s it at tempt s to m a i nt a i n t he n at ion’s at t r ac t ive nes s a s a pl ace to work . W hile the va lue of investments across Europe in 2017 is ex pected to hit $19 bil lion, it w il l achieve that w ith fewer dea ls—3,4 49 for 2017, comp a re d w it h t he 3 ,7 20 d e a l s that tota led $14.4 bil lion in 2016, according to Atomico’s research. France is challenging the United K ingdoms for the most number of dea ls closed per year. “ T h i s i s some t h i n g we’ve seen on a globa l basis overa l l,” Tom Wehmeier, the author of the report and head of research at Atomico, said in an interv iew. “ You’ve seen larger average round sizes this year versus last year,” he said, adding that the drop in a number of investments was due to fewer being made at the ver y smallest sizes below $2 mil lion. “It’s impor tant to focus on t he bi g pic t u re r at her t h a n sma l ler f luctuations,” Wehmeier said. “ We’ d have to look a few years out to know whether it’s a sign of a long-term trend.” In Atom ico’s 2016 repor t, investments into UK star tups t h at foc us on deep tec hnolog y—work grounded in scientific research, such as artificial

intel ligence (A I) or robotics— had declined to $935 million, compared with the record $1.3 billion total for 2015. For 2017 this sector has bounced back to hit a new record tota l of $1.8-billion investment in British companies, such as Graphcore. The deep tech industr y is on track for a total of $3.5 billion across Europe as a whole, up from $2.5 billion in 2016. A mong the UK government’s other plans to prepare for t he i mpac t of Bre x it on this grow ing market, it has a lready launched a £20 -mil lion ($26.9 -million) fund for public ser v ices to invest in A I. It’s an area Br itain has been successf u l in a l ready : Deep Mind sold to A lph abet Inc.ow ned Google in 2014 for a repor ted £400 mil lion, Tw itter pa id about $150 m i l l ion for M a g ic Pony Tec h nolog y, a L ondon-based A I sta r t-up, and SoftBank Group Cor p. paid $ 32 b i l l i o n f o r C a m b r i d g e based A R M Holdings Plc. More re ce nt ly, S of t B a n k i nve s te d $502 mil lion in v ir tua l-rea lit y star tup Improbable. Wehmeier said the grow th of investments into deep tech, and subsequent exits, was because A I is being embedded at the core of many companies. “If I was to roll the clock forward a couple of years, we’d expect to see A I at the heart of a ll companies,” he said. “Like now, if you were to see a consumer company that didn’t have mobile at their core, you’d be really sur pr ised.” Bloomberg News

Singapore home prices vulnerable to rising supply

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he rising supply of homes and slowing population growth may undermine the recent recovery in Singapore residentialproperty prices, according to the country’s central bank. Future development projects could potentially add 20,000 private housing units over the next one or two years, more than doubling the existing number available for sale, the Monetary Authority of Singapore (MAS) said in its annual financial stability report published on Thursday. “Over the medium term, as these development projects are progressively completed, the private housing stock will grow,” the MAS said. “If this is not matched by increased occupation demand, it will add to existing vacancies that are already relatively elevated and weigh on rentals and property prices.” The regulator “will continue to monitor market developments and where necessary, take appropriate actions to maintain a stable and sustainable property market,” it said. Singapore residential property prices have started a gradual recovery this year, ending more than three years of declines. The turnaround has been accompanied by a rising number of en-bloc sales, which are deals in which a group of owners band together to sell entire apartment blocks for redevelopment, as well as new projects based on purchases of government land. There are also constraints on demand. Singapore’s compounded population growth slowed to an annual 1.1 percent between 2012 and 2017, from 3 percent between 2007 and 2012, the central bank noted. As a result, “there is a considerable uncertainty as to whether the new supply coming on stream can be fully absorbed by the market,” the MAS said. The MAS said developers should take into account the significant rise in the number of private housing units available for sale when bidding for land. “The large upcoming supply could lead to a supply imbalance over the medium term if not matched by occupation demand,” the regulator said. The rental property market also remains weak, according to the MAS. The third-quarter vacancy rate stayed “relatively elevated” at 8.4 percent, above the historical average of around 6.5 percent over the past decade, it said. If interest rates rise or rental prices fall further, some borrowers could face difficulties meeting mortgage repayments on their investment properties, the MAS said. New housing loans rose to a monthly average of S$3.5 billion ($2.6 billion) during the first 10 months of the year, from S$2.8 billion a year ago, the MAS said. Nevertheless, the asset quality of Singapore housing loans remains strong, according to the MAS. And its stress tests indicate that the banking system could withstand a drop in property prices of 50 percent over three years, the MAS said. Bloomberg News

www.businessmirror.com.ph | Editor: Lyn Ressureccion

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Friday, December 1, 2017

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As Trump threatens barriers

Global trade boom steams into 2018

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t was meant to be the year of the trade war. Instead, it was the year of the trade boom.

As 2017 draws to a close, the International Monetar y Fund is projecting that the volume of trade in goods and services will have climbed 4.2 percent over the year, up from 2.4 percent in 2016. T hat wou ld be the first time trade has out paced out put grow th since 2014, and harks back to the precrisis days when s uc h out p e r for m a nce w a s a reg u lar occur rence. Among the winners: big manufacturing powerhouses, such as Germany and China, and producers of electronics like South Korea, which on Thursday raised its benchmark interest rate for the first time since 2011 after months of surging exports. Caterpillar Inc. and Samsung Electronics Co. are some of the companies that are cashing in. Closely watched gauges on manufacturing suggest the recovery should continue into 2018. A weighted average of flash Purchasing Managers Indexes (PMI) for China’s major trade partners came in at 56.3 in November—the highest since February 2011, according to Bloomberg Economics. China’s official manufacturing PMI unexpectedly climbed to 51.8 in November.

“A trade boom, rather than a trade war, has been the big theme,” said Chua Hak Bin, a Singaporebased senior economist with Maybank Kim Eng Research. That doesn’t mean the threat of protectionism has passed. President Donald J. Trump is still vowing to crack down on countries the United States believes don’t trade fairly, and negotiate deals more favorable to America. While the White House is focused on pushing through tax cuts, there are still signs Trump plans to get tough on trade. The US Commerce Department this week took the unusual move of evoking powers it hasn’t used in more than a quarter century to begin a probe into Chinese aluminum imports that could lead to tariffs.

Cautionary tale

The US move “is a cautionary and potentially significant marker in the US crusade against what are deemed unfair trade practices,” said Patrick Bennett, a Hong Kong-based strategist at Canadian Imperial Bank of Commerce. “The issue of trade protectionism has potential to continue looming large for financial markets.” The US has taken other steps

t hat have bu i lt supply c ha ins on t he assu mpt ion t hey won’t have to pay ta r if fs w it hin Nor t h A mer ica. Since Trump wants to boost US growth, he will be pleased with the bullish outlook for the world economy. But he also wants to reduce the US trade deficit with the rest of the world—a goal that could slow the recovery in trade if it leads to more barriers.

WTO meetings

Operations at the Navayuga Group Krishnapatnam Port on India’s east coast of Andhra Pradesh Bloomberg

4.2% The increase in the volume of trade in goods and services which the International Monetary Fund is projecting over the year, up from 2.4 percent in 2016

to tighten trade enforcement, and more is expected in 2018 as investigations into Chinese intellectual-property practices and other areas continue.

China factory gauge posts surprise gain as slowdown held at bay

Countdown starts for Opec pact as Russia looks beyond oil deal

hina’s official factor y gauge unexpectedly increased to near a five-year high, as foreign and domestic demand helped cushion the effects of parallel campaigns to clean up the environment and the financial system. The manufacturing purchasing managers index (PMI) rose to 51.8 in November, compared with the 51.4 forecast in a Bloomberg survey of economists and 51.6 the previous month. The nonmanufacturing PMI climbed to 54.8, from 54.3 in October, the National Bureau of Statistics said on Thursday. Numbers higher than 50 indicate improving conditions Both overseas and domestic consumers are snapping up products from China’s factories as global demand remains buoyant, and that’s sustaining producer inflation and boosting corporate profitability. That solid demand has offered a buffer for economic growth for now, as shutdowns of polluting factories and accelerated efforts to curb risky borrowing and cool the property sector feed through the economy. “ The cyclical slowdown t hat ever yone e x pected hasn’t show n up yet,” sa id Zhou Hao, an economist at Commerzbank AG in Singapore a nd t he on ly a n a ly st i n Bloomb erg ’s su r vey to acc u rately forecast t he ma nu fact u r ing PMI. Such strong performance will put pressure on the bond market, he said, adding that “inflation will continue into at least early next year.” “A fter a holiday wobble in October, manufacturers fired up again in November, boosting output,” said Frederic Neumann, cohead of Asian economics research at HSBC Holdings Plc. in Hong Kong. “Improving new orders also suggest that activity will remain relatively firm into year-end, easing worries that tighter environmental and f inancia l pol icies wou ld throttle output.” Bloomberg News

