Businessmirror december 05, 2017

Whistle-blower hot line and case management

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By Henry J. Schumacher

Kirill Makarov | Dreamstime

ompliance management is not easy.

While we know in which areas of the company compliance breaches could be possible, it often needs a courageous person within the organization to become a whistleblower and identify the cases where business ethics are violated. The question obviously arises whether you, as top management, have created such a hot line that whistle-blowers can make use of? If not, maybe it is time to open up safe whistle-blowing channels and encourage reporting to make sure you don’t miss out on any case.

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Tuesday, December 5, 2017 Vol. 13 No. 55

By Butch Fernandez @butchfBM

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enate President Pro Tempore Ralph G. Recto on Monday said the Senate-favored version of the Palace-backed Tax Reform for Acceleration and Inclusion (TRAIN) bill will not only slash income tax rates, “but also the red tape in paying them.”

Recto confirmed the Senate action can be found in several amendments to the National Internal Revenue Code (NIRC), which, once implemented, would relieve taxpayers of the“cumbersome and complicated” procedures in paying taxes.

He explained that simplified taxpaying is an important component of tax reform.

“Cutting the rates must go hand in hand with cutting the number of requirements,” Recto said in sponsoring the TRAIN bill amendments.

As approved by the Senate, he noted that the 12-page Income Tax Return [ITR] for individuals and the eight-page ITR for corporations will be reduced to two pages, adding that information to be supplied in the two-page ITR shall be limited to: personal profile and information; gross sales, receipts or income from compensation for services rendered, conduct of trade or business or the exercise of a profession, except income subject to final tax, as provided under this code; allowable deductions under this code; and, taxable income as defined in Section 31 of the NIRC. On Recto’s recommendation, the Senate, likewise, moved to reduce the frequency of tax filings, with the percentage tax and value-added tax (VAT) to be filed quarterly from the current monthly scheme.

The senator explained that a small

business has to undertake 36 tax-related transactions annually. “Because of complicated tax rules, a small trader has to put in his payroll an employee, whose sole job is to liaise with the BIR [Bureao of Internal Revenue],” he noted.

Another Recto amendment adopted by the Senate, once enacted into law, will reduce withholding tax rates to not more than 10 percent, from the current maximum of 32 percent. “We are correcting this BIR overreach. Sobra minsan ang withholding tax. They’re dipping too deep inside the taxpayer’s pocket,” the senator said.

He added that the Senate also thumbed down a Department of Finance proposal to electronically link cash machines of small businesses like sari-sari (community) stores and carinderias (small eateries) to the main servers of the BIR. “Under our proposal, the issuance of electronic receipt and electronic sales reporting will be limited to export enterprises and taxpayers under the BIR’s Large Taxpayers Service,” Recto said. “If your store is in a far-flung barrio, how will you install a computer hooked up to the BIR?” the senator wondered.

He added that “passing these easein-tax payment provisions will not only eliminate red tape, but reduce graft opportunities that come when discretionary wiggle room is granted to revenue officers.”

Recto asserted that “many taxpayers are willing to pay their dues, if only revenue processes are short and simple.”

He noted that “steep penalties, high fines, short compliance period and arbitrary levying of surcharges” should be reviewed and tempered, as these prevent individuals from coming forward to comply.

PESO exchange rates n US 50.3210

DBM cures ills of the past

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he Philippine manufacturing sector moved to take advantage of the expected surge in demand during the holidays, as the country’s Purchasing Managers’ Index (PMI) registered the highest reading anew in Southeast Asia in November.

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PHL manufacturers still most bullish in Asean 54.8 T

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The country’s Purchasing Managers’ Index in November, the highest in the region for the second straight month

The Philippines’s PMI for November hit 54.8, up from the 53.7 PMI it registered in the previous month.

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ne of the first challenges that President Duterte’s economic team faced when they took office in 2016 was the government’s failure to spend as much as needed to develop the country’s infrastructure, which is a key to attracting investments.

See “PHL,” A2

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BMReports

PHL pre-need insurance industry: Reconciling past for brighter future

By Rea Cu

A

@ReaCuBM

Part Two

T the moment, the Philippine pre-need insurance industry is still surviving, Philippine Federation of Pre-Need Plan Companies Inc. (Pre-Need Federation) President Elmer M. Lorica said.

Lorica told the BusinessMirror that the pre-need insurance industry is now starting to stabilize because of the significant interventions by the Insurance Commission (IC) and the industry as a whole.

These measures include the introduction of the Pre-need Code of 2009, or Republic Act 9829, and the shift of the market to lifeplan products. The latter buffered the market because of its contingent-liability type of product and not as an investment-liability type product as pre-need plans are classified. The industry also credits the implementation of micro-pre-need products to cater to the low-income bracket of the market. “ The focus of the industry now is on the life-plan product, which is an answer to the basic need that is close to the heart of the Filipino, [which is getting education]. It will always be relevant,” said Lorica, who is also

Framed in a window are skyscrapers of Manila’s central business and commercial district that houses different insurance companies. The pre-need insurance industry is still surviving despite posting a net loss of P831.54 million in the first quarter as compared to a net income of P314.95 million in the first quarter of 2016. FAYE PABLO

the president and COO of Eternal Plans Inc., a sister company of the BusinessMirror.

Based on latest data from the IC, there are currently 16 companies that fall under the pre-need classification and have a license to sell pre-need products. These companies are AMA Plans Inc., Ayala Plans Inc., Caritas Financial Plans Inc., CityPlans Inc., Cosmopolitan Climbs Life Plan Inc.; Destiny Financial Plans Inc.,

Eternal Plans Inc., Financial Freedom Plans Inc., Himlayang Pilipino Plans Inc., Manulife Financial Plans Inc.; Mercantile Care Plans Inc., PhilPlans First Inc., Saint Peter Life Plan Inc., Sunlife Financial Plans Inc., Transnational Plans Inc. and Trusteeship Plans Inc.

IC orders

UNDER Circular Letter 2015-27, issued by then-IC Commissioner

Emmanuel F. Dooc, pre-need companies were required to become members of the Pre-Need Federation to help strengthen the industry and promote cooperation and discipline among the companies.

The membership in the PreNeed Federation was made a requirement by the IC for issuing or renewing a certificate of authority to do business in the pre-need insurance industry .

Last year only 14 companies classified as pre-need insurance firms were licensed to operate in the country, the IC data showed.

As of the first quarter of this year, the pre-need insurance industry has recorded total assets amounting to P120.636 billion, expanding by 1.32 percent from the P119.065 billion recorded in the same period for 2016.

The industry’s investments in trust funds totaled P101.855 billion as of end-March, which posted a slight uptick of 0.48 percent compared to the P101.373 billion in 2016. In terms of liabilities, the pre-need insurance industry recorded P104.779 billion for the first quarter, which rose by 4.49 percent, from the P100.273 billion in 2016.

The pre-need insurance industry Continued on A2

n japan 0.4455 n UK 67.6214 n HK 6.4411 n CHINA 7.6007 n singapore 37.3412 n australia 38.1936 n EU 59.6606 n SAUDI arabia 13.4182

Source: BSP (4 December 2017 )

BMReports BusinessMirror

A2 Tuesday, December 5, 2017

PHL pre-need insurance industry: Reconciling past for brighter future Continued from A1

reserves totaled P97.591 billion in the first quarter, which has expanded by 4.01 percent from last year’s P93.826 billion.

Total premium income showed an improvement of 6.10 percent amounting to P4.090 billion this year, from the P3.855 billion recorded last year.

Worth, losses

MEANWHILE, the industry experienced a net loss in the first quarter of the year of P831.54 million as compared to the net income of P314.95 million in the first quarter of last year.

The industry’s total net worth also suffered a 15.6-percent decline in the first quarter to P15.857 billion, from the P18.792 billion the industry posted in the same period last year.

In terms of plans sold, the industry posted a total of 183,837 plans sold in the first quarter of this year, which rose by 0.6 percent from the 183,729 plans sold in the

same period for 2016. Of the total, life plans took the biggest chunk, which totaled 180,148. Pension plans sold accounted for 3,511, and education plans were at 178.

Saint Peter Life Plan accounted for bulk of the life plans sold in the first quarter; accounting for 177,505 life plans sold. For pension plans, Caritas Financial Plans sold a total of 1,766. Philplans First Inc. accounted for all education plans sold for the quarter of this year.

“The life-plan industry is recovering faster than education and pension,” Lorica said in an e-mail interview.

Growth, declines

AS of the quarter ending December 2016, the pre-need insurance industry posted total assets amounting to P120.085 billion. The figure reflects an increase of 2.62 percent, from the P117.017 billion recorded in the same period in 2015.

The industry’s investments in trust funds grew by 1.17 percent totaling P101.257 billion last year, compared to the P100.081 billion

the industry posted in 2015.

The industry’s total liabilities as of end-December of last year grew by 4.13 percent to P104.122 billion, from the P99.996 billion in 2015.

Its pre-need reserves accounted for P96.337 billion, expanding by 3.82 percent, from the P92.795 billion recorded as of end-December 2015.

Total net income of the industry totaled P2.072 billion, increasing by 26.53 percent, from the P1.637 billion in 2015.

Meanwhile, the pre-need insurance industr y ’s total net worth declined by 6.21 percent to P15.963 billion, from the P17.021 billion in 2015.

The industry also suffered a total premium loss of 0.45 percent to P16.287 billion for 2016, from the P16.361 billion it recorded in 2015.

The number of plans sold by the industry reached 697,869 as of endDecember 2016, growing by 0.53 percent, compared to the 694,163 in the same period for 2015.

Of the total, life plans sold by the industry as of end-December 2016 totaled 680,649, pension plans sold

totaled 16,328 and education plans reached 892 for the year.

Saint Peter Life Plan still accounted for bulk of the life plans sold for 2016, which totaled 662,883. For pension plans, Caritas Financial Plans sold a total of 7,043. Philplans First accounted for all education plans sold for 2016.

Group plans

IN February 2017 the Pre-Need Federation expressed its hopes to grow the number of its members for this year, as well as the years to come.

Lorica said a number of insurance companies have expressed their intentions to enter the industry this year. He said such a move is welcome, as the association sees that the entry of new players will help expand the growth of the pre-need insurance industry in the country. The Pre-Need Federation is also eyeing a number of proposals on how to further develop the industry. One of these proposals is the introduction of new pre-need products. To be concluded

NBI to probe ₧3.5-B dengue vaccine deal as Sanofi vows to work with PHL authorities Continued from A12

“Phase III clinical studies conducted in over 30,000 study participants from 10 countries in Latin America and Asia show a pooled efficacy of 65.6 percent against all four serotypes of dengue; 80 percent efficac y against hospitalizations due to dengue, and 93 percent efficac y against severe disease in the study population 9 years of age and older over the 25-month follow-up period of the study program,” Sanofi said in a statement released to the media.

“Consequently, we are proposing an update to the current vaccine label to ensure that physicians

Miss U. . .

can make appropriate vaccination decisions with their patients to enhance the impact of the vaccine in the Philippines, where the majority have been infected by dengue by the time they reach adolescence,” Sanofi added.

The company has also started to inform the new label proposal with private health-care professionals to help them in the assessment of benefit or risk of vaccination of their patients.

Dengue is highly endemic in the Philippines. Since 2010 there has been a reported average of over 160,000 cases every year, mostly in children and teenagers. Studies have shown that, in individuals aged 9 to

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July recorded the biggest receipts of P33.53 billion, while August registered the highest growth at 106.94 percent. South Korea is still the top-spending country, followed by China, the United States, Japan, Taiwan, Malaysia, Singapore, Australia, the United Kingdom and Canada. Teo and Undersecretary Catherine Chloe S. de Castro also stressed that more of the Philippine National Police’s finest men and women

14, 90 percent of them would have already been infected by the dengue virus. However, not all people who have been infected by the dengue virus are aware, because around 75 percent of them do not have any symptoms.

The continuing long-term safety evaluation of the vaccine shows significantly fewer hospitalizations due to dengue in vaccinated vs. unvaccinated participants 9 years and older.

They explained that, based on their clinical data, there is risk of dengue before and after getting the vaccine. However, when a person gets the vaccine after he or she has had an

will be stationed in popular tourist sites to assure everyone that the country will remain 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 enforce preventive measures through police presence and visibility,” de Castro said.

In the first question-and-answer section of the pageant, Nel-Peters, who holds a degree in business management, was asked what the biggest issue facing women around the world is. “Women earn

PHL. . .

infection, the effectivity of the vaccine increases by up to 6 years.

Dengvaxia increases the risk of contracting severe dengue for those who got the vaccine without prior infection.

Sen. Richard J. Gordon suggested that the Office of the Ombudsman need not wait for the result of the Senate probe on matter, saying “they can file cases now.”

Gordon indicated he will ask Congress to enact remedial legislation that the health secretary “cannot be the head of the FDA [Food and Drug Administration] at the same time. We will file the necessary law soon.”

Claudeth Mocon-Ciriaco, Butch Fernandez and Joel San Juan

75 percent of what men earn doing the same thing. I believe in equal pay for equal work.” She was later asked, “What quality in yourself are you most proud of, and how will you apply that quality to your time as Miss Universe?” She answered: “As Miss Universe, you have to be confident as to who you are. [The] Miss Universe has to overcome her fears and teach others to do the same; and nothing is ever too much to ask for. That is exactly who I am.”

She is the second South African to win the title after Margaret Gardiner won in 1978. Born and raised in South Africa, the 22-year-old Demi-Leigh calls

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The local industry grew the fastest in Southeast Asia for the second consecutive month.

This was announced on Monday by regional business media organization Nikkei and

www.businessmirror.com.ph

Whistle-blower hot line and case management list convicted companies.

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It is understood that such a safe hot line must offer protection to the person who has the guts to step up. Allow employees to securely and confidentially report and follow up on cases online or via our telephone hot line.

Once a case is received via the hot line, it is essential that the case is investigated carefully and resolved quickly and effectively.

It is essential that investigation activities are centralized in one place that tracks and records investigation notes, attaches evidence and tracks activities and outcomes related to the investigation.

Once the whistle-blower has submitted the case, investigators can continue the dialogue and ask follow-up questions; whistleblowers and investigators can communicate anonymously and exchange further vital details on the case.

It is important that you keep track and follow up; automatic reminders will spare you the time and pain of ensuring that investigations are on course. Send automatic reminders, alerts and escalations to the responsible person, or reassign cases to new investigators to ensure investigations stay on track.

If you have these procedures in place, what will you gain?

■ Liability—Criminal and civil penalties for corruption offences can cost your company millions and result in tough prison sentences.

Some pieces of anticorruption legislation have near global jurisdiction and can hold almost any company liable for corruption.

■ Opportunity—Business partners and suppliers are increasingly required to document their anticorruption-compliance programs or risk losing contracts.

■ Reputation—Your company’s reputation is its most valuable asset. Corruption investigations can harm business opportunities.

■ Black listing— Companies convicted of corruption offenses can be excluded from bidding on contracts. The European Union, the World Bank and others black-

Sedgefield, Western Cape, her hometown. She very recently earned her degree in business management at North West University. Her biggest motivation comes from her disabled half sister Franje, who was born without a cerebellum and lives in Potchefstroom with her stepmother and father.

“I learned to take responsibility for my future at a young age. With hard work, focus and a lot of dedication, I realized, I can become whoever and whatever I want to become. I proved that to myself when I became Miss South Africa 2017 on my first time entering the competition. I have a competitive spirit and always

international think tank IHS Markit.

Malaysia trailed the Philippines with a PMI of 52. Myanmar followed at 51.6 and Vietnam at 51.4. Indonesia, meanwhile, hit a PMI of 50.4 and Thailand at 50. Only Singapore’s PMI went below the 50-point threshold at 47.4.

