BMReports Shorter working hours seen to boost Pinoys’ productivity By Elijah Felice E. Rosales
S
OME say short and sweet is a pleasant experience. But can that apply to working hours Take the case of Daniel de la Cruz (not his real name), an employee of a contact-center company in Ortigas, Mandaluyong, who was assigned in the graveyard shift. De la Cruz had to commute from Muntinlupa City to his workplace before midnight strikes, making his way northbound when most workers are heading southbound to return home. De la Cruz said he had enjoyed his work as a call-center agent during the first few months, given his nocturnal body clock he
This file photo shows people commemorating Labor Day on May 1, 2016, at the historic park named after revolutionary leader Andres Bonifacio. Filipino workers contesting labor issues have been governed by several regulations, notably the Herrera law. ROY DOMINGO
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Part One
Exhaustion
HOWEVER, de la Cruz’s body failed his expectations. After six months of working in the graveyard shift, he soon developed a sleeping disorder, which later triggered anxiety and depression. “After six months yata iyon, biglang bumagsak ang katawan ko. Hindi na ako makatulog kahit sa umaga, tapos Continued on A2
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A broader look at today’s business
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Monday, December 11, 2017 Vol. 13 No. 61
Lawmakers move closer to finalizing TRAIN bill
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By Recto Mercene @rectomercene & Jovee Marie N. dela Cruz @joveemarie
he leadership of the House of Representatives last Sunday expressed confidence that the Tax Reform for Acceleration and Inclusion (TRAIN) bill will be finalized and enacted before Congress goes on a Christmas break this week.
CUA: “We hope to finish the taxreform bill and have a final bicameral committee version of the measure on Monday.”
M aj or it y L e a d e r R o d ol fo C. Fariñas Sr. of the First District of Ilocos Norte and House Continued on A12
Banks’ property exposure hit P1.8T in Sept By Bianca Cuaresma @BcuaresmaBM
T MARAWI MOSQUE This file photo shows a mosque in Marawi before the city was attacked by Islamic State of Iraq and Syria-inspired Maute Group. Related story on A12. GEORGE TAPAN
Isuzu to roll out eco-jeeps in January By Catherine N. Pillas @c_pillas29
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developed during his college days. “Akala ko noong una, okay ako na magtrabaho sa gabi kasi nga mas gising talaga ako kapag gabi [At first, I thought it was okay for me to work at night because I am more active at night],” de la Cruz shared.
suzu Philippines Corp. (IPC) will pilot test a prototype of its modern, ecojeepneys in select Metro Manila routes starting January next year, according to a company official. In a recent interview with reporters, Isuzu Marketing Division Head Joseph Bautista said commuters can expect to see Isuzu’s modern jeepneys in select Metro Manila areas. “What will happen in January is the jeepneys will be launched in pilot areas. Any business needs review points in terms of performance, profitability. So, after six months, we may have to review what we have to change. We have to perfect it first before a full implementation, but definitely we’re joining the Eco-PUV [public-utility vehicle]
Program,” Bautista said. The company official said the Department of Transportation’s ongoing route rationalization, plus the six-month test run, will determine the extent of IPC’s involvement in the program. “We can’t say yet the number of units we’ll supply, because the replacement of the 250,000 old jeepneys won’t be oneto-one. A certain route now, say, has 500 jeeps servicing it; it’ll probably be cut down to 300 or so,” Bautista said. IPC intends to focus on the class 2 and 3 vehicles, as specified in the Bureau of Product Standards’s guidelines for the eco-PUV. Under the Board of Investments (BOI) Eco-PUV Program, vehicle body makers like Centro and Almazora, and platform suppliers, such as Isuzu, are eligible for incentives, for the localization of vehicle parts. Isuzu will be using Isuzu’s M-series
PESO exchange rates n US 50.7410
platform—a 4.5-ton vehicle equipped with a Euro 4-compliant engine. Complying with European standards, just like the move to comply with Euro 4-fuel compatibility, is seen as the Philippines’s attempt to enhance its environmental standards. The eco-PUV of the BOI will be similar to the Comprehensive Automotive Resurgence Strategy program, according to Bautista. He said, however, that the support of the BOI will be in the form of fixed investment support. “The BOI is probably thinking of giving out incentives to reduce logistics cost. Like, if we invest a certain amount in tooling, the government can support the tooling costs, but we have to show proof of investment first before they give the incentives,” he said. IPC is expected to achieve its sales target of 32,000 units by end-2017. The car company sold 28,000 units last year.
he banks’real-estate exposure—essentially real estate loans and realestate investments—continued to rise in the third quarter despite stricter monitoring from the Bangko Sentral ng Pilipinas (BSP). Data from the Central Bank showed the banks’ total real-estate loans aggregated P1.8 trillion as of end-September. This represented a steady rise from the previous quarter’s P1.23-trillion exposure in real estate. Lender loans and investments to the real-estate sector both rose during the quarter, with real-estate loans still comprising the bulk of the banks’ exposure to the property sector. Realestate loans hit P1.7 trillion in September, up from only P1.64 trillion the previous quarter. Investments to the real-estate sector, meanwhile, accounted for the remaining P90.5 billion, up from P85.76 billion in the previous quarter. Warnings have been issued earlier, particularly from the International Monetary Fund, on the high level of loans focused on a particular sector. The BSP, however, has since allayed fears of a bubble forming in the realestate sector, saying everything was appropriately kept in check. The Central Bank increased its monitoring of the banks’ exposure to real estate to protect the lending industry from any unwarranted price expansion in this particular asset class. Also earlier, the BSP conducted socalled stress tests on banks and launched the residential real-estate price index to show the rate at which property prices in the country was rising.
