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Friday, December 8, 2017 Vol. 13 No. 58
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eaders of Congress gave conflicting signals on the status of the Tax Reform for Acceleration and Inclusion (TRAIN) bill that the administration is rushing to finalize and enact into law before lawmakers go on their Christmas break next week.
Asean builders to reap gains from $323-B spree
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ech is so 2017. With at least $323 billion in infrastructure spending in the pipeline in Southeast Asia and potentially more expected over the next few years, 2018 could well shape up as the year of builders’ stocks from Indonesia to the Philippines that have been the laggards in a broader market rally this year. Governments are boosting spending on everything—from airports to high-speed rails and ports—to increase connectivity and boost economic growth in what promises to be a boon for the region’s construction companies. In one of the more ambitious programs in the region, President Duterte has earmarked an unprecedented $180 billion for infrastructure to keep driving one of the world’s best-performing economies over coming years. Malaysia and Thailand are also ramping up allocations to public works ahead of general elections in 2018. “Infrastructure has been under invested, whether it’s clear water, clean air, energy, roads, ports, railways, education, health care—so there are tons of opportunities,” said Ashish Goyal, head of emerging markets equities at NN Investment Partners (S) Ltd., which manages $288 billion in assets. The firm owns stakes in Indonesian construction stocks. He said investors should watch for the pace of execution in the various countries. UBS Group AG expects “changes in government policy and delivery on infrastructure” to be among the region’s biggest themes for 2018, as growth in global trade fades, analysts, including Ian Gisbourne, wrote in a report dated November 28. Construction stocks on the MSCI Asean Index have risen an average of about 7.4 percent this year in dollar terms, about one-third the gain of the overall gauge, which is set for its best performance in seven years. Technology shares have provided the biggest boost to the Southeast Asian index this year, as global demand for electronics returned. Continued on A2
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Coal tax emerges as big hurdle to TRAIN passage By Butch Fernandez @butchfBM & Jovee Marie N. dela Cruz @joveemarie
2016 ejap journalism awards
What happened to the 2,000 missing containers at BOC?
Alvarez: “We would not allow the inclusion of coal tax, definitely not.”
Dr. Jesus Lim Arranza
Make Sense
Without giving details, Sen. Juan Edgardo M. Angara, chairman of the Senate panel in the bicameral committee, on Thursday said lawmakers inched closer to coming up with the final version of the TRAIN bill. See “C0al tax,” A2
I
n 2011 the Bureau of Customs (BOC) was rocked with the discovery of 2,000 containers that vanished, with their taxes yet to be paid, while being transported from the Port of Manila (POM) and the Manila International Container Port (MICP) to the final port of destination at the Port of Batangas. Continued on A11
Coinbase: The heart of the Bitcoin frenzy
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he booming stock market of the 1920s had the New York Stock Exchange. The tech bubble of the 1990s had Nasdaq and E-Trade. And the virtual currency market of the last year has had Coinbase. Coi nba se h a s been at t he center of the speculative frenzy driving up the value of Bitcoin—which topped $13,000 on Wednesday—and similar currencies. While there are many Bitcoin exchanges around the
world, Coinbase has been the dominant place that ordinary Americans go to buy and sell virtual currency. No company had made it simpler to sign up, link a bank account or debit card, and begin buying Bitcoin. The number of people with Coinbase accounts has gone from 5.5 million in January to 13.3 million at the end of November, according to data from the Altana Digital Currency Fund. In lateNovember Coinbase was sometimes
getting 100,000 new customers a day—leaving the company with more customers than Charles Schwab and E-Trade. The company faces challenges that are a reminder of the early days of now-mainstream online brokerages, which suffered through untimely outages and harsh criticism from traditional finance companies and government regulators. And Coinbase’s missteps make it clear that the virtual currency industry is still
young, with little of the battle testing that other financial markets have faced. Coinbase’s offices in downtown San Francisco show a startup straining to keep up with g row t h. T he compa ny of fers all the usual perks: free lunch and dinner, a sizable cafeteria and a room with yoga mats and board games. Recently, every last inch of space has been pressed into action. See “Coinbase,” A2
Clark development key to plan to disperse industries–Duterte By Elijah Felice E. Rosales @alyasjah
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lark Freeport, Pampanga—President Duterte pressed for the fasttracking of the government’s infrastructure program to spur economic growth in major urban centers outside of Metro Manila. In a speech, the President said Metro Manila will soon be a dead metropolis and, due to this, the government will have to disperse the industries to the provinces to maintain the country’s steady economic growth. He specified Clark as crucial to the “Build, Build, Build,” the government’s infrastructure program, as a number of projects intended to decentralize Metro Manila are located in the developing city. “Clark is a very important destination now for the Philippines,” Duterte said during a food festival here. He added he recommended Clark to some investors for future business ventures, saying it is an ideal site for infrastructure projects. “[ What Clark lacks now] is the infrastructure for mobility, but…I think,
in the fullness of God’s time, we will have it. I hope it would come, even half of what they have offered so far, [even just half of all the planned projects]. Clark is a very important arterial place [because it leads to the exit of ] Luzon upward, and in the development, because it is very important that we disperse the industries,” the President said. He told Capampangans in attendance they are lucky their province is blessed with a landscape perfect for infrastructure development. “It used to be a bane for ultra-nationalists or to the communists in this country— the existence of military bases, the Americans,” Duterte said, adding that it is somewhat alien to the rest of the country due to its inhabitants—a mix of locals and foreigners. He was apparently referring to the Clark Air Base in Angeles City, which was previously operated by the United States Air Force as part of the Military Bases Agreement that was scrapped by lawmakers in 1991. See “Clark,” A2
n japan 0.4517 n UK 67.8349 n HK 6.4866 n CHINA 7.6613 n singapore 37.5600 n australia 38.3161 n EU 59.7825 n SAUDI arabia 13.5136
Source: BSP (7 December 2017 )
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A2 Friday, December 8, 2017
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Gordon asks Ombudsman to probe role Asean builders to reap of Aquino admin officials in vaccine mess gains from $323-B spree Continued from A1
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By Butch Fernandez
ministration officials facilitated acquisition of Dengvaxia vaccine supply, even as its efficacy has yet
to be fully verified. The senator cited reports reaching the Senate that the previous administration moved to fast-track delivery of the vaccine, soon after former President Benigno S. Aquino III personally met officials of vaccine supplier Sanofi Pharmaceutical during a visit to France in December 2015. It was reported that a few days after the meeting, the P3.5 billion was released to pay for the delivery of the vaccine supply and some 700,000 schoolchildren were vaccinated with Dengvaxia by April 2016. Gordon said g raft probers should focus their inquiry on how
public funds were spent without authority from Congress through the annual budget law, or the General Appropriations Act. Information reaching the senator indicated that the P3.5 billion used to pay for the Dengvaxia vaccine was realigned through the socalled Disbursement Acceleration Program that the Supreme Court later found to be in violation of the Constitution. Even as the Ombudsman has yet to confirm it is opening a separate investigation of the case, Gordon said he is set to open a separate Blue Ribbon Committee inquiry on Monday.
The addition of Hirji, who had the same role at TD Ameritrade, was an implicit recognition that this new industry needs more seasoned hands to help young executives like Armstrong, 34. Hirji will manage Coinbase’s trading operations, while Armstrong focuses on new projects. Armstrong has been running Coinbase since he cofounded it in 2012. Soft-spoken and reserved, he is an unusual figure in an industry filled with loud ideologues. He has done few public appearances during bitcoin’s recent bull market, and he recognizes the current frenzy has come with downsides. “It’s probably a little bit too focused on the price or people trying to make money,” Armstrong said last week. “The thing I’m passionate about with digital currency is the world having an open financial system.” There is some irony to the success Armstrong has experienced as a result of Bitcoin’s rising price. In 2015 he helped lead a push to get the Bitcoin network to expand so it could handle more transactions. That effort failed, and Armstrong said in a recent interview that Bitcoin “did break my heart a little bit.” He added he now holds more of his wealth in a Bitcoin competitor, Ether, which Coinbase also offers to customers. Most of the screens in the Coinbase offices show the performance of the company’s servers and customer metrics—like the number of customers downloading its iPhone app. For a time last week, Coinbase was among the 10 most downloaded iPhone apps, ahead of Uber and Twitter. There are a few screens, including one in the
cafeteria, that show the price of Bitcoin, Litecoin and Ether, the three virtual currencies that Coinbase buys, sells and holds for customers. Litecoin was created by a former Coinbase employee and is often described as silver to bitcoin’s gold. The newer Ether, which lives on the Ethereum network, is the second most valuable virtual currency after Bitcoin. Coinbase set itself apart from other early Bitcoin companies when it was one of the first to get a new, special license for virtual-currency companies in New York, called the BitLicense. In the last year, though, Coinbase’s most notable interaction with the government came after the IRS asked the company to hand over all of its customer records. Bitcoin holders are supposed to pay taxes if they collect gains from selling coins, but the IRS has said that only a few hundred people have done so each year. Coinbase fought the broad request from the IRS and last week, while the price was skyrocketing, announced an agreement to hand over only the records of customers who made transactions involving more than $20,000 of virtual currencies—around 3 percent of the company’s customers. In addition to the brokerage service for small investors, Coinbase also runs an exchange, called GDAX, tailored to larger investors. GDAX is overseen by Adam White, a former Air Force officer and a graduate of Harvard Business School. The day Bitcoin hit $10,000, he was in New York speaking with big financial institutions that are looking into Bitcoin. Some companies are getting ready to begin
trading bitcoin futures contracts this month, when that activity becomes available on the Chicago Mercantile Exchange. A year ago, his Wall Street outreach was difficult, but “it’s all inbound now,” White said. Not surprisingly, Coinbase is on a building spree. It recently leased office space in New York that will handle the Wall Street business and a new service that holds virtual currencies for large customers. In San Francisco the company is adding two new floors in the building where it now has one. Still, the main concern among virtual-currency investors is that Coinbase has not expanded fast enough. In May the company was criticized by a customer who could not reach anyone at the company after his account was hacked. Coinbase is trying to be more responsive. At the beginning of the year, the company had 24 employees providing customer support. It now has around 180, with most of them outsourced from a call center in Texas and an e-mail response team in the Philippines. The cafeteria is often turned into a “Crypto Club,” where new employees are taught the ins and outs of virtual currency. Daniel Romero, the general manager of Coinbase, said he wanted to have 400 customersupport employees by the first quarter of next year to provide phone support around the clock. But, in the meantime, there is a 10-day backlog of service requests. “When your customer support issues are that publicly bad, and you have your site go down when people want to be trading,” it’s a very humbling experience, Romero said. New York Times News Service
well as donor and estate taxes, estimated at over P130-billion. Among the deferred items in the TRAIN bill yet to be reconciled by the Senate and House panels are: personal income-tax schedule, indexation and tranche of personal-income tax; taxation for self-employed and professionals; and persons exempt from value-added tax (VAT) but subject to percentage tax/exemption of percentage tax of those with gross sales P500,000. Also deferred by the panel were the VAT-exempt P2-million housing outside Manila; persons exempt from VAT but subject to percentage tax/exemption of percentage tax of those with gross
sales of P500,000; socialized and lowcost housing voucher system; sale of prescription drugs and medicines beginning January 1, 2019; cosmetic procedures; excise tax on coal; mining taxes; and tobacco excise tax.
According to Alvarez, the Senate insertion of the additional tax on coal in the TRAIN runs counter to the constitutional mandate that all revenue measures must originate exclusively from the House of Representatives. “It’s very clear this was provided for in the Constitution. And the Senate based on the charter may only propose amendments or concur, right? They can propose amendments if we can allow it,” Alvarez said. House Committee on Ways and Means Chairman Dakila Carlo E. Cua of the Lone District of Quirino said members of the bicameral committee from the lower chamber are now seriously considering the Senate insertions of new tax provisions. “The matter on coal tax is still pending in the bicam. Of course, the Speaker raises very valid and serious concerns that need to be considered,” Cua said. Article VI, Section 24, of the Philippine Constitution, which provides “all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.” The Senate passed “a 3,000-percent increase in coal taxes” to be collected in three tranches until 2020, which means the current P10 excise tax will be raised to P100 in 2018, P200 in 2019 and P300 by 2010. It also adopted a 10-percent excise tax on cosmetic procedures for aesthetic purposes. At the same time, senators voted to double excise taxes on minerals and mineral products and quarry resources that proponents said was intended to promote “responsible mining and environmental protection.” Alvarez said it would not take a rocket scientist to know that electricity prices would go up if Congress agrees to impose the new tax on coal and that this would create a ripple effect of price increase in goods and services.
@butchfBM
en. Richard J. Gordon on Thursday prodded the Office of the Ombudsman to open an independent investigation into the Aquino administration’s rushed purchase of the controversial anti-dengue vaccine Dengvaxia costing taxpayers P3.5 billion.
Gordon suggested that Ombudsman probers closely look into the haste with which Aquino ad-
Coinbase. . . Continued from A1
The day after Bitcoin hit $10,000 last week, a training session for Coinbase managers was moved to the game room because the engineering team needed to set up an emergency war room in the regular conference room. The engineering team was trying to get Coinbase back up after the company’s site was knocked offline, overwhelmed by a wave of incoming traffic. The number of visitors was double what it had been during the previous peak—two days earlier—and eight times what it had been in June, the peak until recently. All the big Bitcoin exchanges went down for at least part of the day, and Coinbase got back online faster than most. Still, any sort of downtime like that would be unacceptable in more traditional exchanges where stocks and commodities are traded. “There are some well-known places this year when we weren’t able to keep up with the volume,” said Jeremy Henrickson, the chief product officer at Coinbase. “We are not where we need to be yet.” Most Friday afternoons, Brian Armstrong, the chief executive of Coinbase, holds a session in the cafeteria where employees can ask him anything. On the Friday of the record-hitting week, Armstrong discussed how the company was planning to grow and introduced Asiff Hirji, the new president and COO who will help him oversee it all.
Coal tax. . .
Continued from A1
“We gained much headway,” Angara said in a text message to the BusinessM irror, adding the bicameral panel is close to finishing the task of writing up the TRAIN bill’s final version expected to be ratified by the Senate and the House before Congress adjourns for Christmas recess next week. “[It is] almost done except for a few items.” The TRAIN bill was projected to initially raise P190 billion, even as losses are expected to result from downward tax adjustments in personal income, as
‘Major hurdle’ But House Speaker Pantaleon D. Alvarez said he“personally opposes”the inclusion of the coal tax, which was endorsed by the Senate. Alvarez also said he would not allow the inclusion of the coal tax in the tax-reform program, as this would increase power prices. “We would not allow that [inclusion of coal tax], definitely not,” the speaker said.