Remember: Your company’s top management should show visible support for the company’s compliance policies and activities; this will foster a culture of integrity in which bribery is unacceptable. Demonstrating top-level commitment for preventing corruption involves internal and external communication of your policies and top management’s involvement in developing the corruption-prevention procedures. This may include top management-setting prevention policies; assigning management to create, implement and monitor procedures; and keeping these under regular review. The commitment of top management involves formalizing the company’s anticorruption position in an available written document.

Your company should perform periodic assessments of its internal and external risks. Your company must focus most on managing the most serious corruption risks. Perform a periodic and comprehensive risk assessment to identify and weigh internal and external risks and in turn define your priorities.

Remember to work together with those familiar with your company’s processes and sales channels to make effective risk assessments.

And finally: UNITED States companies get extra incentives to disclose bribes: no charges. As before, the US will consider reducing financial penalties for companies that come clean.

Now, the federal prosecutors will more likely consider forgoing criminal charges as well. However, in order to win full protection from prosecution, companies must cooperate with prosecutors, fix the problem and help investigators find those responsible for the misconduct.

If you need assistance in getting these processes and procedures going, we at the Integrity Initiative Inc. are on standby to help. Please contact me under Schumacher@integrityinitiative.com

strive to be the best version of myself. My dreams never stop growing, and I never stop chasing them. I don’t believe in waiting for an opportunity to rise but rather in creating one.”

The US leads the tally of countries with the most number of Miss Universe titles since the pageant’s creation in 1952. The country where the pageant originated first held the crown in 1954, and lately in 2012 with Olivia Culpo. It has also won a title in every decade since the 1950s, except during the 1970s and 2000s. The US is followed by Venezuela with seven titles, Puerto Rico with five and the Philippines and Sweden with three.

The PMI is a composite index, calculated as a weighted average of five individual subcomponents. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show deterioration.

Strong domestic demand toward the holiday season has pushed the surge in the country’s manufacturing sector, with IHS Markit economist Bernard Aw saying the strong performance could extend up to next month.

“A major driver of higher output has been solid domestic demand. The PMI’s gauge of new order volumes showed the recent expansion in sales accelerating in November, resulting in the largest monthly increase so far this year,” Aw said.

“Further rises in purchasing activity and inventories also point to the current expansion continuing and possibly accelerating in December,” he added. But while the economist said the Philippines’s strong PMI is an indication of strong growth in the economy, he warned of rising inflationary pressures associated with a weak exchange rate.

“A further rise in global raw-material costs, combined with a weak peso, will generate an unwelcome tightening of businesses’ profit margins,” Aw said.

The strong performance of the Philippines, nevertheless, mirrors that of the region’s, saying that the Asean manufacturing sector looks to finish the final quarter of 2017 with one of its strongest quarterly performances for over three years.

“The survey’s subindices also showed signs that the upturn will gain momentum in December,” Aw said.

www.businessmirror.com.ph

The Nation BusinessMirror

House Con-ass okay for Charter change likely by Jan–lawmaker

By Jovee Marie N. dela Cruz @joveemarie

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he chairman of the House Committee on Constitutional Amendments on Monday said lawmakers are set to approve a resolution calling Congress to constitute itself as a constituent assembly (Conass) todiscuss proposedrevisionstothe 1987 Constitution by January 2018.

Committee chairman and Rep. Roger Mercado of Southern Leyte said his panel has completed a report of House Concurrent Resolution 9 that consolidated several measures providing con-ass as a mode for charter change.

“I am confident House Concurrent Resolution [HCR] 9 can be expedited and be ready by or before January 2018. The House is therefore able to back up Speaker Pantaleon D. Alvarez when he meets [with] Senate President Aquilino Pimentel III,” Mercado said.

Earlier, Alvarez said Congress may convene into a Con-ass early next year to craft a new Constitution that would enable the country to shift to a federal form of government.

Moreover, Mercado also said his committee will submit the final draft of the Philippine federal constitution this December to the House Committee on Rules, chaired by Majority Leader Rodolfo S. Fariñas Sr. “The draft charter builds upon the proposal of the PDP-Laban Federalism Institute. It is consistent with the ideas of President Rodrigo

Duterte on what the new charter ought to have and contains solutions to the country’s economic problems, especially poverty, the peace and order situation, and the fight against illegal drugs,” Mercado said.

“We have support from our colleagues in the House to get their approval on HCR 9 in the near-term and on the proposed amendments when Congress is convened as a constituent assembly,” he added. There are already two filed measures both seeking to change the 1987 Constitution.

The Resolution of Both Houses 8 filed by Deputy Minority Leader Party-list Rep. Eugene Michael B. de Vera of Arts and Business Science Professionals and Rep. Aurelio D. Gonzales Jr. of the Third District of Pampanga, and the proposed Constitution of the Federal Republic of the Philippines of PDP-Laban Federalism Institute.

The House Committee on Constitutional Amendments has already created four technical working groups, composed of its members, which will draft the new Philippine federal constitution.

The TWG is expected to consolidate the Resolution of Both Houses 8 and the proposed changes of the PDPLaban Federalism Institute submitted by Executive Director Jonathan E. Malaya and Local Government Development Foundation Executive Director Edmund S. Tayao.

Each of the four groups will handle specific areas to be covered in the drafting of the new Federal Constitution.

Editor: Vittorio V. Vitug • Tuesday, December 5, 2017 A3

AFP orders field units to brace for NPA attacks on ‘soft targets’

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ollowing their tactical defeat in Nasugbu, Batangas, last week, the remaining New People’s Army (NPA) bandits are expected to intensify their attacks against “soft targets.”

This was disclosed by Armed Forces of the Philippines (AFP) Public Affairs Office chief Col. Edgard Arevalo late Sunday, when asked on the sudden increase of rebel attacks against police outposts and civilians nationwide in Bicol, Cagayan

and Misamis Oriental.

“Those were meant to make up for the tactical defeats they have experienced in view of the intensified focused military operations, chief of which is the successful operations in Nasugbu, Batangas,

that led to the neutralization of 14 members of the communist terrorists and seizure of 12 high-powered firearms,” he said.

Aside from the deaths of rebels in Batangas, one was also wounded and captured by the military.

“We may add that just for the month of November, 119 New People’s Army were neutralized: 21 died, 29 were arrested, 69 surrendered. A total of 62 high-powered and low-powered firearms were seized,” Arevalo added.

As government forces intensified their campaign against the NPA, the military official urged the rebels to consider the only options

left available to them.

“Take advantage of the opportunity for them to surface and be reunited with their family; join mainstream society; and be productive members of the community by availing themselves of the Comprehensive Local Integration Program. Or suffer the same fate of their cohorts, who died refusing to see the better alternative offered by the government,” Arevalo said.

For the sake of their families and loved ones, the AFP public affairs office chief hopes that the communist rebels choose to surrender and return to the fold of the law. PNA

DOH aims for zero firecracker-related injury during New Year’s Eve revelry

By Claudeth Mocon-Ciriaco Correspondent

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he Department of Health (DOH) is aiming to achieve zero firecracker-related injury in celebrating the New Year’s Eve as the nation welcomes 2018.

The DOH, through its National Capital Regional (NCR) Office, the Department of Education, National Police, Bureau of Fire Protection, Manila City and EcoWaste Coalition, declared this during the news

conference that informed the public about their readiness to handle the festivities and anticipate a minimal, if not zero, injuries, throughout the whole season.

“Be safe during the holidays. I encourage everyone to join community fireworks displays in your barangays. In the unfortunate event of an injury, seek immediate medical treatment for all fireworks-related ones,” Health Secretary Francisco T. Duque III said.

“Oplan: Iwas Paputok. Fireworks Dis-

play ang Patok! Makiisa sa Community Fireworks sa Inyong Lugar” remains to be this year’s slogan in keeping with the newly approved Executive Order 28, entitled “Providing for the Regulation and Control of the Use of Firecrackers and other Pyrotechnic Devices.”

The EO, recently signed by President Duterte, stipulates that the use of firecrackers shall be confined to community fireworks display to minimize the risk of injuries and casualties. Conduct of community fireworks display will also be continuously promoted as

a strategy to at least maintain the low injury figures in the country.

From December 21, 2016 to January 5, 2017, a total of 630 fireworksrelated injuries were recorded by DOH sentinel sites. These are 319 cases (34 percent) less than the five-year (2011-2015) average and 292 cases (32 percent) less compared to the same time period last year. Of the total 630 cases, 627 were from fireworks injuries and three cases of fireworks/ firecrackers ingestion. There was no death reported.

Economy

A4 Tuesday, December 5, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

PHL vows to maintain lead role in GCM negotiations for global migrant workers

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By Recto Mercene

@rectomercene

he Philippines has vowed to continue to take a lead role in the negotiations on the Global Compact for Safe, Orderly and Regular Migration (GCM), a United Nations agreement that seeks to provide better treatment and protection for migrant workers.

“Manila will continue to champion the cause of migrants when it participates in the preparatory negotiations for the GCM, which will take place in Mexico from December 4 to 6”, the Department of Foreign Affairs (DFA) said in a news statement issued on Monday.

“Our experience in the promotion of the welfare and the protection of the rights of Filipino migrants led us to these fundamental advocacies. This firmed up our commitment to stirringly advocate for rights of all migrant workers. The GCM is the primary UN process for advancing these advocacies,” Foreign Secretary Alan Peter S. Cayetano said. The foreign secretary issued the statement from Macau, where he is on an official visit.

“We are also committed to work with our allies and friends in the West who share our values, but have

issues and concerns that need to be addressed,” he added.

The DFA and the Department of Labor and Employment, under Secretary Silvestre H. Bello III, are prioritizing programs and issues on the protection and welfare of migrant workers.

“We remain guided by President Duterte’s directive for us to continue working to promote and protect the interests and welfare of our kababayan [countrymen] abroad.

And the GCM process is important to the Philippines and we are ready to assume a leadership role to ensure a successful outcome,” Cayetano said.

He added that the government interagency team headed by Foreign Undersecretary for Migrant Workers Affairs Sarah Lou Y. Arriola is now in Puerto Vallarta to push the Philippine migrant’s rights

agenda in the GCM negotiations.

Ambassador Teodoro L. Locsin Jr., permanent representative of the Philippines to the United Nations in New York, said that the Philippines is one of the countries that led the campaign for the UN to adopt the Global Compact on Migration.

“The GCM shows that migration has become a major issue in the international agenda and that is why we have fought to mainstream migration into the United Nations development agenda and include it in the Sustainable Development Goals,” Locsin said.

In addition, Ambassador Evan P. Garcia, permanent representative of the Philippines to the United Nations in Geneva, stressed the importance of international migration issues to the country’s national interest.

“The country has to maintain its leadership on international migration governance for the good

of our many kababayan now overseas or planning to go abroad,” Garcia said.

During the negotiations in Mexico, the Philippines is also convening a meeting on Migrants in Countries in Crisis Initiative, which produced the Guidelines to Protect Migrants in Countries Experiencing Crisis or Natural Disasters. The guidelines constitute a voluntary toolkit that may be used by states and other stakeholders to respond to protection needs of migrants in countries experiencing crisis or natural disasters.

The forthcoming meeting in Mexico is also expected to produce inputs to the negotiations on the GCM, which will be held at the UN Headquarters New York from February to July next year. The GCM will be adopted at an international conference hosted by Morocco in December 2018.

Our experience in the promotion of the welfare and the protection of the rights of Filipino migrants led us to these fundamental advocacies.

This firmed up our commitment to stirringly advocate for rights of all migrant workers. The GCM is the primary UN process for advancing these advocacies.”—Cayetano

Rio Tuba and Ogpi reap top award for ‘responsible’ mining

By Jonathan L. Mayuga @jonlmayuga

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he Chamber of Mines of the Philippines (COMP) on Monday said the Philippines has succeeded in establishing itself as a regional powerhouse in responsible mining after two mining companies brought home the top prize in the first Association of Southeast Asian Nations Minerals Awards (AMA) held in Nay Pyi Taw, Myanmar, recently.

“We are proud of the achievement of our two companies, Rio Tuba Nickel Mining Corp. [RTN] and OceanGold [Philippines] Inc. [Ogpi] for winning the top two awards at the recently concluded Asean Mineral Awards. Their dual wins establish the country as a regional powerhouse in responsible mining and show that world-class responsible mining and processing are already happening in the country,” Ronald Recidoro, executive director of COMP, told the BusinessMirror.

“We hope that other mining companies find inspiration in these victories and emulate what RTN and Ogpi have done in their operations,” he added.

It was the Department of Environment and Natural Resources (DENR) and the Mines and Geosciences Bureau (MGB) that backed the nomination for the AMA. “We are pleased that Ogpi won in the best processing category, and Nickel Asia Corp. [or NAC, which owns RTN] also won the best mining categor y, respectively, at the first Asean Mineral Awards international competitions in Nay Pyi Taw in Myanmar.

We are grateful, too, for the encouragement and support of the DENR and MGB in nominating Ogpi to present the Philippines together with NAC”, Joey Leviste, chairman of Ogpi said.

Leviste, also the vice chairman of the mine chamber, said COMP and Ogpi remain commit-

road grinder

Workers harness the power of a newly acquired machinery to scrape the old layer of asphalt and load the waste material to a dump truck through a conveyor belt in a road-repair project along Roxas Boulevard in Manila last Sunday. PNA/Avito C. Dalan

ted to the Duterte administration’s policy of responsible and sustainable mining.

In its official web site, the MGB said the winners of the award were chosen by the board of judges consisting of 10 judges from each Asean member-state, with Indonesia as the chairman. They were recognized for their achievements to support an environmentally and socially sustainable minerals sector.

The Best Practices in Minerals Distribution category was awarded to PT Amman Mineral Nusatenggara from Indonesia, while Pipatkorn Co. Ltd. from Thailand was the runnerup. The Philippines has no entry in this category.

The runners-up for the Best Practice in Minerals Mining category were: PT Nusa Halmahera Minerals from Indonesia, and Siam Cement Kaeng Khoi from Thailand. While the runners-up for the Best Practice in Minerals Processing category were: PT Antam Persero Tbk from Indonesia and MMG Lanxang Minerals Ltd. from Lao PDR. The Sixth Asean Ministerial

Meeting on Minerals (AmMin) also recognized best practices in a range of mineral products and processes: Mining of nickel laterite in the Philippines (Rio Tuba), gold in Indonesia (PT Nusa Halmahera) and limestone quarrying in Thailand (Siam Cement Kaeng Khoi); Processing of ferronickel in Indonesia (PT Antam), gold ore in the Philippines (Ogpi) and copper cathodes in Lao PDR (MMG Lanxang); and distribution of copper concentrates from Indonesia (PT Amman) and feldspar minerals in Thailand (Pipatkorn).

The trophies, plaques and certificates were presented by the chairman of the Sixth AmMin, His Excelllency (HE) U Ohn Win, the Union Minister for Natural Resources and Environmental Conservation of Myanmar.

The certificates for the runnersup for the Best Practice in Minerals Mining category were presented by HE Sok Khavan, secretary of state, ministry of mines and energy, Cambodia; while for the runners-up for the Best Practice in Minerals

Processing and Minerals Distribution categories, the certificates were presented by HE Thongpat Inthavong, Vice Minister of Ministry of Energy and Mines of Lao PDR, AmMin said.

The recognition of these companies and the promotion of their best practice will help raise performance by making good examples accessible, encourage government and industry to aspire to higher standards and spur better ways of doing things.