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‘Sustaining the lead, beating the heat’ BSP Deputy Governor Diwa C. Guinigundo
A case of rational exuberance
E
xactly 21 years ago, in a speech delivered on December 5, 1996, then-US Federal Reserve Chairman Allan Greenspan used the term “irrational exuberance” to warn investors that the spectacular rally in stock prices during the period could potentially signal that global stock markets were overheating. After these words were spoken, stock markets all over the world dropped simultaneously and, yes, precipitously. Greenspan became some kind of a prophet, his speech an explicit warning about market overheating. Nowadays, the Philippine economy has been subject to a similar concern. We are all aware that the Philippine economy has been growing at an incredible pace. The recently released economic data showed that the country’s GDP grew by 6.9 percent in the third quarter of 2017, bringing the economy to 18 years of consecutive and uninterrupted growth. This growth momentum has been accompanied by a substantial rise in credit growth. As a consequence, concerns were expressed that the Philippine economy is going “too hot” and may now be displaying signs of overheating. In particular, the International Monetary Fund’s (IMF) Article IV Consultation with the Philippines flagged that the “combination of high credit growth, buoyant private investment and fiscal expansion without tax reform could lead to an overheating of the economy,” even as the country’s overall economic outlook remained favorable in the medium term.1
Is the Philippine economy getting too much of a good thing? Unlike Greenspan’s speech, though, we argue that our economy has entered a period of “rational exuberance” rather than an irrational one. In my view, the Philippines’s growth story is that of a mature structural expansion of economic activity, profits and employment that probably has many more years to run. 1
International Monetary Fund, Staff Report for the 2017 Article IV Consultation in the Philippines, October 10 ,2017 (release date: November 6, 2017); de Vera, B. “IMF warns PH economy may overheat,” www.inquirer.net, November 8, 2017; Ocampo, J., ”IMF warns Philippine economy could overheat”, www.philstar.com, August 8, 2017; Lopez, Melissa Luz, ”IMF flags sources of domestic risk,” www. bworldonline.com, November 8, 2017.
Getting the terms right
But first, how does one appreciate overheating? Overheating occurs when an economy’s capacity to supply goods and services is not able to keep up with demand. During an economic boom, overheating materializes when there are high levels of aggregate demand (for consumption, investments, government expenditures and net exports) that exceeds what suppliers can produce on a long-term basis. To meet excess demand, producers overemploy their resources, i.e., by extending working hours or using machineries beyond their capacity. If demand is not met, prices adjust upwards in the short run until such time that supply matches demand. This will hardly become sustainable if producers’ capacity (and the economy’s capacity as a whole) to produce does not expand and results in, among others, machine breakdown or workers getting sick. This condition ultimately slows down the entire production process and may, at the same time, accelerate both inflation and inflation expectations.2 In short overheating is seen when output rises unreasonably above its potential level, followed by unanticipated acceleration in inflation due to prolonged high growth rate. The rapid rise in inflation diminishes consumers’ purchasing power. This may, subsequently and abruptly sink confidence, as both consumers and businesses realize the relative mismatch in production and demand. This is certainly not the case for the Philippines.
Everything is relative First, credit expansion in the country is accompanied by solid economic growth. While bank loans have been expanding at double-digit levels, the rise in lending activity has been based on solid demand for loans across key economic sectors and households. In other words, there is sustained demand for loans because the economy continues to grow. 2
Jahan S. and A.S. Mahmud, “What is output gap?” IMF Finance and Development, September 2013 Continued on A4
n japan 0.4487 n UK 68.3938 n HK 6.4999 n CHINA 7.6717 n singapore 37.5637 n australia 38.1166 n EU 59.7577 n SAUDI arabia 13.5302
Source: BSP (8 December 2017 )
A2 Monday, December 11, 2017
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Shorter working hours seen to boost Pinoys’ productivity Continued from A1
palagi akong umuuwing parang patay na ang katawan,[I think that was after six months when my body began to malfunction. I cannot even sleep in the morning, and I usually return home deadbeat tired],” de la Cruz said. “My mother said it might be due to exhaustion and lack of sleep. In-advise niya akong huminto na muna sa trabaho dahil hindi na talaga ako makatulog nang maayos at sirang-sira na iyong body clock ko [She advised me to resign from work because I can no longer sleep properly and my body clock is all screwed up],” he added.
Wish
AFTER eight months in the contact-center industry, de la Cruz resigned from work to try to
restore his health. He said he was also told by a doctor to address his sleeping disorder by drinking medicine and balancing his worklife schedule. De la Cruz said everything would have been better for him if he was not working from 12 midnight to 9 a.m.—eight hours at desk and a one-hour break. He added the night differential, or the additional pay for working at night, was so tempting he did not consider his health and took the shift just for the money. “Definitely,” he said, when asked if a shorter working time would have helped him maintain his health and retain his job. “Mas maikling oras sa trabaho sana, mas maraming oras para magpahinga [Shorter hours at work would mean more time to rest],” de la Cruz said.
Advocacy
DE LA Cruz is one of the many call-center agents that brought Rene E. Ofreneo, labor and industrial relations professor at the University of the Philippines, to the halls of Congress to fight for reduced working hours in the country. For more than a decade, Ofreneo has been calling on lawmakers to find a way to give workers more time not only for rest, but also for recreation, which he said is crucial to the well-being of any person. “I have long been advocating shorter hours, from eight to seven or even six for call center/BPO [business-process outsourcing] workers working at night,” Ofreneo told the BusinessMirror. He had presented his case before the House of Representatives a long time ago,
only to fall on deaf ears. The labor professor argued working at night is a whole different thing from working at day. He said it is unusual for a person to stay awake all night to earn money for the day.