ussia’s qualms over how far to prolong oil-output cuts with O rg a n i z at i o n o f Pe t ro l e u m Exporting Countries (Opec) may reflect a shifting calculus for an economy feeling increasingly hobbled by shackling one of its biggest growth drivers. Although a recovery in crude prices was crucial to mending the budget and the ruble, Russia is now confident it can ride out a downturn in oil if it comes to that. On Wednesday Opec and Russia moved closer to a deal to extend their oil-production cuts until the end of next year, but there was no indication that Moscow had received the assurances it was said to be seeking on how and when the agreement could be phased out. With growth in industrial output at a halt after a surprise deceleration in GDP last quarter, Russia may be getting second thoughts over the historic agreement struck a year ago with the Opec and due to expire at the end of March. Meanwhile, Rosneft PJSC may be eager to shake off the pact’s restraints toward the end of 2018, given the pipeline of projects Russia’s biggest oil company has in the works, according to Citigroup Inc. “A flat oil-production profile is quite a big hit to GDP,” Clemens Grafe, an economist in Moscow at Goldman Sachs Group Inc., said by phone. “Russia has to be very careful not to overextend and basically support oil prices in the short run at the expense of lower oil prices in the long run, hence adding to volatility rather than reducing it.” Russia’s recovery stumbled last quarter following the country’s longest recession this century, with Economy Minister Maxim Oreshkin partly blaming the curbs negotiated with Opec for the zero growth in industrial output in October. Crude production has decreased by 2.7 percent since reaching its post-Soviet record in October 2016. The world’s biggest energy exporter has already made clear that it’s hunkering down for years of depressed oil prices, using the level of $40 a barrel for Russia’s Urals blend to shape its entire economic policy, from its monetary stance to public finances. It’s the price used to calculate the country’s budget from 2017 to 2019 and to carry out foreign-exchange purchases

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as part of a fiscal mechanism implemented this year. Russia’s gains from the deal with Opec were estimated at 2.5 trillion rubles ($43 billion), with some 1.75 trillion of additional tax revenue and the rest going as an extra gain to oil companies, according to President Vladimir Putin. To balance the budget, the government needs the price of oil to average $60 a barrel this year and $50 in 2018, about half the level in 2012 and 2013. The oil industry accounts for 15 percent to 20 percent of GDP, according to Goldman Sachs. For Russia, reassurance about how the cuts would eventually be wound down seemed to be as important as the duration of the extension, according to people involved in the closed-door negotiations in Vienna. Russian Energy Minister Alexander Novak offered a positive impression of the discussions so far, and said final details will be announced on Thursday. Russian oil producers currently aren’t hurting from the curbs, but the situation will change next year as Rosneft looks to bring greenfield projects on stream and tries to reverse a natural decline at its existing fields, according to Ronald Smith, Citigroup’s energy analyst in Moscow. Another concern for Russia is the possible fallout of higher oil prices for the currency. Coming off its best-ever year in 2016, the ruble is up another 5 percent in 2017 against the dollar, threatening the competitiveness of Russian exporters. Still, the ruble has increasingly decoupled from oil, with the link eroded this year as foreign investors piled into Russian assets to benefit from one of the highest real yields in emerging markets. The ruble has also been shielded by the Finance Ministry’s foreign-currency purchases to soak up revenue earned in excess of the $40 oil price assumed in the budget. With presidential elections only months away, a possible plunge in the ruble in case oil prices drop also poses political risks, according to Vladimir Tikhomirov, chief economist at BCS Financial Group, a Moscow brokerage. A weaker ruble is “double-edged sword: maybe it will suppor t the budget, but it could also cause a certain discontent among some voters,” he said. “Ahead of the elections, it could be seen as a weakness.” Bloomberg News

The US has proposed changes to the North American Free Trade Agreement (Nafta) that have been rejected by Mexico and Canada, raising the risk that Trump will follow through on his threat to pull out of the deal. The US also wants to revamp its trade deal with South Korea. “ There is a sense that this ad m i n ist rat ion rega rd s w it h suspicion” multilateral organizations, such as the World Trade Organization (WTO), said Carlos Gutierrez, who was US Commerce secretary under George W. Bush. He’s now chairman of the National Foreign Trade Council in Washington. He added Nafta ta lks “aren’t going any where,” a distressing situation for globa l companies

That contradiction will loom over the world’s trade ministers when they meet next month in Argentina at a high-level gathering of members of the WTO. W TO Director General Roberto Azevedo has warned that the Trump administration’s decision to block appointments to the WTO’s appeals panel is undermining its ability to resolve trade disputes. Trump doesn’t feel the US gets a fair shake at the W TO— an arg ument ot her members question, given America’s leading role in creating the trade tribunal and the global rules that under pin it. “Ever y countr y in the world hates the W TO. They just hate all the alternatives worse,” said Rufus Yerxa, president of the National Foreign Trade Council, whose members range from Coca- Cola to Facebook. “ That’s really the lesson the US has to draw. It’s easy to hate some

system rules. The question is, what’s the alternative? ”

Strong momentum

But while the r isks stemming f rom trade tensions rema in, the economic backdrop cou ld h a r d l y b e r o s i e r. G o l d m a n Sachs Group Inc. and Barclays Plc. forecast global growth w ill reach 4 percent next year. The trade recovery is fueling confidence elsewhere too. A nascent recovery in investment as companies spend more on upgrading and expanding to meet demand creates a second wave of support. I l l i noi s -ba sed C ater pi l l a r, long a pointer for global growth, has seen increased sales in almost every corner of the world: from Asia to Europe, and Africa to Latin America. A nd even w ith a protectioni st Tr u mp presidenc y, t rade pac t s cont i nue to get i n ked e l se where. T he Tra n s Pac i f ic Pa r t nersh ip, du mped by Tr u mp, h a s been rev ived by the 11 remaining members who continue to discuss it. “The global economy appears set to remain in good shape in 2018 as the broad-based economic strength seen this year will carry over,” Oxford Economics wrote in a recent note, in which they revised their forecast for world trade higher by 0.5 percentage points to 4.2 percent next year. “We see some scope for further upward revisions.” Bloomberg News

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Croat war criminal’s shocking death stuns UN intl tribunal

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HE HAGUE, Netherlands— Seconds after a United Nations judge confirmed his 20-year war crimes sentence on Wednesday, former Bosnian Croat military commander Slobodan Praljak shouted, “I am not a war criminal!” threw back his head, drank liquid from a small bottle and told the court he had taken poison.

A flustered judge halted the hearing and Praljak was rushed to a nearby hospital, where he died. Shocking images of the 72-yearold former philosophy professor and theater director who became a wartime general shouting and drinking what he said was poison were streamed live on the court’s web site and around the Balkans. The death cast a pall over the last case at the groundbreaking International Criminal Tribunal for the former Yugoslavia. Judges upheld sentences ranging from 10 years to 25 years against Praljak and five other Bosnian Croat wartime political and military leaders for their part in a plan linked to Croatia’s late former President Franjo Tudjman to violently carve out a Croat-dominated mini-state in Bosnia during the Balkan wars by killing, mistreating and deporting Muslims. Croatian Prime Minister Andrej Plenkovic offered his condolences to Praljak’s family and said the former general’s actions reflected the “deep moral injustice” done to him and the five others whose sentences were also upheld by the appeals judges on Wednesday.

In their ruling, the judges con f i r me d t h at P r a lja k w a s guilty of crimes, including murder, persecution and inhumane treatment as part of the plot to establish a Croat entity in Bosnia in the early-1990s, as well as the 20-year sentence initially handed to Praljak in May 2013 at the end of the six men’s trial. Ironically, Praljak, who surrendered to the tribunal in April 2004 and had already been jailed for 13 years, could have soon walked free because those who are convicted are generally released after serving two-thirds of their sentences. A f t e r P r a l j a k ’s o u t b u r s t , Dutch police immediately were called in to launch an independent investigation. Questions the detectives will attempt to answer include: What was the liquid Praljak drank, and how did he manage to get it into the tightly guarded courtroom? The courtroom where the dramatic scene unfolded was sealed off. Presiding Judge Carmel Agius said it was now a “crime scene.” A Serbian law yer who has frequently defended suspects at the UN war crimes court in

Slobodan Praljak brings a bottle that allegedly contains poison to his lips, during a Yugoslav War Crimes Tribunal in The Hague, Netherlands. Praljak yelled, “I am not a war criminal!” ICTY via AP

the Netherlands told The Associated Press it would be easy to slip poison into the court. Lawyer Toma Fila said that security for lawyers and other court staff “is just like at an airport,” with security staff inspecting metal objects and confiscating cell phones, but “pills and small quantities of liquids” would not be registered. Nick Kaufman, an Israeli defense lawyer who used to work as a prosecutor at the tribunal, also said a defendant could find a way to bring in a banned substance. “W hen deprived of authority over the masses and the attention that formerly fueled their ego and charisma, such defendants can often be extremely resourceful with the little power they retain,” he said. In the past, two Serbs have taken their lives while in the tribunal ’s custody. In July 1998 Slavko Dokmanovic, a Croatian Serb charged in the deaths of over 200 Croat prisoners of war, was found dead

in his prison cell in The Hague. Milan Babic, a wartime Serbian leader who was closely cooperating with prosecutors, took his life in a prison tribunal cell in March 2006. Wednesday’s hearing was the final case at the groundbreaking tribunal before it closes its doors next month. The tribunal, which last week convicted former Bosnian Serb military chief Gen. Ratko Mladic of genocide and other crimes, was set up in 1993, while fighting still raged in the former Yugoslavia. It indicted 161 suspects and convicted 90 of them. The original trial began in April 2006 and provided a reminder of the complex web of ethnic tensions that fueled fighting in Bosnia and still underlies frictions in the country today. Croatian Prime Minister Plenkovic said that his country’s leadership during the Bosnian war could “in no way be connected with the facts and interpretations” of Wednesday’s judgment. AP