To recall, the First AMA is a project under the Asean Senior Officials Meeting on Minerals. Brunei Darussalam led the Asean initiative to establish the first AMA. The Philippines’s entries were chosen in March from among the mining companies that participated in the competition. They were screened by the Philippines AMA Committee composed of technical experts from the MGB, which is the designated focal point for the Philippines-AMA, being the agency responsible for the local minerals sector.

www.businessmirror.com.ph

Lawmaker presses passage of ease of doing business bill

By Jovee Marie N. dela Cruz @joveemarie

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member of the House Committee on Economic Affairs urged the leadership of the 17th Congress to pass the ease of doing business bill before the year ends.

Rep. Frederick W. Siao of the Lone District of Iligan City said the economy needs the new law “sooner rather than later.” The passage of the bill, he added, would simplify the issuance of license, clearance or permit to business entities.

“There is some talk about a special session of Congress for some other bill or bills. If Malacañang wants a special session before 2017 is over, I hope the request of the Palace will include the two versions of the ease of doing business bill of the House and of the Senate,” Siao said.

“If a special session can make that happen, I favor that...it will be the Christmas gift of the 17th Congress to the business community and the thousands of Filipino entrepreneurs and small businesses out there,” he added.

The House Bill (HB) 6579, or Ease of Doing Business Act, and Senate Bill (SB) 1311, or the Expanded Anti-Red Tape Act, are now pending before the congressional bicameral conference committee.

House Committee on Trade and Industry Chairman Rep. Ferjenel G. Biron of the Fourth District of Iloilo said, “Hopefully, we could have bicam [meeting] next week.”

But House Committee on Economic Affairs Chairman Rep. Arthur C. Yap of the Third District of Bohol, member of the bicameral discussing the ease of doing business measure, said the committee may focus tackling the measure next year, as “all attention is on the TRAIN [Tax Reform for Acceleration and Inclusion] bicam.”

Moreover, Siao said HB 6579 and SB 1311 are similar in many aspects, and that “many provisions are similar,” but different as to Short Title: Ease of Doing Business Act (HB 6579) compared to the Expanded Anti-Red Tape Act (SB 1311).

“But if HB 6579 and SB 1311 will not be certified as urgent, enactment would likely happen in the first quarter [before the summer break] or in May 2018 before the second regular session ends,” he said.

“Those several months would be time lost. Add to that the 90 days allowed for the crafting and approval of the implementing rules and regulations. Add also the time it would take to put in place the IT [information-technology] systems needed,” Siao added.

SB 1311 proposes the creation the Business Anti-Red Tape and Competitiveness Bureau, while the House version creates an Ease of Doing Business Commission (EDBC).

“I am expecting that the short title of HB 6579 will be the one adopted at the bicameral conference committee because the contents of both bills pertain specifically to transactions of businesses and entrepreneurs with government agencies. Red tape is the

nomenclature of wider scope which would include transactions that are not business or enterprise related because government agencies transact with more than just businesses and entrepreneurs,” he said.

The lawmaker, citing the Administrative Code of 1987, said there are two types of bureaus: the line and staff bureaus. Staff bureau essentially provides staff support to the department secretary, while line bureau implements department directives and implementing rules of national laws concerning the department.

On the other hand, Siao said a commission, in Philippine administrative law, is an attached agency.

“While the Ease of Doing Business Commission in HB 6579 is attached to the DTI [Department of Trade and Industry], in future administrations, the President can transfer the EDBC to other departments or to the Office of the President. Other agencies have had trouble whenever they get transferred to the supervision of other departments of office,” he added.

“The decision is now with the bicameral conference committee on which approach to adopt. If they choose the bureau approach, I hope the new bureau will be a line bureau so it can have field offices to implement at the LGU [local government unit] level of cities and towns. If the bureau is just a staff bureau, I do not expect that bureau to be effective in implementing the new law,” he said.

Meanwhile, Biron said “the purpose of this bill is to provide an easy, simple, straightforward and troublefree avenue for entrepreneurs, micro, small and medium businesses and ordinary citizens who would like to venture into business in the country.”

With its 12th-largest population and the 43rd-largest economy in the world, Rep. Luis Raymund F. Villafuerte Jr. of the Second District of Camarines Sur, the panel vice chairman and one of the authors of the bill, said the Philippines has been ranked as the second most-favored destination for foreign direct investment in Southeast Asia.

However, Villafuerte said the Philippines’s rank in ease of doing business is one of the lowest in the world at 171st out of 185 countries this year.

Rep. Vilma Santos-Recto of the Sixth District of Batangas, also author of the bill, said it takes 16 procedures to navigate and an average of 29 days to start a business in the country.

“Compared to our other Asean neighbors in the ‘Ease in Starting a Business’ rankings, the Philippines has performed poorly,” Santos-Recto said.

HB 6579 aims to provide a business environment that is conducive for the establishment and operation of enterprises in the country.

The measure also intends to promote transparency in the government with regard to business registration and other manner of public transactions, to reduce red tape and expedite permitting, licensing and other similar transactions in the government.

Caap sees 10-percent increase in holiday passenger air traffic

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he Civil Aviation Authority of the Philippines (CAAP) has estimated a 10-percent increase in the number of passengers in airports nationwide during the Christmas season.

This, as the national aviation authority launched “Caap Balik Pasko 2017” to ensure safe and efficient operations of its 35 airports currently engaged in commercial operations from December 1, 2017, up to January 5, 2018.

“Airports under the aviation regulator are prepared for the influx of passengers eager to return to the provinces to celebrate the holidays in their respective hometowns,” Caap Director General Captain Jim Sydiongco said in a news statement.

Caap has coordinated with air-

lines on the efficient processing of passengers, especially at checkin counters.

Additional airline personnel have been scheduled for additional duty to handle the increase in the number of travelers.

Concerned government agencies operating at the airports, including the Office of Transportation Security and the Philippine National Police Aviation Security Group, will deploy sufficient personnel at their areas of concern to ensure smooth passenger flow while all leaves for operations personnel are cancelled to augment airport service staff.

Passenger movement has reached 18.3 million passengers in 2016 based on data from the Caap. PNA

Banking&Finance BusinessMirror

www.businessmirror.com.ph

Editor: Jun B. Vallecera • Tuesday, December 5, 2017

A5

BTr tapping the retail bond market again

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By Rea Cu

@ReaCuBM

he government on Monday started selling retail Treasury bonds (RTB) anew to try to raise at least P255 billion.

The fund-raising exercise followed weeks of drumbeating for the government security at a time when even a retail investor with disposable income as small as P5,000 is encouraged to participate.

Treasury officials said the decision to tap the retail T-bond market again was precipitated by small investor interest at each stop of the road show, when public

demand for the government security was strongest.

The RTBs that started selling on Monday was the 20th tranche for the security and the second such sale under President Duterte.

“We are delighted that the general investing public continued to show strong support for RTBs. The overwhelmingly positive response from the public shows

that an increasing number of Filipinos are saving and investing, as well as considering the long-term benefits of investments for themselves and their loved ones,” National Treasurer Rosalia V. de Leon said.

The financial instrument was met with strong public demand that led the BTr to award P130 billion at the initial T-bond sale in November and another sale that generated P125.4 billion during the November 20 to 27 offer period.

Bids for the RTBs were oversubscribed multiple times, with the BTr setting the initial offer at P30 billion.

Moreover, the BTr also harnessed the added liquidity in the market ahead of the Christmas season, with the RTBs positioned as viable gifts leading to financial stability.

Such a sale also helps the monetary authorities cap liquidity expansion in the fi-

nancial system that would otherwise only serve to boost inflation.

“The benefits of RTBs are multifold.

These instruments help achieve financial stability for individuals and families, and, at the same time, these allow ordinary Filipinos to profoundly contribute to nationbuilding,” she added.

The Development Bank of the Philippines (DBP) and Land Bank of the Philippines (LandBank) were the joint lead issue managers for the 20th RTB offering and were joined by BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp. and SB Capital Investment Corp. as joint issue managers.

Last month the BTr received bids amounting to as high as P191.808 billion for the second sale of RTBs for this year, which prompted the auction committee to

sell a total of P130 billion.

Relatively high liquidity in the market allowed the Treasury to sell P130 billion so soon after an initial offer of P30 billion. The five-year security sold for 4.530 percent and a coupon rate issue of 4.625 percent.

Earlier in the year, the government offered to sell only P30 billion worth of RTBs but ended up selling a total P181 billion in three-year RTBs. The sale was 16 times oversubscribed with total tenders reaching P500 billion.

RTBs earn a fixed interest rate based on prevailing market rates, with interest coupons paid quarterly.

According to the BTr, offering RTBs to the general investing public is one of the ways for the government to develop the local capital market by expanding the investor base of government securities.

IC supports doubling passenger accidental death benefits T

HE Insurance Commission (IC) on Monday expressed its support for the proposal increasing the insurance benefits of riders of public-utility vehicles (PUVs) and has referred the proposal to the Land Transportation Franchising and Regulatory Board (LTFRB) for approval.

According to Insurance Commissioner Dennis B. Funa, the IC referred to the LTFRB the proposal from 1-United Transport Koalisyon (1-Utak) to increase the insurance benefits under the Passenger Personal Accident Insurance (PPAI) program prescribed under LTFRB Memorandum 2015-028. This, after the regulator conducted a public consultation with all the stakeholders and the transport groups last month.

“Based on the reports submitted to

the IC, particularly the amount of insurance claims paid and settled under the PPAI program and the prompt release of insurance benefits, the PPAI program proves to be an effective tool in providing immediate assistance to the riding public and their families. Thus, any proposal to increase the insurance benefits should always be considered and evaluated,” Funa said.

The IC also referred the proposal to LTFRB-accredited insurance companies through their respective management companies, such as the Passenger Accident Management and Insurance Agency Inc. (Pami) and the SCCI Management and Insurance Agency Corp. (SCCI), as well as to the Philippine Insurers and Reinsurers Association Inc. (Pira).

“Based on the study conducted by the

Pira, the umbrella organization of all nonlife-insurance companies and an ICaccredited rating organization, the existing premium rates, using the historical numbers and actual insurance claims paid and settled for the period from 2015 to June 2017, could no longer sustain the proposed increase in benefits. Thus, it proposed that the premium rates be increased,” he added.

Funa said the final consensus reached during the public consultation was a proposal to increase the existing P200,000 death benefit to P400,000, and the existing P20,000 medical reimbursement benefit to P100,000, as well as to include a family allowance benefit in the maximum amount of P30,000 in case of hospitalization and P7,000 during interment subject to the increase in premium rates,

Asian economic integration

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n October 25 the Asian Development Bank (ADB) released a report on Asian Economic Integration and commented on the lessons learned after the Asian financial crisis 20 years ago.

It stated that growing trade and investment linkages in Asia and the Pacific have helped to improve the region’s economic resilience to uncertainties in the global economic environment.

Asia’s intraregional trade rose in 2016 and acted as a buffer against headwinds from uncertainties in global trade and policy. Subregional trade integration was strongest in East Asia, followed by Southeast Asia and Central Asia.

Amid a decline in global foreign direct inflows to Asia, intraregional investment flows continued to rise, increasing as a share in total FDI to 55 percent in 2016 from 48 percent in 2015. In fact, Asian economies have continued expanding their global presence with FDI originating from Asia rising through investment in renewable energy, natural resources, semiconductors and information technology. The report stated that Asia and the Pacific is leading a recovery in world trade that will help the region to maintain strong growth momentum.

This, indeed, is good news when juxtaposed against the Asian financial crisis 20 years ago.

It was a major turning point for many in the region’s economies.

The crisis exposed structural weaknesses and policy distortions along with poorly planned financial liberalization, thus prompting a wave of major economic and financial-policy reforms. These reforms laid the foundations for periods of sustained high growth, and today Asia has a stronger economic outlook.

Most of the crisis-affected countries then have greatly reduced their dependence on ex-

FINEX free enterprise Mercedes B. Suleik ternal financing and strengthened their overall financial stability with sound macroeconomic fundamentals and policies, flexible exchange rates, adequate international reserves and strong regional cooperation. This has been the experience of the Philippines, which has bounced away from being an international debtor and actually becoming a lender to the International Monetary Fund.

Although briefly disrupted by the 2008-2009 global (or should I say developed Western) crisis, improvements in macroeconomic management and financial regulatory frameworks have remarkably fostered the region’s growth and stability.

Three key lessons drawn from the Asia’s crisis experience were pointed out by the ADB: (1) maintaining sound macroeconomic fundamentals is a prerequisite for economic and financial resilience; (2) deepening and broadening financial systems is essential to boost both financial efficiency and resiliency; and (3) greater regional cooperation efforts are needed to reinforce regional financial safety nets for financial resilience.

The report also offered and expanded the foregoing recommendations so as to strengthen responses to future crisis, which include: (1) strengthening national regulatory and supervisory frameworks and institutional capacities; (2) further development of local currency bond markets; (3) strengthening regional regulatory cooperation, including resolution mechanisms for interconnected regional banks;

and (4) reviewing and strengthening existing financial safety nets against potential contagion and spillover effects.

For the Philippines, the Bangko Sentral ng Pilipinas governor highlighted in a recent speech the bank’s interest-rate policy as supporting the development of the capital market by promoting money-market transactions and active liquidity management among banks. The financial sector has shown stability and sustained growth. Carefully calibrated and well communicated monetary policy has anchored market expectations, enabling the maintenance of price stability, while providing support to economic expansion.

This robust ability of the Philippine banking system to provide credit support to the economy is the result of a long and systematic reform process, boldly implemented since the Asian financial crisis. These reforms included asset cleanup, industry consolidation, continuing enhancement of corporate governance and risk management standards, and strengthening of compliance and enforcement networks.

Today, the BSP continues to pursue prudential reforms that promote financial stability and enhance guidelines, raising the bar on corporate governance, and emphasizing the role of the board of directors and shared responsibility of all officers and personnel.

These reforms will ensure that the Philippines remains a promising investment destination.

Southeast Asia, as mentioned in the ADB Report, is one of the most economically dynamic and fastest-growing regions in the world. In the Philippines economic growth is expected to be sustained and is dedicated to outpacing regional growth, which is already faster than global economic growth. merci.suleik@gmail.com

subject to the requests of Pami and SCCI that its memorandum of agreement with the LTFRB be extended for another three years, among others.

“Considering that these proposals would require a modification in the PPAI program, which is primarily being implemented by the LTFRB and would require the revisit of the LTFRB’s three-year memorandum of agreement with Pami and SCCI that will expire on November 2018, we referred the same to the LTFRB,” he said.

The last increase in benefits under the passenger insurance program was in 2015, which was without a corresponding increase in premium rates, except for the bus segment that was raised by P500. “ Shou ld t he LT FR B approve t he proposals on the enhancement of the

PPAI program, the necessary amendment in the existing benefits as embodied in an insurance policy, as well as any changes in the premium rate, should have prior approval from the IC,” Funa added.

In July transport group 1-Utak submitted its proposal to increase the benefits under the PPAI program to the IC. Under the current PPAI program, the maximum medical treatment benefit is only P5,000 without need to be supported by receipts and P20,000 if substantiated by receipts.

The transport group also requested for the establishment of a Drivers’ Training Fund to be administered by the LTFRB, to help operators who lack the financial ability to train its drivers in support of the LTRFB’s Drivers Academy Program. Rea Cu

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Tuesday, December 5, 2017

briefs Kushner says Trump still undecided on Israel’s capital

WASHINGTON—President Donald J. Trump has not yet decided whether to recognize Jerusalem as Israel’s capital or whether to proceed immediately in moving the United States Embassy from Tel Aviv to the holy city. That’s according to his son-in-law and senior adviser Jared Kushner.