Rationale
FOR Ofreneo, the difference between working at day and during nights is reason enough to trim working hours in the contact-center industry. He said the health of callcenter agents must be a top priority as, like any worker, this is the horsepower of their labor. “In call centers, business-process outsourcing and hazardous industries, there may be a case for shortening work hours,” Ofreneo added. Aside from taking care of the workers’ health, the labor professor also said shorter working
hours can mean less turnover at work, which is beneficial to employers. Ofreneo added a wellrested worker is more efficient and motivated to deliver. And this is significant in increasing the capacity rate of the labor force, he said. However, Ofreneo admitted further studies must be conducted in determining how many hours a Filipino should work in a day. The study should take into account other factors, such as the traffic gridlock in major urban centers and disparity of wages between regions. He added it will be better if working hours is slashed at the same time new technology is used at work, so as to “reduce working hours when new technology is adopted or introduced [is] okay.” To be continued
Membership of PHL, 4 other countries to boost gains from TPP
to join the TPP after the Trump administration, and the Philippines is not part of the agreement, it will become more difficult for the country to join. Manzano said joining the TPP now may be “less taxing” on the part of the Philippines, especially where trade concessions are con-
cerned. He said under the TPP proposals, when the US has not yet withdrawn from the trade pact, some proposed provisions were difficult to comply with. He noted that some of the TPP’s initial provisions required the Philippines, to change the 1987 Constitution. This, he added, will
require not only strong political will but also a significant amount of time. However, National Economic and Development Authority (Neda) Undersecretary for Policy and Planning Rosemarie G. Edillon said the TPP is currently not being discussed at the Committee on Tariff and Re-
lated Matters (CTRM). The CTRM advises President Duterte and the Neda Board on tariff and related matters and on the effects on the country of various international developments; coordinates agency positions and recommends national positions for international economic nego-
Continued from a12
tiations; and recommends to the President a continuous rationalization program for the country’s tariff structure. Edillon added the CTRM does not consider the TPP a priority unlike the RCEP, which is aimed at streamlining the list of FTAs in the region.
Lawmakers. . . Continued from A12
the TRAIN bill. Torres, who now heads the TUCP, and former Agriculture Secretary Leonardo Montemayor of the Federation of Free Farmers (FFF), joined the Philippine Tobacco Growers Association in airing serious concerns over the backlash of the plan to raise tobacco excise tax anew. They said this will result in a “significant” drop in crop production, reduction of farmlands planted with tobacco and loss of jobs following the “yearly exorbitant hike” in tobacco tax since 2013. The concerned groups conveyed their appeals in separate letters to the Senate Ways and Means Committee chairman, Angara, citing dire prospects from any drastic increase that would be “damaging to the economic situation” of both the tobacco farming and labor sectors. Citing data from data from the National Tobacco Administration (NTA), Torres said that in 2015 alone, the number of workers in the tobacco industry was reduced by 9,232. “Another related NTA report shows that there was also a decline in the area of the land planted with tobacco from 38,264 hectares in 2014 to only 32,761 hectares in 2015, or more than 5,500 hectares abandoned,” he added. FFF, headed by Montemayor, noted that almost 1,000 fulltime positions in the manufacturing sector were lost since the enactment of the “sin” tax law of 2012, or Republic Act 10351. He noted that several hundred workers will lose their jobs follow ing the announcement of Br it ish A mer ican Tobacco in November that it will close its operations in the Philippines.
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PHL hosting of 2023 Fiba World Cup excites Palace By Elijah Felice E. Rosales @alyasjah
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alacañang last Sund ay l auded M a n i l a’s emergence as the host of the 2023 International Basketball Federation (Fiba) World Cup, saying it is an opportunity for the country to spur tourism and businesses, all the while showing the country’s love for the sport. In a statement, Presidential Spokesman Harry L. Roque Jr. said the government is thankful to Manny V. Pangilinan and the Samahang Basketbol ng Pilipinas for their effort to bring the Fiba World Cup to the country. “The Palace is pleased to announce that the Philippines, together with Indonesia and Japan, will be hosting the 2023 Fiba World Cup. We thank everyone for their tireless dedication and hard work to make this hosting possible,” Roque said. He added Manila hosting the 2023 edition of the basketball world cup will be an opportune time to showcase the Filipinos’ love for the sport. “It will be a great opportunity for a basketball-loving country like the Philippines to
show to the world our love for the sport and our unity as a people,” Roque added. “Together, let us make the 2023 Fiba World Cup in the Philippines a great success,” he added. On the other hand, Presidential Communications Secretary Martin M. Andanar branded Manila’s hosting of the Fiba World Cup as “the country’s reemergence and rising prominence in the world of international sports,” noting the last time Fiba was held here was in 1978. “The 2023 World Cup is slated for Manila, Okinawa and Jakarta, with the group stages to be played in five venues. We can expect this to spur tourism even further and provide added stimulus for businesses, as well as investments,” Andanar said. “We laud the initiative, hard work and commitment of the Samahang Basketbol ng Pilipinas and Mr. Manny V. Pangilinan in championing the country in securing the coveted games. We are looking forward to #PlayLouderIn2023,” he added. #PlayLouderIn2023 is the official hashtag of Manila’s bid to become host of the basketball world cup.
Editor: Vittorio V. Vitug • Monday, December 11, 2017 A3
PNP to thwart NPA attempts to expand terrorist activities
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By Rene Acosta
@reneacostaBM
he Philippine National Police (PNP) is beefing up its internal security operations by intensifying its intelligence works against the New People’s Army (NPA), which has threatened to carry more attacks against the government after President Duterte declared it as a terrorist group, along with its political arm, the Communist Party of the Philippines (CPP).
PNP Spokesman Chief Supt. Dionardo Carlos said last Sunday the intensified intelligence operations is part of the police’s proactive efforts
in thwarting attempts by the rebels to expand their “terrorist activities” in the countr yside. The President, through Presidential Proclamation 374, has
declared the NPA and the CPP as terrorist organizations. Carlos said the PNP is prepared to address the threats posed by the NPA against “Communities, industries, private businesses and government installations.” He said the PNP continues to maintain tactical capability through its national, regional and provincial maneuver forces to respond to contingencies arising from the activities of the CPP and the NPA. This was the case, Carlos cited, when PNP units successfully repulsed two separate hostilities recently staged by the rebels in Labo, Camarines Norte and Binuangan, Misamis Oriental. The PNP Spokesman warned that persons or entities providing financial and material support to the two groups can be held liable for serious violation of law either as conspirators, accomplices or accessories to terrorism. Along with the intelligence operations, the PNP has reminded all of
its units and offices of its standing order to sustain and beef up their law-enforcement and security operations against the rebels and other threat groups. “Expect possible ambushes and attacks to be launched by the NPA. Preventive and prophylactic combat patrols in coordination with the AFP should be launched in addition to target hardening of all camps and vital installations,” the order stated. “Offense is always better than defense…emphasize alertness, especially during administrative transport of personnel and others. Conduct social investigation not only for intelligence net work i ng but to est abl i sh rapport. A ll personnel should know the community they are in,” it added. The order, according to Carlos, is regularly reiterated to police offices and units on the ground and it has been reemphasized following the listing of the NPA and the CPP as terrorist groups.