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Trump stokes anti-Muslim sentiment; censured in US, abroad

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A SHINGTON—Stoking the same anti-Islam sentiments he fanned on the campaign trail, President Donald J. Trump on Wednesday retweeted a string of inflammatory videos from a fringe British political group purporting to show violence being committed by Muslims. The tweets drew a sharp condemnation from British Prime Minister Theresa May’s office, which said it was “wrong for the president to have done this.” May’s Spokesman James Slack said the far-right Britain First group seeks to divide through its use of “hateful narratives which peddle lies and stoke tensions.” Brushing off the criticism in an evening tweet, Trump said May instead of focusing on him should “focus on the destructive Radical Islamic Terrorism that is taking place within the United Kingdom.” Trump had turned away from taxes, North Korea and other issues facing his administration to share the three videos tweeted by Jayda Fransen, deputy leader of the British group. It was not clear what drew him to the videos, though one had been shared by conservative commentator Ann Coulter the day before. White House Spokesman Sarah Huckabee Sanders said Trump was simply promoting border security and suggested that verifying the content was not a top concern. “Whether it’s a real video, the threat is real, and that is what the president is talking about,” she said. The tweets read: “VIDEO: Islamist mob pushes teenage boy off roof and beats him to death!” and “VIDEO: Muslim Destroys a Statue of Virgin Mary!” and “VIDEO: Muslim migrant beats up Dutch boy on crutches!” Trump made anti-Muslim comments one hallmark of his presidential campaign and has previously retweeted inf lammatory posts from controversial Twitter

accounts, including some with apparent ties to white nationalist groups. As president, he has sought to ban travel to the United States from a number of majorityMuslim countries. His promotion of the videos came two days after he mocked Massachusetts Sen. Elizabeth Warren as “Pocahontas” during an Oval Office event with Native American veterans, drawing criticism from of Native American war veterans and politicians of both major parties. Britain First opposes what it calls the “Islamization” of Britain. It has run candidates in local and national elections, with little success, and has campaigned against the construction and expansion of mosques. Trump’s retweets gave a wide platform to the previously obscure group. The videos were each shared more than 10,000 times, and Fransen picked up nearly 10,000 Twitter followers in the hours following Trump’s retweets. She thanked him on Twitter, saying “GOD BLESS YOU TRUMP!” Former Ku Klux Klan leader David Duke also welcomed the videos, tweeting that Trump was being “condemned for showing us what the fake news media WON’T. Thank God for Trump! That’s why we love him!” Condemnat ion f rom c iv i lrights organizations was swift. The executive director of the Council on American-Islamic Relations, Nihad Awad, said in a statement that Trump is “clearly telling members of his base that they should hate Islam and Muslims.” The American Civil Liberties Union, in a tweet, said, “Trump’s prejudice against Muslims reveals itself at every turn—with today’s tweets meant to gin up fear and bias.” There are about 3.45 million Muslims in the US, according to an August report from the Pew Research Center. AP

EU official: IS remains What N. Korean photos say about new ballistic missile a terror threat despite T loss of its ‘caliphate’

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NK A R A , Turkey—T he recent loss of its soc a l le d c a l iph ate w i l l cr ipple the Islamic State (IS) group but the ter ror threat posed by t he e x t rem ists is not over yet, the European Union’s (EU) counter-ter rorism coordinator said. Gilles de Kerchove told The Associated Press in an interview that there hasn’t been a massive flow of IS fighters returning to Europe as many had feared following the group’s loss of territory in Syria and Iraq, adding that the intelligence services describe the fighters’ return as “more a trickle than a flow.” However, people inspired by the ideology remain a threat and the group is likely to entrench in other parts of world with “weak governance,” such as Libya or Afghanistan, the EU official said. De Kerchove was in Turkey for talks on enhancing cooperation against terrorism. He spoke with the AP on Tuesday but his comments were under an embargo set by the European Union’s office in Ankara until Thursday. IS has been driven from more than 96 percent of the large parts of Iraq and Syria it once held, crushing its goal of establishing a caliphate in the region. Raqqa, the group’s de-facto capital in Syria, fell to Kurdishled forces on October 17, four months af ter operations to reclaim it began. The city was

the group’s hub of operations, and its capture was a major symbolic blow. “With no physical caliphate anymore, it will be much more difficult for the organization to repeat what they have done and attract so many people,” de Kerchove said. “That does not mean that the game is over. We still have to address the ideology. More and more, we see in Europe [people] inspired by terrorism, homegrown terrorism.” He said IS “will probably develop in one way or the other in some parts, where you have weak governance. Either more weak governance like in Libya or Afghanistan, or where it’s more difficult to police, like in the Sinai.” A n attack on a mosque in Eg y pt’s northern Sinai region last week k i l led more t han 300 people. A d d re s s i n g t he i s s u e o f dozens of European women and children in Iraq and Syria whose husbands and fathers joined IS, de Kerchove said they should be allowed to return, but spoke of the necessity of putting in place effective rehabilitation programs. He praised Turkey’s efforts to fortify its border with Syria, through the construction of a wall and improved policing. “I wouldn’t say it’s impossible to cross the border but it’s now 10 times more difficult than it was before,” he said. AP

OKYO—North Korea released dozens of photos on Thursday of the Hwasong-15, a new intercontinental ballistic missile (ICBM) it claims can reach any target in the continental United States. The photo dump, published in the paper and online editions of the ruling party’s official daily, is a goldmine for rocket experts trying to parse reality from bluster. Their general conclusion is that it’s bigger, more advanced and comes with a domestically made mobile launcher that will make it harder than ever to preemptively destroy. But there’s a potentially major catch: it might not have the power to go much farther than the West Coast if it is loaded down with a real nuclear warhead, not a dummy like the one it carried in its test launch on Wednesday. Here’s a closer look:

The missile

The North’s new missile appears to be significantly bigger than the Hwasong-14 ICBM it tested twice in July. Note how it dwarfs North Korean leader Kim Jong Un, who stands about 170 centimeters (5 feet 7 inches) tall. In a tweet just after the photos were published, Michael Duitsman, a researcher at the Center for Nonproliferation Studies in Monterey, California, said: “This is very big missile.... And I don’t mean ‘Big for North Korea.’ Only a few countries can produce missiles of this size, and North Korea just joined the club.” Si ze i s i mpor t a nt bec au se a missi le targeting the US wou ld h ave to c a r r y a lot of f ue l . D u it sm a n a l so sug gested t he new IC BM appea rs to h ave a

North Korean leader Kim Jong Un (third from left) talks with his aides near what the North Korean government calls the Hwasong-15 intercontinental ballistic missile in North Korea. Independent journalists were not given access to cover the event depicted in this image distributed by the North Korean government. The content of this image is as provided by the North Korean government and cannot be independently verified. Korean Central News Agency/Korea News Service via AP

d if ferent eng ine a r ra ngement a nd i mproved steer i ng.

The launcher

North Korea boasted repeatedly in its announcement of the launch on Wednesday that the Hawasong-15 was fired from a domestically made erector-launcher vehicle. Its photos back that up. Being able to make its own mobile launch vehicles, called TELs, frees the North from the need to get them from other countries, like China, which is crucial considering the tightening of international sanctions that Pyongyang faces. TELs make it easier to move

missiles around and launch them from remote, hard-to-predict locations. That makes finding and destroying the Hawasong-15 before a launch more difficult.

The payload

North Korea claims the Hwasong-15 can carry a “super heavy” nuclear payload to any target in the mainland US. The reentry vehicle, that nose cone in the photo, does indeed look quite large. But the heavier the load, the shorter the range. Michael Elleman, a leading missile expert, has suggested in the respected 38 North blog that Hwasong-15’s estimated

13,000-kilometer (8,100 mile) ra nge a ssu mes a payload of a rou nd 15 0 k i lo g r a m s (3 3 0 pounds), which is probably much lighter than any real nuclear payload the North can produce. To get to the West Coast, the North needs to keep that weight down to 500 kilograms (1,100 pounds). Whether it can do that remains questionable. “Kim Jong Un’s nuclear bomb must weigh less than 350 kilograms [800 pounds] if he expects to strike the western edges of the US mainland,” Elleman e s it m ate d . “A 6 0 0 - k i lo g r a m [1,300 -pound] payload barely reaches Seattle.” AP

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Editor: Jun B. Vallecera • Friday, December 1, 2017

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NG debt as percent of GDP improves further

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ore government debt relative to local output growth, or the GDP, retreated to only 41.7 percent of GDP in the third quarter from 42.4 percent a quarter earlier, the Bureau of the Treasury (BTr) said. Treasury officials reported on the improvement on Thursday following the release of data showing core government debt having actually risen higher to P6.501 trillion in October. This brought total outstanding core government debt 0.9 percent higher dur-

ing the month or an expansion in debt by P57.19 billion. This means that, while the outstanding core or national government debt actually grew in nominal terms, such indebtedness as percent of GDP improved to a more manageable level.