Kushner said last Sunday that the president continues to weigh his options ahead of an announcement on the matter that is expected this week.

“The president is going to make his decision,” Kushner said in a rare public appearance at an event hosted by the Brookings Institution, a Washington think tank. “He is still looking at a lot of different facts.” AP

U.N. voices alarm about spread of H.I.V. in Egypt

CAIRO—The United Nation is voicing alarm over the spread of HIV in Egypt, where the number of new cases is growing by up to 40 percent a year, and where efforts to combat the epidemic are hampered by social stigma and a lack of funding to address the crisis.

The virus that causes AIDS, UN officials say, is infecting more young and adolescent people than any other age group.

Egypt, home to some 95 million people, ranks behind only Iran, Sudan and Somalia in the Middle East for the rate at which the epidemic is spreading, according to UN figures. In Egypt patients are often jailed on trumped up charges and ostracized by society. The disease is associated with homosexuality, which is not explicitly illegal but is widely seen as a transgression against religion and nature in the conservative, Muslim-majority country. AP

Boycotted Qatar’s emir to join Gulf meet in Kuwait

Qatar’s Emir Sheikh Tamim bin Hamad Al Thani will attend this week ’s Gulf Cooperation Council (GCC) summit, the first official gathering of the bloc since Saudi Arabia and three allies severed ties with Doha in June.

Talks will include the GCC crisis, Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said in a public lecture in Doha last Sunday, adding that the Qatari government had yet to receive the formal agenda for the meeting. Saudi Arabia, along with the United Arab, Emirates, Bahrain and Egypt cut diplomatic and transport links with Qatar, accusing it of funding extremism and criticizing its ties with Shiite-led Iran. Doha has repeatedly denied the allegations. Bloomberg News

Trump to scale back 2 natl monuments in trip to Utah

WASHINGTON—President Donald J. Trump is announcing plans to scale back two sprawling national monuments in Utah, responding to what he has condemned as a “massive federal land grab” by the government.

Trump is traveling to Salt Lake City on Monday to outline his intention to shrink the Bears Ears and the GrandStaircase Escalante national monuments spanning millions of acres in Utah. The two national monuments were among 27 that Trump ordered Interior Secretary Ryan Zinke to review earlier this year.

Utah’s Republican leaders, including Sen. Orrin Hatch, pressed Trump to launch the review, saying the monuments declared by Presidents Barack Obama and Bill Clinton locked up too much federal land. AP

The World BusinessMirror

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

US defies N. Korea with war drills involving 230 aircraft

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he United States and South Korea on Monday began a fiveday joint air exercise on the Korean Peninsula involving 230 aircraft and 12,000 American troops, the allies said in a joint statement.

A day before the Vigilant Ace 18 drills, North Korea called for “merciless revenge” and said the nation would consider the “highest-level hard-line countermeasure in history,” according to the state-run Korean Central News Agency (KCNA). It referred to a similar statement in September, which Foreign Minister Ri Yong Ho said may refer to a groundlevel test of a hydrogen bomb in the Pacific Ocean.

North Korea regularly cites military drills around the peninsula as justification for its nuclear and missile-testing program.

Last week the isolated regime launched a new type of intercontinental ballistic missile (ICBM) with improved technology that can deliver a nuclear warhead anywhere in the US, and claimed it had completed its nuclear force.

North Korea’s state media said the joint drill pushes the Korean Peninsula “to the brink of nuclear war.” Such language is typical in North Korean propaganda because the country sees US-South Korean drills, which are held regularly, as preparation for invasion.

T he United States and Sout h Korea sa id t he e xercises a re a n a n nu a l e vent a i med at en su r i ng peace a nd sec u r it y on t he pen i n su l a .

Yonhap News reported it’s the first time that six F-22 stealth fighter planes flew to South Korea at once, and that the allies plan to stage simulated attacks on mock North Korean nuclear and missile targets.

12K

The number of American troops involved in the joint United States and South Korea five-day military exercise on the Korean Peninsula

Talks proposal

White House National Security Adviser H.R. McMaster told Fox News last Sunday that North Korea was the greatest immediate threat to the US, saying that the potential for war “is increasing every day.”

McMaster said that President Donald J. Trump will take care of North Korean threats by “doing more ourselves.”

“The priorities that the president’s given us to move as quickly as we can to resolve this crisis with North Korea,” he told Fox News in an interview.

“If necessary, the president and the United States will have to take care of it, because he has said he’s not going to allow this murderous, rogue regime to threaten the United States.”

Evacuate from South?

Sen. Lindsey Graham said it’s time to start moving the families of

A United States Air Force F-22 Raptor takes off from a South Korean air base in Gwangju, South Korea, on Monday. The US and South Korea have started their biggest-ever joint air force exercise with hundreds of aircraft, including two dozen stealth jets. Yonhap via AP

American military personnel out of South Korea.

“It’s crazy to send thousands of children to South Korea, given the provocation of North Korea,” the member of the Senate Armed Services Committee said on CBS’s Face the Nation.

The US government has not announced a formal decision to evacuate US citizens from South Korea, and there were no such signs in the diplomatic community in Seoul. An evacuation of dependents by Seoul ’s closest

ally and major military defender could prompt a panicked reaction by other countries, and among South Koreans.

In addition to American diplomats and other embassy workers, about 28,500 US troops operate in South Korea, and many come to their posts with their families, who often live on huge, wellguarded military bases.

Meanwhile, a Russian lawmaker, who recently visited Pyongyang as part of a delegation from Moscow, said that North Korea is

ready for talks with the US as long as Russia participates as a third party, the TASS news agency reported last Friday.

Vitaly Pashin said that before last week ’s ICBM launch, North Korea had refrained from militar y provocations for 75 days while awaiting reciprocal steps from the US, according to TASS. Instead of meeting North Korea halfway, it said, the United States “announced large-scale sur prise militar y drills.”

Bloomberg News and AP

Trump lashes out at own FBI in a series of tweets W ASHINGTON—President Donald J. Trump launched a fresh attack last Sunday on the credibility of his own FBI, responding to revelations that an FBI agent was removed from special counsel Robert Mueller’s team investigating Russian election meddling because of anti-Trump text messages.

Trump, two days after his former national security adviser Michael Flynn pleaded guilty to lying to the FBI, again denied that he directed FBI Director James Comey to stop investigating Flynn.

The Republican president offered a running Twitter commentary last Sunday, amid renewed focus on Mueller’s probe and Flynn’s decision to cooperate with the investigation as part of his plea agreement.

Democrats said the deve lo pme nt s s u g ge ste d g row i n g e v ide nce of co ord i n at ion b e t we e n Tr u mp’s c i rc le a nd Ru ssi a n medd l i ng i n t he 2016 pre s ide nt i a l e le c t ion .

California Sen. Dianne Feinstein, the top Democrat on the Senate Judiciar y Committee, said the panel is beginning to see “the putting together of a case of obstruction of justice” against Trump.

“I think we see this in indict-

ments...and some of t he comments t hat are being made. I see t his in t he hy per f renetic attitude of t he W hite House, t he comments ever y d ay, t he cont i nu a l t weets,” Fei nstei n sa id. “A nd I see it most important in what happened with the f ir ing of Director Comey, and it is my belief t hat t hat is d irect ly because he d id not ag ree to lif t t he c loud of t he Russia investigation. T hat ’s obstr uction of justice.”

In a series of tweets, Trump questioned the direction of the federal law-enforcement agency and wrote that after Comey, whom Trump fired in May, the FBI’s reputation is “in Tatters—worst in History!”

He vowed to “bring it back to greatness.” The president also retweeted a post saying new FBI Director Chris Wray “needs to clean house.”

The president seized on reports that a veteran FBI counterintelligence agent was removed from Mueller’s team last summer after the discovery of an exchange of text messages that were viewed as potentially anti-Trump.

The agent, Peter Strzok, had also worked on the investigation of Democrat Hillary Clinton’s use of a private e-mail server.

Peter Carr, a spokesman for

Mueller, said Mueller removed Strzok from the team “ immediately upon lear ning of the a l l e g a t i o n s .” H e w o u l d n o t elaborate on the nature of the accusations. T he person who discussed the matter w ith T he Associated Press was not authorized to speak about it by name and spoke on condition of anony mity.

Tr u mp t w e e t e d l a s t Su n d ay : “ Ta i nte d [no, ve r y d i s hone st?] F BI ‘a ge nt ’s role i n C l i nton prob e u nde r re v ie w.’

L e d C l i nton Em a i l prob e.”

In a separate tweet, he wrote: “ R e p o r t : ‘A N T I -T RU M P F B I AGENT LED CLINTON EMAIL PROBE ’ Now it a l l st a r ts to make sense!”

Strzok ’s removal almost certainly ref lected a desire to insulate the investigators from any claims of political bias or favor itism. Tr ump and many of his supporters have at times sought to discredit the integrity of the investigation, in part by claiming a close relationship between Mueller and Comey and by pointing to political contributions to Democrats made by some law yers on the team.

Fol low i ng t he t weet s, Sen. L i nd se y Gra h a m, R e publ ic a nSout h C a rol i n a , w a r ned t he president to t read c aut iou s -

ly. “ You t weet a nd com ment re g a rd i n g on goi n g c r i m i n a l i n v e s t i g at i o n s at y o u r o w n per i l. I ’ d be c a ref u l i f I were you , Mr. P resident. I ’ d watc h t h i s,” Gra h a m sa id.

Mueller has been investigating whether Trump campaign associates coordinated with Russia to influence the outcome of the 2016 presidential election, and Strzok ’s background in counterintelligence would have been seen as particularly valuable for a secretive FBI probe examining foreign contacts.

Mue l ler ’s i nvest igat ion h a s so fa r net ted c h a rges aga i nst fou r p e o ple , w it h t he mo s t recent c r i m i n a l c a se brought l ast Fr id ay, when F ly nn pleaded g u i lt y to ly i ng to t he FBI about h i s conversat ions w it h t he Ru ssi a n a mba ssador.

Last Saturday Trump tweeted that he “had to fire General Flynn because he lied to the Vice President and the FBI. He has pled guilty to those lies. It is a shame because his actions during the transition were lawful. There was nothing to hide!”

T he t weet sug gested t h at Trump was aware when the White House dismissed Flynn on February 13 that he had lied to the FBI, which had interviewed him weeks earlier.

Comey has said Trump the following day brought up the Flynn investigation in private at the White House and told him he hoped he could “let this go.”

Amid questions raised by the tweet, Trump associates tried to put distance last Saturday evening between the president himself and the tweet. Trump’s personal lawyer John Dowd told ABC News that he drafted the tweet and gave it to the president’s social media director Dan Scavino. Dowd had declined to comment when reached by the AP last Saturday night.

California Rep. Adam Schiff, the top Democrat on the House Intel ligence Committee, said given that Mueller could have charged Flynn with more crimes but instead limited it to just one offense, “Bob Mueller must have concluded that he was getting a lot of value in terms of Gen. Flynn’s cooperation.”

“I do believe he will incriminate others in the administration. Otherwise, there was no reason for Bob Mueller to give Mike Flynn this kind of deal,” Schiff said, adding, “Whether that will ultimately lead to the president, I simply don’t know.”

Feinstein spoke on NBC’s Meet the Press, Graham spoke on CBS’s Face the Nation, and Schiff spoke on ABC’s This Week. AP

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

The World BusinessMirror

Tuesday, December 5, 2017

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UK fears breakdown in Brexit talks as May is set to meet EC chief

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re x it ta l k s r isk being torpedoed by the taboo issue of the European Court of Justice (ECJ), a senior British official said, as Prime Minister Theresa May heads to Brussels on Monday with the best offer her party will tolerate.

While a deal on what happens to the Irish border after Brexit is still to be done, the role of the ECJ in enforcing the rights of citizens emerged as the greatest obstacle last Sunday after a weekend of intense talks, according to the British official and a person familiar with the European Union (EU) side.

May has offered all that she can and a rejection from Europe now would risk a breakdown in talks, according to the United Kingdom official.

May has lunch with European Comm ission President Jea nClaude Juncker on Monday, which the EU has set as the final deadline for her to come up with concessions if she wants talks to move on to trade by year-end.

The UK pushed back against the deadline, saying the crucial date is the EU council summit on December 14, and UK officials on Sunday played down expectations of an imminent breakthrough.

“With plenty of discussions still to go, Monday will be an important staging post on the road to the crucial December council,” the British government said in a statement late last Sunday.

May is prepared to make some concessions on the role of the ECJ after Brexit, enraging members of her Conservative Party for whom the court is a symbol of lost sovereignty. But the compromise may not go far enough to satisfy the European Union.

The UK is aiming to win the approval of the other 27 EU states for talks to move on from the separation to the future relationship at the leaders’ summit on December 14. Lunch on Monday is meant to be a stepping stone toward that.

Without progress by the end of December, officials on both sides worry Brexit negotiations will collapse. Some Tory euroskeptics, already uneasy with May’s concessions on the financial settlement that Britain will pay when it leaves, think May should be ready to walk out now.

“If they don’t want to go for trade, the money should be off the table, and if there are no trade talks by Christmas we need to get ready to depart on World Trade Organization terms,” former Conservative leader Iain Duncan Smith said in an interview.

Irish border

Two other divorce issues need to be signed off before negotiations

can move on: An outline agreement has been reached on the financial settlement and talks have intensified on how a hard border can be avoided on the island of Ireland once Northern Ireland quits the European Union along with the rest of the UK. I r i sh Fore ig n M i n i ster Simon Covene y s a id l a st Su nd ay he ho p e d for p ro g re s s , a nd t h at I re l a nd wou ld not a sk “t he i mpossible” of M ay.

Coveney said he wasn’t looking for final answers in order for talks to progress, but an agreement on the “parameters” for resolving the issue in the months ahead.

The Irish Cabinet meets on Monday and an EU official said t here wa s some opt i m ism— though the deal is not done. One British official said the prospect of a solution to the Irish question is still bleak.

May would set out her case to Juncker at the European Commission’s headquarters. The pair is likely to be accompanied by UK Brexit Secretary David Davis and European Union chief Brexit negotiator Michel Barnier for the meal, according to two British officials.

Before they sit down to eat, Davis and Barnier are planning to hold a separate meeting to take stock of progress made during frantic behind the scenes negotiations last week and over the weekend.

ECJ compromise

The battle of the ECJ is of totemic importance on both sides.

European leaders want the ECJ to keep its legal power to protect the rights of EU citizens living in Britain after Brexit in 2019, arguing that UK courts could dilute the entitlements of foreign nationals over time.

May has previously ruled this out but is now offering to give the ECJ a permanent role, to the dismay of many euroskeptics in her own party. Under May’s plan, the Supreme Court in London will be able voluntarily to refer cases involving European Union citizens to the ECJ, when the law needs to be clarified.

That doesn’t go far enough for those who want to maintain an automatically binding role for the Luxembourg-based court.

Officials in London believe France and Germany are the most resistant to May’s plan, privately saying that the negotiations will be pushed back if these two countries do not compromise.

T he European Parl iament, which has a veto over the final deal, has also demanded a role for the ECJ and last week called for the UK to do more to defend EU citizens’ rights after Brexit.

Bloomberg News

Young Europeans optimistic; better off than their parents

Y

oung Europeans are the most optimistic age group in the region, with a growing number saying they believe they’ll be better off than their parents.

It’s a key finding in the latest Intrum European Consumer Payment Report, in which the Swedish debt-collection company surveyed about 24,000 people in 24 countries. Just over half the 18 to 24 year-olds surveyed said their financial circumstances are improving, up from only 40 percent in 2016, Intrum said.