Some builders are already rallying in anticipation of the rewards they will reap from the spike in infrastructure outlays. Indonesian cement supplier PT Indocement Tunggal Prakarsa soared as much as 54 percent earlier this year, as investors expect it to benefit from a surge in demand as the nation builds toll roads, ports and power plants. Manila-based EEI Corp. has surged 73 percent, leading a rally in Philippine construction stocks, as it begins work on the nation’s $1.6-billion, 44-kilometer (27-mile) mass-railway project. Infrastructure development and more Chinese investments into the Philippines could support stocks with net-asset value of the nation’s developers expanding by as much as 12 percent over the next three years, Goldman Sachs Group Inc. analysts, including Paul Lian, wrote in a report dated December 7. Companies that provide services for construction projects, such as improving management efficiency or sustainability, may also capitalize on the spending boom on public works, Felix Lam, a portfolio manager at BNP Paribas SA’s asset management arm, said by phone. Even so, the Southeast Asian market as a whole might continue to underperform, compared to “its larger, more liquid and faster-growing Nor th Asia and India counterparts,” Goldman Sachs Group Inc. analysts, including Timothy Moe, wrote in a November report. And Credit Suisse Group AG has maintained its underweight rating on the region for 2018. Still, Morgan Stanley sees investor attention back on the Asean region, as markets are expected to give returns of as much as 10 percent next year, more than three times what’s seen for emerging markets. Here is a breakdown of what countries are planning and what investors are saying about Southeast Asia’s infrastructure spending spree:
The Philippines
The government has allocated about P1 trillion ($20 billion) to infrastructure in the 2018 budget, as part of Duterte’s $180-billion infrastructure program over a six-year period to build a network of railroads and highways across the archipelago. The tax-reform program will help fund infrastructure projects. Construction and infrastructure-related stocks will outperform in 2018, according to Noel Reyes, who helps manage $1 billion as chief investment officer at Security Bank Corp. The tax-reform bill is awaiting Congress approval and is among the first of five tax packages proposed by Duterte to raise taxes to pay for infrastructure projects. The infrastructure program includes 70 projects from railways, airports, roads and bridges, cities, ports to mass transit during Duterte’s six-year term as president. Companies involved in construction and infrastructure are: Metro Pacific Investments Corp., Megawide Construction Corp., Ayala Corp. and EEI Corp., among others.
Indonesia
Indonesia’s Finance Minister Sri Mulyani Indrawati has announced more than 240 infrastructure projects. The country needs 931 trillion rupiah ($69 billion) from 2015 to 2019 for infrastructure spending. It has allocated only 528 trillion rupiah over the period, according to Public Works and Public Housing Ministry. Concerns about funding availability and financing risks among Indonesian infrastructure companies have depressed construction stocks this year. Shares of PT Waskita Karya, the country’s biggest listed builder, have dropped 27 percent in 2017, even as the Jakarta Composite Index hit a record high in November. Its biggest construction companies are: PT Jasa Marga, PT PP Persero and PT Waskita Beton.
Clark. . .
Continued from A1
What used to be a “bane” became a blessing for the Capampangans, Duterte said, as Pampanga later on became the owner of Clark. Clark is critical to the Duterte administration’s “Build, Build, Build” campaign. The infrastructure program aims to develop the Clark International Airport and Clark Green City as part of efforts to attract industries and people to move outside of Metro Manila. The President graced the
Malaysia
Malaysia has allocated 210 billion ringgit ($51.6 billion) for projects in the 2018 budget, of which 73 percent will go to rail and public transport. About 55 billion ringgit was allocated to East Coast Rail Link, 50 billion to 60 billion ringgit given to Kuala Lumpur-Singapore High Speed Rail and 40 billion ringgit to phase 3 of the mass rapid transit system. Rail, affordable housing, roads and water infrastructure are major segments that will benefit from the government’s spending next year, Sharizan Rosely, an analyst at CIMB wrote in a report dated October 30. The general election is due by August 2018. Its biggest construction companies are: Gamuda Bhd., IJM Corp. Bhd., Sunway Construction Group Bhd. and Malaysian Resources Corp. Bhd.
Thailand
The Thai government has pledged 1.5 trillion baht ($46 billion) over the next five years to boost growth via infrastructure spending to develop its three eastern provinces as the Eastern Economic Corridor. Infrastructure spending is to remain a key driver for the economy and new development projects like EEC, said Orsen Karnburisudthi, Bangkok-based senior investment manager at Aberdeen Asset Management Co. EEC envisions to turn the provinces into hubs for technological manufacturing and services with strong connectivity by land, sea and air with help of state and private funding, as well as foreign direct investment. Elections to be key upside for economic growth and business sentiment, Aberdeen said. Prime Minister Prayuth Chan-Ocha said in October a vote will be held in November 2018. Banks will see earnings improve, as economic growth boosts loan growth and reduces bad loan provisions, while shopping mall operators and retailers can benefit from consumption recovery, Orsen said. Its biggest construction players are: Italian-Thai Development Pcl., CH. Karnchang Pcl., Unique Engineering & Construction Pcl., Sino-Thai Engineering & Construction Pcl.; EEC beneficiaries: Amata Corp. and WHA Corp.
Vietnam
Vietnam has allocated 150 trillion dong ($6.6 billion) for infrastructure development from 2016 to 2020, and still needs $480 billion to fund investments by 2020, according to the Ministry of Planning and Investment. Key infrastructure projects include a $13-billion, 1,800-kilometer expressway from Ha Noi in the north to Ho Chi Minh City in the south, the nation’s largest-ever road project. Its biggest infrastructure players are: Songda Urban, Ho Chi Minh City Infrastructure, Coteccons Construction, Ha Do JSC and Song Da No. 9 JSC.
Singapore
As the only developed market in Southeast Asia, Singapore is less likely to see government expenditure in infrastructure on the same scale as its neighbors. While some key projects for 2018 include a new airport terminal at Changi Airport, mega shipping port and the Kuala Lumpur-Singapore high-speed rail, the country’s stock market is more likely to benefit from a recovery in the property sector and overall economy. DBS Group Holdings Ltd. sees property prices recovering 3 percent to 5 percent annually over the next two years, buoying small to mid-cap construction-related and real-estate stocks, such as Chip Eng Seng Corp. and APAC Realty Ltd., analysts, including Ling Lee Keng, wrote in a note dated December 5. Singapore’s economic recovery is also seen broadening out from the manufacturing industry in 2018 to the services sector, which accounts for about two-thirds of GDP. Bloomberg News
Capampangan Food Festival here. He was accompanied by Rep. Gloria Macapagal-Arroyo of the Second District of Pampanga and Gov. Lilia G. Pineda in the first-ever cooking showcase of Culinarya Pampanga, a network of chefs and restaurant owners in the province. According to the Pampanga tourism office, the food festival was held to bolster the province’s bid to become the “Cuisine Capital of the World.” The event features mostly traditional Capampangan dishes, including pork-belly bringhe, kilayin, morcon, pancit luglug, asadong dila and kalderetang dila.
Economy
A4 Friday, December 8, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
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Domestic trade volume up 3.3% in Q3–PSA report
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By Cai U. Ordinario
@cuo_bm
he country’s total domestic trade value increased by 3.3 percent in the third quarter of 2017, according to preliminary data released by the Philippine Statistics Authority (PSA).
On Thursday PSA data showed the total value of domestic trade reached P153.99 billion, slightly higher than the P149.14 billion posted in the same period in 2016. In terms of value, data showed
a total of 4.86 million tons were traded in the Philippines in the third quarter. This was an 18.9-percent increase from 4.09 million tons of the same quarter a year ago. “Commodity flow or domestic-
₧153.99B The total value of domestic trade in Q3, which is slightly higher than the P149.14 billion posted in the same period in 2016
trade statistics is a compilation of data on commodities carried through the air, rail and water, transport systems in the country,” the PSA said. Among the regions, the National Capital Region (NCR) registered the highest outflow value amounting to P31.52 billion, or 20.4 percent,
from the total. The PSA added the NCR was followed by Western Visayas and Eastern Visayas with P27.11 billion and P24.65 billion, respectively. Central Visayas had the highest inflow value amounting to P28.03 billion, or 18.2 percent, of the total inflow in the third quarter of 2017. Cagayan Valley posted the lowest inflow value at P14.3 million. “Outflow refers to the total quantity value of commodities, which goes out of the specified region or province, while inflow refers to the total quantity value of commodities coming in the specified region. Trade balance is the difference between the outflow and inflow,” the PSA said.
Meanwhile, six regions posted positive trade balances in the third quarter of 2017. Eastern Visayas registered the highest trade balance of P16.94 billion. It was followed by the NCR with value amounting to P11.93 billion. Other regions that had a positive trade balance were Central Luzon with P7.77 billion; Davao region, P4.77 billion; South Cotabato, Cotabato, Sultan Kudarat, Sarangani and General Santos, or Soccsksargen, P1.2 billion; and the Autonomous Region in Muslim Mindanao, P0.67 billion. However, around 10 regions registered an unfavorable trade balance during the third quarter of 2017. These were led by Caraga with a trade deficit of P23.92 billion.
ERC readies MR on CA spot-market price decision By Lenie Lectura
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@llectura
he Energy Regulatory Commission (ERC) is expected to file a motion for reconsideration (MR) following a Court of Appeals (CA) decision that declared the validity the November and December 2013 spot-market prices. “We have received decision of the Court of Appeals, and we have until December 12 to file a motion for reconsideration. The MR is currently being prepared,” said ERC Spokesman lawyer Rexie Digal. In a 42-page decision, the fifth division of the appellate court said the assailed orders dated March 3, 2014, March 27, 2014, May 9, 2014, and October 15, 2014, of the ERC in ERC Case 2014-021 MC are declared null and void and set aside. “Accordingly, the prices for the November and December 2013 supply months in the WESM [Wholesale Electricity Spot Market] are reinstated and declared valid,” the CA decision stated. According to the ERC, the decision was dated November 7. The CA said the assailed ERC orders were issued in violation of the constitution and laws rendered without any factual and legal basis. It said that the ERC committed errors of fact and law in the exercise of its quasi-judicial functions that warrant the reversal of the assailed orders. “During the issuance of the March 3 order, the ERC had no credible basis to conclude that the entire power-generation industry withheld capacity in the controversial ‘tight supply months’ of November and December 2013 and precisely because the IU [investigating unit] has not yet concluded its investigation. “Such erroneous act is basically akin to having a judge issuing a final sentence on a defendant even if
the trial on the case is still ongoing,” the CA said. The ERC’s IU released a report that identified 11 power-generating firms allegedly engaged in anticompetitive practices of generation companies (gencos). The 11 gencos identified in the report are the Power Sector Assets and Liabilities Management Corp., Pan-Asia Energy Holdings, Therma Mobile (TMO), CIP II Power Corp., Trans-Asia Power Generation Corp., 1590 Bauang, AP Renewables Inc., Udenna Management Resources Corp., Strategic Power Development Corp., GNPower Mariveles Coal Plant Ltd. and SEM-Calaca. The country’s largest power-distribution utility firm, Manila Electric Co. (Meralco), was also found to have committed “market abuse” during the November and December 2013 supply months. Based on the report, Meralco was included because of its agreement with TMO and the manner by which its supply deal with the power producer was carried out. The case stemmed from the P4.15 per-kilowatt-hour (kWh) rate hike that Meralco was supposed to collect in December 2013, and the P5.33 per-kWh rate increase that was supposed to be collected in January 2014. Its implementation, however, was stopped by the Supreme Court. Prior to the release of the report conducted by the ERC IU, the Philippine Electricity Market Corp. also identified the same players that breached the so-called mustoffer WESM rule. Under the must-offer rule, gencos registered in the WESM must declare and offer the maximum generating capacities of their power facilities in the spot market. With the order reinstated, this means that consumers would have to pay more for electricity charges.
Other regions that posted trade deficits during the period were Cavite, Laguna, Batangas, Rizal and Quezon, or Calabarzon, P4.96 billion; Zamboanga Peninsula, P3.81 billion; Central Visayas, P3.57 billion; Occidental Mindoro, Oriental Mindoro, Marinduque, Romblon and Palawan, or Mimaropa, P3.08 billion; and Northern Mindanao, P2.18 billion. The list includes Ilocos region with P1.09 billion; Western Visayas, P0.64 billion; Cagayan Valley, P0.01 billion; and Bicol region, P0.01 billion. Data on the inflow and outflow of commodities in the different regions of the country are used to construct interregional and interindustry relation tables.
LTO to start issuing motor vehicle plates in March
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Brain fix Sen. Risa Hontiveros-Baraquel (right), sponsor of the Philippine mental health bill, interacts with students and guidance counselors from different universities and colleges to discuss how to handle cases of depression and suicidal tendencies at the Senate in Pasay City on Tuesday. The senator, citing data from the Department of Health, earlier said that 1 in 5 Filipinos suffer from some form of mental disorder. PNA/Avito C. Dalan
₧1-B microloan allotted for MSMEs next year
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he Duterte administration has allocated P1 billion for next year’s Pondo sa Pagbabago at Pag-asenso, or P3 microloan program for micro, small and medium enterprises (MSMEs). In a news statement issued on Thursday, Trade Undersecretary Zenaida Maglaya said President Duterte kept his promise to provide affordable microfinancing program for small-scale businesses for them to avoid borrowing money and capital from loan sharks. The fund will come from the Office of the President, which will be coursed to the Department of Trade and Industry’s financing arm Small Business (SB) Corp. The SB Corp. partners with nonbank microfinance institu-
tions (MFIs), cooperatives and associations to serve as conduits. The P3 was launched in January 2017 to give better financial access to MSMEs, particularly in the 30 poorest provinces in the country. P3 can lend out P5,000 to P100,000 for an enterprise at an interest rate not exceeding 2.5 percent per month, which is lower than the 20 percent monthly interest rate in “5-6” lending schemes. The DTI’s microfinancing program also requires no collateral, w ith minimal documentation requirement and one-day processing application. Borrowers can opt to pay on a daily or weekly basis. As of November 24, some 16,210 MSMEs tapped the P3 program.