According to the BTr, the domestic debt segment of the IOUs accounted for a bigger share of the total debt pie for the month. Treasury data show the government w ith outstanding ag gregate debt of P6.501 trillion in October this year, or 7.1 percent more than core government debt of only P6.069 trillion in the same month in 2016. “The effect of local currency depreciation on foreign currency debt considerably affected the end-month level of national government debt,” the BTr said in a statement. Broken down, the country’s domestic debt outpaced that of external debt, with the former amounting to P4.216 trillion and the later reaching only P2.285 trillion.

amounted to P2.285 trillion, 1.3 percent higher than the previous month [at P2.255 trillion]. This was due to the weakening of the peso against the US [United States] dollar which translated to a P37.98 billion increase in the level of external debt,” the BTr said. The total national government guaranteed debt slightly went down by 0.005 percent month-on-month to P489.09 billion as of end-October 2017. Year-on-year, this translated to a 12.8-percent contraction from the P560.65 billion in October 2016. “The national government debt ratio [as of end-third quarter] is at 41.7 percent of GDP. This continues the downward trajectory for the year after the slight increase to 42.4 percent as of the second quarter of 2017, from the end-2016 level of 42.1 percent,” the BTr added. Rea Cu

Domestic debt expanded by 7.6 percent in October this year compared to only P3.917 trillion in 2016, on the back of the government’s net issuance of dent notes. “National government domestic debt amounted to P4.216 trillion, a 0.7-percent increment from the end-September level [at P4.188 trillion]. Net issuance of government domestic bonds reached P27.15 billion, while the P0.42-billion impact of currency adjustments on onshore dollar bonds added to the increase in domestic debt for the month,” the BTr said. Debt incurred from foreign entities reached P2.285 trillion, which also increased by 6.2 percent, from P2.151 trillion as of end-October in 2016 owing to the payment of government securities. “National government external debt

Waze routing and navigation Notions of lower features now serve motorcyclists deposit reserves persist among lenders S S ome of the biggest lenders in the countr y reported increased anticipation that the monetary authorities would allow for lower deposit reserves over the near horizon. Such a view, lender officials said, was made increasingly possible by headline inflation actually proving lower than that targeted this year by the economic managers. Big guns in the industry are saying the anticipated adjustments in the banks’ deposit reserve ratios by the Bangko Sentral ng Pilipinas (BSP) augurs well for both the banking industry and the larger economy. Pedro Florescio, treasurer at Banco de Oro for instance, said prospectively lower deposit reserves among banks is vital in improving the lending capacity of banks. “Lowering the deposit reserve requirement ratio [RRR] will allow banks to boost its lending capacity, providing a continuous supply of credit for consumers and businesses” alike, Florescio said. Such a reduction, he continued, should

not only allow banks to boost their retail and corporate lending but present greater opportunities that benefit the economy and the government’s push for financial inclusion. Bank of the Philippine Islands Treasurer Antonio Paner also brushed aside concerns that lowering the RRR only adds to more inflationary pressure. “At t he c u r rent cond it ion, t here w il l be minima l inf lationar y effect bec au se t he reduced cost of f u nd s will help reduce cost-push inf lation,” Paner said. “We are confident that the BSP is equipped to manage the impact on price changes as there are other monetary tools that can be used,” he said. The banks’ deposit reserves, or the portion they may lend but must instead keep at all times in the vaults of the BSP, currently stands at 20 percent. At this level, economists lament as one of the highest deposit reserves in the region. Such has also been in place since May 2014. Bianca Cuaresma

Bitcoin surges past $11,000

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itcoin surpassed $11,000 in a matter of hours after hitting the $10,000 milestone, taking this year’s price surge to almost twelvefold as buyers shrugged off increased warnings that the largest digital currency is an asset bubble. The euphoria is bringing to the mainstream what was once considered the provenance of computer developers, futurists and libertarians seeking to create an alternative to central bank-controlled monetary systems. While the actual volume of transactions conducted in cryptocurrencies is relatively small, the optimism surrounding the technology continues to drive it to new highs. Some on Wall Street are embracing the run, with more than 100 hedge funds now dedicated to digital currencies. Others are issuing dire warnings, with Nobel Prize winner Joseph Stiglitz saying it ought to be outlawed as it “doesn’t serve any socially useful function.” Bitcoin has risen by about 75 percent since October alone, after developers agreed to cancel a technology update that threatened to split the digital currency. Even as analysts disagree on whether the largest cryptocurrency by market capitalization is truly an asset, its $178-billion value already exceeds that of about 95 percent of the S&P 500 Index members and is driving the debate about where financial technology is headed. “It feels frothy, of course,” said Bob Diamond, chief executive officer of Atlas Merchant Capital, in a Bloomberg television interview with Francine Lacqua. “I think the issue here is the disruptive nature of technology” for banks. “Whether it’s the application of blockchain, or their core processing, or delivery to customers or clients, financial services today is being disrupted by technology.” The rising profile of digital currencies even saw bitcoin feature in the Senate confirmation hearing on Tuesday for Federal Reserve chairman nominee Jerome Powell, who’s a current board member. Answering a senator’s question, he said that “cryptocurrencies are

something we monitor very carefully,” and that at some point, their volumes “could matter” for monetary policy, though not today. “It really is a validation of the fact there’s real enthusiasm, real value and maybe a use case for bitcoin and other cryptocurrencies,” said Arthur Hayes, cofounder and CEO with BitMEX, a Hong Kong-based cryptocurrency derivatives venue. “It’s the start of broader attention and adoption by the investing public.” There’s no agreed authority for the price of bitcoin, and quotes can vary significantly across exchanges. In Zimbabwe, where there’s a lack of confidence in the local financial system, the cryptocurrency has traded at a persistent premium over $10,000. Volumes are also difficult to assess. Bloomberg publishes a price that draws on several large bitcoin trading venues. It was at $11,254.75, up 13 percent, as of 9:16 a.m. New York time. From Wall Street executives to venture capitalists, observers have been weighing in, with some more skeptical than others as bitcoin’s rise has grown steeper, sweeping along individual investors. The number of accounts at Coinbase, one of the largest platforms for trading bitcoin and rival ethereum, has almost tripled to 13 million in the past year, according to Bespoke Investment Group Llc. In a move toward mainstream investing, CME Group Inc. has said it plans to start offering futures contracts for bitcoin, which could begin trading in December. JPMorgan Chase & Co., the largest US bank, was weighing last week whether to help clients bet on bitcoin via the proposed futures contracts, according to a person with knowledge of the situation. “This is going to be the biggest bubble of our lifetimes,” hedge fund manager Mike Novogratz said at a cryptocurrency conference on Tuesday in New York. Novogratz, who’s says he began investing in bitcoin when it was at $90, is starting a $500-million fund because of the potential for the technology to eventually transform financial markets. Bloomberg News

ince its founding, Waze has been routing automobile drivers, helping them find optimal routes, avoid traffic, get arrival time estimations and more. A few years ago Waze added the “Taxi” vehicle type to better serve professional drivers who can access roads otherwise restricted to private drivers. Now Waze is adding a new vehicle type: motorcycle. The new addition comes primarily as a way to ensure that all motorcyclists are able to navigate through roads more safely. In addition to enjoying the standard suite of Waze benefits, including alerts on police, speed camera and speed traps, road closures, restrictions and more—motorcycle drivers will also enjoy:

n Improved routes based on information from fellow motorcyclists’ Android iOS; n Better arrival-time estimations that may vary from automobile estimated time of arrivals; n Routing on narrow roads where cars are not permitted; n New motorcycle cursor for vehicle type; new motorcycle moods available to all Wazers; and n Easy navigation without touching the phone—to ensure a safe ride, all motorcyclists can utilize voice commands so they don’t need to touch the phone while docked/they’re driving. To turn on routing for motorcycles, visit Settings > Vehicle type and tap “Motorcycles.” Drive times, routes and roads vary between automobiles and motorcycles.

By including a new vehicle type, Waze expands its support to include a driving experience unique to motorcycle navigation. Due to their size and agility, motorcycles are an efficient and economical solution for many living in busy urban centers. They are becoming more useful in European cities, where automobiles are barred from accessing narrow roads. Meanwhile, in countries in the APAC region, motorcycles are a primary transportation vehicle. This new feature answers the call made by countless Waze fans, the world over. By adding a distinction within vehicle types, and adding motorcycles to the group—data collection will increase in accuracy, and all drivers regardless of car type will benefit.