Optimism is also improving overall, with 29 percent saying their country’s economy is improving, up from 20 percent last year. Some 38 percent said their personal financial situation is getting better, up from 30 percent.

“Optimism among European consumers appears to have improved over the past 12 months, possibly as an effect of the past few years of economic recovery in many European economies,” Intrum said.

T he European Union (EU ) will probably grow more than 2 percent this year and next, according to November forecasts by the EU Commission.

The survey also found that “the greatest optimism” regarding personal financial prospects was seen in respondents aged 18 years to 24 years. In 2017 37 percent of respondents said they believe they will be financially better off than their parents, up from 29 percent in 2016 and 31 percent in 2015. Bloomberg News

Senate Republicans grapple over trigger provisions as tax-overhaul legislation begins debate. Bloomberg

US tax cuts seen giving modest growth boost as recession looms

F

iscal stimulus, including large Republican-backed tax cuts, will deliver a modest boost to the United States economy in the next two years, although many economists also expect a recession to start during that time, according to a new survey.

About half of economists say fiscal-policy changes will augment US growth by 0.2 percentage point to 0.39 percentage point in 2018, according to a survey of 51 forecasters by the National Association for Business Economics (Nabe) conducted from November 6 to 15. About one-fifth project a bigger gain and another fifth see no benefit to growth.

Since the survey was conducted, the Republican tax proposal has undergone numerous changes that could alter its impact on the economy, with the potential for further modifications during

Senate and House negotiations before it heads for President Donald J. Trump’s signature.

Even with the bump, a slight majority anticipates a recession beginning sometime before the end of 2019, with most of that group seeing a business-cycle peak in the second half of that year.

That compares with 48 percent who see the expansion running through at least 2020.

Economists were most likely to cite trade protectionism as a top risk to expansion, followed by a substantial stock-market decline and higher interest rates.

The effects on the economy from the tax plan, pushed by the Trump administration and congressional Republicans, has been a contentious topic. Republicans have said that the additional growth unleashed by the legislation means the cuts pay for themselves by increasing revenues; many economists disagree.

The White House says the package will trigger an investment boom by companies that will lift growth to a sustained 3-percent pace and make up for the loss of tax revenue from lower rates.

Less optimistic

At the time of the survey in earlyNovember, 76 percent of economists expected tax cuts to be enacted during the first half of 2018. They were less optimistic on the prospects of an infrastructure-spending program from the Trump administration, with just 35 percent expecting one to get done in 2018, and 37 percent saying it won’t happen during the current presidential term.

For 2019 44 percent see a bump to growth of 0.2 percentage point

to 0.39 percentage point, but roughly the same proportion expects a smaller boost or none at all.

In another question, most economists said the renegotiation of the North American Free Trade Agreement would have either a marginal effect or no impact on the US economy. Twenty-five percent expect the results of the talks to be marginally positive, while an equal proportion expect it to be marginally negative and 19 percent predict zero net benefit.

Trump has threatened to pull out of the 23-year-old accord if Mexico and Canada don’t bow to US demands.

Economists were split on the reasons US-wage growth has remained weak even as the job market tightens. About 30 percent blamed poor productivity growth, while 27 percent pointed to low inflation and 19 percent cited an aging population.

Yelena Shulyatyeva of Bloomberg Economics, part of Bloomberg LP, was one of several economists who helped compile the report for the Nabe. Bloomberg News

Oil falls below $58 a barrel as US increases drilling

O

il dropped below $58 a ba r re l a s i nvestors weighed an increase in United States oil-drilling rigs against Organization of Petroleum Exporting Countries’s (Opec) promise to extend output cuts through the end of next year.

Futures fell as much as 0.9 percent in New York after adding 1.7 percent last Friday. Opec and its allies, including Russia, last week agreed to keep their supply cuts in place and beefed up the extension with the inclusion of Nigeria and Libya.

Executives from three of the biggest independent US drillers said while they won’t increase activity just because prices rise after Opec agreed to prolong curbs, they will continue to grow.

Oil has advanced for three consec ut ive mont hs t hrough November amid optimism that out put cuts by Opec and its partners are helping to balance the market. Drillers targeting crude in the US added two rigs to 749 last week, the highest level since late-September, according to Baker Hughes Inc. “Even though adding Nigeria and Libya is a positive sign, Opec has basically played all its cards after deciding to extend production curbs through next year,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. “As long as US shale suppliers exist, it will be hard to see further gains in oil prices from now on.”

West Texas Intermediate (WTI) for January delivery was at $57.93

a barrel on the New York Mercantile Exchange at 2:02 p.m. in Seoul, down 43 cents. The contract gained 96 cents to settle at $58.36 last Friday. Total volume traded was about 21 percent below the 100-day average.

Brent for Febr uar y sett lement d ropped 36 cents to $63.37 a barrel on the Londonbased ICE Futures Europe exchange. Prices added $1.10, or 1.8 percent, to close at $63.73 last Friday. The global benchmark crude was at a premium of $5.43 to Februar y W TI. Pioneer Natura l Resources Co., Parsley Energ y Inc. and Newfield Exploration Co. said t hei r emph a sis wou ld be on m a i nt a i n i ng spend i ng d isc ipline and generating profits,

rather than just boosting supply on higher oil prices. Pioneer plans to boost output from about 300,000 bar rels of oil equivalent a day this quarter to more than 1 million by 2026.

Money ma nagers have increased their bullish ICE Brent crude oil bets by 11,739 net-long positions to 537,979, the most bullish level in three weeks, the weekly ICE Futures Europe data on futures and options show.

Citig roup rema ins bear ish 2019 with a forecast of about $49 a barrel for Brent as Opec, the US, Canada, Brazil and Russia look to add material volumes of supply, which would likely be at a faster growth rate than demand, bank analysts including Ed Morse wrote in a note. Bloomberg News

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Global Eye BusinessMirror

Tuesday, December 5, 2017 • Editor: Angel Calso

www.businessmirror.com.ph

Apple and Google CEOs bring star power at Internet confab as China touts control

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pple Inc.’s Tim Cook and Google’s Sundar Pichai made their first appearances at China’s World Internet Conference (WIC), bringing star power to a gathering the Chinese government uses to promote its strategy of tight controls online.

Apple’s CEO gave a surprise keynote at the opening ceremony last Sunday, calling for future Internet and artificial intelligence (AI) technologies to be infused with privacy, security and humanity. The same day, one of China’s most-senior officials called for more aggressive government involvement online to combat terrorism and criminals.

Wang Huning, one of seven men on China’s top decision-making body, even called for a global response team to go well beyond its borders.

It was Cook’s second appearance in China in two months, following a meeting with President Xi Jinping in October. The iPhone maker has most of its products manufactured in the country and is trying to regain market share in smartphones against local competitors, such as Huawei Technologies Co. “The theme of this conference —developing a digital economy for openness and shared benefits—is

a vision we at Apple share,” Cook said. “We are proud to have worked alongside many of our partners in China to help build a community that will join a common future in cyberspace.”

The Wuzhen conference, which until this year has had a primarily local presence, is designed to globally promote the country’s vision of a more censored and controlled Internet. The attendance of leaders from two of the world’s most valuable tech giants lends credibility to China’s efforts to influence the global Internet so it better resembles its own.

“It is interesting to see Apple and Google at the WIC, but we doubt there will be any meaningful changes in China government policy,” said Kirk Boodry, an analyst with New Street Research. “Current policies have worked very well so far: Two of the top 5 Internet companies in terms of market cap are Chinese —supported

and many Western commercial and educational web sites.

New order

Pichai

by growth in consumer spending, which is a key government priority.”

The two companies Boodry referred to participated in the conference, with Alibaba Group Holding Ltd. Chairman Jack Ma and Tencent Holdings Ltd.’s Pony Ma taking part.

The other technology executives in attendance included Cisco Systems Inc.’s Chuck Robbins and Baidu Inc. cofounder Robin Li. Cook’s comments come at a pivotal point for the company’s future in China, which is now its biggest market outside of North America.

It relies on the sale of hardware and services in the world’s most populous country to propel revenue and profit growth. But the efforts required to stay in China’s good graces are causing tensions with civil libertarians and politicians at home.

36-year-old makes $62M with instant Web flea market

By Pavel Alpeyev Bloomberg

Y

usuke Mitsumoto had a hunch: What if you paid people instantly for their used goods over the Internet, with no guarantee that they would hand them over?

The 36 year-old e-commerce entrepreneur launched an app in June to test the idea. It worked better than he imagined; after 16 hours he was stunned to discover he was on the hook for ¥360 million ($3.2 million) and shut the service down.

A day later, truckloads of clothes and electronics gadgets started to arrive, with his start-up’s employees forming a bucket line to move packages into his company’s tiny office in Tokyo.

All told, less than 1 in 10 secondhand-goods sellers didn’t deliver as promised. That was good enough for Mitsumoto, who relaunched the service, called Cash, in August as a new way to gather inventory for an online flea market. Total daily purchases are capped at ¥10 million, and are limited to smartphones, luxury handbags, watches, clothing and other specific items from a list of several thousand. Customers take a photo and are given a nonnegotiable offer. Prices are set automatically based on data gleaned from other secondhand marketplaces and Cash makes money by reselling the goods.

“It was a social experiment,” said Mitsumoto, who started selling goods on the Web in 1996. He later launched Stores.jp, Japan’s version of Shopify, which he sold and then bought back. “Of course, I believed that good people would outnumber the bad, but the question was by how much. That’s not something you can find out without trying.”

Secondhand sales are a big business in Japan and a market worth ¥1.6 trillion, according to the Reuse Business Journal. Bookoff Corp. has hundreds of stores that buy and sell everything from used books to video games and electronics. Yahoo Japan Corp. operates the country’s biggest online auction site. Mercari Inc.

COOK

He said Apple’s operations in the country began three decades ago with a handful of employees. Today, it helps support more than 5 million jobs in China, including 1.8 million local mobile app developers, he added.

Apple has come under fire for cooperating with Chinese authorities in removing apps that give users there uncensored communications.

In November Apple complied with government orders to pull Microsoft Corp.’s Skype phone and video service from the Chinese version of its popular app store. Cook used an earnings call with investors to justify such moves, saying it obeyed the laws of the markets where it operates.

“Much has been said of the potential downsides of AI, but I don’t

worry about machines thinking like humans. I worry about people thinking like machines,” he said. “We all have to work to infuse technology with humanity, with our values.”

Technology of the future should have openness, creativity and safeguards to protect users while providing privacy and decency, he added.

It’s a goal that, according to Cook’s Chinese hosts, can only be accomplished through more laws and regulations that control what can be shared online. Wang, a member of the Politburo Standing Committee, called for a global emergency response team that would respond in times of crisis using new and undetermined measures. China goes far beyond censoring content that could support terrorists and criminals. It also blocks Facebook, Twitter

“What we propose is we should promote a controllable security and build a new order,” Wang said through a translator. “Cybersecurity is a serious challenge. Cyber crimes and cyber terrorism have grown more rampant. The world’s destiny has become more intertwined in cyberspace.”

Unlike Cook, Google’s Pichai did not deliver a keynote speech and was instead on a panel to discuss the digital economy. The vast hall remained mostly empty for much of the session as a result of confusion among conference staff over when the session would begin.

Wuzhen holds special significance for the search giant, whose AI program defeated the world’s top-ranked player of the ancient board-game Go at the same venue earlier this year—a point Pichai alluded to as he promoted the company’s kit of AI software tools, called TensorFlow.

“There are many small and medium businesses in China who take advantage of Google to get their products to many other countries outside of China,” he said. “Technology is giving opportunities at a global scale, driving interconnectedness and cooperation and I think it’s a big trend and I think it’s almost irreversible at this point.” Bloomberg News

Fiat Chrysler bares plan to develop hydrogen engines with Hyundai

By Tommaso Ebhardt Bloomberg

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Mitsumoto Bloomberg

became Japan’s first start-up to be valued at more than $1 billion with a smartphone app that made it easy for people to sell unwanted things to each other.

What Mitsumoto discovered was a way to remove the last bit of friction for sellers to get rid of stuff, unlocking value wasting away in people’s closets. He tapped into a market of people who lacked either the time or the patience to take nice pictures, write product descriptions and haggle with buyers.

He also knew that it was only a matter of time before bigger rivals followed with similar offerings. So when Mitsumoto got a Facebook message on October 4 at 1:58 a.m., “Hi! This is Kameyama! Sell Cash to me! No?” he saw a way to stay ahead of the competition.

Keishi Kameyama is one of Japan’s richest people and the founder of DMM.com, a media and technology empire with $1.6 billion in revenue.

Kameyama started with pornography but has grown his company into a vast collection of enterprises that spans a currencytrading platform, video games, an online English school and solar

farms. Mitsumoto agreed to sell Cash to DMM for ¥7 billion and continue running the business.

“For people doing Internet businesses in Japan, DMM is a scary presence,” Mitsumoto said. “You never know when they may launch their own business and become a tough rival. I figured it’s best to at least meet.”

Indeed, a week after the deal was announced, Mercari launched an identical offering. The move

by Cash proved that there was a need for such a service, said Takeo Iyo, the vice president in charge of Mercari Now. Kameyama said his team recognized the potential of the market uncovered by Mitsumoto, but admits that the eye-popping valuation for a company of six people that’s not even one year old was also partly an “acquihire”—an acquisition based on hiring.

“Doing business on the Internet is not all capital and equipment, you need a certain intuition, a design sense and ability to get a service going,” Kameyama, 56, said in an interview. “I can also appreciate a bold play. There aren’t that many audacious people in this world.”

iat Chrysler Automobiles (FCA) revealed that it’s in talks with South Korea’s Hyundai Motor Co. about a partnership to develop hydrogen engines.

The alliance, which would also cover transmissions, could become “a strong one,” Fiat Chrysler CEO Sergio Marchionne said last Saturday at the Alfa Romeo Museum in Arese, near Milan. “We welcome the interest from other automakers in our advanced transmissions and hydrogenpowered technologies,” Hyundai said in an e-mail on Monday.

Cooperation on hydrogen propulsion would come despite electricpowered autos being established as the dominant technology in the emerging post-fossil fuel era. Hyundai initially led the commercialization of fuel-cell vehicles, though it has fallen behind Japan’s Toyota Motor Corp. in terms of sales, while Fiat backed away from hydrogen power earlier this decade.

“There is the potential of a technical partnership with Hyundai, which already supplies some components and transmissions for the United States,” Marchionne told reporters after a presentation on Alfa’s planned Formula One (F1) return. “Let’s see if we find a deal to develop transmissions and hydrogen.”

Marchionne, a vocal proponent of automaker consolidation, having led Fiat’s takeover of Chrysler, said there is no likelihood of a merger with Hyundai.

Shrinking size

Shares of Hyundai fell 1.2 percent to 159,500 won as of 11:23 a.m. in Seoul on Monday. The Seoul-based automaker is working on shrinking the size of a fuel-cell powertrain to one that’s comparable to an internalcombustion engine, so that it can fit into various models, as well as reduce costs. Hyundai makes the ix35 Fuel Cell and plans to release a long-range hydrogen-powered sport untility vehicles next year.

FIAT CHRYSLER Bloomberg

Fiat Chrysler has focused on electric developments, though on a limited basis. The company has offered a plug-in version of the 500 subcompact that’s available only in California, and last year introduced a hybrid variant of the Pacifica minivan.

“It can be a win-win situation for both automakers,” said Koh Taebong, a senior analyst at Hi Investment & Securities Co. in Seoul. “If the report turns out to be true, Hyundai would be able to sell fuel-cell engines, an area where Japanese automakers are ahead, while FCA can expand its lineup with fuel-cell vehicles.”