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A4 Monday, December 11, 2017 • Editors: Vittorio V. Vitug and Max V. de Leon
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Senate probers eye 3 priorities in dengue-mess inquiry
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By Butch Fernandez
@butchfBM
he Senate inquiry into the controversial dengue vaccine for which the government realigned P3.5 billion in late-2015 will have at least three priorities, according to the chairman of the Blue Ribbon—one of two panels conducting the hearing on Monday. First, Sen. Richard J. Gordon said, is the “welfare of the so-called zeronegative” children, or those who had no prior exposure to dengue when they received their first dose in 2016.
Sanofi Pasteur, manufacturer of the vaccine Dengvaxia, had recently created a worldw ide scare when it disclosed to French regulators that further assess-
ment of its clinical studies had shown that while Dengvaxia had effectively prevented new infections among those who had prior bouts with dengue, the ones who never had infections when they were vaccinated are now at risk of “serious disease.” Gordon said he hoped the inquiry would right away produce timely, effective interventions by health authorities to identify and safeguard the schoolchildren who fall in the class of zero negative. Meaning, they are closely monitored and quickly treated and financially supported if they fall ill. The second priority of the inquiry, which Gordon’s panel will hold jointly with the Committee on Health chaired by Sen. Joseph Vic-
tor Ejercito, would be to trace “how we got to this [mess],” Gordon said. He indicated that he would draw attention to the timeline he produced from an earlier inquiry he called right, in the thick of the then-Aquino administration’s efforts to fasttrack the dengue-vaccine program, as this would show the red flags in terms of timing and accountability. He lamented how “we were ignored then because Sanofi was advertising strongly on radio, TV... until they were ordered to stop.” He said many people called him out also for saying that rushing an unproven vaccine without awaiting final advice from global disease experts was tantamount to making “guinea pigs of Filipinos.” Gordon temporarily shelved the
inquiry, as it was just weeks before the May 9, 2016, elections, but did not close it. A third priority of the joint Senate inquiry this time around would be, according to Gordon, finding out what Dr. Paulyn Jean B. Ubial—the Duterte-era health secretary whom Congress rejected at confirmation hearings—knew. He recalled that “she was reluctant” to talk about the vaccination program when her confirmation was pending, and word had gotten to them that she was being pressured by some House of Representatives members who were close to her predecessor, Dr. Janette L. Garin. Garin, whose sister Sharon holds the powerful post of deputy speaker, was at the center of the Aquino
‘Sustaining the lead, beating the heat’ continued from a1
Outstanding bank loans: Growth and trend
One does not, however, have to take loan growth numbers at face value (registered year-on-year at 21.1 percent in September 2017).3 Credit can be better assessed relative to the size of an economy (as indicated by the level of GDP), 4 resulting in a metric called creditto-GDP ratio. This credit-to-GDP measure may be evaluated relative to its gap or difference over its long-term trend performance. This gap relative to its long-run trend performance indicates that credit expansion has been within statistically desirable limits.5 3 This bank lending growth, in turn, leads to around 14.5-percent domestic liquidity (or M3) growth (year-on-year [YoY]) in September 2017. 4 Depending on the size of the economy, credit growth may need to be faster or slower. Small developing economies may aptly experience higher credit growth as creditors meet the requirements of faster business expansion and
consumers’ or households’ greater access to financial services. 5Based on the methodology of Drehmann, M., Borio, C., Gambacorta, L. (2010), “Countercyclical Capital Buffers: Exploring Options.” BIS Working Paper 317. Credit refers to domestic credit to the private sector. The credit gap measures (in percentage points) the deviation of the private credit-to-GDP ratio from trend. The BIS suggests a critical thresholds of 2.0 to 6.0 percent. Meanwhile, using the International Monetary Fund’s (IMF) methodology of assessing whether credit expansion exceeds the country’s average credit fluctuations also indicate that current credit growth is (1) way below the 23.5 percent threshold; and (2) well around the estimated trend of 16.9 percent (April 2004 issue of the IMF’s World Economic Outlook; see also Dell’Ariccia et al. (2012), "Policies for Macrofinancial Stability; How to Deal with Credit Booms," IMF Staff Discussion Notes 12/06, International Monetary Fund.
Private-sector credit
Numbers speak louder than words
Second, our set of monitoring tools and surveillance systems indicates that there is very little evidence of overheating. Based on the results of the Q3 2017 Senior Loan Officers’ Survey (SLO), universal and commercial banks (UKBs) have continued to maintain their sound credit standards for corporate and consumer loans. This reflects banks’ prudent lending practices even in the face of sustained strong loan demand from enterprises and households. Moreover, potential overheating may also be seen from the lens of the real-property sector. But the trend in this sector shows general alignment with its fundamental values. The Residential Real Estate Price Index, a measure in assessing the trends in housing prices, has been on a general decline in 2017, which reflects an easing in the buildup of price pressures in the residential property.6
Sustaining the lead with solid footing Third, and perhaps the most important argument, the country’s macroeconomic fundamentals have remained solid and robust for the past 18 years. This growth story of 75 consecutive quarters demonstrates how income and economic growth does not have to come as magic.
Source: BSP and other central bank web sites IT is not surprising that domestic credit performance (whether in terms of credit or credit-to-GDP ratio) shows that, despite its already rapid expansion, credit has room to accommodate further growth. The Philippine credit-to-GDP ratio (of
63.6 percent) remains one of the lowest in the region, second only to Indonesia’s (40.6 percent). And the Philippines’s total output continues to grow and grow according to its increasing potential. More on this in the third and fourth arguments.