Joint BOC-BIR anti-smuggling unit formed

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he Bureau of Customs (BOC) has issued a memorandum to all district directors to coordinate with the regional offices of the Bureau of Internal Revenue (BIR) in forming Joint Anti-Smuggling Units in their respective areas. This was in compliance with the directive from Finance Secretary Carlos G. Dominguez III mandating the agencies to go after “erring importers, brokers and BOC personnel” in customs districts outside Metro Manila.. “In line with the instruction of the secretary to strengthen anti-smuggling efforts and establish anti-smuggling units in the provinces or regions, I issued a memorandum directing all these district collectors to coordinate with BIR regional directors for the establishment of Joint Anti-Smuggling Units,” Customs chief Isidro S. Lapeña said in a report to the Department of Finance (DOF) Executive Committee (Execom). Lapeña earlier was ordered to spearhead the creation of joint regional task forces with the BIR to unify and beef up anti-smuggling operations in the provinces. Dominguez said he wanted the agencies to strengthen their cooperation at the regional level against anti-smuggling activities, considering that most of the illicitly traded goods entering the country are

Fintech may hurt Hong Kong, South Korean banks most–MAS

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mong banks in Asia’s biggest economies, those in Hong Kong, South Korea and Singapore, stand to lose the most in the face of competition from financial-technology companies, according to Singapore’s regulator. Operating income at Hong Kong lenders could drop by about 7 percent due to being displaced in payments, deposit and lending, according to estimates made by the Monetary Authority of Singapore (MAS) in its annual Financial Stability Review. South Korean and Singapore banks could see reductions of more than 5 percent, the regulator said in a report published on Thursday. The estimates are “based on an unmitigated scenario in which banks do not take actions to address the fintech competition,” the MAS said. “The competitive threat and its corresponding impact is expected to vary across business lines,” it said, adding payment is the largest area of risk.

being sold outside Metro Manila. Dominguez also directed Lapeña and Revenue Commissioner Caesar R. Dulay to focus on rice, fuel, steel, cigarettes and other food and agricultural product, such as chicken, onions and garlic in intensifying the government’s efforts to combat smuggling. On top of creating BOC-BIR anti-smuggling units, Lapeña reported the recent intercept of P25 million worth of smuggled goods from several shipments loaded with agricultural products, liquor, auto and aircraft parts and other merchandise and seized 18 luxury vehicles collectively worth P103 million but were grossly undervalued at only P32 million, both at the Manila International Container Port (MICP). On curbing corruption at the BOC, Lapeña instituted measures helping eliminate opportunities for illegal practices, among them, the one assessment/no sectioning policy to eliminate the palakasan and suki system that avoid delays in the processing of shipments. The measure does away with the practice of dividing the bureau’s Assessment Division into 15 sections according to commodity. Lapeña is also implemented an “antifixer” campaign at the BOC’s Accounts Management Office.

Under his one-strike policy, Lapeña relieved or reassigned 116 customs personnel, including 10 district collectors for various infractions. As a result of these efforts, the BOC’s October 2017 collection of P42 billion has emerged as the highest in the bureau’s history with the Ports of Manila, Batangas and the MICP also reaching its highest collection rates during this period. He said the September 2017 collection of P40.26 billion was also higher than the BOC’s monthly average collection of P35 billion. The BOC’s October 2017 collection was higher by 26.4 percent, from last year’s collection of P33.22 billion for the same period. Lapeña previously bared a five-point program for the BOC that included eliminating the tara system, increasing revenue collections, and strengthening the government’s anti-smuggling efforts while improving the incentives and rewards systems for employees. Lapeña said that topping his priority list is the weeding out of corruption at the BOC, which he plans to do by implementing the “no tara, no gift and no take” policy at the bureau. Customs officials and employees will also be subjected to lifestyle checks, Lapeña said.

Case clippings

By Justice S J Ranada Jr. INFORMATION–failure to designate offense The failure to designate the offense by statute, or to mention the specific provision penalizing the act, or an erroneous specification of the law violated, does not vitiate the information if the facts alleged clearly recite the facts constituting the crime charged, for what controls is not the title of the information or the designation of the offense, but the actual facts recited in the information. People v. Ursua 04 Oct. 2017

GR 218575 Peralta, J

A10 Friday, December 1, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

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editorial

Federalism or feudalism

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recent article in The Economist magazine was titled “The Philippines has the most persistent poverty in Southeast Asia”. The author attempted to identify the problem of why the Philippines has done such a mediocre job of poverty reduction in comparison to our neighbors. The subhead was, “But the government of Rodrigo Duterte is paying the poor some attention,” giving the impression that the current administration is doing a better job than previous governments. The primary cause of our failure is “Low growth: Between 1980 and 2005 the average annual increase in GDP was just 0.63 percent, a pathetic pace by regional standards.” Undoubtedly, that is a primary contributor to the dismal numbers of long-term poverty reduction. However, the actual focus of the article and the conclusion of why Philippine poverty reduction is such a failure follows. “The [economic] growth is concentrated in Manila and the two neighboring provinces, which generate around 60 percent of the country’s output.” We are being told something that we have all known for a long time. We even have a term for it: “Imperial Manila.” The article then goes on to discuss provincial Philippines: “Jobs in rural areas are scarce. Unfair systems of land ownership left over from colonial times are largely to blame. Powerful families have kept huge estates through their political influence; the family of former presidents Corazon and Benigno Aquino is a case in point.” Birth rates are also much higher in the provinces with “the average woman in Leyte will have 3.5 children during her lifetime. Her counterpart in Manila will have just 2.3.” The author continues with examples of the differences between Imperial Manila and the rural areas. “Many in the provinces do not speak Tagalog, the national language, let alone English.” The Economist article concludes, “The popular perception of him [Duterte] as an outsider willing to fight against the elites of Manila has some grounding in reality.” Some will see this as a justification for the President’s call for federalism. The argument that no one knows what “federalism” would mean to the Philippines is weak. Simply put, it clearly means that the local government has more—perhaps final—authority to raise revenues and to decide expenditures. The idea is that a government that is closer to the people and the local problems can make better decisions. On paper, that looks to be a good idea. However, the reality—and our concern—is that the line between federalism and “feudalism” can be easily blurred. The belief that the Philippines has moved beyond the mentality and structure of the “provincial warlord” is dangerously naïve. No better example is the Maguindanao massacre. The feudalism of medieval Europe was the family of the primary landholder giving the peasants just enough sustenance to work the fields but not enough to give them the strength to rise up against the Lord of the Manor. Not much has changed in the past thousand years. Interestingly and maybe just coincidental (or not) is that the best effort at poverty reduction has occurred in countries—China, Vietnam, Indonesia and Thailand—with very strong and controlling national governments. Federalism may be an important step to break the hold and power of Imperial Manila. But unless the rule of law can overcome the warlords, we are not going to accomplish anything positive. Since 2005

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Three questions James Jimenez

spox

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t’s almost an article of faith that a commissioner of the Commission on Elections (Comelec) cannot be reappointed as chairman in case of a vacancy in that position. This belief is rooted in the 1986 Constitution, which explicitly provides that “[t]he chairman and the commissioners shall be appointed by the President with the consent of the Commission on Appointments [CA] for a term of seven years without reappointment.” For many, and for a long time, this particular provision was considered uncontroversial and as clear as day. In fact, since I joined the Comelec in 2000, I’ve had occasion to repeat the exact same principle at least twice. Imagine everyone’s surprise then when, late last week, the news broke that the Chief Executive had nominated a sitting commissioner to succeed the recently resigned Comelec chairman. “Can that be done?” everyone asked. The Supreme Court itself provided the answer to that when, in

2012, it promulgated its ruling in Funa v. Villar (GR 192791), holding that a “a commissioner who resigns after serving in the commission for less than seven years, is eligible for an appointment to the position of chairman for the unexpired portion of the term of the departing chairman,” provided “that the aggregate period of the length of services as commissioner and the unexpired period of the term of the predecessor will not exceed seven years and that the vacancy in the position of chairman resulted from death, resignation, disability or

removal by impeachment.” In other words, a sitting commissioner can be tapped by the President to assume the chairmanship, if that commissioner vacates his original position, and if the total time he will be spending on the Commission—the number of years spent as commissioner, plus the number of years he will be serving as chairman—comes out to no more than seven years. But what about the provision that specifically prohibits reappointment? Funa v. Villar answered that, too. According to the court, the “reappointment” spoken of by the Constitution simply referred to a person getting appointed to the same position again. Thus, a commissioner cannot be named commissioner a second time. In contrast, moving from one position to another, say from commissioner to chairman, would actually be a new appointment. In the strict legal sense therefore, the court said, that couldn’t be considered a reappointment, as prohibited by the charter. After hearing these answers, the conversation circled back around to “So is Commissioner Sheriff Abas the new chairman?”

India restores faith in capitalism

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By Mihir Sharma | Bloomberg View

ccording to one of India’s most respected bankers, it’s a once-in-a-lifetime opportunity—a mammoth sale of distressed assets, some $40 billion in the first round. Much could go wrong, of course, especially given that so many powerful interests have so much money at stake in the process. Fortunately, Prime Minister Narendra Modi’s government, which has stumbled in some of its biggest policy moves recently, appears to be handling this particular challenge with both agility and a sense of urgency. That mind-set should now be carried over into other parts of the reform agenda.