The DTI also partnered with 90 conduits nationwide and hopes to tap 45 MFIs as new conduits for the P3. Around P485.81 million has been released by the DTI to conduits and P307.8 million was directly released to the borrowers. “We’re very grateful that this program has come into fruition, so we can help microentrepreneurs who are at the bottom of the pyramid and create an entrepreneurial environment in the countryside that will also generate jobs for Filipinos,” Maglaya said. “Through the P3, sectors can find relief from overly expensive borrowings as they pursue their livelihood activities,” she added. PNA
he Land Transportation Office (LTO) has assured that the first batch of new license plates in the Philippines will be issued by March 2018, allaying fears of further delays in the delivery of the motor vehicle plates. I n a ne w s st atement , t he agency said it has awarded the P978.8 -million license platesupply deal to Trojan Computer Forms Manufacturing Corp. and J.H. Tonnjes E.A.S.T. GmbH & Co. KG Joint Venture. The said group “has already been required to provide the performance security.” “Initial delivery is expected sometime in March 2018,” the regulator said on Thursday. “The LTO assures the public that the agency is doing the best it can, in compliance with existing laws and regulations, to deliver the license plates.” To recall, the procurement of the plates was stopped after being questioned before the courts and the Commission on Audit. This should have covered the supply of license plates from 2014 to 2018. In mid-2016, the Supreme Court issued a temporar y restraining order preventing the LTO from releasing and distributing 700,000 license plates turned over by the Bureau of Customs after the plates’ supplier-importer failed to pay the required customs duties. Hence, when the present administration came in a month after, “there was no budget allocation for procurement of license plates for 2016, 2017 and 2018.” Lorenz S. Marasigan
Lower power rates in December House approves MUP pay increase proposal on 2nd reading
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ower rates will go down this month to P9.2487 per kilowatt-hour (kWh) from last month’s P9.6272 per kWh, mainly on account of a P0.3035-per-kWh decrease in generation charge. The Manila Electr ic Co. (Mera lco) said on T hursday the P. 378 5 - per -kW h dec rea se a mou nt s to around P76 reduction in the tota l bil l of a t y pica l residentia l customer consuming 200 kW h. The generation charge decreased from P4.9080 per kWh in November to P4.6045 per kWh this December, primarily due to the peso’s appreciation and lower Wholesale Electricity Spot Market (WESM) charges. Despite a slight increase in the demand for power in Luzon in November, charges from the WESM decreased by P0.4658 per kWh. The power-supply situation improved from October, when the grid experienced three instances of yellow alerts. The share of WESM purchases to Meralco’s total requirement this month was 12 percent. Charges from independent power producers (IPPs) and power-supply agreements (PSAs) also registered decreases of P0.2191
per kWh and P0.3244 per kWh, respectively, mainly due to the strengthening of the peso against the United States dollar. The pesodollar exchange rate affects around 97 percent of IPP and 60 percent of PSA charges. IPPs and PSAs each provided 44 percent of Meralco’s total requirement. Transmission charge of residential customers decreased by P0.0186 per kWh due to lower transmission wheeling and ancillary charges. Consequently, taxes and other charges also went down by P0.0564 per kWh this month. Meralco’s distribution, supply and metering charges, meanwhile, have remained unchanged for 29 months, after these registered reductions in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corp. of the Philippines. Taxes and other public policy charges like the FiT-All are collected by the government. Lenie Lectura
By Jovee Marie N. dela Cruz @joveemarie
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he House of Representatives has approved on second reading House Joint Resolution 18, authorizing the increase in base pay of militar y and uniformed personnel (MUP) in the government. House Appropriations Committee Chairman Rep. Karlo Alexi B. Nograles of Davao City said the measure will modify the existing base pay of around 381,381 military and uniformed personnel nationwide. If approved by both houses of Congress, the resolution will double the base pay of a police officer (PO) 1 in the Philippine National Police, a private in the Department of National Defense and equivalent ranks in the Bureau of Jail Management and Penology, Bureau of Fire Protection, Philippine Public Safety College, Philippine Coast Guard and the National Mapping and Resource Information Authority. A PO 1 will enjoy a 100-percent in-
The notable amendment we did on the floor is that the suspension of the pension indexation will now only be up to January 1, 2019, or until a new pensionreform law is passed, whichever comes earlier.”—Nograles
crease in monthly base pay, from the current P14,834 to P29,668, effective on January 1, 2018. The national government will tap P64.24 billion from its cof-
fers to fund the salary hike. For the other ranks, the increase in base pay will be calibrated, resulting in an average increase of 58.70 percent for all ranks. “This is in recognition of the critical role of the military and police in maintaining national security and peace and order, as they exercise their duty to ensure the safety of our citizens being exposed to various high-peril environments and life-threatening risks, in the discharge of their functions,” Nograles said. As to the indexation of the pension of retired military and uniformed personnel with the base pay of those in the active service, Nograles said that, while the Joint Resolution suspends the indexation with respect to the base pay increase, the suspension of indexation will be automatically lifted on January 1, 2019. “The notable amendment we did on the floor is that the suspension of the pension indexation will now only be up to January 1, 2019, or until a new pension-reform law is passed, whichever comes earlier,” he said.
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Editor: Jennifer A. Ng • Friday, December 8, 2017
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US food exports to PHL up 11% in Jan-Aug By Jasper Emmanuel Y. Arcalas
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@jearcalas
he value of food and beverage products shipped by the United States to the Philippines rose by 11 percent to $631.4 million in January to August, from last year’s $568.3 million, according to a Global Agricultural Information Network (Gain) report.
The Gain report, which was prepared by the US Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) in Manila, attributed the increase to the improvement in the purchasing power of Filipinos and their increasing preference for American products. “A mature market with a growing demand for consumer-oriented products, the United States remains the Philippines’s largest supplier for food, beverage and ingredient products,” the Gain report, which was published on December 7, read. “The Philippines has a strong preference for US brands and is always looking for new American products to taste and enjoy. As incomes grow, more American brands are likely to find a market here,” it added. The FAS said the demand for US consumer-oriented products in the Philippines will continue to grow due to rapid urbanization and the expansion of the upper and middle class. The report also noted that the rising number of supermarkets, hypermarkets and convenience stores in the country would likely boost the purchase of food and beverage (F&B) products from the US. “[There is] strong interest in Western brands among Philippine consumers [and] a growing awareness of the quality and health benefits of US food, beverage and ingredient products,” it read. During the eight-month period, dairy products topped Philippine F&B import bill from the US, reaching $172.8 million. The figure is 11 percent higher than the $134.8 million recorded in the same period
last year. The report also indicated that shipments of pork and pork products recorded the highest increase at 37 percent in January to August. The value of pork and pork products exported to the Philippines reached $60.2 million. Last year USDA data showed the value of American F&B products shipped to the Philippines reached $923.4 million, nearly 3 percent higher than the previous year’s $898.4 million. The Gain report also indicated that Philippine food retail sales last year rose by 4 percent to $45.3 billion, from $43.5 billion recorded in 2015. It attributed the expansion
to the growth of the Philippine economy. “Driven by a growing population, strong domestic consumption and a buoyant economy, the food retail sector in the Philippines continues to grow,” the report read. The Gain report said the country’s largest grocery retailers, such as SM, Robinsons and PureGold, continued to dominate the food retail business, which drove the expansion of the industry in the last five years. “In 2016 these retail giants focused on expanding its midsized supermarkets and small format stores [i.e., convenience stores and minimarts] into smaller towns across the country,” it read. “Filipino consumers increasingly prefer to purchase groceries from modern retail outlets, which provide a convenient format for onestop shopping. This preference has led to the continuous expansion of both supermarkets and hypermarkets,” the report added. The report said the bulk, or 59.5 percent, of total retail sales in 2016 came from “Mom & Pop” stores, more popularly known in the Philippines as sari-sari stores. Sales from these stores last year grew 2.7 percent to $26.94 billion, from the previous year’s $26.23 billion. Revenues from supermarkets
reached $10.21 billion last year, 7.13 percent higher than the $9.53 billion recorded in 2015. The report also noted that food sales from hypermarkets in 2016 expanded by 5 percent to $2.61 billion, from the previous year’s $2.53 billion. “Hypermarkets recorded a slower sales performance in 2016 at 3 percent growth, due to a smaller number of stores being opened during the year,” the report read. “Hypermarkets, however, still remain popular among consumers, serving as a one-stop store carrying a wide range of products, from food to general merchandise, which allows consumers to save time and effort.” The report indicated that convenience stores posted the highest increase in terms of food sales, registering an 8-percent revenue hike last year. Food sales from convenience stores in 2016 reached $910 million. “Convenience stores continue to expand due to the bullish businessprocess outsourcing sector and the increasing number of outlets opening in condominiums and areas outside Manila,” it read. The FAS in Manila projected that total food retail sales this year could hit $47.4 billion due to the sustained growth of Philippine economy and the increase in the purchasing power of Filipinos.
Hunter Haven Dairy Farm in Pearl City, Illinois. Dairy products top the list of the United States’s food exports to the Philippines. Photograph by Daniel Acker/Bloomberg
Virus strikes Bulacan pond, kills 101,383 tilapia–report
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he lethal Tilapia Lake Virus (TiLV) has arrived in the Philippines, killing 101,383 tilapia in a lone Bulacan-based pond in June, the Department of Agriculture (DA) said. In a notification submitted to the World Organisation for Animal Health (OIE), Agriculture Assistant Secretary for Livestock Enrico P. Garzon said TiLV killed 101,363 tiliapia out of the 300,000 susceptible population in a Bulacan-based pond, representing a 33.78-percent mortality rate. Garzon added the outbreak was confirmed last June 29 and has already been resolved by the DA on September 15. “An unexplained daily mortality of tilapia fingerlings was observed in the nursery pond of a private farm after stocking on May 16, 2017. Elevated mortality after 15 days reached approximately 25 percent. Affected fish showed distended abdomen and bulging of the eyes,” he said in the notification dated November 23. Garzon said on May 31, the DA collected samples from the affected farm and were submitted to the Fisheries Biotechnology Center (FBC) in Muñoz, Nueva Ecija. “Semi-nested RT-PCR exhibited positive results using reported Tilapia Lake Virus [TiLV] primers. Other samples submitted to National Fisheries Laboratory- Fish Health of the Bureau of Fisheries and Aquatic Resources also showed positive results by insulated isothermal PCR [iiPCR],” he said. The DA official added the laboratory results indicated that the “amplified 3 segment of the viral ENE [expression and nuclear retention element] has 94 to 95 percent nucleotide similarity to Israel TiLV strain.” Garzon said the movement of fingerlings from the affected pond has been restricted and monitored. He added that the results of the last two samplings showed negative for TiLV. On May 26 the Food and Agriculture Organization (FAO) of the United Nations warned countries of TiLV as it is considered a “lethal threat” to food security. “The outbreak should be treated with concern and countries importing tilapia should take appropriate risk-management measures—intensifying diagnostics testing, enforcing health certificates, deploying quarantine measures and developing contingency plans,” the FAO said. “Tilapia-producing countries need to be vigilant, and should follow aquatic animal-health code protocols of the World Organisation for Animal Health when trading tilapia. They should initiate an active surveillance program to determine the presence or absence of TiLV, the geog raphic extent of the infection and identif y risk factors that may help contain it,” the FAO added. The FAO said the TiLV poses no public health concern, but could decimate infected populations. The TiLV has been reported in at least five countries in three continents: Colombia, Ecuador, Egypt, Israel and Thailand, according to the FAO. “Tilapia are the second most important aquaculture species in volume terms, providing food, jobs and domestic and export earnings for millions of people, including many smallholders,” it said. “In 2015 world tilapia production, from both aquaculture and capture, amounted to 6.4 million tons, with an estimated value of $9.8 billion, and worldwide trade was valued at $1.8 billion,” the FAO added. Jasper Emmanuel Y. Arcalas
Cargill opens $12-million animal Kentucky hopes to benefit from renewed horse sales to China nutrition premix plant in Bulacan
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o meet increasing demand from medium and large livestock farms and feed millers in the Philippines and Southeast Asian countries, Cargill opened on Thursday its first animal nutrition premix plant in the Philippines. The company said in a statement it invested $12 million in the plant, where 50 local employees will produce animal nutrition premix solutions that will be marketed under the “Provimi” brand. An opening ceremony was held on Thursday at the plant in First Bulacan Industrial Park in Malolos, Bulacan. “The Philippines and Southeast Asian countries are seeing increased consumer demand for meat products, especially pork and chicken,” said Noel Kim, general manager of Cargill Provimi, Philippines. “At our premix plant, Cargill can now manufacture the animal nutrition products these producers need to sustainably deliver highquality, safe, affordable meat to consumers,” Kim added. Malolos City Mayor Christian Natividad said Cargill’s presence in the area is a boon for the local community. “The city of Malolos is appreciative of Cargill’s presence, a big boost to our cities’ economic and employment opportunities.
We hope to reciprocate by providing all the needed assistance and better business ambiance to make Cargill’s project a success,” Natividad said. “With the population and income growth driving demand for animal protein in the region, Cargill knows how important it is to invest here, supporting local farmers and creating additional job opportunities as a result of our growth,” said Chuck Warta, president of Cargill Premix and Nutrition. Ralph Bean, agricultural counselor at the United States Department of Agriculture’s Foreign Agricultural Service, noted that the plant is just one of the many investments made by American firms like Cargill in the Philippines. “This plant...heralds a strong partnership and a bright future for all going forward. The plant will provide products that will enable Philippine farmers to ensure greater productivity, reliability and quality in the end products that go onto Philippine dinner tables,” Bean said. Earl ier, t he company announced the opening of a poultryprocessing facility, which is a joint venture with Jollibee, in Batangas. The two plants strengthen the company’s presence in Asia Pacific, where Cargill employs 54,000 employees across 16 countries.
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OUISVILLE, Kentucky—After a two-year standstill, Kentucky’s renowned horse industry is back in the race to develop a market in China, the world’s most populous country. State Agriculture Commissioner Ryan Quarles on Monday touted a new trade accord lifting a ban on United States equine exports to China. The deal was signed by US and Chinese officials last month. The racing industry remains in its infancy in China, where betting is not allowed on horse races, Quarles said. But with the market now reopened, he predicted buyers will attend equine sales in Kentucky with an eye toward boosting racing and breeding operations in China. “The Chinese racing industry, like other countries, wants the best, and they know Kentucky as the Lamborghinis of horses,” Quarles said in a phone interview. Kentucky accounts for nearly two-thirds of overall US horse exports, he said. The Bluegrass state exports about $200 million worth of horses each year. China has the potential to become a lucrative market, Quarles said. “Imagine one planeload of thoroughbreds leaving central Kentucky after a sale headed toward China,” he said. “That’s going to be a multi-milliondollar economic impact off the bat.” Quarles joined some of Kentucky’s equine leaders for an event Monday at Keeneland in Lexington to applaud the new trade accord. Quarles predicted multiple breeds of Kentucky horses will be sold to China. Horses rank as Kentucky’s second-leading ag enterprise, with equine cash receipts projected at about $1 billion in 2017, according to University of Kentucky ag economist Kenny Burdine. In 2015, the Chinese placed a hold on importing horses from the United States due to concerns about a potentially fatal equine viral disease.