6 Residential real-estate prices went down by 4.6 percent YoY in Q2 2017, a reversal from the 1.2-percent and 11.6-percent growth registered in first quarter 2017 and second quarter 2016, respectively. There could be a clear case of overheating if such growth comes with surging price movements. But in the case of the Philippines, growth has been accompanied by a benign inflation environment. Inflation (headline, core and alternative measures) remains close to the midpoint of target range in 2017, while inflation projections show annual average inf lation settling within the target range
of 3.0 percent ± 1.0 percentage until 20197. It is also important to emphasize that while we see risks to inflation 8, such as the impact of the impending tax increase, both the outlook and expectations continue to be well-anchored to the inflation target over the policy horizon.9 T hese m ac roeconom ic i mprovements have not been lost to third-party analysts, including credit-rating agencies, which have upgraded the Philippines to investment grade on account of such achievement. The government is committed to continue strengthening institutions, promoting greater transparency and enhancing competitiveness.10 7The year-to-date actual inflation of 3.2 percent is well within the government’s inflation target range of 3.0 percent ± 1.0 percentage point for the year. 8 While the proposed tax-reform program may exert potential transitory pressures on prices, various social safety nets and the resulting improvement in output and productivity are also expected to temper the impact on inflation over the medium term. 9 Results of the Bangko Sentral ng Pilipinas’s survey of private sector economists for October 2017 showed that mean inflation forecasts for 2017 was at 3.2 percent. Expectations for 2018 and 2019 were also seen to be slightly above the midpoint of the government’s target range of 2.0 to 4.0 percent. For the Bloomberg survey, inflation forecasts for 2017 to 2019 would continue to be within the said target. 10 Since 2010 the Philippines has received 11 credit rating upgrades, moving the long-term sovereign debt status from junk grade to investment grade. We must also make the point that the inflation rate for the bottom 30 percent of the population has trended lower than the overall headline inf lation. Poverty incidence, based on the statistics compiled by the Philippine Statistics Authority, has also illustrated that rapid economic growth has started to benefit the middle in-
come and the poorer segments of society. Indeed, high real GDP goes beyond media, it is something that can be eaten and enjoyed; it is both enabling and empowering. The current economic performance is, therefore, not a product of unintended drivers that bubble up growth. The country’s ability to post remarkable growth against domestic and external headwinds did not manifest overnight nor did it pop out instantly after getting exposed to some microwave excess demand. In other words, ours is not a popcorn economy. Sustainable growth is built on a long history of purposeful structural reforms and string of policies. In the Philippines, this is precisely the case because we have on record almost 25 years of policy and structural reforms ranging from dismantling telecom monopoly, deregulation of the power sector and the oil industry, liberalization of the banking industry and restructuring of public revenues. Its position of strength is characterized by an accelerating growth, a benign inflation environment, sound banking system, resilient external payments position, adequate buffers and responsive macroeconomic policies.
Beating the heat by expanding capacity
Fourth, in combination with the improving macroeconomic environment, the structural reforms we have pursued have, indeed, been translated into higher potential output for the economy. The country’s potential output has recently risen to 6.0 percent to 7.0 percent following: i) the recent climb in economic efficiency as indicated by the declining incremental output ratio; ii) increasing total factor productivity; and iii) favorable labor-market dynamics given the young population and improvements in the education and skill sets of those in the labor force. Moreover, with the recent policy of the government to strengthen both hard and soft infrastructures, the country’s potential output could definitely further increase.
Conclusion: When worrying is a good thing
IN view of these arguments, overheating concerns may, indeed, be misplaced. Nonetheless, these concerns are not necessarily bad. In fact, policy-makers are paid to always worry about the economy. Sustaining the lead and beating the heat require us to remain watchful and attentive. There can be no room for complacency or benign neglect. We have a stable of analytical tools, early warning systems and stress tests that should be useful to guide us when to move the lever of monetary policy if the risks are widely spread or deploy macroprudential measures to deal with sector-specific concerns. It’s not bad to be exuberant but we should remain rational.
administration efforts to rush the vaccination program, including it in the school-based immunization programs even if billions had to be realigned by then-Budget Secretary Florencio B. Abad for the purpose, as the dengue vaccine was not provided for in the 2015 General Appropriations Act. Gordon recalled that Ubial had objected initially to pursuing the Dengvaxia program—it had to be given in three doses—but later gave clearance, adding that Ubial also had to answer some questions, as she might be liable for still pursuing it. Gordon asked in Filipino, “So, the question is, who were pressuring her—friends and colleagues of Garin, or her relatives in Congress?”
More strategic relations with Australia, Japan for PHL urged
I
N light of China’s continuing expansion in the disputed West Philippine Sea, the country should explore more strategic partnerships with other countries in the Asia Pacific, especially Japan and Australia, security experts said. A way to counter Beijing’s aggression is to explore setups, such as a common Visiting Forces Agreement with Japan and Australia or a trilateral deal among the three countries, Dr. Renato de Castro said at the roundtable discussion organized by private think tank Stratbase Albert del Rosario Institute with theme, “The Special JapanAustralia Strategic Partnership Within the Ambit of Democratic Security Diamond.” “Japan and Australia hold a common view on the importance of encouraging third countries in playing active roles in regional security and the need to develop closer ties with them,” de Castro added. What exists at the moment is the bilateral PhilippineAustralia Status of Visiting Forces Agreement (SOVFA), ratified in 2007, on the status of armed forces from each country while in the territory of the other. “The Philippines might consider either negotiating or signing a separate VFA with Japan or it may extend its existing VFA with Australia to include Japan,” de Castro said. Another arrangement is something like the Democratic Security Diamond, an informal partnership among Australia, Japan, India and the United States, which de Castro said could help the Philippines in enhancing its maritime capabilities and contributing to the establishment of a rules-based order in the region. Stratbase ADRI President Dindo Manhit said, “Democratic Security Diamond is relevant to the Philippines in order to develop and enhance the maritime capabilities of the Philippines in the face of China’s expansion in East Asia. Specifically, capacitybuilding efforts and attempting to reorganize regional security architecture through establishing a rules-based order in East Asia.” “Maximizing the JapanAustralia Strategic Partnership efforts for capacity building in parallel with healthy relationships with the US will greatly benefit Philippine interests,” Manhit added.