The fire sale of assets has been made possible by one of Modi’s true achievements: the passage of a modern law to replace the creaking, ineffectual bankruptcy mechanism India had used earlier. The law gives courts the power to appoint resolution professionals to sell off and revive investments and companies financed by loans that have turned bad. The hope is that India’s statecontrolled banks will recover some of their money and that the economywide problem of stalled investment and stranded assets might finally begin to shrink. As has been made clear by the botched rollout of a nationwide goods-and-services tax, however, even a landmark reform can do great damage if not handled well. One problem with the new law has been apparent since the beginning: It didn’t say anything about who could

or couldn’t bid for these distressed assets, leaving open the possibility that the same company owners who had bankrupted their firms—many of them powerful and politically connected families—could buy them back at pennies on the dollar. This might seem counterintuitive. Someone who’s deep in debt wouldn’t seem likely to be the winning bidder at a blind auction. In India, however, company owners (or “promoters,” in the local terminology) are adept at squirrelling away money—whether company revenues or funds borrowed with the firm’s assets as collateral—using complicated group holdings and privately held corporations. At least some owners undoubtedly saw the new bankruptcy act as a way to retain control of the firms they had mismanaged, while avoiding the need to repay the loans

that state-controlled banks had unthinkingly handed them. At first, state banks seemed happy to oblige. Some senior bankers argued that the existing owners at least understood the sectors they were in and, if they offered high bids, banks should accept them in order to preserve the value of the assets as far as possible. In one much-publicized example, one of the banking system’s largest debtors reportedly tied up with a Russian bank to bid for a steel company it had previously controlled. This loophole threatened to discredit the whole process. Most observers have an understandably hard time understanding why owners who have demonstrated their inability to judge market conditions, or to abide by their promises, should be treated like any other bidder. Even if some of them had defaulted because of a shift in the economic climate rather than malfeasance or mismanagement, the damage done to the credibility of the process by including them in auctions outweighed any possible benefit. So, it’s welcome that the government last week issued an ordinance modifying the bankruptcy law so that anyone who runs a company into the ground is forbidden to bid for a distressed asset. (Parliament still needs to ratify the change within six months.) The government says that its “amendments aim to keep

Well, technically, not yet. First of all, he wasn’t “appointed,” but nominated. That’s very clear from the letter sent by the Chief Executive, dated November 22. In that letter, which contains very specific language, the President informed Abas that he had been “nominated,” for the position of chairman of the Comelec. The distinction between being appointed and being nominated is a critical one—which, judging from the news stories the following day, was entirely lost on headline writers. A nominee only assumes office “upon consent by the Commission on Appointments (CA),” just as Abas was informed in the President’s letter. Appointees, on the other hand, generally ad interim (or appointed while Congress is not in session), assume office right away subject to confirmation of their appointment by the CA; without that confirmation, the ad interim appointee needs to vacate the office. Going by the Chief Executive’s letter, it is clear that the commissioner must wait on the action of the CA, consenting—not “confirming”—to his appointment before he can take the chairmanship of the Comelec.

out such persons who have willfully defaulted, are associated with nonperforming assets, or are habitually noncompliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company.” If nothing else, this means that, in the future, owners will be quicker to try and push their companies into resolution; the law allows them one year to raise funds that would allow them to retain control. That should help clear the credit pipes a bit faster. But there was always meant to be a larger purpose to bankruptcy reform, as well: to revive a certain degree of faith in India’s corporate sector, which had sullied its reputation over the past decade as high-profile promoters took out loans they knew they couldn’t repay, defrauded investors and outright mismanaged their businesses. A bankruptcy process that ended with the same bunch of capitalists in control of the same sectors might have saved some banks—and taxpayers—money in the short run. But it wouldn’t have achieved the aim of restoring credibility, whether in state-controlled banks or in troubled infrastructure companies. The new ordinance gives the investment-starved Indian economy a chance to regain some dynamism and for investors to begin to trust the private sector again. India Inc. needs new blood and new faces. The government’s trying to ensure it finds them.

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Caritas Margins’s Buy and Give Expo 5 opens at Glorietta 5 Rev. Fr. Antonio Cecilio T. Pascual

SERVANT LEADER

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aritas Margins opens the last leg of its Buy and Give Expo 5 on Monday at the Sunken Activity Center of Glorietta Mall in Makati City.

His Excellency Cubao Bishop Honesto Ongtioco D.D. will grace the blessing and opening of the Expo on December 1 at 11 o’clock in the morning with guests Mr. Roberto de Ocampo, Ms. Hortie Lim, Ms. Nena Prieto and Ms. Emilie Cruz. The Expo will run until December 3 and offers products by marginalized community partners of Caritas Margins, ranging from food, home and ladies accessories, personal-care products, gift items and decors. It will also feature artworks by resident inmates of penal communities cared for by Caritas Manila’s Restorative Justice Ministry. Caritas Margins is a social enterprise that markets products of poor micro entrepreneurs all over the Philippines. To date, Caritas Margins supports over 900 micro entrepreneurs in Metro Manila and the provinces by providing them livelihood opportunities and marketing their products. The three-day Expo will also make available products of Caritas Manila’s Segunda Mana, such as artworks and preloved items like clothes, shoes, bags, toys and home and fashion accessories at affordable prices. Segunda Mana, which advocates the

3Rs—reuse, reduce and recycle— provides employment to almost 6.7 percent of the unemployed from the urban-poor sector and livelihood to families who are engaged in trading as a source of income. As Christmas is approaching, let us all make Caritas Margins’s Buy and Give Expo 5 a way to let everyone feel the grace and happiness in the birth of Jesus Christ. Let us all support the programs of Caritas Manila as it continues to help the less fortunate be blessed throughout the year. Proceeds of the Expo are for the benefit of Caritas Manila’s flagship program, the Youth Servant Leadership and Education Program, which supports more than 5,000 youth scholars nationwide. The faithful are also encouraged to attend the Eucharistic Celebration to be held every five o’clock in the afternoon during the three-day event. To know more about Caritas Manila, visit www.caritasmanila.org.ph. For your donations, call our DonorCare lines 563-9311, 564-0205, 0999-7943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www.veritas846.ph. For comments, e-mail veritas846pr@gmail.com.

China’s microlending mess By Christopher Balding Bloomberg View

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n their bid to reduce risk, China’s financial regulators are cracking down on a promising business: online microlending. Although the industry has some serious problems, killing it off would be a big mistake. Last week, state media announced that broad changes were coming to the sector, on the orders of the State Council’s Financial Stability and Development Committee. Approvals of new lenders have been halted, and existing firms are likely to be severely curtailed.To an extent, this crackdown reflects valid concerns. Growth in microlending has been explosive in recent years. Outstanding loans offered on peer-to-peer platforms ballooned by 256 percent from October 2015 to the same month this year, reaching a total of 1.2 trillion yuan. Although still small in relative terms—less than $150 billion worth of lending in a $40-trillion financial-services market— the industry presents some growing risks. One is abusive lending practices. The official index rate for peer-to-peer (P2P) loans hovers at about 10 percent, but many recently listed microlenders offer annualized rates approaching 40 percent, with some less scrupulous firms making offers that top 100 percent. The phrase “consumer protection” rarely enters the lexicon of Chinese regulators but, in this case, they do seem concerned that too many people are getting in over their heads. A related concern is loan quality. The proliferation of platforms and the enormous growth in balances suggest that some essential aspects of lending—due diligence, internal controls, credit checks—aren’t being carried out prudently. That’s all the more concerning given that most of the loans are unsecured. Stories of bike-sharing companies leaving users without their deposits, and P2P platforms resorting to Ponzi schemes have become alarmingly common. Given these risks, why are so many people looking for loans outside of the traditional banking system? One reason is that China’s stateowned banks simply aren’t meeting consumer demand. With little real competition, they’ve tended to treat customers

as captive deposits while lending mostly to other state-owned enterprises. In response, China’s rapidly growing consumer class has started turning to online platforms offering higher returns, while entrepreneurs have turned to microlenders when they need credit. New bank deposits are down 9.1 percent since October 2016. This suggests that China’s regulators should proceed with caution: Microlending, for all its problems, really does have a lot of advantages. Most obviously, it’s giving consumers greater choice in products that they want. It’s also a potential boon for small businesses that might have been shunned by the big banks. But the real benefits of microlending are likely in the future. Some Chinese fintech firms, for instance, are developing data analytics that would put banks in richer countries to shame. A Chinese credit-analytics firm accessing a typical WeChat profile will know what you spend, where you spend it, and who you spend it with, on top of being able to infer a wealth of other insights from the rich data available. Given time, well-managed microlenders could make great use of such tools.It would be a shame if regulators shut them down. But the government seems more likely to apply a sledgehammer to this industry than a scalpel. The plans announced last week imply that only lenders with significant financial backing will be left standing, likely meaning either state-owned firms or major tech companies, such as Tencent Holdings Ltd. For all the government’s talk of promoting innovation and entrepreneurship, it is reverting to the familiar pattern of selecting favored firms and putting the rest out of business. A better approach for regulators is to be precise about what practices won’t be tolerated, but to otherwise have an open mind. Requiring audited financial statements, along with capital reserves to cover losses by investors, would be a good start. Encouraging fair competition between established lenders and startups should also be a priority. State-owned behemoths aren’t responsive to market demand, use antiquated technology and generally interact poorly with their customers. Smaller and nimbler private firms have revolutionized this landscape and should have the right to compete on a level playing field.