Kentucky played an active role in US efforts to resolve Chinese concerns. A Chinese delegation visited the Bluegrass state to visit horse farms and an equine research center. The thoroughbred export market to China is estimated at about $30 million, with most racehorses now coming from Australia, New Zealand and Ireland, said Chauncey Morris, executive director of the Kentucky Thoroughbred Owners and Breeders. Keeneland, which hosts lucrative thoroughbred auctions in Lexington, also hailed the resumption of horse sales with China. “As the world’s largest thoroughbred auction house, we at Keeneland are excited by the significant expansion opportunities it offers Kentucky’s entire horse industry, especially breeders and sellers,” said Keeneland President and CEO
Tapit the stallion, a popular horse stud in Kentucky. Mason Levinson/Bloomberg
Bill Thomason. Morris predicted Kentucky will reap the lion’s share of US horse exports to China. China’s potential as a horse market would skyrocket if its ban on betting horse races ends, he said. “Should wagering on horse racing ever become legal in China, it would become, overnight, probably the most important export market in the world,” he said. China has already become an important export market for Kentucky soybeans, pork and poultry, UK ag economist Will Snell said. The next goal is to develop a Chinese market for Kentucky beef, Quarles said. “Opening new export markets are critical to the future growth in the Kentucky ag economy,” Snell said. Kentucky hopes to benefit from renewed horse sales to China. AP
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Friday, December 8, 2017
The World BusinessMirror
Editor: Lyn Ressureccion | www.businessmirror.com.ph
House votes to sharply expand concealed-carry gun rights
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ASHINGTON—The House on Wednesday easily passed a sweeping expansion of the right to carry concealed firearms virtually anywhere in the country, putting the fate of the National Rifle Association’s (NRA) top legislative priority in the hands of a divided Senate.
To win over Democrats, House Republicans paired the measure, which would require all states to recognize any other state’s concealed-carry permit, with a more modest bipartisan fix meant to incentivize better reporting of legal and mental health records to the national background-check system. Together, the measures were the first gun-related bill to pass through the chamber since two of the deadliest mass shootings in the United States, in Las Vegas and Sutherland Springs, Texas, in the fall. But the background-check measure was not enough to win over most Democrats, nor did it persu ade l aw- enforcement officials in some of the largest cities, including New York, who say the legislation would force locales with strict gun laws to bow to places with few or no gun restrictions. The final House vote was 231198, with six Democrats in favor of and 14 Republicans against the bill. Passage in the Senate would almost certainly require 60 votes to overcome a Democratic filibuster, and although several Democrats have expressed support in the past, the climb for the NRA will be steep. On Wednesday the Senate Judiciary Committee debated its own response to the shootings in Texas and Nevada and appeared willing to move forward with a background-check bill. But Senate leaders seemed disinclined to take up the concealed-carry measure anytime soon. Regardless, House Republicans and gun-rights activists celebrated the concealed-carry vote, hailing it as an important step toward victory in a decades-long fight to extend concealed carry and simplify the rules for gun owners. Chris W. Cox, the NRA’s executive director, praised the vote as a “watershed moment” for Second Amendment rights. “This bill ensures that all lawabiding citizens in our great country can protect themselves in the manner they see fit without accidentally running afoul of the law,” he said. Democrats said the measure would jeopardize public safety and set a dangerous precedent for overriding states’ rights to determine their own laws. “The answer to our national problem of gun violence is not
that we need more people carrying concealed firearms on our streets,” said Rep. Jerrold Nadler of New York, the top Democrat on the Judiciary Committee. Laws regulating the carrying of concealed weapons have traditionally been left up to the states, creating a patchwork of varying standards and expectations. Some states, including New York and Maryland, as well as the District of Columbia require that permit applicants have livefire experience and safety training, along with a clean criminal history. Others are more lenient, and a dozen states do not even require a permit. The House bill would not force states to change their own laws, but it would treat a concealed-carry permit like a driver’s license, letting individuals allowed by one state to carry a concealed weapon to another state. It would also allow visitors to national parks, wildlife refuges and other federally administered lands to legally carry concealed
guns. And it carves out a provision that would let qualified permit holders carry concealed guns in school zones. Law-enforcement officials from major cities like New York and Los Angeles, where strict gun-control laws are aimed at handguns, warned that the bill would usurp states’ authority to set their own laws and effectively impose the lax laws of southern and rural states on densely populated cities. Republicans in the Senate would need to pick up at least eight Democrats to pass the measure. And while several Democrats backed a similar measure when it was last voted on in 2013, the politics surrounding guns have shifted since then amid a spate of deadly mass shootings. The result has been a virtual deadlock as Democrats and Republicans cannot agree on how, if at all, to address gun violence. Several Democrats who voted for the 2013 measure, including Sens. Martin Heinrich of New Mexico, Mark Warner of Virginia and Tom Udall of New Mexico, said this week they would not do
so this time around. Even Democrats perceived to be the most in favor of gun rights, including Sens. Joe Manchin III of West Virginia and Jon Tester of Montana, were cautious about staking out a position before they needed to. Republican leaders, wary of seeing the measure once again fail on the floor of the Senate floor, were not rushing the concealed-weapon bill to that chamber. Sen. John Cornyn of Texas, the No. 2 Republican and a cosponsor of both the concealed-carry and background-check bills in the Senate, said on Tuesday that he was “realistic enough” to realize that following the House’s lead by combining the two bills would also be pointless in his chamber. “If you put them together, it makes it harder to do what we can do and can do now and need to do,” he said. Senators from both parties view the background-check bill as one of the hopeful—albeit narrow—areas of consensus. It was developed in response to a lapse that allowed the gunman in the
231-198
The final House vote on the gun bill, with six Democrats in favor of and 14 Republicans against
Sutherland Springs shooting to buy his weapons. The Air Force failed to send his domestic violence conviction to the national database. Had it done so, the gunman, Devin P. Kelley, would have been barred from buying a firearm from a licensed gun dealer. T he mea su re i ncent iv i z es states and federal agencies to report criminal offenses and other information to the National Instant Criminal Background Check System (NICS). During the Senate Judiciary hearing, the acting director of the Bureau of Alcohol, Tobacco, Firearms and Explosives also told senators that the agency expected to begin regulating—and could even ban—so-called bump stocks, which can turn semiautomatic rifles into weapons capable of firing long, deadly bursts. The Las Vegas shooter used such devices during his deadly rampage. Democrats in the House denounced the decision by Republicans to combine the two bills and fretted that they could force shut a rare window of bipartisanship over guns. Mark Kelly, the retired astronaut and the husband of former Rep. Gabrielle Giffords, who was badly wounded in a 2011 shooting in Tucson, called the move “reprehensible.” “The concealed-carry reciprocity is bad in a worse way than the fixing of the NICS system is a good thing,” said Kelly, who helps lead a gun-control group bearing Giffords’ name. “They don’t cancel each other out.” New York Times News Service
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lack Americans have been gaining ground in the labor market this ex p a n s i o n , n a r row i n g t h e g a p with white workers to a historic low. Yet, there are reasons to interpret that progress cautiously. Nearly 58 percent of black adults are working, lagging the white ratio by less than three percentage points. The difference between the two groups is hovering around its narrowest level in data going back to 1975. The gains may not last, however. Black people tend to experience more labor-market volatility, with employment rising during business-cycle highs and falling sharply back when recession strikes. A growing body of research points to that pattern as one component of the stubborn racial income gap in the United States, which contributes to a wealth differential over time. White households are roughly seven times richer than their African-American counterparts. “ This first fired, last hired is so important,” Mary Daly, research director at the Federal Reserve (the Fed) Bank of San Francisco, said in an interview conducted last week, before the Fed entered its premeeting blackout period. Wh i te wo r ke r s s e e f a s te r wa g e gains when they change jobs, but when black men do, their earnings growth decelerates, Daly and her colleagues show in unpublished research that was presented at a conference. For black women, job changes neither hurt nor help their pocketbook. Black workers also move from fulltime to part-time employment or the unemployment line more frequently, disrupting their careers.
Wage gaps
Partly as a result, black people earn less than white people. The average black man in America earns 70 percent as much per hour as the average white man, Daly and her colleagues showed in separate research. R a c i a l wa g e g a p s w i d e n ove r a worker’s lifetime, further evidence that disruptions may add up over time to hold back-pay gains. While comparatively low incomes are a problem in and of themselves, they also curtail wealth building. The trends illustrate that improvements in the labor market are a limited tool for healing racial inequities in the US, no matter what politicians say. President Donald J. Trump is the latest in a long line of leaders who have promised to better the fortunes of lowincome African-American communities by targeting jobs. A repor t due from the Labor D e p a r t m e nt o n Fr i d ay i s p ro j e c te d to show the job market continues to make strides. Payrolls stayed resilient, posting another good month of about 195,000 gains in November following hurricane-related distortions, according to the median forecast of economists sur veyed by Bloomberg. The jobless rate probably held at a more than 16-year low of 4.1 percent, analysts project.
First step
The manager of Bob Moates Sports Shop, David Hancock, poses with a firearm in the shop in Richmond, Virginia, on December 5. Hancock says he is not expecting any major changes in the state’s gun laws as a result of the election of many Democrats in the Virginia House of Delegates. AP/Steve Helber
Trudeau: Canada-US trade deal possible if Nafta fails
anadian Prime Minister Justin Trudeau said he would consider one-on-one talks with the United States on trade, if negotiations to update the North American Free Trade Agreement (Nafta) fail. “We will always look at different opportunities,” Trudeau said on Thursday in response to a question about a two-way US
Black Americans cross jobs milestone
trade deal at the Fortune Global Forum in China. “We’re ready for anything, when things come forward. The new administration has shown a willingness to disrupt the patterns of past behavior and look for new models, and we’re willing to entertain next steps forward.” The prime minister, who was in the southern Chinese city of Guangzhou to wrap up a five-day
visit, said the 23-year-old Nafta “needs to be updated” and warned that canceling the pact would harm Canadians. “We’re still very confident in the kinds of support and response that we’ve gotten from friends, partners, colleagues in the US who recognize that trade is a powerful driver of growth and benefit to citizens,” he said.
While the Canadian government has repeatedly said it was committed to working with Mexico to renew Nafta, officials have sometimes signaled a willingness to consider a two-way pact of the kind US President Donald J. Trump prefers. Trump has threatened to scrap Nafta, which underpins $1.2 trillion of trade, if the other two signatories don’t
accept proposals that the administration argues will reduce US trade deficits. Canada and the US had a bilateral trade deal that was superseded and suspended by Nafta. Canada’s chief Nafta negotiator told lawmakers this week that the old agreement would kick in again if Nafta failed, although would have to be reimplemented. Bloomberg News
Centr al bankers, who are responsible for fostering low unemployment, have long expressed skepticism that jobs can provide a cure -all, painting them as a first step rather than an end solution. “A generally strong labor market is helpful in alleviating all of those disparities, but we don’t have a targeted set of tools,” Fed Chairman Janet Yellen told a bicameral group of legislators in testimony last week. Fe l i c i a Wo n g, p r e s i d e n t o f t h e Roosevelt Institute, a liberal think tank, said the racial wealth disparity is the product of accumulated disadvantage over time—which is why shor t-term economic gains aren’t enough to bridge divides. It has “more to do with the historical exclusions from education, the housing market, the labor market and ultimately capital acquisition that African-Americans have had relative to whites.” Daly’s work shows that explanations like educ ation or area of residence don’t account for a large and growing por tion of the wage gap, though it ’s true that African-Americans graduate from high school and college at lower rates than white people. Bloomberg News
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Editor: Lyn Resurreccion • Friday, December 8, 2017
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UN, EU and pope hit Trump’s Jerusalem announcement
President Donald J. Trump, accompanied by Vice President Mike Pence, holds up a signed proclamation recognizing Jerusalem as the capital of Israel in the Diplomatic Reception Room of the White House on Wednesday. AP/Alex Brandon
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OME—Pope Francis said, “I cannot remain silent.” The United Nations secretarygeneral spoke of his “great anxiety.” The European Union (EU) expressed “serious concern.” US allies like Britain, France, Germany and Italy all declared it a mistake.
A chorus of international leaders criticized the Trump administration’s decision on Wednesday to officially recognize Jerusalem as the capital of Israel, calling it a dangerous disruption that contravenes UN resolutions and could inflame one of the world’s thorniest conflicts. Secretary-General António Guterres and Francis both expressed alarm that the announcement would provoke new tensions in the Holy City, which is revered by Jews, Christians and Muslims. Within minutes of Trump’s speech, in which he said the US Embassy would be moved from Tel Aviv to Jerusalem, Guterres delivered what amounted to a diplomatic rebuke. Reading a statement outside the Security Council chambers at UN headquarters in New York, Guterres criticized “any unilateral measures that would jeopardize the prospect of peace for Israelis and Palestinians,” underscoring the administration’s departure from decades of US policy. “Jerusalem is a final-status issue that must be resolved through direct negotiations between the two parties on the basis of the relevant Security Council and
General Assembly resolutions, taking into account the legitimate concerns of both the Palestinian and the Israeli sides,” Guterres said. “In this moment of great anxiety, I want to make it clear: There is no alternative to the two-state solution,” he said. “There is no Plan B.” In Rome, Francis prayed that Jerusalem’s status be preserved and needless conflict avoided. “I cannot remain silent about my deep concern for the situation that has developed in recent days,” Francis said at his weekly general audience at the Vatican. “And at the same time, I wish to make a heartfelt appeal to ensure that everyone is committed to respecting the status quo of the city, in accordance with the relevant resolutions of the United Nations.” “Jerusalem is a unique city,” he said, “sacred to Jews, Christians and Muslims, where the Holy Places for the respective religions are venerated, and it has a special vocation to peace.” In especially strong language, the pope added, “I pray to the Lord that such identity be preserved and strengthened for the benefit of the Holy Land, the Middle East
and the entire world, and that wisdom and prudence prevail, to avoid adding new elements of tension in a world already shaken and scarred by many cruel conflicts.” The EU’s top diplomat, Federica Mogherini, expressed concern about “the repercussions this may have on the prospect of peace.” In a statement, she reiterated the bloc’s position that Jerusalem should be a future capital of two states, Israeli and Palestinian, and that embassies should not be moved there until the city’s final status was resolved. She cited a 1980 UN Security Council resolution that condemned Israel’s attempted annexation of East Jerusalem as a violation of international law. She called on actors in the region “to show calm and restraint in order to prevent any escalation.” Within a few hours of Trump’s speech, eight countries on the 15-member Security Council— including some of America’s closest allies—requested an emergency meeting to be held before the end of the week. Diplomats said it would most likely be scheduled for Friday. Joakim Vaverka, political coordinator of Sweden’s UN mission, said in a statement that the delegations of Bolivia, Britain, Egypt, France, Italy, Senegal, Sweden and Uruguay had sought the meeting, including a briefing by Guterres, “in light of the statement today by the president of the United States regarding the status of Jerusalem.” The warnings by the pope, the UN and the EU spoke to a broad fear that Trump’s announcement would be the death knell for an already moribund peace process and that it would pull the plug on
I wish to make a heartfelt appeal to ensure that everyone is committed to respecting the status quo of the city, in accordance with the relevant resolutions of the United Nations.”—Pope Francis a two-state solution. Critics of the announcement said the change in policy removed any pretense that the United States is a neutral broker for peace. Palestinians and other Arabs in the region already view the Trump administration as leaning toward Israel’s right-wing government. The change in US policy “destroys the peace process,” said the Palestinian prime minister, Rami Hamdallah. Some of the United States’s closest allies expressed apprehension. Prime Minister Theresa May of Britain called Trump’s decision “unhelpful in terms of prospects for peace in the region.” President Emmanuel Macron of France, who was in Algeria on Wednesday meeting with the country’s president and other figures, said in a news conference that the decision by Trump was “regrettable” and that “France and Europe are committed to a two-state solution.” He called on all parties to refrain from violence. Germany’s chancellor, Angela Merkel, said through a spokesman that her government “does not support this position, because the status of Jerusalem is to be resolved in the framework of a two-state solution.” Prime Minister Paolo Gentiloni of Italy wrote on Twitter: “Jerusalem holy city, unique on earth. Its future will be defined within the framework of the peace process based on the two states, Israel and Palestine.”