Marchionne has said Fiat Chrysler will push forward with electrification but doesn’t see it as the sole alternative to traditional engines. Hyundai Motor’s affiliate Hyundai Mobis Co. is an established supplier, providing a six-speed transmission for the Jeep Compass Patriot.

Five-year plan

Marchionne, who at 65 is preparing a five-year business plan before retiring from the post in 2019, confirmed plans to spin off Fiat Chrysler’s Magneti Marelli and Comau component businesses into separate companies by the start of 2019. The mechanism hasn’t been decided, but could include selling a stake to raise cash.

A spinoff of the Alfa Romeo and Maserati brands is too remote to be discussed at the moment, Marchionne said, while highlighting

the importance of motor racing in Alfa’s development. A return to F1 could help polish the marque’s image as it seeks to rebuild an upscale reputation.

Marchionne has invested billions of dollars to develop new vehicles after the Alfa lineup shrank and sales collapsed in the last decade.

F1’s global appeal will bring wider exposure after previous attempts to expand beyond Europe were delayed.

Financial goals

The CEO confirmed Fiat Chrysler’s financial targets for 2018, including an increase in operating profit to about €9 billion ($10.7 billion) and the elimination of debt. He said he anticipates “manageable costs” from a diesel investigation that Fiat is facing in the US. The issue “will cost us something, but we have reduced the risk expectations,” Marchionne said, adding that a separate French probe is groundless.

Marchionne, who met with US Vice President Mike Pence and other officials at the White House this week to discuss North American Free Trade Agreement concerns, said he doesn’t see Donald J. Trump’s administration leaving the Nafta.

“They want to find a solution that somehow reestablishes the American interest being more important,” he said. “They think they gave up too much at the table and they want some of it back. The question is how much and when.”

Global Eye BusinessMirror

www.businessmirror.com.ph

Tuesday, December 5, 2017 A9

Quants want to program robots to track Bitcoin

By Dani Burger | Bloomberg

Q

asset classes and strong historical trending behavior.”

uantS blended with cryptocurrency sounds like a cocktail poured in hell. But behind closed doors, a few intrepid souls in the investing world are starting to drink it.

Part academic exercise, part arranged marriage of Wall Street fads, a handful of theorists and traders are looking at what investment factors like momentum and value can tell you about—yep—the price of Bitcoin. Factors, the wiring behind smart beta exchange-traded funds (ETF), already revolutionized equities, proving that groups of stocks with traits like cheapness and lowvolatility return more than the market as a whole.

That discovery was a gold mine, launching $700 billion in smart beta ETFs, so it’s no surprise people want to turn it loose elsewhere. A more abstract motive hearkens to the foundation of quantitative investing. It’s the idea that no matter where you look—stocks, bonds, initial coin offering tokens—mental mistakes by investors cause the same trading opportunities to arise in every market.

In the theory camp is Stefan Hubrich, the director of asset-allocation research at T. Rowe Price Group Inc., who set out to publish the first academic paper linking factor anomalies

to blockchain assets. After building models and analyzing data, Hubrich says he can show that factor investing beats a simple buy-and-hold strategy in digital tokens.

“Our results should not be taken as an endorsement of cryptocurrencies as an asset class,” Hubrich wrote in his October 28 research. “Instead, we view our findings as an intriguing confirmation of the efficacy of the underlying factors themselves.”

Too little data

One reason Bitcoin and its peers are a tempting laboratory for academic quants is how different they are from traditional assets. Stocks may bounce around, but they’ve got nothing on cryptocurrencies, where jarring price swings, flash crashes and cataclysmic exchange malfunctions happen regularly. If concepts like value and momentum stand in that jungle, researchers reasoned, it would help confirm that behavioral biases operate everywhere.

It’s been something of a cause for Cliff Asness, the founder of

Momentum strategy

AQR Capital Management, to prove that factors aren’t just for the stock market. In 2013 long before the Bitcoin craze, he published a paper that found tilts like value, momentum and carry work across asset classes, geographies and time periods. Asness said in November that, while still early, it’s not unreasonable to apply the same logic to cryptocurrencies.

While it may not be unreasonable, at present, too little data exists to prove tradable risk factors exist in Bitcoin, says Campbell Harvey, an adviser at Research Affiliates and Man Group and professor at Duke University. It’s a little too convenient, Harvey says, to declare the momentum factor may be at work in Bitcoin, something everyone knows has done nothing but rise in 2017.

‘Operational hurdles’

“I would not really call any of the factors applied to cryptos, factors,” Harvey said. “That said, given these

are relatively young markets, it makes sense that there could be some inefficiency in the pricing.”

Doug Greenig has more concrete goals. The University of Californiaeducated math doctorate and former chief risk officer at Man AHL started his London-based CTA, a type of quantitative fund that bets on price patterns, called Florin Court Capital in January 2015.

Then, in April, he converted his $522 million firm solely to exotic assets on April 17.

Why? Because unlike trendless, crowded and calm developed markets, Greenig saw value in chasing assets like European electricity and, yes, Bitcoin.

“It just makes sense to be involved even though the operational hurdles for an institutional-grade fund are considerable,” Greenig said. “My perspective, in short, is that cryptocurrencies are an interesting asset class, with low correlations to the traditional

The change seems to be working.

From April through the end of October, Florin Court has returned 15.5 percent, compared with 0.2 percent for the Societe Generale AG CTA index.

Greenig says he’s one of the first CTAs to incorporate Bitcoin. The strategy is momentum, adding bullish bets as the cryptocurrency picks up steam. His preferred method of obtaining exposure is Bitcoin Investment Trust, which trades overthe-counter.

Hurdles for investing in cryptocurrencies are like those in the other weird things Greenig trades, like finding counterparties, minimizing operational risk and keeping up fiduciary responsibility. But the beauty of Bitcoin, he said, is that it’s so sentiment driven: Interest begets interest, making momentum a powerful strategy.

“The trending behavior of Bitcoin has been strong in the past, and CTA momentum models seem to work as expected,” Greenig said.

“The maturity of the market has grown, and we expect eventually to see more participation by systematic players.”

Three factors

According to Hubrich, three factors work in the major digital currencies: value, carry and momentum. The philosophical challenge is finding a way to replicate those

traits. They’re reasonably straightforward in stocks, say, measuring value through a company’s priceearnings ratio.

To find a crypto corollary, Hubrich gets creative. He translates value to mean the token’s market value versus the dollar volume of blockchain transactions. For momentum, Hubrich uses a four-week horizon because of limited historical data, rather than the 12 months typically used for equities.

“This is a very volatile and young asset class, and we’re bound to learn much more over time,” Hubrich said. “Momentum is more than 100 years old, but it’s very early days for cryptocurrencies.”

Though Hubrich’s study was an academic exercise, Michael Paritee of Serrada Capital uses a similar value ratio to invest in cryptocurrencies. Paritee founded Serrada in 2006, and launched the Digital Asset fund in September, which blends discretionary and systematic strategies to invest in cryptocurrencies.

That includes evaluating a token’s market cap to transaction volume ratio, he said.

“We saw a lot of opportunity to trade something we love doing— volatility, because that’s how we like to make money and traditional markets have gotten harder and harder in the last couple years,” Paritee said.

“There’s technical reasons to be involved in crypto, there’s idealogical reasons to be involved in crypto, but we see a real business opportunity for hedge funds and asset managers in this space.”

What we know about corporate winners and losers in US tax bill

By Jonathan Levin, Andrew Pollack & Drew Armstrong Bloomberg

T

he tax bill passed by Republicans in the United States Senate over the weekend may boost profits for industries, from banking to retail to fossil fuels. It also could put the squeeze on hospitals and renewable-energy firms.

While the plan is still subject to revision, the centerpiece of the existing legislation is a reduction in the corporate income-tax rate to 20 percent, from the current 35 percent, along with a provision that allows some companies to bring back hundreds of billions of dollars in foreign profits at a lower rate than they otherwise would’ve paid.

The Senate bill preserves the alternative minimum tax for corporations after originally proposing to eliminate it. With the regular corporate rate now set to drop to 20 percent—the same as the corporate alternative minimum tax—it’s unclear if companies would be able to use research and development credits to lower their tax bills.

The bill, which underwent a raft of last-minute changes late Friday and early Saturday before passage, may still see more alterations as Senate and House leaders begin work to reconcile their two versions. President Donald J. Trump also weighed last Saturday, unexpectedly saying the corporate-tax rate in the package could reach 22 percent.

Here’s how sectors may fare under the legislation as it stands:

Asset managers

Stocks of US-based asset managers rose to a record last week on optimism about the tax overhaul.

Among the top gainers were Federated Investors Inc., Bank of New York Mellon Corp., Franklin Resources Inc., Waddell & Reed Financial Inc. and Eaton Vance Corp.

That’s in part because asset managers typically pay tax rates of 30 percent to 35 percent, according to data compiled by Bloomberg. It’s higher than many other industries because the firms generally qualify for few deductions, Gabelli & Co.’s Macrae Sykes said last week.

Asset managers also benefit from rising equity markets, as higher prices increase the value of the holdings they manage and improve the performance of their funds.

Asset managers with foreign earnings could see particular benefits from the Senate bill, according to Rory Callagy, a senior vice president with Moody’s Investors Service.

As a group, they’d also gain from the bill’s tax cuts for individuals— as well as changes to the alternative minimum tax and restrictions on the estate tax. Those provisions would give individual investors “more of their income and inherited wealth” to put into mutual funds and exchange-traded funds, “helping managers grow assets and related fees,” Callagy wrote.

Banks

Lenders, including JPMorgan Chase & Co. and Citigroup Inc., have rallied on news of the bills’ progress in Congress. “Banks would be one of the clearest beneficiaries of this tax-reform bill,” Isaac Boltansky, an analyst at Compass Point Research & Trading in Washington, said in an e-mail early Saturday after the Senate amended the bill.

If Republican promises of faster economic growth are realized, banks will benefit with corresponding loanportfolio expansion, Boltansky said.

Moreover, as corporations that pay relatively high effective tax rates themselves—with fewer available deductions—banks also stand to benefit a great deal from the reduced overall rate.

Banks would pay slightly higher rates than other types of companies under a new tax on certain payments to overseas affiliates. However, they’d benefit from a last minute change to another aspect of the socalled base erosion anti-abuse tax, or BEAT, which stipulated that payments involving derivatives wouldn’t count toward triggering the levy.

Another provision would eliminate the deduction for Federal Deposit Insurance Corp. premiums by banks with consolidated assets above $10 billion.

Pharmaceuticals

Drug and biotechnology companies would be among those benefiting

from paying a reduced tax rate on repatriated earnings.

The money isn’t likely to go to workers, though. Senior executives from Pfizer Inc. and Amgen Inc. have said they’ll use a lower tax rate and cash inflow to return money to shareholders through buybacks and dividends. The new tax regime could also set off a mergers-and-acquisitions boom, as flush war chests give large drugmakers the means to snap up assets they’ve had their eyes on.

Hospitals/insurers

The Senate bill’s repeal of Obamacare’s individual mandate won’t help health insurers and hospitals, which are already working to cope with the Trump administration’s efforts to undermine the law. Ending the individual mandate—a requirement that all Americans carry health-insurance coverage or pay a fine—is likely to raise the number of uninsured.

For health insurers, that means the only people who will buy coverage are those that need it most—typically sicker, more costly patients. In response, many have already started to raise the premiums they charge, or to pull back from some of the law’s markets. Hospitals have less flexibility. Any increase in the uninsured means a decrease in the number of paying customers. Sick people still show up at the emergency room for care, though, and hospitals often have to write off their unpaid bills.

Private equity

Because of their use of leverage to juice returns, private equity firms are primarily watching proposals to limit the amount of interest expense they can deduct from portfolio companies’ taxable income.

House Republicans’ bill would cap the deduction at 30 percent of a company’s earnings before interest, taxes, depreciation and amortization. The cap in the Senate bill is stingier at 30 percent of earnings before interest and taxes—a much lower measure than Ebitda. The firms can currently saddle their companies with debt and deduct the full interest cost.

Dealmakers are also watching a potential change in how their personal earnings are taxed. Currently,

their cut of profits on private equity investments made using client capital is treated as a long-term capital gain—and taxed at a lower rate than ordinary income—if the investment is held for at least a year. Both the House and Senate bills would lengthen the one-year standard applied to such earnings, known as carried interest, to three years.

Real estate

For commercial real-estate developers and owners, the Senate version brings few significant changes. The biggest revision would create a new tax break for many—a 23-percent deduction on business income, subject to certain restrictions.

The deduction would be available to businesses organized as so-called pass-throughs—including partnerships, limited liability companies and S corporations. Pass-throughs don’t pay taxes themselves but pass income to their owners, who—under current law—pay taxes at their individual income-tax rates.

Many commercial real-estate developers and owners have their businesses set up as such. The House would provide a pass-through tax rate via a different mechanism—the disparity will be one of the key differences that lawmakers will have to work out.

Technology

The technology industry also stands to benefit from the provision allowing cash stockpiled overseas to be returned home at a lower tax rate.

US companies have $3.1 trillion in overseas earnings, according to a Goldman Sachs & Co. estimate. The largest stockpile belongs to Apple Inc. at $252.3 billion—94 percent of its total cash. Microsoft Corp., Cisco Systems Inc., Alphabet Inc. and Oracle Corp. round out the top 5, data compiled by Bloomberg show.

Dean Garfield, chief executive officer of the Information Technology Industry Council, which represents almost every major tech company, applauded Senate passage of the bill, saying it “moves us closer” to “a more competitive economy.”

Telecoms

Telecommunications companies, which need to regularly upgrade

their networks, will be winners if provisions that increase the deductibility of capital investments stay in the final versions of the bill. AT&T Inc. CEO Randall Stephenson said his company will invest $1 billion more in US infrastructure in 2018 if Trump signs off on tax reform.

The reduction in corporate income tax combined with enhanced deductions for capital expenditures over the next five years will allow AT&T to invest more in fiber-optic cable to US homes and businesses, he said.

Industrials

Industrial firms are likely to see the overall package as a positive because of what it would mean for overseas earnings that they’ve left stockpiled offshore.

Both the Senate and House bills have provisions that encourage companies to repatriate past international profits at attractive tax rates. They would then be able to invest more in US operations and pursue growth opportunities and acquisitions. Critics point out that, when companies have been given incentives to repatriate earnings in the past, they used the bulk of them on returning cash to shareholders.

Fossil fuels

Lowering the corporate-tax rate and changes to cost-recovery provisions will help spur investment and create jobs, according to the American Petroleum Institute, the industry’s main lobbying group.

The Senate plan would also open a portion of Alaska’s Arctic National Wildlife Refuge to oil and naturalgas drilling—a move that lawmakers estimate could yield $1 billion in revenue over the next decade. A final tax plan may also increase sales from the Strategic Petroleum Reserve to help boost short-term revenues.

Environmental groups have questioned the revenue figures and industry interest in drilling in the Arctic National Wildlife Refuge.

Moreover, not every fossil-fuel producer is pleased with the legislation.

Robert Murray, CEO of coal company Murray Energy Corp. and a staunch supporter of the president, attacked the bill as a “mockery of tax reform” because it fails to repeal the corporate

alternative minimum tax.

“This legislation is much worse than the status quo,” Murray said in a statement last Saturday. “Our company will see a significant tax increase resulting primarily from the loss of the business interest expense deduction.”

Renewables

The proposed tax bill threatens a critical but esoteric source of wind and solar finance: tax equity. In tax-equity deals, renewable-energy developers sell portions of their projects’ tax credits to corporations —often banks and some insurance companies—that can apply the credits to their own tax bills. That market is expected to total $12 billion this year, according to Bloomberg New Energy Finance.