Friday, December 1, 2017 A11

The old houses of this island Tito Genova Valiente

annotations

I Love You Much Too Much Perhaps I hold your heart too tightly But who am I to say If I should hold it lightly Then it might slip away —from an old Yiddish song known popularly as “I Love You Much too Much”

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am walking along the street of Silay. This street, the place tells me, is called Cinco de Noviembre. It is already the 29th of November. The month is waning, and the street regrets. The air is a bit humid. Beyond the trees, I will find out, is the sea unseen from the memories of this old site. A scene of the sea is too much if one is strolling through a place, a small city, of ancient trees and old, old houses. I am with the Executive Committee on Cinema of the National Commission for Culture and the Arts. We are making a sidetrip to Silay after days of thinking about films and encouraging young filmmakers and energetic festival directors about the might of films made from margins, of cinemas produced out of the periphery. The town of Silay is an appropriate ending, cinematic perhaps, but rightfully so for this odd bunch of film scholars, documentarians and cineastes. We thus shake off the humidity and settle in our consciousness a production design of a slight chill in November and a cozy warmth in our heart. We enter a house. It is called “Balay Negrense.” The house is not anymore a home but a museum. Ian Rosales Casocot, the good writer from Silliman Universi-

ty, pulls me aside and whispers: “The problem with preserving houses is that you kill it.” Ian, an inestimable fictionist, uses the word

“ death ” to imply the tragedy of the act of heritage preservat ion. But deat h, l i ke t he fiction of the sea and eternity, is also too much to bear when one’s late afternoon is framed by remembering, edited by nostalgia and directed by imagined histories. We go up the fan-like staircase of the old house. We are late; the museum is closing. The home, you might say, is not open to visitors anymore. We do not insist. The genteel lady at the wide door beams and pushes aside the rope that separates us from recalling an invading. We enter the house. We look around. We do not know where to go. The ground floor has lost the division between the private and the public. There are no more forbidden areas in this home that was once the place only for those who built it and those who lived in it. The kind lady suggests we can listen to her story. She shows us a table of kinship, a diagram of clan. On the wall of the small room near the foyer is a photograph of a woman, her head tilted in a haughty pose. The haught iness

becomes her. She is Conchita Gaston, the Filipina soprano noted for her “Carmen.” There are more photographs on the second floor. As we climb the stairs, we note the omen of the “oro,” the “plata” and the “mata.” Gold, silver and death. If one already knows how death can wait on a step, why choose morbidity? Perhaps, a carpenter is evil, the architect reckless? Perhaps, this is a generation that sees fate as a trickster? On the second floor, the breeze is vicious in its tenderness. The walls have more photographs. This is a house of beautiful women. One is staring at us. The conversation drifts to arranged marriages and personal choice and happiness. She is lovely beyond compare. The footnote from the past supplies us with modifiers of loneliness and recrimination. You are right, Ian: the problem with heritage houses is the preservation of memories that will never be ours. We are the eavesdroppers, the intelligent gossips pretending to eat histories when we are really gobbling down the intricacies of intrigues and rumors to make monuments and antiques delectable. In any exquisite town or city, with special spaces for lovely mansions and memories, we forget about the matter of poverty, of grounds that may never supply us with the giddiness of the gilded past. Realities are like the haze of the white, distant sea apprehended from a dark porch. There is a brighter haze of homes unoccupied by those who loved them. We want to stay in these loves, in emotions that are curated, imprisoned in storyboard we mistake for true documentations of an era beyond critique and review.

Collective intelligence can change the world

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By Geoff Mulgan | Bloomberg View

N the 1950s a cult formed in suburban Minnesota, led by a woman who adopted the pseudonym Marian Keech. She predicted that, during the night of December 20, 1954, the world would come to an end, but that a spaceship landing by her house at midnight would save her cult members.

Neither happened, and her skeptical husband slept soundly through the night. But rather than being disheartened by this unrealized calamity, the cult concluded that the strength of their faith had saved the world from imminent disaster and from then on went out recruiting with renewed vigor. The psychologist Leon Festinger used the Keech case to demonstrate his theory of cognitive dissonance, which described the many ways in which we adapt, spin, edit and distort to maintain a coherent worldview. These ways help us to survive and sustain our sense of self, and they do the same for groups. But they are frequently the enemies of intelligence and, on a large scale, of collective intelligence. The same is true of our habitual ways of thinking. The psychologist Karl Duncker invented the term functional fixedness to capture how hard it is to solve problems, because so often we start off by seeing a situation through the lens of just one element of the situation, which in our mind already has a fixed function. But frequently, that has to be changed for the problem to be correctly interpreted, let alone correctly solved. This turns out to be particularly hard. His classic example was the “candle problem.” People were given a candle, box of thumbtacks and book of matches, and asked to fix the candle onto the wall without using any additional items. The problem could only be solved when you realized that the box containing the thumbtacks

could be used as a shelf and wasn’t just a container. A group with a more autonomous intelligence will fare better than one with less autonomy. It will fall victim less often to the vices of confirmation bias or functional fixedness. It is more likely to see facts for what they are, interpret accurately, create usefully or remember sharply. Knowledge will always be skewed by power and status as well as our pre-existing beliefs. We seek confirmation. But these are matters of degree. We can all try to struggle with our own nature and cultivate this autonomy along with the humility to respond to intelligence. Or we can spend our lives seeking confirmation, like Keech and her followers. Much of what is best about the modern world has been built on institutions that reinforce the autonomy of intelligence. These serve us best by not serving. They work best for their clients or partners by serving a higher purpose, and not trying too hard to keep people happy or comfortable. The aviation industry is a good model of autonomy in this sense. Every airplane contains within it two black boxes that record data and conversations, and that are recovered and analyzed after disasters. Every pilot is duty bound to report near misses, which are also analyzed for messages. The net result is a far more intelligent industry and one that is vastly safer. In 1912 at the dawn of aviation, more than two-thirds of the US Army’s trained pilots died in

accidents. By 2015 the accident rate for the main airlines was around one crash for every 8 million flights, helped by an array of institutions that study errors and disasters, and recommend steps to prevent them being repeated. The modern world is full of institutions that reinforce the autonomy of intelligence against the temptations to illusion and self-deception. A functioning market economy depends on independent auditors assessing company accounts as accurate (and suffers when, as in the United States, the auditors have strong financial incentives to please the companies they are meant to audit). Markets depend on accountability procedures, shareholder meetings that potentially challenge managements that have become carried away and free media that can uncover deceptions. More recent the movement to promote open data in business has made it easier to track ownership patterns and corporate behavior. Over 80 million businesses are tracked by OpenCorporates. These devices all exist to make lies and deception harder. Much the same is true in governments. We can’t rely on the personal ethics and integrity of our leaders, although we should prefer ones who can still spot the difference between right and wrong. As Mark Twain put it, the main reason we don’t commit evil is that we lack the opportunity to do evil. So a wellfunctioning government depends on scrutiny and transparency that can show how money is spent, and which policies are achieving what results, all supported by bodies over which the government has limited, if any, power. The moves to create new institutions to support evidence form part of this story, such as “What Works” centers, expert commissions,

E-mail: titovaliente@yahoo.com.

independent offices of budget responsibility and independent central banks that have to publicly justify their decisions. All exist to make the available facts more visible so as to reduce the space for deception, delusion and ill-conceived actions. The principle is that anyone in power has every right to ignore the evidence (since it may well be wrong). But they have no right to be ignorant of it. A healthy science system is the same. It polices itself. Thanks to peer review and tough scrutiny of research findings, the science system needs less oversight, management or intervention from the outside. What counts as quality is transparent. There are many threats to this kind of self-governance: corporate funding with too many strings, the tendencies to suppress negative research findings because careers appear to thrive much more when research findings prove something new rather than failing to prove something, the decay of peer review, outright fraud and hidden conflicts of interest. But there are plenty of counterforces and, in the best systems, lively debate that uses errors to make the system work better. These defenses against deception are the corollary of the expansion of autonomous intelligence within societies and daily life—giving people the freedom to explore, think and imagine without constraint. This was the logic of the Enlightenment, as well as the great wave of tinkerers and fiddlers who energized the Industrial Revolution, and held a view of freedom as the freedom to try things out. Some of their work was logical and linear. But much of it was more iterative and exploratory: testing ideas and options for feel as well as coherence, multiplying arguments and seeing whether they stood up or not.

2nd Front Page BusinessMirror

A12 Friday, December 1, 2017

Gadon tells Sereno to quit to avoid ‘further humiliation’ By Joel R. San Juan

@jrsanjuan1573

T’s over for embattled Chief Justice Maria Lourdes A. Sereno, her accuser said on Thursday, following the testimony of Senior Associate Justice Teresita Leonardode Castro on Wednesday before the House Committee on Justice. Lawyer Lorenzo Gadon, the complainant in the impeachment case against Sereno, said de Castro’s testimony, backed by documentar y proofs, were “incontrovertible evidence” that have spelled the inevitable impeac hment of Sereno by t he House of Representatives. “The testimony of Justice Teresita de Castro is more than enough and sufficient to impeach Sereno. Her testimony, aside from being supported w ith documentar y evidence, is tremendously strong since the issues under question are matters precisely within her knowledge, as she herself was a direct participant in those matters of administrative orders and TRO [temporary restraining order] resolutions—a firsthand knowledge by direct participation,” he stressed. Gadon said de Castro’s testimony showed Sereno’s alleged culpable

violation of the Constitution. The lawyer admitted that he felt vindicated by the statements of the senior magistrate that validated most of his allegations in the impeachment complaint. Testifying before the House Committee on Justice, de Castro said the Chief Justice had misrepresented the collegial decision of the Supreme Court (SC) in ordering the creation of the Regional Court Administrative Office (RCAO) in Region 7 in issuing Administrative Order 175-2012 without the approval of her colleagues, as required in their internal rules. The magistrate also testified on the issue involving the TRO issued in the case of Senior Citizens Partylist during the midterm elections. She said the Chief Justice violated court rules when she issued a blanket TRO on the Commission on Elections’s proclamation of partylists in 2013.