In China, the Ministry of Foreign Affairs spokesman, Geng Shuang, expressed support for a Palestinian state with East Jerusalem as its capital and urged all parties to the conflict to proceed cautiously. “What we worry about is any potential flare-up of regional tensions,” he said. “The status of Jerusalem is a complicated and sensitive issue.” Britain’s foreign minister, Boris Johnson, told reporters in Brussels, “Clearly this is a decision that makes it more important than ever that the long-awaited American proposals on the Middle East peace process are now brought forward.” That process, led by Trump’s sonin-law, Jared Kushner, has seemingly failed to get off the ground. Leaders in the region had already warned against the move. A statement from the royal palace of King Abdullah II of Jordan, whose kingdom is the custodian of Al-Aqsa Mosque in Jerusalem, emphasized that the city was critical to “achieving peace and stability in the region and the world.” In Turkey, President Recep Tayyip Erdogan was convening a summit meeting of the main Pan-Islamic body next week in Istanbul to discuss the American move and to show, as his spokesman Ibrahim Kalin told reporters in Ankara, “joint action among Islamic countries.” K a lin ca l led the ex pected change a “grave mistake,” adding that “Jerusalem is our honor, Jerusalem is our common cause,
Jerusalem is our red line.” Iran, unsurprisingly, condemned the change. Its supreme leader, Ayatollah Ali Khamenei, said at a conference in Tehran on Wednesday that it reflected the “incompetence and failure” of the US government. Like much of Europe, the Vatican has long been sympathetic to the plight of Palestinians. The Vatican established full diplomatic relations with Israel in 1994, and Pope John Paul II and Pope Benedict XVI both visited Israel and the Palestinian territories. In 2012 the Vatican called for “an internationally guaranteed special statute” for Jerusalem, with the goal of “safeguarding the freedom of religion and of conscience, the identity and sacred character of Jerusalem as a Holy City, [and] respect for, and freedom of, access to its holy places.” Francis visited the Holy Land in 2014, but he upset some Israelis by flying by helicopter directly from Jordan to the “State of Palestine,” as the Vatican schedule at the time referred to the territories. He visited Israel afterward. In 2015 the Vatican entered into a treaty with the State of Palestine. On Tuesday Francis spoke by telephone to the Palestinian Authority president, Mahmoud Abbas, about the unfolding crisis. Before the pope’s public remarks to the faithful at the Vatican on Wednesday, he met privately with a group of Palestinians participating in interfaith dialogue with officials at the Vatican. “The Holy Land is, for us Christians, the land par excellence of dialogue between God and mankind,” he said. “ The primary condition of that dialogue is reciprocal respect and a commitment to strengthening that respect, for the sake of recognizing the rights of all people, wherever they happen to be.” New York Times News Service
China says it’s open for business; foreign firms find it’s not that simple
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UANGZHOU, China—The southern Chinese city of Guangzhou on Wednesday welcomed dozens of corporate leaders and foreign dignitaries with one overriding message: China is open for business. The reality on the ground was more complex. China is increasingly presenting itself as a global force: President Xi Jinping surprised the world in January when he told power brokers gathered in Davos, Switzerland, that the country planned to intensify its role in the absence of American leadership. That message was echoed at the Guangzhou conference, which was attended by the leaders of companies like Apple, Ford, Philips and Walmart and foreign leaders like Prime Minister Justin Trudeau of Canada. “China’s door will not close to the world but open wider,” Xi said in a letter addressed to the gathering, which was organized by Fortune magazine. China’s president was to attend the conference until changing his plans at the last minute,
according to local media reports. Wang Yang, China’s vice premier, spoke of the country’s commitment to a “nondiscriminatory environment for foreign companies.” Another senior Chinese official promised a level playing field for foreign businesses. But the messages of openness contrasted sharply with actions taken in Beijing and elsewhere in the country. China wants its giant national companies to be world leaders in sectors like electric cars, robotics and drones, but authorities are accused of curtailing foreign firms’ access to Chinese consumers. A government-led effort to help Chinese companies at home and abroad has set up a potential trade battle with the United States, as a growing number of US businesses complain that Chinese trade practices like forced technology transfer are putting them at a disadvantage. At the conference in Guangzhou, multiple officials promoted what they called the “spirit” of the ruling Communist Party’s recent congress, which tightened Xi’s grip on the state and gave his policies an exalted status in a sign of the role
the party intends to play in China’s economy. The crowd in the cavernous ballroom at the ShangriLa Hotel thinned out as one official after another spoke over the course of an hour. Surveys of China business leaders by the US Chamber of Commerce in recent years have shown that many American companies do not think the playing field is even. “Chinese government statements reaffirming China’s commitment to providing a nondiscriminatory environment for foreign companies are always welcome, but need to be accompanied by real progress,” said Kenneth Jarrett, the president of the US Chamber of Commerce in Shanghai. “The challenges of China’s regulatory environment—its opaqueness, unpredictability and basic problems of market access—make it difficult for US companies to realize their full potential,” he added. Others were more blunt in their assessments. “You can get WeChat in America, but you can’t get Facebook here in China,” Terry Branstad, the US ambassador to China said on Wednesday, re-
ferring to the popular Chinese social-media app that is used by nearly 1 billion people. Facebook, by contrast, is blocked in China, although the company is still trying to get into the country. “We are hopeful that we can still continue to make progress, but there are still basic areas of concern,” Branstad added, referring to the growing frustration that China is demanding too many concessions from companies that want to compete in the country. One company that has sought to make concessions in hopes of maintaining its access to the Chinese market is Apple. The company has been criticized for recently removing some apps from its China app store, including those meant to help users circumvent the country’s heavily censored Internet. The company’s chief executive, Tim Cook, expressed respect for China’s rule of law at the conference on Wednesday. “When you go into a country and participate in the market, you are subject to the laws and regulation of that country,” Cook said, underscoring the notion that some US business leaders
are willing to play by China’s rules. “You don’t bring the laws and regulations that you wish were there,” he added. Cook had come to Guangzhou from the World Internet Conference, which was organized by the Cyberspace Administration of China. His attendance at that event raised concerns that he was lending his support to the government’s heavyhanded control over the Internet. Cook, responding to those concerns, said, “My view is that you show up and you participate because nothing ever changes from the sidelines.” He also added he hoped that some of the apps the company had made unavailable in China would one day be available there again. Against this backdrop, Chinese companies are beginning to claim some of the dominant positions that their foreign counterparts once had around the world. One of the many statistics that officials here cited to support China’s growing strength on the global stage was this one: The Fortune 500 list now includes 115 Chinese companies, nearly equal to the number of US companies.
One thing is clear: The days when foreign companies thought they could come to China and make a quick profit are over. “You cannot just be in the market to make money,” said Hans Tung, a managing partner at venture capital firm GGV Capital. “I think that, if you can help the Chinese government to achieve its objective of being a model of growth, you’ll have achieved your own objective as well.” Not every business leader here was quite as diplomatic. “People complain too much,” said Jack Ma, the founder of the e-commerce giant Alibaba. Ma’s company plays a dominant role in the lives of most Chinese consumers, and it has become a darling of US investors and almost as valuable as Amazon. “If you cannot survive in China, I barely think you can survive in other countries,” Ma added, citing the success in China of US companies like IBM, Starbucks and Walmart. His advice for foreign companies was simple: “Have patience and respect the rule of law.” New York Times News Service
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Friday, December 8, 2017
The World BusinessMirror
Editor: Lyn Ressureccion | www.businessmirror.com.ph
Malaysian PM plays ethnic card as he gears for elections
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China’s blow to recycling boosts the United State’s $185-billion plastic bet. Bloomberg
China slams the door on plastic trash, delighting US producers
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hina is upending the global plastics market. The world’s biggest user of scrap has stopped accepting shiploads of other countries’ plastic trash as it phases in a new ban.
That’s bad news for the recycling industry, as China has been a major consumer of salvaged materials it processes into resin that ends up in pipe, carpets, bottles and other cogs of modern life. China has begun buying brandnew plastic to replace all the recycled scrap—and that’s great news for US chemical makers, such as DowDuPont Inc., which are rushing to find markets for millions of tons of new production amid an industry investment binge. United States exports of one common plastic are expected to quintuple by 2020. “It’s a good time to be bringing on some new assets,” Mark Lashier, CEO of Chevron Phillips Chemical Co., said in an interview last month as he marked the opening of two polyethylene plants in Old Ocean, Texas. “If you pull recycled plastic out, that market demand is going to increase.” China is undoing decades of effort that built a massive scraprecycling industry—the cheapest way to produce plastic products for its growing economy. The countr y accounted for 51 percent of the world’s plastic scrap imports last year, with the biggest contribution coming from the US, according to the Institute of Scrap Recycling Industries, an international trade group.
Supply shift
Now China is changing course, telling the World Trade Organization in July that it will stop accepting imports of used plastics and paper by January 1 as the
51% China volume of the world’s plastic scrap imports last year, second to the US
nation takes steps to clean up its industrial pollution. The China ban could shift about 2 percent of global polyethylene plastics supply from recycled to new material, Vincent Andrews, an analyst at Morgan Stanley, said in a November 30 report. The country has already halved its purchases of scrap polyethylene from a 2014 peak, he said. The US is the only country in a position to quickly fill the gap, said Jonas Oxgaard, an analyst at Sanford C. Bernstein and Co. That’s because the US has become the cheapest place in the world to make plastic, thanks to a fracking boom that’s created a glut of natural gas, the main feedstock for manufacturing. Ta k i n g a d v a nt a g e o f l o w gas prices, chemical producers have invested an unprecedented $185 billion to build new capacity in the US, according to the American Chemistr y Council, an industr y group. Natural gas prices at $3.50 per million British thermal units would be about $20 a barrel on an
oil equivalent basis, Royal Dutch Shell Plc. said during an investor briefing on October 13. West Texas Intermediate crude futures traded at $57.40 a barrel at 5:04 p.m. Singapore time. Exporting high-value resins to China instead of cheap scrap could help chip away at the US’s $250-billion trade deficit with the nation—a goal that has been on the top of President Donald J. Trump’s agenda.
Two-way flow
“Some of the patterns of production we saw 15 years ago are starting to change quite rapidly,” said Simon Tay, chairman of the think tank Singapore Institute of International Affairs. “The twoway flow between US and China becomes much stronger.” About 30 percent of North America’s recyclables were historically processed in China, according to Morgan Stanley’s Andrews. China is creating a void in the market for used plastic that will have a “devastating impact” on recycling worldwide, according to the recycling trade group. So far, domestic markets for used polyethylene, PET and polypropylene remain healthy, said Brent Bell, vice president for recycling at Waste Management Inc., North A merica’s largest trash hauler. Even so, some recycling programs are beginning to come under stress because China has stopped issuing licenses to import scrap plastics ahead of the January 1 ban, Bernstein’s Oxgaard said. Global prices for the waste have already dropped 10 percent, said Aloke Lohia, chairman of Indorama Ventures Pcl., which buys used plastic bottles for its processing plants in Europe, Mexico and Thailand. The US West Coast appears to be hardest hit. In the area around Portland, Oregon, for instance, some recyclers are limiting the types of plastics they will accept.
Waste haulers in rural parts of the state recently began steering some plastic to the trash dump because the market is drying up, said Peter Spendelow, a recycling policy analyst for the Oregon Department of Environmental Quality.
Darkening outlook
While at this point most of the scrap is still finding a home, “there is certainly potential for things to get a lot worse,” Spendelow said. For producers, however, China’s ban on importing scrap will boost demand for new plastics by enough to nearly absorb all the new polyethylene output coming online next year in the US, Andrews said in the Morgan Stanley report. The effects can already be seen in China’s increased appetite for v irgin polyethylene, with imports up 19 percent this year as scrap polyethylene imports dropped 11 percent, he said.
Export explosion
U. S. ex por ts of polyethylene plastic to Asia will reach about 5 million tons by 2020, a fivefold increase from last year, with most of it headed to the Chinese market, according to J.P. Nah, an Asia polyolefins analyst at IHS Markit consultants. Four new US plastics plants, including a project by DowDuPont’s Dow Chemical unit, will begin annual production of 3.6 million tons of polyethylene by year end, said Nick Vafiadis, a vice president at IHS Markit. More are on the way. All the new US output had been expected to push plastic prices into a slump until demand catches up. That still may happen, but much less than previously thought as the China scrap ban, Hurricane Harvey disruptions and delays in US plant construction are keeping the market more in balance. “ It ’s goi ng to be a pret t y sha l low trough versus what we thought” earlier in the year, Vafiadis said. Bloomberg News
Obama talks at climate-change summit as mayors sign charter
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HICAGO—Former US President Barack Obama on Tuesday told a summit of mayors driven to act, after President Donald J. Trump rejected the Paris climate accord, that cities and states are the “new face of American leadership” on climate change. Obama, who did not mention Trump by name, made a quick appearance at the conference hosted by his former chief of staff, Chicago Mayor Rahm Emanuel. He said it was an “unusual time” with the US as the only country to walk away from the Paris agreement, but it was a chance for local leaders to come together and fulfill promises the country has made.