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Editor: Jennifer A. Ng • Monday, December 11, 2017
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PHL purchases of US meat up 10% By Jasper Emmanuel Y. Arcalas
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@jearcalas
he Philippines imported 295.518 million pounds (lbs) of meat products from the United States in January to October, 10.29 percent higher than last year’s 267.937 million lbs, according to the United States Department of Agriculture (USDA). The latest data from the USDA Economic Research Service (ERS) showed that the bulk of meat products imported by the Philippines during the 10-month period were broiler meat. Philippine broiler meat imports from the US expanded by 8.35 percent to 192.084 million lbs, from 177.280 million lbs recorded in the same period last year. In October, USA Poultry and Egg Export Council Vice President of Marketing Greg Tyler told the BusinessMirror in an interview that the volume of poultry products that the Philippines would
buy from the US this year would likely exceed 199.508 million lbs. Tyler said the increase in US poultry shipments to the Philippines would be driven by the demand for chicken dishes during the holidays. “In the last quarter, you will see a big push for our exports, especially during the holiday season.” “We have a very good outlook for our broiler exports. As long as the price is good, we think that our exports will continue to grow as leg quarters is one of our biggest exports to the Philippines,” he added.
SeongJoon Cho/Bloomberg
The latest USDA-ERS market data indicated that Washington’s 10-month broiler export volume to Manila is just 7.424 million lbs away from matching their tota l outbound shipments of
199.508 million lbs last year. USDA-ERS data also showed Philippine pork imports during the period reached 75.3 million lbs, 15.86 percent higher t ha n t he 6 4.989 m i l l ion lbs
recorded last year. Data from the ERS indicated the American exporters are poised to surpass this year the 76.06 million lbs of pork products they delivered to the Philippines in 2016.
Philippine beef and veal imports from the US went up by 23 percent, according to USDA-ERS data. In January to October shipments reached 26.381 million lbs, from last year’s 21.449 million lbs. Also, data showed US hog exports to the Philippines tripled to 895 heads, from last year’s 294 heads. The figure has also surpassed Washington’s total hog exports last year of 614 heads. Earlier, the Meat Importers and Traders Association (Mita) projected that the country’s total meat imports this year would hit another record high due to the sustained increase in the demand for processed-meat products. Data from the Bureau of Animal Industry obtained by the BusinessMirror showed that meat imports from January to September this year reached 510,777.572 metric tons (MT), 7.72 percent higher than the 474,163.290 MT recorded last year. The figure is just 135,726.128 MT shor t of the record-high 646,503.7 MT purchased by importers last year. Mita President Jesus C. Cham said imports in the October-to-December period would likely exceed 135,000 MT.
CLSU researchers develop Future farms, supply and value chains, cooperatives cheaper alternative to I detecting poultry disease
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he Bureau of Agricultural Research (BAR) said researchers from Central Luzon State University (CLSU) have developed an “affordable” technology that would allow easier detection of Newcastle disease virus (NDV) among poultry flocks. The BAR, an attached agency of the Department of Agriculture, said a CLSU College of Veterinary Science and Medicine research team, headed by Dr. Clarissa Yvonne Domingo, formulated a dry format RT-LAMP, or the reverse transcription-loop-mediated isothermal amplification, an alternative nucleic based (NAB) assay for detecting NDV. “This test assay is rapid, simple, sensitive and very convenient to use by any adapting veterinary poultry practitioner or an animal diagnostician working in a laboratory with simple resources,” BAR said in a statement. “It can be used for early NDV detection, thus, is a powerful and promising tool for monitoring, surveillance and control of the disease,” it added. Domingo and her team created the dry format RT-LAMP after the confirmed NDV outbreak in poultry farms last year. “The key to control and successfully eradicate the NDV disease is to detect it as early as possible and prevent it to spread,” Domingo said. She said the dry format of the RT-LAMP removes the need for storing the tubes at freezing temperature thus, they can now be
kept at room temperature. “ This feature also removes the fear of reagent degradation and assures that the diagnosis of Newcastle disease in local poultry farms in endemic areas would be faster thus, making it more convenient,” the BAR said. “However, because of its very high sensitivity, the assay must be handled carefully free from contamination in order to get full efficiency of the dry RT-LAMP amplification,” it added. Domingo said NDV is a “serious, contagious and fatal” viral disease that affects species of birds. “Currently, it’s a major concern in poultry production killing thousands of chicken. The symptoms in chicken generally include gastrointestinal, respiratory and neurological signs and may vary from subclinical to sudden death with 100-percent mortality,” she said. “Mortality is very high in unvaccinated poultry flocks, however, it can still infect and cause death even in vaccinated poultry. Most of infected chickens die from NDV but can also spread the virus since the transmission is both directed contact with infectious body excretions and airborne,” Domingo added. The technology, which sought to aid veterinary practitioners and poultry raisers in detecting NDV, was funded by the BAR in a form of a research grant which CLSU won during the 27th National Research Symposium. Jasper Emmanuel Y. Arcalas
had the pleasure to meet Gerard Papillon, President of Pamora Farms, the home of real free-range chicken, an eco-agri destination again. Our long discussion can easily be divided in the three subjects mentioned above: future farms, the opportunities for supply and value chains and the need for cooperatives to create reliable coproduction.
Henry J. Schumacher
Future farms
Talking to Gerard and seeing what he and his wife have created, it is pretty obvious that thinking about expanding agricultural production alone is no longer good enough. So many experts in the Philippines and in other parts of Asia, including the ADB, have clearly outlined that farming needs to undergo a complete transformation. Pamora Farm, a Filipino-European joint venture, at Km. 396 Garreta, Pidigan, Abra, operates a free-range chicken farm. Pamora Farm started to raise free-range chicken in 2000. The company’s production of dressed free-range chicken began in mid-2002, with a monthly capacity of 200 broilers. Today, monthly capacity has reached 7,000 broilers and still increasing due to markets’ demand for quality free-range chicken meat. Pamora Farm’s operation is fully integrated from raising/growing of free-range chicken, dressing to packaging, ready for distribution, ready to cook and ready to eat.