Most tax-equity investors are multinational companies, and the issue now is that the Senate version includes a provision that imposes a minimum tax on these companies’ foreign transactions. If they have to pay a minimum tax, they may no longer have any need for the credits acquired through tax-equity deals.

“It literally will grind our industry to a halt,” said John Marciano, cohead of project finance at Akin Gump Strauss Hauer & Feld Llp. “Developers would be fighting for the few remaining investors.”

Retail

Retailers expect the tax overhaul to boost demand for their goods and services. Most chains rely on middleand low-income shoppers for the bulk of their sales, and they say aspects of the legislation on the personal side —like doubling the standard deduction—will give such individuals more discretionary income.

The advantage would be temporary under the Senate bill; its individual tax cuts would expire in 2026.

After successfully lobbying to kill a House plan for a border-adjusted tax that would apply to imports, retailers have fully supported the overhaul. They tend to pay effective tax rates that are higher than industries with significant overseas operations, such as energy and pharmaceuticals, so almost any reduction in the corporate rate is seen by retailers as a boon.

A10 Tuesday, December 5, 2017 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial

Senator Pacquiao as PHL boxing czar

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recent story on the ABS-CBN news web site said Sen. Emmanuel D. Pacquiao has been mulling over quitting his post due to frustrations on what he has found out about politics.

Of course, he went on to say these frustrations are about those who keep criticizing and planning destabilization plots against President Duterte more than anything else, but he is frustrated enough to say he is unsure if he would still pursue politics after 2022, when his term as senator ends.

This is not going to be an argument for Pacquiao to get out of the political arena. He has certainly earned the right to do whatever he wants with his life. However, another news piece last week also gave us a glimpse of what Pacquiao can do if ever he decides to quit politics for good, or after he finally hangs up his gloves.

Last week the Philippine Sports Commission (PSC), the Association of Boxing Alliances in the Philippines and Pacquiao announced that they will join hands in rekindling interest and searching for the best new boxing talent in the country through the PSC-Pacquiao Amateur Boxing Cup. According to a statement from the PSC, the project calls for the nationwide development on the interest and participation in boxing as a sport. They will go around the country to scout potential boxers who could not only join the competition but also the national pool.

Pacquiao’s ring exploits have already positively promoted the Philippines more than most Filipino political leaders or officials. Perhaps continuing his boxing advocacy, taking on the mantle of a Freddie Roach or an Oscar de la Hoya is not such a bad idea.

Pacquiao’s MP Promotions already has former Olympian Mark Anthony Barriga, who represented the country in the 2012 London Games, and reigning International Boxing Federation junior bantamweight champion Jerwin Ancajas in its stable.

We could certainly see Pacquiao training Filipino fighters and future champions who would continue his legacy. We could see him bringing the sport of boxing into a much higher status than what it enjoys now. Only a legendary fighter like Pacquiao could rally the resources and inspiration necessary to do so.

Perhaps, if Pacquiao started as an amateur and was trained by the likes of Roach early in his career (not necessarily by him), who knows, he could easily have earned the country its first Olympic gold. He punches fast and heavy, moves like a dream and can be just as devastating in the amateurs as he has been in the professional rank.

Filipinos are good boxers. They just need the right training and ample financial support, and certainly can do with a lot less exploitation from promoters.

Boxing can be an Olympic goldmine. Countries like Cuba and Russia have proved this. We don’t have anything against basketball, the nation’s pastime, but, realistically, we can throw all the money we want into basketball, and even then we probably would never get an Olympic gold from it.

We could see Pacquiao being the country’s boxing czar, in charge of developing Filipino fighters and developing the sport itself. He could also choose to train professional fighters, like Roach does, and he could be successful at it. Having learned from Roach himself, it’s like earning a PhD in boxing from the best university in the world. Roach has shown there is also prestige and money in training professional champions. Best of all, you never have to leave the sport you love.

Or, Pacquiao could focus full-time on promoting boxers and boxing itself. A great champion naturally attracts great fighters into his stable. He can be as big inside the ring as outside of it. He could parlay his success in the ring into his business and take very good care of his fighters.

Pacquiao is already one of the greatest fighters in the history of boxing.

He could still be one of its brightest stars outside the ring if, and when, he hangs up his gloves. And it certainly does not have to be in Philippine politics. No, not at all.

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Manny B. Villar

THE Entrepreneur Continued from A1

W

E all know the controversies that hounded the department in the previous administration, but let’s leave it at that. During presentations before foreign and local business leaders, Department of Budget and Management (DBM) Secretary Benjamin E. Diokno said past underinvestment in infrastructure explained why we have the poorest roads, bridges, urban-transit systems and railways in this part of the world.

The present, poor state of infrastructure reflects decades of neglect and misallocation of public resources. We did not just find ourselves with horrendous traffic jams and cramped trains in a few years or so.

Citing DBM data, Diokno said infrastructure spending as share of GDP averaged less than 2 percent from 1986 to 2016. According to multilateral institutions, the suggested ratio for infrastructure spending as a share of GDP is 5 percent for developing countries. The Philippines barely reached half of that threshold during the last 50 years.

This is the reason the Duterte administration has identified infrastructure development as a priority. The Philippines has to close the infrastructure gap soon if we are to realize our development objectives of becoming an upper-middle income economy by 2022 and reducing

poverty rate to 14 percent.

The administration plans to spend P8 trillion to P9 trillion, or approximately $160 billion to $180 billion in the next six years. For 2017 the government will spend P858 billion and under the proposed budget.

For 2018 the amount will increase to P1.1 trillion. As a share of GDP, infrastructure spending will be ramped up from 5.4 percent of GDP in 2017 to 7.3 percent of GDP by 2022. The infrastructure program, dubbed “Build Build Build,” is easily the boldest infrastructure program in our recent history.

The first task for the DBM is to reduce underspending as a share of the cash budget. From P302 billion in 2014 (13.3 percent of the cash budget), government underspending went down to P96.3 billion (3.6 percent) in 2016 and P6 billion (0.4 percent) in the first half of 2016.

‘Hey PSE, what’s up?’

John Mangun

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

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DBM cures ills of the past

OUTSIDE THE BOX

A

fter having basically been in a one-direction move higher since March, the Philippine Stock Exchange Composite index (PSEi) topped out in the middle of October. Stock markets go up and down like the rising and falling ocean tide. The concern for stock prices—unlike for the sea tides—is that you never know how high prices will go when resistance is broken or how low prices will drop once support fails.

An eight-month bull market from March saw the PSEi gain 6.4 percent in August, 5.43 percent in September and 3.01 percent in October. It was expected then as momentum was slowing, that November would see a decline as what happened with the PSEi losing 1.07 percent. There is nothing wrong with that, and is even seen as positive. We needed a pullback to digest the gains and relieve the “too far-too fast” pressure.

The problem, though, is that during the last days of November trading and the first of December’s—even with a one-day holiday—the PSEi took a large fall, being down 2.64 percent. In fact, this was the worse weekly performance of 2017. We could have taken some comfort in the fact that the market was down, as perhaps it would indicate that the selling of the previous four or five weeks was coming to an end.

But volume was low—any big

Allocating huge resources for infrastructure is only part of the solution to our serious lack of roads, bridges, ports and other infrastructure facilities. At the same time, the large budget presents opportunities for inefficiency and corruption.

Thus, the DBM instituted reforms to make sure that money is spent wisely, promptly and efficiently. For instance, the President vetoed an item in the 2017 budget that gives appropriations a validity of two years —the validity period has been cut to one year. According to Diokno, the two-year validity period in the past led to delays in the delivery of public services as bureaucrats became complacent with the two-year validity.

To ensure efficient implementation of infrastructure projects, the government will push for 24/7 construction. To promote transparency, the government will enforce stronger project monitoring through technology. This is already being done by the Department of Public Works and Highways, which is utilizing drone technology.

For the swift and cost-effective rollout of projects, the government is adopting the hybrid public-private partnership (PPP) approach. Under this approach, the government chooses the project, then arranges the financing through the budget, official development assistance or through foreign loans. Then the project is bid out to local or foreign contractors. After the completion of the project, the government bids out the operation and maintenance of the project to the private sector.

Diokno cites two reasons for

volume being portfolio repositioning—and that almost eliminates the chance for a selling climax when disappointed holders give in and sell with a volume jump.

By next week, we will be hearing about a potential “Santa Claus” rally in December. For the past three years, the PSEi has traded sideways in December with the changes being up 0.88 percent, up 0.36 percent and down 0.87 percent, respectively. The last time the market had a significant upside move was in 2012 (3.05 percent). Dear old Santa may come by, but he may be bringing lumps of coal rather than fancy gifts.

I had thought a month ago that we would end 2017 closer to PSEi 9,000 than 8,000. However, since the beginning of October, the PSEi was directionless. Now that has changed, and we need to look at what the stock market is saying.

Currently, the best PSEi support level comes in at 7,950. Below that, we move to 7,800. We may see a bottom shortly, but it must come on high volume. The market rarely moves higher like a thief in the night. It may start that way, but only from a

adopting the hybrid PPP modality.

First, it will make sure that the projects will be completed earlier. Second, the project will be more affordable, as the government can borrow at lower cost and need not impute a return on public investment.

Studies show that, under the traditional PPP approach, projects take 29 months from identification to groundbreaking, Diokno said. He stressed that the government could not afford such delays because the administration’s goal is to complete all projects, with few exceptions, during the term of President Duterte.

On the second reason, the government can borrow at a much lower rate and for far longer period.

For example, for the Metro Subway Project, we can borrow at 0.1 percent, payable for 40 years, inclusive of the grace period.

What I just discussed was based on presentations, as I said earlier, before business leaders, including those in China, Singapore, Japan and the United States.

The nature of my business takes me around the country, and I continue to see the numerous infrastructure projects being undertaken in many places far from Metro Manila.

The point I want to make is that Duterte and his economic team are really serious about achieving the goal they set out to do. This, in turn, leads to another point: The President is sincere and determined to deliver on his promise—to improve the lives of Filipinos.

For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

strong bottom and needs higher volume than we have been experiencing to sustain a rally.

There is frustration to those who look for reasons for market movement. The Philippine tax reform appears to be on schedule. There are no anticipated negative surprises from the United States Federal Reserve.

The country’s economic growth and inflation rate are within expectations.

Here is my read on the PSEi: Having been at the historic high for about three months, investors are mentally exhausted and worn out, needing a vacation. There is little selling pressure but a complete lack of buying in most issues. Whatever happens in the next three weeks is going to disappear in the sunset of 2017 just as what happened in the end of 2016. Buy the movers if they have high volume. Otherwise, count your 2017 profits and wait for the New Year.

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

Opinion BusinessMirror

www.businessmirror.com.ph

President Aquino mocked the country’s judicial system Cecilio T. Arillo

database

T

HE popular biblical idiom (Hosea, 8:7), “Sow the wind, reap the whirlwind,” can be ascribed to the period between President Ferdinand E. Marcos’s constitutional regime and President Corazon Cojuangco Aquino’s revolutionary government and beyond that saw the contemptuous mockery of the country’s judicial system.

In contrast to President Marcos’s constitutional democracy and adherence to the rule of law in his time, Mrs. Aquino in 1986, only a few days in power, abolished the 1973 Constitution under which she took her oath of office, arrogated unbridled authority unto herself and arbitrarily ordered the wholesale removal of Supreme Court justices, appellate court justices, lower court judges, prosecutors and other career officials and employees of the then-Ministry of Justice.

Then she entrusted the reorganization of the two judicial bodies to a group of “volunteers” under Supreme Court Justice Claudio Teehankee and Justice Minister Neptali Gonzales.

Because of the Edsa euphoria, nobody questioned the illegal procedure: The civil service law was completely disregarded and the reentry and selection of justices, judges, prosecutors and other career employees depended only on the subtle and irresolute recommendations of the Aquino “volunteers.”

As a result, the Judiciary, whose image had been repeatedly criticized under the Marcos martial-law regime for its subservient inclination, plunged into a crisis of its own, as some of the justices chosen by the Aquino administration became the objects of an impeachment complaint by the Anti-Graft League of the Philippines Inc. (AGLPI) in Congress for corruption, extravagance and usurpation of powers, among other things.

A lt hou g h t he compl a i nt s reached the committee level, the impeachment subsequently died a natural death for lack of quorum.

But the country’s judicial system was never the same again.

The AGLPI, in my book Greed & Betrayal, published by Amazon in 2000, said: “...the Members of the Supreme Court, more particularly, the Supreme Court under Chief Justice Claudio Teehankee or Teehankee Court, and under Chief Justice Pedro Yap, or Yap Court, namely: Chief Justice Pedro I. Yap, Associate Justices Marcelo B. Fernan, Andres R. Narvasa, Ameurfina A. Melencio-Herrera, Hugo E. Gutierrez Jr., Isagani A. Cruz, Edgardo L. Paras, Florentino P. Feliciano, Emilio A. Gancayco, Teodoro Padilla, Abdulwahid A. Bidin, Abraham Sarmiento, Irene R. Cortes and Carolina Grino-Aquino, have individually or collectively prostituted the administration of justice; made a mockery of the judicial processes; abused and used the Court to promote their personal interest; committed culpable violation of the Constitution; and have engaged in judicial legislation and encroached on the powers of Congress, as well as the exclusive power of the people to amend the Constitution.”

Specifically, the AGLPI charged the justices under Article XI of the 1987 Constitution with knowingly rendering a decision that was clearly wrong, manifestly unjust, obviously malicious, against public interests in a classic case of judicial legislation that constitutes a culpable violation of the Constitution.

The decision in question was the

Zaldivar v. Honorable Raul Gonzalez, (GRL 80578) and Enrique Zaldivar v.

Tanodbayan, (GRL 796-707).

In these cases, the incumbent justices (except then new Justice Leo Medialdea, the father of now Executive Secretar y Sa lvador “Bingbong” Medialdea in President Duterte’s administration) stripped the Honorable Raul Gonzalez, as Chief Special Prosecutor, of the power to conduct preliminary investigation, file and prosecute criminal cases with the Sandiganbayan.

In its decision, the Supreme Court said the incumbent Tanodbayan (called Special Prosecutor under the 1987 Constitution) was clearly without authority to conduct preliminary investigation and to direct the filing of criminal cases with the Sandiganbayan, except upon orders of the Ombudsman.

This right to do so was lost effective February 2, 1987.

“It was impossible to be mistaken unless it was done deliberately and maliciously,” said the AGLPI, adding that Section 7 of Article XI (Accountability of Public Officers) of the 1987 Constitution provides that “the existing Tanodbayan shall hereafter be known as the Office of the Special Prosecutor. It shall continue to function and exercise its powers as now or hereafter may be provided by law, except those conferred on the Office of the Ombudsman created under this Constitution.”

The AGLPI said it was quite clear that the title of the Office had just been changed from Tanodbayan to Special Prosecutor. “It was also very clear that said office shall continue to function and exercise its powers as now or hereafter may be provided by law, except those conferred on the Office of the Ombudsman created under the 1987 Constitution.

It was just really a change of name (Constitutional Commission Journal 41 p. 29, July 28, 1986).”

According to the AGLPI, the change was only in the title of the office and not in the prosecutory powers and function, adding that Gonzalez was vested with powers to conduct preliminary investigations, file and prosecute criminal cases with the Sandiganbayan as then (February 2, 1987) provided by law.

From the enumeration of the powers of the Ombudsman, said the AGLPI, it was clear that the power to investigate by the Ombudsman referred only to administrative investigation and not to preliminary investigation for purposes of prosecution.