“Ultimately, the work is done on the ground,” Obama said. “Cities and states and businesses and universities and nonprofits have emerged as the new face of American leadership on climate change.” Chicago officials billed the Nor th American Climate Summit, which began last Monday evening, as the first of its kind for the city. Leaders elsewhere have taken similar action, despite Trump’s announcement earlier this year that the US would pull out of the 2015 Paris agreement, which involves nations setting benchmarks to reduce emissions of heattrapping gases.
The US won’t technically back out until 2020 because of legal technicalities. The idea is to fill the void left by the actions of the Republican president, who has worked to reverse much of Obama’s approach to foreign policy, Chicago officials said. Trump has said the terms of the agreement should be more favorable to businesses and taxpayers. The Chicago charter calls for mayors to achieve a percent reduction in greenhousegas emissions that’s equal to or more than what is outlined in the Paris agreement. It also calls for them to work with scientific and academic experts to find solutions.
Mayors from 51 cities, including Paris, Mexico City, San Francisco and Phoenix attended the summit. Some mayors have specifically agreed to commitments to expand public transportation and invest in natural climate solutions, such as tree canopy and vegetation. Emanuel said the current resident of the White House—not mentioning Trump by name—and his environmental officials are in denial on climate change despite facts. “Climate change can be solved by human action,” he said. “We lead respectively where there is no consensus or directive out of our national governments.” AP
UALA LUMPUR, Malaysia—Embatt led Ma l aysian Prime Minister Najib Razak said on Thursday it would be a “nightmare” for ethnic Malays if the opposition wins elections next year. Opening a three-day annual assembly of his United Malays National Organization (Umno), which has ruled Malaysia since independence in 1957, Najib poked fun at the opposition coalition led by former Prime Minister Mahathir Mohamad, saying the octogenarian was in the same league as former Zimbabwe President Robert Mugabe. Umno is the linchpin of Malaysia’s ruling National Front coalition but its support has dwindled in the last two elections. It lost the popular vote for the first time to the opposition in 2013. Despite being plagued by an epic corruption scandal that involved hundreds of millions of dollars passing through his bank accounts, Najib has clung to power, and his coalition is likely to win elections due by August. The opposition coalition was in disarray but has converged under 92-year-old Mahathir after he made a high-profile return to politics in a bid to oust Najib. Mahathir was Asia’s longestserving leader for 22 years before stepping down in 2003, and is still influential among ethnic Malay Muslims who account for about 60 percent of Malaysia’s 32 million people. Chinese and Indians make up the rest. “It is odd that there are still people who are willing to be led by someone in his twilight years. Former Zimbabwe President Mugabe, who is the same age as he is, has already been rejected by his own people,” Najib said. He urged Umno’s more than 3 million members to stay loyal and prevent the country from falling into the opposition’s hands. “We are at a monumental crossroad. The fate of the nation is in our hands. The nightmare that
will befall us is unthinkable” if the party loses, Najib said, warning that Malays will be stepped on and disparaged in their own land. Najib has fired critics in his own government, including an attorney general and deputy prime minister and muzzled the media since the corruption scandal erupted two years ago. The United States and several other countries are investigating allegations of cross-border embezzlement and money laundering at 1 Malaysia Development Berhad (1MDB), a state investment fund set up and previously led by Najib to promote economic development but which accumulated billions in debt. The US Justice Department says at least $4.5 billion was stolen from 1MDB by associates of Najib, and it is working to seize $1.7 billion taken from the fund to buy assets in the US, potentially its largest asset-seizure ever. Its complaint filed with a US District Court says more than $700 million landed in the accounts of “Malaysian Official 1,” which it did not name but through descriptions of that official’s role in the fund and government, as well as other details, made clear was Najib. Malaysia’s attorney general has said the millions in Najib’s accounts were a political donation from the Saudi royal family that was mostly returned. Najib has denied any wrongdoing. Analysts said the 1MDB scandal didn’t resonate with rural Malays, who were more irked by rising cost of living. Aided by a stronger economy, Najib recently promised financial handouts to rural folks, cut income tax, abolished tolls on several major highways and boosted infrastructure spending in the 2018 national budget. “He is the best prime minister of all because he takes care of our welfare,” said Aisah Mahidin, who was listening to Najib’s speech. She said there was no proof that Najib took the money and that the US investigation was a move to smear Najib’s image. AP
Merkel looks to convention of rivals for quest to 4th term
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ermany’s Social Democratic Party (SDP) is testing support for a renewed alliance with Chancellor Angela Merkel with a party convention vote that’s a crucial hurdle in her quest for a fourth term. Polls suggest most SPD members still need to be persuaded to have the party serve as junior partner to Merkel’s Christian Democratled bloc for another four years. Party leaders are asking delegates to back a motion on Thursday that only approves preliminary talks with Merkel without immediately setting a rerun of the “grand coalition” as a goal. Ahead of the three-day convention in Berlin, only 28 percent of SPD supporters favored reviving the alliance of Germany’s two biggest parties, though even fewer wanted a new election, according to a Spiegel Online poll. A majority backed a third option: a Merkelled minority government backed by the SPD. “There has to be a significant majority for the vote on entering talks with the Christian Democratic bloc, otherwise there is a big danger that the SPD fumbles in the course of negotiations,” Carsten Brzeski, chief economist for Germany and Austria at ING Diba in Frankfurt, said in an interview. “Even with a good result, there’s still a risk the talks could collapse.” The Social Democrats have engaged in a round of soul-searching after Chairman Martin Schulz initially vowed not to return the party to government with Merkel, a reaction to the party’s worst result since World War II in the German election on September 24. Schulz told reporters on Wednesday he expects a stormy debate at the convention, which begins at 11 a.m. in Berlin, and will be a tough negotiator if talks go ahead, the Deutsche Presse-Agentur newswire reported. The SPD head is leaving open the option of supporting a Merkel-led minority government, an arrangement that Germany has shunned since World War II and which
the chancellor rejects as unstable. Schulz, 61, also is running for reelection as party chairman on Thursday, a ballot that’s another measure of his support among the party base. Merkel’s coalition talks with the Free Democrats and the Green party collapsed on November 19, shifting the burden to the Social Democrats to reconsider and avoid a repeat election in Europe’s biggest economy.
Nothing automatic
Schulz eased off his rejection of Merkel, prodded by many in the party base, as well as President Frank-Walter Steinmeier, a Social Democrat now pledged to a nonpartisan role, who called on all parties face up to their obligation to voters. Schulz and other SPD leaders insist there will be no “automatic” new coalition and have laid out demands including a strengthening of the euro area. Ending the political deadlock could take months. If Thursday’s motion passes, Merkel and Schulz would be expected to meet as early as next week, with exploratory talks possibly starting in December. A select group of national SPD delegates would have clear the way for formal coalition talks, possibly in January, which would take several weeks. Any coalition pact would be put to a nationwide vote by party members, a scenario that means Merkel’s new term might only begin in March. If the SPD takes the plunge, a difficult task of aligning policies lies ahead. Schulz campaigned on greater European integration along the lines proposed by French President Emmanuel Macron, investment in infrastructure, more family-reunion rights for refugees and shoring up pensions. Merkel is under pressure from conservatives in her bloc to avoid too many concessions. While Merkel emerged victorious but weakened from the election, the SPD may face an existential threat. Bloomberg News
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Banking&Finance BusinessMirror
Editor: Jun B. Vallecera • Friday, December 8, 2017
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10-month PHL inflation lower than 7-year average PBOC seen holding rates post Fed hike amid stable yuan, bond gap
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HE People’s Bank of China (PBOC) will refrain from raising open-market interest rates even if the US Federal Reserve (the Fed) decides to increase borrowing costs next week, according to a Bloomberg survey. More than 80 percent of 32 economists, analysts and traders said the PBOC will maintain its current rates on reverse-repurchase agreements, which guide the cost of funding in financial markets. Four forecast an increase of 10 basis points and one expects a hike of 15 basis points. The official benchmark rate for the broader economy has been on hold since late-2015. Investors anticipate the Fed will boost its benchmark lending rate a quarter-point to a range of 1.25 percent to 1.5 percent when it meets from December 12. The PBOC refrained from raising borrowing costs in June after a Fed hike, a switch from March when it increased money-market costs hours after its US counterpart tightened. Recovering sentiment on the yuan, the biggest yield gap in more than two years between US and
Chinese 10-year sovereign bond yields, and still-moderate inflation offer ample breathing room for policy-makers as 2017 comes to a close. Holding for now helps avoid market volatility, too, as interbank rates have already risen strongly this year, amid a renewed pledge to curb risks and tighten regulation. Still, abstaining from a rate increase fuels risks of yuan depreciation, especially in an environment where a prospective US tax cut may lead to some capital repatriation. Emerging-market portfolio flows turned sharply negative in lateNovember in anticipation of the tax deal that emerged earlier this month, according to analysis by the Institute of International Finance. China’s open-market interest rates are becoming a de facto benchmark, so moving it is “sensitive,” said Shi Lei, chairman of Attractor Adviser Ltd., an advisory group in Shanghai. “China pays more attention to domestic economic fundamentals in terms of monetary policy. There’s no necessity for a hike as inflation won’t be very high next year, and the financial system is tightening,” he added.
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HE Department of Finance (DOF) said headline inflation remains at a comfortable level, averaging only 3.13 percent in the first 10 months of 2017 and actually lower than inflation rate of 3.16 percent the past seven years. Undersecretary Gil S. Beltran, in a report to Finance Secretary Carlos G. Dominguez III, said as the government continues spending for inf rastr ucture under the P8.44-trillion “Build, Build, Build” program, inflation should continue to be at a favorable level owing to the country’s sound macroeconomic fundamentals. “ The consumer price index [CPI] is the most-watched indicator for price movements. From 2010 to 2016, during the period when the economy grew by 6.3 percent annually, CPI inflation averaged 3.16 percent. During the first 10 months of 2017, when the economy grew by 6.7 percent, CPI inflation averaged 3.13 percent, slightly lower than the seven-year average,” said Beltran, who is also the DOF chief economist.
Inflation could be tamed successfully should the country’s production continue to grow and keep up with rising population and growing incomes, according to Beltran. “ T his implies maintaining good m ac roeconom ic f u nd amentals. This means that the government should continue to spend for infrastructure and social services and that the Bangko Sentral ng Pilipinas should maintain a level of money supply appropriate for the goods and services produced by the economy,” he added. To blunt the high and immediate impact of low agricultural production on inflation, Beltran said the government must continue putting up the needed infrastructure for the sector, such
Financial technology to help push Islamic microfinance in Mindanao F I N A NC I A L te c h nolo g y driven Shari’ah-compliant microfinance is key to accelerating financial inclusion in the Autonomous Region in Muslim Mindanao (ARMM), said an executive of Fintq, the financial technology arm of Voyager Innovations. Speaking at the Seventh Global Islamic Microfinance Summit in Istanbul, Turkey, Fintq Managing Director Lito Villanueva said that there is a need to push for an enabling framework for Islamic microfinance in the Philippines in order to break down the barriers in accessing digital finance. “We are not telling the whole story of financial inclusion if Islamic banking and finance are absent in the equation. There is an urgent need to push for necessary legislation, infrastructure support and technology enablement for Islamic microfinance,” said Villanueva, the only Filipino and non-Muslim financial technology (fintech) executive included in the roster of speakers. In t he Phi l ippines around 5.6 percent of the population are Muslims, with a geographic
concentration in the ARMM, composed of five provinces, two cities and 116 municipalities. “ARMM has so much potential given its resource-rich landscape. Combined with its industrious population, the region has huge economic potential. However, from the time it was established in August 1989, ARMM remains the poorest region in the country, with less than 70 percent of the adult population still unbanked and underserved. There are only 20 banks and 28 ATMs [atuomated teller machines] servicing almost 4 million ARMM residents. Not a single bank there is Shari’ah compliant. That’s why there is an opportunity to better serve and enable the communities with Islamic microfinance, enabled by financial technology.” Villanueva said. In line with the situation at ARMM, Villanueva calls on industry players to support the creation of a task force whose duty is to look into establishing a Shiri’ah-compliant Islamic microfinance framework. The task force was proposed to be led by the existing Microfinance NGO
Regulatory Council, which was created by Republic Act 10693, or the Microfinance NGOs Act. The council is chaired by the Securities and Exchange Commission (SEC), together with the Department of Finance, the Department of Social Welfare and Development and the Department of Trade and Industry, and in partnership with the Bangsamoro Transition Commission and the National Commission for Muslim Filipinos. “We support financial-inclusion initiatives, and we look forward to consider proposals from like-minded fintech companies regarding Islamic microfinance in the country. This is something that we are willing to look into,” SEC Chairman Teresita J. Herbosa said. Fintq, together with its partners, have recently launched a national movement called “KasamaK A” to further drive financial inclusion in the countr yside. KasamaK A (loosely translated to mean as financial inclusion) aims to provide greater access to financial services to every Filipino. The initiative is supported
by the Bangko Sentral ng Pilipinas, the SEC and the Insurance Commission. “Deploying Shari’ah-compliant Islamic microfinance, initially in Marawi, would be more meaningful, impactful and sustainable socioeconomic intervention that could help alleviate poverty and promote peace and development in the region,” Villanueva concluded. Fintq is the leader in customer-centric, demand-driven, mobile-first, value-creating and inclusive digital financial innovations through collaboration across strategic markets with award-winning and pioneering platforms, products and services. It is the largest and the only financial-technology business in the country with diverse digital banking and finance portfolio of platforms including lending, security, micro-savings, microinvestments, insurance, disbursements, microcredit and virtual banking, among others. For more information about Fintq and all of its products and services, visit www.fintq.com.