Supply and value chains
Gerard explained his efforts to involve the community around the farm to become partners in the supply chain. I was surprised to learn that that process has not been/still is not as smooth as one would expect. In this context, it is worthwhile to look at the reasons again why supply and value chains are needed to make modern and competitive farming possible: Establish professional, transparent cooperatives across the country to serve as agricultural hubs and support farmers with access to finance, capacity building in agri-preneurship and agri-business skills, new agricultural techniques and value-added processing; provide processing facilities, serve as a trading
europe Beat hub for agricultural goods to cut out the middle man and provide machinery and agricultural inputs to farmers at fair market prices; Invest in transportation and storage infrastructure and facilities to reduce spoilage of products during the transportation/storage process from farm to market; Ensure cooperation and alignment between national and local government, in support of the implementation of pro-growth policies and projects for the agriculture sector. Let me add that Pamora Farms, being fully integrated today from raising chicken to bringing the end-product to market, offers co-chicken growers regular off-take of chickens at fair prices. Additionally, farmers in the supply chain/ in the municipalities around the Pamora Farm could provide Pamora with feeds. These feeds (corn and soya), however, have been developed with researchers over the last decade and farmers have to follow the quality requirements strictly. Of course, the farmers who grow the feed can also grow chicken for Pamora, provided—again—they follow a very strict quality regime.
Cooperatives
GERARD agrees that his supply chain would be ideally supported by a cooperative that would manage the chicken-growing process within the clear parameter of Pamora’s quality requirements and see to it, that supply deals are maintained and are exclusive. Has it worked out? Gerard was careful in this response: There is room for improvement. For the Philippines, a modernized coop-
erative system would be ideal. More emphasis should be put on this movement. There is plenty expertise available locally (a number of good cooperatives exist) and European expertise has been offered and is still being offered. With functioning cooperatives, there will be more investments in agriculture, farmers will get easier access to finance, there will be lower unemployment and supply/value chains will be created. In modern cooperatives, agricultural enterprises as well as farmers pool their resources to create economies of scale, reduce costs and lift incomes. Let’s have a look what happens in other Asian countries with regard to cooperatives. China is already modernizing farms through cooperatives, and by using e-commerce platforms to tap into high-value markets. In Vietnam a cooperative program has improved the quality of produce for urban consumers and lifted tea, fruit and vegetable revenues by nearly one-third. There are encouraging example of cooperative movements in Bangladesh, India and Nepal also. However, a lt hough cooperat ives a re gradually catching on in Asia, they will need much more support. Most of the region’s cooperatives are fragile, informal arrangements. But with the right legal framework in place and good managers running cooperatives, they could become far more efficient and durable.
Conclusion:
I learned so much in the exciting discussion w ith Gerard. He and his w ife Tina are pioneers in creating a moder n far m w ith emphasis on hea lth of the consumer of their chicken. T heir focus is on no antibiotics and increasingly on an organic env ironment. One of my sur pr ises was a lso that even w ith the size of operations and track record available, access to finance remains an issue. Comments are welcome; you can contact me under Sc hu m ac her@mc a si a.org , or get in touch with Gerard directly under Gerard@pamorafarm.com.
Trump’s plan to bail out coal may be unraveling under new regulator
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he Trump administration, which was looking to have a plan in place by next week to bail out America’s coal country, will instead have to wait until the new year. Kevin McIntyre, sworn in last Thursday as chairman of the Federal Energy Regulatory Commission, asked for a 30-day extension to act on a sweeping proposal by Energy Secretary Rick Perry that would subsidize struggling coal and nuclear plants. Perry, who had called on the commission to come up with a plan by December 11, granted the delay late Friday, saying he “respects the reasons”
but “looked forward to swift action.” McIntyre said in his request that the commission needed more time to consider the flood of comments on the proposal and have a full debate. The move casts uncertainty over the future of a plan that critics say could cost consumers billions. It has drawn united opposition from oil and natural-gas producers and clean-energy developers, who deride it as a retreat from fair competition in wholesale power markets. “It’s a hornet’s nest,” said Paul Patterson, a New York-based utilities and power analyst for Glenrock Associates
Llc. “Given the complexity of the issue, it’s not surprising that they’re asking for more time.”
Predecessor’s plan
Perry ordered the commission to consider the plan in September, invoking an obscure 30-year-old statute. The initiative would pay a premium to power plants that store at least 90 days of fuel on site, in an effort to make grids more reliable. Coal and nuclear generators would be uniquely suited because, unlike gas plants, they aren’t fed by pipelines. Wind and solar farms,
meanwhile, require no fuel. The delay threatens to stall efforts by his predecessor, Neil Chatterjee, who had been crafting an alternative to Perry’s plan to curb retirements of coal and nuclear plants. While chairman, Chatterjee had repeatedly said the commission would act on the proposal no later than December 11. The extension could, on the other hand, potentially give the commission more time to drum up support within the agency for a proposal like Chatterjee’s. McIntyre and Chatterjee, a former
aide to Republican Kentucky Sen. Mitch McConnell, didn’t respond to requests for comment. “It’s clear now that the original approach that emerged from the DOE is going to require some work and some modification,” said Mike McKenna, a Republican strategist and president of Washington-based MWR Strategies.