Fast-forward to 2012, another scenario of judicial impropriety took place when the Senate convicted, through impeachment, Chief Justice Renato Corona of the Supreme Court and this time, another one, Chief Justice Maria Lourdes Sereno, is also undergoing impeachment proceedings before the House of Representatives. Between them, in the lower courts, are scandals and scams of varying degrees that embarrassed the country.

The question is: Can President Duterte end the whirlwind?

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

Tuesday, December 5, 2017 A11

Something is rotten in the state of the fund Ernesto M. Hilario

ABOUT TOWN

‘E

nterprising” officials of the pension agency for government workers have hatched a scheme to rake in a few millions of pesos in the purchase of an insurance treaty from a reputable international insurance or reinsurance provider. The practice is meant to safeguard and earn from the insurance treaty duties to the country and pensioners.

Before 2016 came to a close, the Government Service Insurance System (GSIS) tendered its 2017 insurance treaty requirements to the market with a P375-million authorized budget cap (ABC). Here’s the rob/rub: Global markets and analysts priced and valued the treaty needed by GSIS at some P350 million only. That’s a P25-million excess over the true worth of the services needed.

No GSIS top official has come forward to explain the P25-million overprice. Not one offered a clue where the P25 million went or who gained from the overpricing.

This scheme has been one of the

easiest sources of huge commissions for certain GSIS officials and their partners in the scheme (which had been ongoing under various administrations). A close look at the records over the years would show who were/are these favored partners in the scheme.

Obviously, this “practice” persists to this day. Unfortunately, for GSIS members—especially public-school teachers who constitute the bulk of the pension agency’s membership— and the government, the old syndicate members (insiders and their favored insurers) continue to lord over the entire process.

By giving out inadequate, if not

thoroughly false, misleading or even garbage information to possible bidders, this syndicate has set into motion the laundering of commissions through adjustment payments, i.e., the “favored” insurer(s) will have the chance to collect additional fees since they can claim that the data and related items contained in the terms and conditions of the bid were inaccurate, inadequate, misplaced, etc.

On November 29, despite unanswered queries about its flawed bidding data and rules, GSIS bid out the 2018 insurance treaty. The usual excessive pricing: the 2018 authorized budget cap is P450 million, while analysts and the markets are saying that the coverage needed is only P350 million. The fatty excess of P100 million can likely grease certain people’s pockets.

Only three prospective bidders have turned up and “shown interest”: a) Federal Phoenix (part of the Zuellig Group) that used to employ the current GSIS SVP for insurance, Atty. Maria Obdulia V. Palanca; b) Pioneer Insurance (a new entrant), one of whose senior executives is Atty. Betty Medialdea, the wife of Executive Secretary Salvador Medialdea; and c) Prudential Guarantee, owned by Robert Coyuito, who

Maybe China can’t take over the world

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By Christopher Balding | Bloomberg View

lmost daily, newspapers in the United States, Europe and China release eye-catching headlines about China’s technological advances and economic prowess. The accomplishments are real. But they’re not necessarily evidence of Western failure or Chinese invincibility.

In touting such achievements, commentators too often overlook the structural factors that have shaped them. Economists now recognize just how much of economic interaction is driven by such forces.

For instance, the gravity model in international trade posits that the distance between countries impacts how much they trade. No matter how warm the ties between China and Bolivia, sheer distance will always limit their bilateral trade volumes. By contrast, despite frosty relations, large amounts of trade and investment flow between China and Taiwan, owing to proximity and shared language.

Many of the most innovative Chinese companies have benefited not only from government support and protection, but from structural conditions that have made their businesses more viable than they would’ve been otherwise.

They’ve thrived in a unique cauldron of challenges and inputs that don’t exist in most other places in the world.

Take mobile payments, where China is the clear world leader. In 2016 Chinese spent more than $5 trillion using their phones—more than 50 times as much as in the US, according to one estimate. That figure is expected to grow strongly again in 2017, as simple and ubiquitous platforms connect ever more buyers and sellers. In many cities,

cash has become virtually obsolete.

Two structural factors have boosted adoption of mobile payments. The first is China’s archaic banking system, which has long served the interests of big companies, not consumers. That retarded the development of a credit-card culture among both merchants and buyers. For many years after arriving in China in 2009, I was struck by the fact that even Chinese bankcards weren’t accepted in many places, with storeowners preferring cash.

Second, the two key players in the field of mobile payments—Tencent Holdings Ltd., which dominates messaging with its WeChat app, and online retailer Alibaba Group Holding Ltd.—enjoy virtual monopolies in China. Chinese spend roughly 30 percent of their smartphone time using WeChat, not just messaging one another but ordering taxis, exchanging business information, storing loyalty points for retailers. Meanwhile, Alibaba cornered 60 percent of the e-commerce market in 2016 and well above 50 percent in 2017. No two companies capture consumer time the same way anywhere else in the world.

By contrast, Western consumers are spoiled for choice, especially when it comes paying for things.

They can use cash, credit cards, debit cards with major payment networks,

One of the major puzzles of corporate China is why firms have struggled to expand internationally. The answer may be that they’re offering solutions to problems that don’t exist in quite the same way overseas.

Unless they can cater to the needs of customers operating under very different conditions, their remarkable progress may end at China’s shores.

checks, PayPal and, more recently, mobile-payment systems like Apple Pay. While mobile payments are gaining, the other payment providers are innovating, as well. For the average consumer, there’s little difference between scanning a QR code and waving an RFID-enabled credit card at a especially enabled reader. And at least the card doesn’t require downloading and learning a new technology.

Similar examples can be found in other sectors, as well. Alibaba has succeeded in large part because brick-and-mortar retailing is so challenging on the mainland.

Roughly a quarter of the world’s cities with more than 500,000 people are located in China—twice as many as India, the next country on the list.

Real-estate prices in those urban areas are astronomical, which limits how big stores can be and thus the range of consumer choices.

That makes platforms, such as Alibaba and JD.com, much more attractive both to consumers—who then provide the kind of data the online giants can use to sell them debt they can use to buy more on the platforms—and to manufacturers.

was recently appointed presidential adviser on capital markets.

Then again, there exists a provision in all government tender documents that allows the procuring entity to stop and cancel the bidding process at anytime—without penalty. Or, simply accept the market’s verdict and work within the limits imposed by it.

Given the market’s rejection of GSIS officials’ folly, (the market held its ground on a realistic P350million appraisal vs. a bloated P450million ABC trotted out by GSIS exchairman Francisco Duque III-led operatives) will GSIS calmly accept the market verdict even if it means a cool P100-million “lost revenue” to the manipulators?

Or, will it reject what the market prescribes and consider another bid? Or, worse, rechannel the programmed P100-million overprice to some other “activity”?

Will the GSIS board, sans Duque, have the courage to initiate an investigation into this aborted mess to ensure the proper usage of government funds?

Millions of public-school teachers are waiting for answers—their hard-earned money is at stake.

E-mail: ernhil@yahoo.com.

Instead of fighting for shelf space, the latter can simply open online shops, take orders on Alibaba and ship directly from their warehouse.

That’s led to a flourishing of niche online retailers selling everything up to and including replica National Aeronautics and Space Administration space suits.

Even the bike-sharing craze that’s drawn so much attention in the West has exploded largely because of China’s unique environment. Lower-income Chinese have gravitated toward the super-cheap services in order to solve the socalled last-mile problem, getting to and from public transport nodes.

The technology didn’t emerge first in the West partly because consumers—even in bike-crazy Holland—haven’t really needed such a cost-effective solution. (Ironically, as Bloomberg View columnist Adam Minter recently pointed out, it’s not so clear this particular innovation can work economically even in China.)

None of this is to diminish the fact that Chinese companies have produced some remarkable technologies and, given the vast amounts of research going into artificial intelligence, are likely to produce even more. The question is how successful such companies and technologies will be once transplanted into different contexts. One of the major puzzles of corporate China is why firms have struggled to expand internationally. The answer may be that they’re offering solutions to problems that don’t exist in quite the same way overseas. Unless they can cater to the needs of customers operating under very different conditions, their remarkable progress may end at China’s shores.

US Congress achieves the impossible on tax reform

I

n their rush to pass something, anything, that they can call “tax reform,” congressional Republicans have achieved the impossible: They have made an awful plan even worse.

The first thing to note about the bill the Senate passed early Saturday is that it is not, by any reasonable definition of the term, tax reform. The elements of a smart reform are no secret. It would lower rates, broaden the base by closing loopholes, eliminate distorting provisions and seek to distribute the burden as fairly as possible.

Done well, it could improve the country’s longer-term growth prospects by offering greater simplicity and certainty, and it need not unduly increase the federal deficit or count on

added growth to pay for cuts.

Last month House Republicans passed a bill that violates pretty much all those principles. It would compensate for lower rates by scrapping some deductions, but would still add more than $1 trillion to the federal deficit—a number it reached only with the help of thinly veiled gimmicks, such as making a key corporate-tax provision (full and immediate expensing of equipment purchases) expire after five years. As regards fairness, it would primarily benefit the rich.

To win the requisite votes in the Senate, however, Republicans had to make further tweaks. In a stark recognition of their failure to limit deductions, they have reinstated the

alternative minimum tax, a sort of backstop (with its own separate set of rules) designed to ensure that people and corporations can’t claim so many deductions that they avoid paying taxes altogether. They have set individual income-tax cuts— among the few elements that benefit the middle class—to expire in 2026.

And they would gut Obamacare by eliminating the requirement that all Americans have health-care coverage, potentially leaving millions uninsured. Some elements of the hastily constructed legislation, part of which was handwritten into the margins, will inevitably have unexpected consequences. Consider the timing of corporate-tax changes. The equipment-expensing provision

takes effect immediately, but under the Senate bill the corporate-tax rate falls to 20 percent (from 35) only in 2019. This will allow businesses to take deductions on investments while rates are high, then pay a lower rate on the resulting income, creating a perverse incentive to pursue otherwise unprofitable projects.

The end result is sheer absurdity: a reform that actually complicates the tax code further, and that must contradict itself and partially selfdestruct to attain some semblance of the fiscal discipline Republicans claim to value. It’s hard to imagine a more egregious waste of time and energy, or a worse outcome for taxpayers and the broader economy.

Bloomberg View

2nd Front Page BusinessMirror

A12 Tuesday, December 5, 2017

NBI to probe ₧3.5-B dengue vaccine deal as Sanofi vows to work with PHL authorities

J

USTICE Secretary Vitaliano N. Aguirre II on Monday formally tasked the National Bureau of Investigation (NBI) to look into the P3.5-billion dengue vaccination project, even as multinational pharmaceutical company Sanofi Pasteur said it is ready to work with authorities to resolve fears over its dengue vaccine.

“The NBI, through Director General Dante A. Glerran, is hereby directed and granted authority to conduct investigation and case buildup over the alleged danger to public health arising from the P3.5billion anti-dengue vaccination drive of the DOH [Department of Health] and Sanofi Pasteur, and, if evidence so warrants, to file appropriate charges thereon,” Aguirre said.

He admitted that among those who would be investigated for possible culpabilities is former

President Benigno S. Aquino III, who gave the go-signal for the DOH to proceed with the vaccination project in 2016.

Also expected to be investigated is Aquino’s health secretary, Janette Garin, who insisted on implementing the project despite strong objections from medical experts due to lack of certification from the World Health Organization (WHO).

“Yes, everybody who was involved will be included in the NBI investigation,” Aguirre said in a text

160,000

The estimated average number of dengue cases in the country annually

message to reporters when asked if Aquino is covered by the NBI probe.

Aguirre directed Gierran to submit a report to his office on its current activities related to the implementation of the order.

“We have to know why [the DOH] ordered such a huge amount of vaccine and immediately vaccinated 733,000 schoolchildren. Is that appropriate?” Aguirre said in a news briefing.

Pharmaceutical firm Sanofi Pasteur recently issued an advisory to the public that its product Dengvaxia is effective for people who have had dengue prior to immunization, but creates a risk of a “severe” case of dengue for people who have not yet had dengue.

Philippine health officials is now under fire for allowing the country to be the first Asian nation to approve the vaccine for in-

dividuals aged 9 to 45 in December 2015. Aguirre noted that the DOH administered the Dengvaxia vaccine just four months after it was manufactured by Sanofi.

Sanofi Pasteur on Monday allayed fears and assured the public that dengue vaccine Dengvaxia is safe in children 9 years old and above. Sanofi Global Medical Head Ng Su Pieng said the dengue vaccine does not contain viruses that can make people ill with dengue or severe dengue.

Severe dengue infections are uncommon complications of dengue disease, occurring in an estimated 0.5 percent of cases manifesting symptoms of dengue annually.

Ng, however, said she would not recommend Dengvaxia for those who have not been infected with dengue in the past. She also noted that all study participants who got severe dengue, whether vaccinated or not, have fully recovered.

Sanofi Pasteur officials said the dengue vaccine has been clearly proven to be safe and effective in the prevention of dengue in people 9 years of age and older living in endemic settings.

Continued on A2

www.businessmirror.com.ph

MISS U ORGANIZERS EYeING PHL AS PAGEANT HOST ANEW

By Roger Pe

Special to the BusinessMirror

A

fter the Philippines hosted the 2016 Miss Universe Beauty Pageant, organizers told the Department of Tourism (DOT) a flattering message: It wanted the country to host again the following year, an invitation normally not accorded to the incumbent host.

“As a matter of fact, they told it to us bluntly,” Tourism Secretary Wanda Corazon T. Teo said in a news conference held at the penthouse of the DOT Building in Makati City on Monday. The President begged off because the country was focusing on another major event—the Asean Summit’s 50th Anniversary, which the Philippines also mounted successfully in November.

Today, the hosting rumors are once again flying. The chichi crowd is going gaga with the coming of newly crowned Miss Universe 2017 DemiLeigh Nel-Peters this week. Peters was the vivacious South African damsel who beat 89 other girls worldwide for the crown held in Las Vegas.

Not only that, she will be accompanied by her predecessor, Iris Mittenaere, the French Miss Universe of 2016, and 14 other Miss Universe beauties who participated in the pageant last month.

What gives? Is this a prelude to the Philippines hosting the pageant again next year? “The pageant directors told us we did a great job in hosting the pageant in 2016. They said it was the most beautifully, efficiently organized

competition in recent years. So they are extending the invitation to us again.

But it is really up to the President to decide,” Teo said.

Among the 14 beauties coming over are Miss Great Britain, Miss Russia, Miss Italy, Miss Canada, Miss Germany, Miss China, Miss India, Miss Malaysia, Miss Singapore, Miss Thailand and other candidates from emerging and key countries the DOT wants to tap, especially for its global event promotion—the “Bring home a friend to the Philippines” campaign.

The “queens” will be divided into three groups, with some of them flown to Batanes, Camiguin and other equally spectacular destinations in the Philippines. They will participate in gala fashion shows, dinner and hold photo sessions to promote the country as Philippine ambassadors to their respective countries.

Did the hosting of the Philippines in 2016 convert into bottom-lines and other measurable aftereffects?

Teo said the media mileage that it created made all the candidates and people from all over the world know the Philippines better.

“There was a notable increase in tourist traffic. We now have a steady, loyal influx of foreign visitors coming from different regions of the world, in spite of what happened to Marawi,” she noted.

As of the latest arrival figures from January to August this year, the Philippines already generated earnings well beyond the figures it earned for the same period last year.

See “Miss U,” A2

OUT SOON!

The Turning Points: Global Agenda 2018, a year-end package of opinion pieces and features, photos and cartoons covering events and trends in 2017 that will influence 2018 and beyond.

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