GADON: “If she does not resign by Monday [December 4], I am going to file graft and corruption cases against her and some of her minions in the SC over the issue of the hiring of IT [information-technology] consultants, which was found to be illegal.”

De Castro said she was the member in charge of the case and recommended issuance of the TRO on Senior Citizens Party-list’s case, but Sereno instead issued a blanket TRO that was “grossly unprocedural because she included third parties who were not included in the case.” De Castro also testified on the SC decision she penned that declared unconstitutional the clustering of shortlisted nominees made by the Judicial and Bar Council (JBC) last year in connection with the vacancies in the Sandiganbayan, which Sereno allegedly manipulated. Last, she discussed the merits of her separate concurring opinion in the August 2014 ruling that voided the JBC’s decision not to include the name of then Solicitor General Francis Jardeleza on the shortlist of nominees for SC justice post after Sereno raised an integrity issue against him. The 15-man High Tribunal on Tuesday gave its go-signal for its

member-justices and courts officials to testify before the House Committee on Justice in connection with the impeachment case filed against Sereno. Aside from de Castro, also invited by the committee to testify before it were Associate Justice Noel Tijam, retired SC Justice Arturo Brion, Court Administrator Jose Midas Marquez, SC en banc Clerk of Court Felipa Anama and Deputy Clerk of Court Lani Papa and SC Spokesman Theodore O. Te. The SC voted unanimously during its regular en banc session to let the justices and court personnel to testify on administrative matters of the impeachment complaint. With the charges against Sereno now based on solid evidence, Gadon reiterated his call for the chief magistrate to resign from her post to avoid “further humiliation.” “If she does not resign by Monday [December 4], I am going to file graft and corruption cases against her and some of her minions in the SC over the issue of the hiring of IT [information-technology] consultants, which was found to be illegal,” he warned. He cited a fact-finding report submitted to the SC, which recommended that the contract amounting to about P10 million for the services of IT consultant Helen Perez-Macasaet be voided for “lapses in the procurement process.” It stated that the contract violated existing laws and Commission on Audit rules because it did not undergo public bidding.

GOVT DEPLOYING MORE TOURISM-ORIENTED COPS UNDER TOPCOP PROGRAM

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ore of the finest men and women of the Philippine National Police (PNP) will be stationed in popular tourist sites, even as the Department of Tourism (DOT) assured that the country remains a safe haven for international and local tourists. “While the continuous influx of foreign guests attests to our image as a safe tourist destination, we must enhance security and preventive measures through police presence and visibility,” Tourism Secretary Wanda T. Teo said. “Needless to say, the few good men and women of the PNP have served not only as protectors to our foreign guests and the general public, but also as diplomatic hosts in the tradition of Filipino hospitality,” Teo pointed out. At least 46 personnel from the National Capital Region Police Office (NCRPO) formally joined the ranks of the Tourist Police Unit after recently completing a seminarworkshop on Tourism-Oriented Police for Community Order and Protection (Topcop) conducted by the DOT-NCR in cooperation with the PNP. Teo said other DOT regional offices and local police units are jointly preparing to implement the Topcop program. In Metro Manila alone, “the DOT-NCR will hold a series of Topcop seminar-workshop to produce 200 more tourist police officers by 2017,” DOT-NCR officer in charge

Director Ina Z. Loyola said. Loyola spoke at the graduation of the first batch of Topcop, citing the vital role the policemen performed in facilitating, as well as securing, major international events like the recent Asean Plus 3 Summit. Chief Supt. Emmanuel Luis D. Licup, PNP deputy director for operations, also addressed the Topcop graduates, saying the program is an opportunity for them to show the outstanding qualities of police officers. “Let us put our best foot forward and earn the respect that we, uniformed men and women, so deserve,” Licup stressed. The weeklong seminar-workshop covered the following topics:Tourism Basics andTrends; Child SafeTourism/ Child Protection Laws, Tourist Behavior Patterns and Market Profiles; Local Products and Services; Basic Investigation Procedure and Security and Safety Protocols; CommunityOriented Policing System; Incident Command System; Immigration Laws and Procedures and Crisis Incident Management. Also joining Loyola in inducting the new Topcop graduates were Senior Supt. Chito G. Bersaluna of the NCRPO Regional Training and Education Division, Senior Supt. Rudolph B. Dimas of the Public Safety Division; DOT-NCR Chief Tourism Operations Officer Catherine C. Agustin and DOT-NCR Training Director Mariville Ramos.

DOT projects 31M ‘same day’ tourists in Calabarzon area By Ma. Stella F. Arnaldo

‘DANCING LIGHTS’ Bonifacio Land Development Corp. on November 29 formally opened its Christmas decorations at the Bonifacio High Street, Bonifacio Global City, commercial and business district with Christmas lights “dancing” in time with Christmas carols. The “dancing lights” show runs every 30 minutes from 6 p.m. to 10 p.m. until January 7, 2018. FAYE PABLO

Senate’s TRAIN version seen better for economy Continued from A1

the Senate version for a few reasons. First, fuel excise taxes are backloaded rather than front-loaded,” Credit Suisse said. In the House version, an additional P3 will be added as tax per liter in the first year of implementation, with an addition of P2 per liter in the second year and a final P1 addition per liter on the third year of implementation. In the Senate’s version, meanwhile, only a P1.75 tax imposition per liter will be implemented in the first year of the bill, followed by an addition of P2 per liter in the second year and a final P2.25 addition per liter. “Second, tax increases—such as on sugary drinks—are lower,”

Credit Suisse added. For sugary drinks, the House approved a P10 per liter tax imposition for locally manufactured sugary drinks, and P20 per liter for imported products. Some exclusions to the scheme include milk, coffee and 100-percent natural fruit juice. The Senate, meanwhile, approved a P4.50 per liter tax on beverages using calorific and noncalorific sweeteners, and P9 per liter for beverages using highfructose corn syrup. Exemptions to the tax hike also include milk, coffee and 100-percent natural fruit juice, as well as 3-in-1 coffee. “Third, the newly introduced taxes—such as documentary stamp tax, mining taxes and cosmetic procedures—are narrow and on

specific sectors rather than broadbased,” Credit Suisse said. The senate’s version introduced excise ta xes on documentar y stamps, mining and cosmetic procedures, as well as on body enhancements taken for purely aesthetic reasons. The House version has no taxes on these sectors. “Fourth, VAT [value-added tax] exemptions are kept for items such as low-cost rentals and mass housing in the Senate version,” Credit Suisse said. Senate, in its version of the ta x-refor m bill, retained the VAT exemptions for leases below P15,000 per month, and for socialized housing amounting to P450,000 and below. This is in contrast to House’s version, removing exemptions

for rentals, mass housing (subject to establishment of voucher system), and also the business-process outsourcing sector. Credit Suisse also said the Senate bill is “slightly more supportive of private consumption,” with personal income-tax cuts front-loaded in one tranche in the Senate bill, compared with two tranches in the House version (2018 and 2020). Inflation for 2018 is projected to hit 3.4 percent, according to the latest forecast of the Bangko Sentral ng Pilipinas (BSP). While it is still within the target range of 2 percent to 4 percent for the year, analysts, including the International Monetary Fund, said the BSP should stand ready to respond with monetary policy if local inflation goes awry.

@akosistellaBM Special to the BusinessMirror

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HE provinces of Quezon and Laguna took home the “Destination of the Year” awards for attracting the most number of tourists in the Southern Tagalog region or Calabarzon. The awards were handed out by the Department of Tourism (DOT) Region 4 A at the recent fourth Calabarzon Tourism Summit at The Bellevue Manila. Calabarzon is composed of Cavite, Laguna, Batangas, Rizal and Quezon. In a news statement, the DOT said both provinces recorded 6.6 million same-day tourists and 1.22 million overnight visitors, respectively, in 2016. “We extend our sincerest congratulations to Quezon Province Gov. David Suarez and Laguna Gov. Ramil Hernandez and all awardees of the Calabarzon Tourism Summit,” Tourism Secretary Wanda Corazon T. Teo said in a speech read for her by DOT Assistant Secretary Malou Japson. “May we continue to work hand in hand in utilizing the full potential

of our region.” DOT Region 4A Regional Director Rebecca Villanueva-Labit said she projects a 20-percent increase in same-day tourists in the region, exceeding 31 million in 2017, from last year’s 26 million, and a 20-percent to 25-percent rise in overnight staying visitors to about 5.3 million this year, from the 4.5 million in 2016. Select hotels, resorts and other tourism establishments also received the Pillars of Tourism Award. These include Taal Vista Hotel in Tagaytay, Villa Escudero Plantations and Resort in Quezon, Enchanted Kingdom in Laguna and the Costales Nature Farms in Batangas. Also handed out was the Director’s Award for the Association of Travel and Tour Agencies in Calabarzon, Terra Verde Ecofarm and Resort, Nurture Wellness Village and the Tagaytay Tourism Council. DOT-Region 4A, likewise, recognized other hotels; resorts; provincial, cit and municipal tourism officers; media partners; and other tourism supporters during the summit which carried the theme, See “DOT,” A2