Alvarez says no to anti-consumer coal tax in TRAIN
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PEAKER Pantaleon D. A lvarez on Thursday said the House of Representatives would not allow the inclusion of the coal tax in the package known as the Tax Reform for Acceleration and Inclusion (TR AIN) as it would only increase the price of electricity. The coal tax is among the contentious issues at the bicameral conference committee harmonizing the provisions of the respective versions of the House of Representatives and the Senate. “We definitely will not allow the inclusion of the coal tax in the TR AIN,” Alvarez said in a radio interview on the controversial coal tax. The Senate approved a 3,000 -percent increase in coal
ta xes to be col lected in three tranches until 2020, which means the current P10 excise tax will be raised to P100 in 2018, P200 in 2019 and P300 by 2020. No such tax is included in the House version of the TR AIN. According to Alvarez, the industry players may not protest too much on the proposed tax on coal and urged colleagues in the legislature to “look at this objectively from the point of view of the consumers” because the industry players could simply pass on the added burden to electricity consumers. Alvarez said one does not have to be a rocket scientist to understand that electricity prices would go up if Congress agrees to impose the new tax on coal and that such would create a ripple price-increase
impact on goods and services. “We should look at this from the perspective of consumers. We already have some of the more expensive electricity and certainly some of the most expensive in Asia. Now, we ought to lower the electricity rate and not raise it,” Alvarez said. He ad d e d t he p a s t s e ve r a l months, he and Energy Secretary Alfonso G. Cusi held several meetings to discuss various ways of lowering power rates. With this in mind, the House recently approved on third and final reading House Bill 1616, exempting the system-loss charge component in the sale of electricity by distribution companies and electric cooperatives from the coverage of the value-added tax (VAT). System loss is the part of one’s
electric bill representing the cost of electricity lost during transmission, pilferage and due to technical and administrative inefficiency, which is passed on to the consumers. Under existing laws it is also subject to VAT, which further drives electricity bills up. Alvarez finds it odd that some colleagues support a measure that could only push electricity rates higher. Apart from the expected hike in electricity rates, the coal tax would also hinder the growth of the country’s manufacturing sector. Alvarez also stressed the Senate insertion of the coal tax in the TR AIN runs counter to the constitutional mandate that all revenue measures must originate exclusively from the House of Representatives.
as farm-to-market roads and irrigation and appropriate extension services by the Department of Agriculture. “This implies that there is a need to sustain economic growth and maintain appropriate monetary policy. There are alternative measures of inflation. While CPI reflects the inflation for a basket of commodities that comprise the consumer’s budget, there are other inflation measures that reflect a wider array of goods and services that the whole economy produces and consumes,” he said. He mentioned the GDP deflator, which shows the price movement of all the goods produced and consumed by the economy, including consumer goods, investment goods and government supplied goods and services. T h e 2 0 17 G D P d e f l a t o r shows an inflation rate of 2.1 percent for the third quarter, going down from 2.7 percent in the first quarter and 2.5 percent in the second quarter. “Second, we have the manu fact u r ing sector producers’ price index, which shows the movements of production costs of the manufacturing sector. It shows that the manufacturing sector’s inflation rate has been declining by 3.63 percent annually from 2012 to 2017, implying rising competitiveness for the
sector,” he said. Meanwhile, he added the general wholesale price index is an indicator designed to measure the changes in the price levels of commodities that flow into the wholesale trade intermediaries. Wholesale price refers to the price of commodity transacted in bulk for further resale or processing. It is the sum of the producer price, wholesale trade margin, tax mark-ups and distribution cost of the wholesaler. “Wholesale prices have risen by 1.2 percent annually from 2012 to 2017, but there was a sudden spurt by 4.6 percent in 2017, as petroleum prices began to normalize. Since the sector is involved in transport and distribution, it is susceptible to movements in prices of transport inputs, mainly gasoline and labor,” he said. Beltran added that food inflation mirrors the movement of the overall CPI. He said when the CPI inflation spiked in 2014 at 4.18 percent, food CPI inflation also spiked at its highest peak in a five-year period, posting 7 percent. “It was observed that as food inflation rises, CPI inflation also rises. For the first 10 months of 2017, food inflation averaged 3.8 percent, higher than the 2.1 percent in the same period of 2016,” Beltran said. Rea Cu
UCPB Group continues investing for rural youths
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CPB and its thrift bank subsidiary, UCPB Savings Banks, have donated P11.0 million anew to the scholarship program for children of needy coconut farmers. The donation will help send 200 more children of coconut farmers from various coconut provinces to college and to technical-vocational school next school year 2018-2019. UCPB has been supporting the scholarship program since it was launched 2003. To date, the program has awarded grants to 2,857 children of coconut farmers from 63 coconut provinces, 1,852 of whom took college courses and 1,005 underwent technical-vocational training. The program is being implemented by the UCPB-CIIF Foundation. UCPB, together with United Coconut Planters Life Assurance Co., UCPB General Insurance Co, United Coconut Chemicals Inc. and the CIIF Oil Mills Group, formed the foundation in 1987 to undertake developmental activities primarily in c oconut communities. “Our donation affirms the UCPB Group’s commitment to pursue its social mandate to empower coconut-farming families to improve their living condition,” UCPB President and CEO Higinio Macadaeg Jr. said. Macadaeg added graduates of the program are now providing financial support to their families not only for their household expenses but also for alternative income-generating livelihood projects and the education of their siblings. More than half, or 1,732 of the scholarship recipients, have already graduated, including 125 who completed their college courses with academic distinction. The program has, so far, produced two summa cum laude, nine magna cum laude and 114 cum laude graduates, representing 14 percent of the total college graduates.
Based on the annual monitoring of the status of the scholargraduates, nearly 80 percent are now earning incomes with 7 in every 10 of them already earning enough to be able to provide regular financial support to their families. Apart from inclusive and quality education, UCPB actively supports three other United Nations Sustainable Development Goals, namely health and well-being, sustainable forest management and poverty alleviation. Last month the bank brought medical volunteers of Operation Smile to Davao City operate on children with cleft lip and cleft palate for free. The children’s medical charity organization, with UCPB’s support, has treated 32,000 Filipino children disfigured by oral cleft since 1982. The UCPB-CIIF Reforestation Program has reforested 33.3 hectares of denuded land inside the Upper Marikina watershed area. The site now provides a haven to 65 species of birds, 18 of which are endemic, or found only in the Philippines; six species of mammal; and seven species of amphibians and reptiles, including the rare diminutive forest frog. The UCPB-CIIF Finance and Development Corp., which UCPB formed in 1994, has released P400 million in livelihood loans to coconut farmers as of end of November this year. Over the past 22 years, the finance company has pumped into the rural economy over P8.0 billion in loans directly benefiting 500,000 coconut-farming families.
A10 Friday, December 8, 2017 • Editor: Angel R. Calso
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editorial
Police body cams: Good idea or not?
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uring a press briefing this past week, it was disclosed that Philippine National Police (PNP) chief Director General Ronald “Bato” dela Rosa has ordered the mandatory use of body cameras for policemen conducting antidrug operations. This follows the directive of President Duterte to bring back the PNP to the government’s war on drugs. The issue of requiring law-enforcement officers to wear body cams has become a global issue for the past few years, particularly in light of problems in the United States that apparently point to the police using excessive and unnecessary force in dealing with the public. On first examination, it would appear that requiring police officers to wear body cams is a logical and positive step in controlling what might mildly be called “misbehavior.” Any one of us that have been involved in a minor traffic accident knows that immediately taking lots of pictures of the mishap protects our rights and keeps the story from being distorted. Thus, even requiring “dash cams” in automobiles has been discussed for some time. In the course of normal day-to-day police operations, studies have shown mixed results that favor both using and not using police body cams. The first assumption might be that the police do not want body cams as it might show their improper actions. A study in the United Kingdom, though, showed that the use of body cams is a two-way street in dealing with the public. The study revealed that police equipped with body-worn cameras received 93 percent fewer complaints from the public. The questions then are, were there fewer complaints because the officers wearing body cams acted more professionally or that false complaints could not be made because of the digital proof of proper police actions? Here is where it gets interesting. The researchers found that there was no significant statistical difference between the number of complaints received by officers wearing cameras and those without, as long as the public assumed that all the officers in a district were body cam-equipped. For the police, the researchers theorized that even non-body cam officers acted better because of what was called “contagious accountability.” However, in the US state of Washington, an 18-month study of more than 2,000 police officers found that officers equipped with cameras used force and prompted civilian complaints at about the same rate as those who did not have them. Yet, perhaps the best conclusion came from Chief Peter Newsham of the Metropolitan Police Department in Washington, D.C. “I thought it would have a difference on police and civilian behavior, particularly for officers who might be more inclined to misbehave.” But the most positive effect was that body cam usage increased the public’s trust in the police. Newsham said, “You have to be legitimate and trusted. You can’t underestimate the value these cameras bring to that.” The relationship between the public and the PNP is absolutely one of diminished trust in light of all that has happened in the past year. For that reason alone, requiring PNP and all other officers involved in drug enforcement is crucial and an absolute necessity. Any available option for the PNP to gain the public’s trust must be taken immediately. Since 2005
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James Jimenez
spox
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hen I first joined the Commission on Elections (Comelec) as the assistant director for education and information, there was no officially designated spokesman. By default, it was the director for education and information who took on that role, but for the most part, anyone of sufficient rank was considered to be able to speak for the commission—at least for matters falling within the scope of their responsibilities and functions within the organization. Back then, “speaking for the commission” had a very strict definition. At most, it meant that the director could announce the promulgation of resolutions and, within the four corners of the text, explain what the resolution meant, what it was intended for, and how it was supposed to work. Beyond that, the stock answer was, “let’s ask the chairman or the commissioners.” This reflects what I call the traditional concept of a spokesman: someone who makes announcements and little else. Many spokesmen in government still operate within this framework. For some, such as the spokesman of the Supreme Court, for instance, this is an appropriate model considering the nature of the institution he represents. For other government institutions, however, the argument can be made that both the institution and the public would be better served if the spokesman could do more than just read an announcement.
Take the Comelec as an example. For getting information about formally promulgated resolutions out, spokesmen working under the traditional model worked well enough. However, it did leave a lot of room for improvement in terms of effectively communicating the context of those official utterances. Why did the Comelec do this and not that? How will this or that occurrence affect things? What if nothing goes according to plan? Imagine the frustration when these questions—and many more besides—had to be met with “let’s ask the chairman.” And these were only questions relating to formally promulgated resolutions. While the Comelec does conduct its business through resolutions, in practice, these documents effectively enunciate only top-level policy; then as now, the nuts and bolts of actually carrying them out are typically left to Comelec executives at various levels— from the executive director all the way down to the election officers.
Considering that the broader public interacts with the Comelec almost exclusively at the level of these front-line officers, far below the level of official policy, the practice of enunciating only what the resolutions contained and putting off detailed questions as to how those policies operated in actual practice, caused many information gaps to emerge and be left unaddressed. Unsurprisingly, this paucity of answers resulted in an environment that was characterized by public dissatisfaction with the Comelec. Political players who had no qualms about bolstering their own positions exploited this vulnerability by encouraging speculation and engaging in deliberate misrepresentation, effectively portraying the Comelec as hopelessly corrupt and ineffectual. With the Comelec hobbled by its adamant insistence on letting its resolutions “speak for themselves,” the media often had to file their stories lacking a critical element—the Comelec side. Inevitably, the unbalanced nature of the reportage only contributed to the perpetuation of the Comelec’s unflattering monolithic image. To address the information gaps, minimize the opportunities for speculation and ensure more balanced reportage, it was necessary to break away from the traditional mold of spokesmen and redefine expectations. This was my top priority when I became the director for education and information and, later, when I was officially designated the Comelec spokesman. In order to do that, I looked to spokesmen outside of government and realized that a spokesman didn’t always need to be a mere mouthpiece; that a lot could be achieved by being
the kind of spokesman who actually explained and provided context for their principal’s position, rather than just making announcements. Spokesmen of private corporations and organizations are typically public relations professionals. As a result, their performance of their functions is heavily informed by public communications strategies and tradecraft. In general, this is characterized by an overarching adherence to facts, underpinned by an emphasis on: promoting full comprehension by the public of the whys and wherefores of any action undertaken by an organization; establishing the predictability of the organization’s actions; and striving for the clarity that eliminates “gray areas” where speculation thrives. Factuality, comprehensibility, predictability and clarity became my guiding concepts. In the context of speaking for the Comelec, this meant that as a spokesman I always stuck to the facts, and that I had to take every opportunity to make the public understand the Comelec procedures relevant to the situation at hand; I had to map out the possible outcomes of any given situation, within the bounds of Comelec policy and practice; and I had to be able to draw on a wide range of sources to provide precedents, historical examples and existing Comelec resolutions. Taken all together, these elements amount to a coherent explanation of the Comelec’s actions (or of any organization’s for that matter) in any given instance. And it is to this definition of what a spokesman is—one who articulates the position of his principal—that I’ve gravitated from the very beginning.
Renewed servant-leaders for the new evangelization
Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace
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Rev. Fr. Antonio Cecilio T. Pascual
SERVANT LEADER
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S we open the new liturgical year during the first week of Advent, we also embark into the sixth year of our nineyear spiritual journey for our celebration of the 500th year after the arrival of Christianity in our country in 2021. Let us all take this opportunity to deepen our faith, join in prayers and activities as we heed the call of the Catholic Bishops’ Conference of the Philippines (CBCP) for renewed servant leadership for the new evangelization among the clergy and consecrated persons. In his first pastoral exhortation as the new CBCP president, Davao Archbishop Romulo Valles, DD, called for the integral renewal of the spiritual and moral values, behavior, and characteristics of the clergy and consecrated persons. He also cited the important work the clergy and consecrated persons are undertaking for the advancement of the
Kingdom of God in our society. “Our priests faithfully celebrate the sacraments daily in the busy urban areas and in the distant and lonely barangays. Our men and women religiously administer church institutions, teach catechism and serve in the parishes. They bring joy to the orphanages, hospitals and prisons. Some have started working for
rehabilitation of drug dependents,” Achbishop Valles said. Through these works, we continue to reach out and help those who are in need and seeking for God. As what Archbishop Valles also said “We, as members of His Church, are invited to actualize the Kingdom of God present in our midst. We are called to reach out to those in greatest need, to love and to serve those considered different and far from us.” Recognizing the value of serving other people, we at Radio Veritas also found the inspirational story of San Miguel Corp. (SMC), which had been known for its social advocacy through its “Mga Kwento ng Malasakit.” Throughout the years, SMC has been known for its core value of malasakit or compassion to others, cultivated by the organization in its 127 years of existence in the industry. Through the San Miguel Foundation, it is continuously empowering communities and helping the deprived sectors of our society by providing them with education and means of livelihood. This inspiring generosity as a way of building a “community of compassion” brings us
to work with the company in encouraging, serving and bringing hope to the marginalized poor. Radio Veritas, for its part, is doing its part to help the poor and marginalized in crisis through its public affairs program Good Samaritan that serves as a platform to help and provide public service to people who are in need of legal or spiritual advice, medical, material and financial assistance, and link them to “Good Samaritans.” As we enter the Year of the Clergy and Consecrated Persons, let us continue to support and pray for all “servants to the servants of the Gospel.” May they continue to prosper and encourage others by serving with the values of malasakit and humility.
To know more about Caritas Manila, visit www. caritasmanila.org.ph. For your donations, please call our DonorCare lines 563-9311, 564-0205, 0999-7943455, 0905-4285001 and 0929-8343857. Make it a habit to listen to Radio Veritas 846 in the AM band, or through live streaming at www. veritas846.ph and follow its twitter and instragram accounts @veritasph and YouTube at veritas846.ph. For comments, e-mail veritas846pr@gmail.com.
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The history of money and bitcoin
The vulnerable fruit and the virgin-martyr Tito Genova Valiente
annotations
Alvin Ang
EAGLE WATCH Part One
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itcoin reached $12,581.74 as of December 6, 2017. The incredible and sudden rise in its exchange value has made a lot of people wanting to own one. Before we put in our savings into this, we need to have a clear understanding of what it is and what is its purpose. Investing requires prudence, and its basic rules is summarized as “do not put your money in something that you do not understand.” With this perspective, let us understand what is bitcoin. Bitcoin is a currency that was created in 2009. It was the first of what is now known as a cryptocurrency or digital currency. Unlike national currencies like our peso, cryptocurrencies have no backing of a central bank and there are no physical representations like paper bills and coins. They are created by using high-powered and high-performance computers working together to validate and secure the system allowing for transactions. But why were cryptocurrencies invented? It would be good to look back at the history and purposes of money which is exactly what cryptocurrencies want to be. Consider this, without money, we will be reduced to a barter or exchange economy. For example, a barber who wants to eat at a burger joint needs to find a burgerjoint owner who wants a haircut. What if he cannot find one and vice versa? This is why we have markets where we can buy or sell goods and services using a common medium of exchange called money. Initially, money was represented by perishable items, such as pepper corn and rice. However, since they are perishable, their supply is unstable and makes it difficult to use them to store value for future purchases. Likewise, it is difficult to standardized their unit of measurement. A kilo of rice may be equivalent to one pair of shoes but of what size? These difficulties were solved by the introduction of what is known as precious metals represented by gold and silver, among others. They serve all three needs for money, i.e., a convenient medium of exchange, store of value and stable unit of measurement. However, their weight made it inconvenient to carry and use them. Eventually, the metals were deposited in banks and people buy and sell using a note issued by the bank with claims on the precious metal deposits. People can just get them using the notes issued by the bank. Fast forward, the link to precious metals in deposits were later removed giving rise to what is known as fiat money. Fiat money, or the money we have today, has no material value. The value of the Philippine peso today is what we as a nation believe its value to be. It is invented mainly for efficiency or to remove the costs involved in inconveniences. With fiat money, we can do two things with it—we can use it for transactions and we can use
Bitcoin is a currency that was created in 2009. It was the first of what is now known as a cryptocurrency or digital currency. Unlike national currencies like our peso, cryptocurrencies have no backing of a central bank and there are no physical representations like paper bills and coins. it for precautions or saving for future use. Since different people have different needs for money in different times, there needs to be a coordinated mechanism that is managed centrally. This gave rise to the central bank. The central bank determines how much fiat money to print. Unlike precious metals which have a finite amount to be mined, fiat money in circulation is determined by the central bank. It prints more if it perceives there is need for more money in the system or holds printing if not. Too much money in the system could lead to inflation or high prices. In our recent history, the interconnectivity of global financial markets has led to a number of banking crises due to over or undervaluation of fiat money. Bitcoin came out in 2009, just after the 2008 global financial crisis. It appears to serve as an alternative to the existing financial system. It satisfies the requirement for money, i.e., store of value, unit of measurement and medium of exchange (although not yet at full level). At present, it is limited with its transactional use, but heavy in its precautionary use. It is designed to be like precious metals, i.e., having limited availability over time. This way, its value is not based on what central banks decide to print but intrinsically. Bitcoins are mined electronically similar to gold and silver. The total number of bitcoins will be about 21 million by the year 2040, today it is about 13 million. This seems to be the driver of its current exchange value—people anticipate that since its availability is capped in the future, it is anticipated to increase over time. This basic comparison with money gives us a perspective of what bitcoin is. It’s complicated and technology-dependent process requires more understanding as to its future acceptability. For it to function as money, all people must believe that it is one. To be continued
Friday, December 8, 2017 A11
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here was a town in Iloilo called “Katmon” before the Spaniards came. Now, the town is listed as “Santa Barbara” named after the virgin-martyr.
We were looking for the Katmon tree and its fruits when we visited, one afternoon last week, the town of Santa Barbara. Towns and places are named after objects or resources plentiful in the place. Histories tell us that there were, indeed, numerous Katmon trees in the area. Colonization works on a strange, unknowable logic. When patron saints were selected by the colonizing faith, there was always a reason for such act. The main justification was the inculcation of lessons about what the new religion offered. San Isidro, for example, was an apt symbol of the values of hard work and spirituality. The agricultural economy rediscovered by the colonizers inspired the employment of a sainted farm worker. How was the virgin-martyr selected for the town? Well, purity and virginity were two ideals that the Christians from a very uptight European country, perhaps, wanted to teach our women. Books like Barangay of William Henry Scott would make a nonhistorian blush at the findings that women, and women of the 16th-century “Philippines,” were conversant about sex gadgets. This, however, is a conjecture. One afternoon last week, Raymund Salao drove me to Santa Barbara. There we met with Dennis Hubad. Raymund and Dennis are two of Iloilo’s prominent filmmakers. But, Santa Barbara holds a historical prominence, as well. In a country where historical records reek of the smell and perspective of Manila, we
are always fastidious about who did something first after Manila. Santa Barbara holds the record of being the first town that raised the Philippine flag outside Manila, in Luzon. For a small town, the church looms over a park, with the convent stretching away from its façade. A local museum under the auspice of the National Historical Commission of the Philippines is across from the religious center. This is exciting. Churches and historical museums swing like a perfect jazz music—the rhythms of the church and the museum run as counterpoint to each other. Some historical accounts, it is true, are captive listeners to the a rc h ives de pos ited in churches. The brave national museumshould be always ready to confront institutionalized religion for every anecdote about conversion of the natives; there should be the luxuriously trenchant narratives about millenarian movements and cargo cults. For every trumpet that shall sound for the second coming of the Messiah, if we may paraphrase Peter Worsley, are the bountiful harvest of rebels and heroes who become anointed as saints and divinities.
It must be said that, when it comes to colonial history, the conquistadores never had the monopoly of the Holy Spirit. As with discussions about believing, we were fated that Saturday afternoon to meet the director of the Santa Barbara Museum. The door to the museum was open, prompting us to climb the stairs. In the hallway a man informed us the museum was closed and people were there on overtime to prepare for the fiesta of the town. The man also said he would check with the director whether we could go in. We could. At the staircase landing was Arlene Magallon, the director who, indeed, cordially welcomed us. What is the plot about the virgin-martyr without the t hou g ht of t he sour
fruit, Katmon? Arlene related to us a creative program she hatched and that was to plant once more Katmon trees all over the town. As practically, there were no more Katmon trees in the town, Arlene got some saplings from nurseries in Manila. The first time she planted them, most of the small
Bloomberg View
C
alling it a “recognition of reality” and “the right thing to do,” President Donald J. Trump announced on Wednesday that the United States was recognizing Jerusalem as Israel’s capital, and that the American Embassy will be moved from Tel Aviv to the contested city. The announcement leaves many questions, two of which are primary. The first is whether violence will ensue. The Palestinians and Turks are making threats, and Israel’s security establishment is said to be on alert. But many Israelis are dismissing the dangers of what they call “Trumpocalypse.” Unlike hypothetical steps, such as assigning the Palestinians a smaller state than they
demand or ending US support for a twostate solution, recognizing Jerusalem as Israel’s capital changes nothing on the ground. Many Israelis and even Palestinians, thus doubt that, grandstanding aside, the Palestinians would risk much in response to a statement that merely acknowledges what the world has long known to be true. The other major question is, “Why now?” Theories abound, of course, but the most obvious explanation is that Trump is seeking both a diversion from his growing problems at home and a bone to throw to his evangelical Christian and Orthodox Jewish base before his support there erodes. Trump’s core supporters will likely stick by him through thick and thin, but there have to be some religious voters who find the president’s open endorsement of Alabama Senate candidate Roy Moore—widely believed to have forced underage women into
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What happened to the 2,000 missing containers at BOC? Dr. Jesus Lim Arranza Continued from A1
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alled transshipment, the procedure allows importers or brokers to file the import entries and pay for the duties of their shipment at its final port of destination, provided that their shipment must be bonded and/or guarded during transport from its port of unloading to its final port of destination. And while transshipment has been stopped at the BOC since the discovery of the large-scale smuggling scheme, which could have caused hundreds of millions of pesos in foregone revenues for the government, the incident has raised a lot of questions, though. How could such a large-scale smuggling scheme skip the watchful
eyes of Customs officials? And, how long had this smuggling scheme been going on at the BOC? Luckily for the Filipino people, and, of course, the government, I learned from my sources at the BOC that in an alleged March 2012 report of a certain Customs official, Jeffrey Patawaran , a person personally known to me, was named as one of
those who helped in uncovering the 2,000 missing containers. The report allegedly said Patawaran, who was the director for administration of the defunct Presidential Anti-Smuggling Group, provided the documents that confirmed the missing container vans when he was able to secure copies of some import entries for the said mysterious importations. Otherwise, the 2,000 missing container vans issue at the BOC could have gone to the dustbin, as nobody from the Bureau of Customs could provide any import entry for the 2,000 missing containers. Was the disappearance of the 2,000 containers a manipulation of a well entrenched smuggling syndicate involving BOC old hands and importers? The case of the 2,000 missing containers at the BOC must have its final closure, if only to send the message that the government is serious in its anti-smuggling campaign. But most of all, the government must recognize and appreciate the efforts of people like Jeffrey Patawaran
Trump is clear on Jerusalem, even if his motives are not By Daniel Gordis
trees did not survive. She sourced more young trees and planted them in that town. In the museum, Arlene programmed a revisiting of those young men who died during martial law. They were also martyrs and, if an obscure woman when paganism was an outstanding category, the men and woman who died for freedom and human rights were as much martyrs without the anguish of purity. In the church, under the convent, stood the patroness of the town. She is clad in blue and bright pink. Was she responsible for the disappearance of the Katmon? My cursory research about this tree and its fruit, which was part of my childhood, yielded many information. Scientifically labeled as Dililla Philipinensis, the tree and its fruit as supposedly source of potency that can help one be cured of cough and other maladies. The bark and the sepals of the fruit are potions, and its roots are poison. The juice extracted from the fruit can address hyper—and hypoglycemia, the bane of diabetic with sugar count that rise and go down without reason. The trees have not made a comeback in the town of Katmon. With that in mind, we cannot yet rally a return to the ancient name of the town. Outside the parish office, a miniature version of the martyr-saints sell for some P60. The colonizer wins over the subaltern, at this point. And yet a question remains: Is the virgin-martyr more miraculous than the vulnerable, sour fruit of Katmon?
sexual encounters—distasteful to say the least. The Russia investigation looms, as do increasing questions about whether Trump, his family or his innermost circle may be legally vulnerable. It hasn’t been a good period for the president; if Trump was looking for a diversion, he seems to have landed on an effective one. There is one much less cynical, although unlikely, possibility that deserves mention. Trump has long said he will forge a deal between Israelis and Palestinians, and rumors on the street are that the “key principles” of his team’s agreement are emerging. Accounts vary. The Palestinians would get a state, though the 1967 lines would not be its borders. According to some, the territory they get would not be contiguous. That would amount to substantially less than the Palestinians demand and far more than Israel’s right flank intends to give
them. If the administration is serious about such a deal, Trump needs to buy the allegiance of both sides. The capital announcement is a prize that Prime Minister Benjamin Netanyahu (weakened by corruption scandals and in no position to push back) can use to assuage his right flank. At the same time, Trump may have told Palestinian authority President Mahmoud Abbas (who is 82 and running out of time) that no one will object if the Palestinians protest or burn flags, but serious violence will not be tolerated. If Abbas wants his state, he may have heard, he had better make sure to keep the response to Trump’s announcement muted. Netanyahu, in return, may have been warned that, in return for his prize, he will be expected to deliver support for the plan Trump’s team plans to proffer. If anyone can deliver the Israeli right, it
is Netanyahu, likely the most-skilled political manipulator the country has had as prime minister. With his political life possibly nearing its end and with little to show for his years in office, Netanyahu would like a deal like this to ensure his place in history. How likely is this scenario? It’s hard to say. A careful plan in which the Trump administration moves slowly and stays on script would hardly be characteristic of his modus operandi so far. But it’s not entirely out of the question. Trump, not surprisingly, is taking heat from all corners, including Palestinians, Iranian President Hassan Rouhani, United Kingdom Prime Minister Theresa May, Christian leaders in Israel and even the liberal American Jewish community. Yet, even if he was motivated primarily by his own selfish needs, Trump is right—he did the right thing. For decades, the Western world has
who, mindless of the risks that come with his exposure of the smuggling scheme, helped in uncovering the 2,000 missing containers and its subsequent full-blown Senate inquiry. We need to encourage and motivate more people to actively engage in the campaign against smuggling. And we at the Federation of Philippine Industries, where I sit as its chairman, as strong advocates against smuggling and illicit trade, we are willing to cooperate and coordinate with other groups or individuals in the campaign against smuggling. Like the recent Senate inquiry on the 600 kilos of shabu worth over P6 billion that slipped the gates of the BOC, the 2,000 missing containers also had tremendous impact on the nation’s economy. And should Congress want to take a second look at the missing containers, perhaps, I can convince Patawaran to step forward again, if only to shed light on the 2,000 missing containers at the BOC.
allowed fear of Palestinian terrorism (or Palestinians backing out of negotiations) to silence claims that everyone knows to be true. Such capitulation serves no one. It doesn’t serve the West, for it renders even the US impotent in the face of Palestinian threat. It doesn’t help Israel, which wants the world to acknowledge that its capital, being near the seat of King David’s kingdom and the location of the two Temples, symbolizes with utter clarity that the Jews have returned home. And it doesn’t serve the Palestinians, who through the use of threat, have immobilized the West and put off the serious deliberations they will have to undertake if they are ever to get the state they want. Whether the president has the focus, skill and interest in making this move the beginning of a positive and far-reaching process, though, remains to be seen.