Plant Closings
Critics of the proposal say it could prevent coal and nuclear plants from closing even if they’re not economic to run. That could slow development
of gas, wind and solar projects, whose growth depends on aging power plants’ closing. “In a power market where demand is not growing, you need to displace something if you want to build something new,” said Ethan Zindler, a Bloomberg New Energy Finance analyst. Coal companies argue that the current market structure does not adequately compensate the reliable power they supply. While an extension could give the commission time to reach agreement, coal producers aren’t welcoming the delay. Bloomberg News
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Arab ministers to Trump: Reverse Jerusalem decision
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AIRO—Arab foreign ministers last Sunday demanded that the United States rescind President Donald J. Trump’s decision to recognize Jerusalem as Israel’s capital, calling it a “grave” development that puts Washington on the same side as “occupation” and the violation of international law. In a resolution long on rhetoric but short on concrete actions, the ministers also called for the United Nations Security Council to adopt a resolution condemning Trump’s decision, but acknowledged that Washington would most likely veto it. If the US vetoes the resolution, the Arabs would seek a similar resolution in the UN General Assembly, Palestinian Foreign Minister Riyad Al-Maliki told a predawn news conference in Cairo. A two-page resolution adopted by the emergency meeting, which began last Saturday night, did not include any punitive actions against the United States, like a call for a boycott of American products or suspending or downgrading ties with Washington. It also appeared to fall short of matching the anger felt by Palestinians in the Gaza Strip and West Bank, which have seen three days of violent protests against Trump’s decision.
“We have taken a political decision not meant to reflect [what is going on in] the streets. Political work is responsible work,” said Arab League chief Ahmed Aboul-Gheit. “Jerusalem has been occupied for 50 years. This is an extended battle, a battle that will be escalated,” he told the news conference. The resolution said the ministers would meet again within a month and held out the possibility that an emergency Arab summit would be held in Jordan to discuss Jerusalem. Trump’s December 6 announcement on Jerusalem, and his intention to move the US Embassy there, triggered denunciations from around the world, with even close allies suggesting he had needlessly stirred more conflict in an already volatile region. Jerusalem’s status lies at the core of the Israeli-Palestinian conflict, and Trump’s move was widely perceived as siding with Israel. Even small crises over Jerusalem’s status
PALESTINIANS run away from a sound bomb during clashes with Israeli security forces following a protest against US President Donald J. Trump’s decision to recognize Jerusalem as the capital of Israel in Jerusalem last Saturday. AP/MAHMOUD ILLEAN
and that of the holy sites in its ancient Old City have sparked deadly bloodshed in the past. Arab diplomats said some Arab League members had wanted a more hard-line resolution, including punitive measures against countries that follow the US example and recognize Jerusalem as Israel’s capital. That was considered too radical by moderate Arab nations and eventually dropped, according to the diplomats who spoke on condition of anonymity because they were not authorized to brief the media. But Al-Maliki, the Palestinian Foreign Minister, sought to
play down differences, saying the meeting produced “complete” unity among Arab nations. “There were differences in assessment when we moved to specifying measures,” he said. “But in the end we agreed on gradually escalating measures.” Both Aboul-Gheit and Al-Maliki said Arab nations remained committed to a 2002 Arab peace plan that provides for recognition of Israel in exchange for lands occupied by Israel in the 1967 Middle East war. “That plan is a key reference in the Middle East peace process,” Al-Maliki told the news conference.
Trump’s decision, according to the Arab resolution, was “illegal” and a “dangerous violation” of international law. “It’s a dangerous development that places the United States at a position of bias in favor of the occupation and the violation of international law and resolutions.” Israel occupied and later annexed the eastern part of Jerusalem in the 1967 Middle East war, declaring the holy city its eternal capital. Palestinians want that part to be the capital of their future state. Trump’s decision, said the resolution, also stripped the US of its role as a “sponsor and broker” in the Mideast peace process, and “undermines efforts to bring about peace, deepens tension and will spark anger that will threaten to push the region to the edge of the abyss of violence, chaos and bloodshed.” The resolution adopted by the ministers reiterated that only the creation of an independent Palestinian state with east Jerusalem as its capital would end the Arab-Israeli conflict. It also mandated the Arab League to launch an “international media campaign” explaining the “gravity” of the American decision. During a two-and-a-half hour session carried live on regional and local TV networks, the ministers gave speech after speech on the issue of Jerusalem, with comments ranging from blasting Trump’s decision to the need for concrete action to musings on whether fiery speeches would change anything. AP
China airs pessimism on N. Korea as Kim touts UN talks
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HINAexpressedpessimismabout bringingtheNorthKoreanstandofftoapeacefulresolution,evenas Kim Jong Un’s regime touted new United Nations support for “regular” talks. Chinese Foreign Minster Wang Yi said last Saturday that “the outlook is not optimistic” on the Korean Peninsula and urged all sides to end what he said was a “vicious cycle” of confrontation. Wang’s remarks—part of a broad foreign-policy speech in Beijing—came hours after North Korea said a departing UN delegation had agreed to communications to help ease tensions. Wang said there was still hope for a diplomatic solution to the frictions over North Korea’s nuclear ambitions. He reiterated a Chinese “freeze-for-freeze” proposal for North Korea to suspend weapons tests while the United States halts military drills in the area. “The first steptopullthesituationonthepeninsula out of the current ‘black hole’ of confrontation is to create the conditions and atmospheretorestartdialogue,”Wangsaid. The UN’s top official for political affairs, Undersecretary-General Jeffrey Feltman, left North Korea last Saturday. His visit came as the US sent a B-1B bomber to join massive aerial drills with South Korea after Kim recently tested a new type of intercontinental ballistic missile that could reach any American city. Bloomberg News
e World
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Now for the hard part for May after her Brexit breakthrough
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HE United Kingdom and the European Union struck a deal to unlock divorce negotiations, opening the way for talks on what businesses are keenest to nail down—the nature of the postBrexit future. The deal, made before dawn last Friday after rushed talks through the night, clears the path for discussions to start next year on the new terms of trade between the UK and its biggest commercial partner. The EU was quick to put down a marker of where it thinks those talks are headed and it’s far short of what May has said she wants. The agreements outlined last Friday, including a €45-billion ($53- billion) divorce bill and vague promises on the sensitive issue of the Irish border, will come back onto the table if trade talks turn sour. While the European Union made some concessions, the United Kingdom did most of the running. Businesses have won some time, as the EU said it was prepared to move quickly to discuss the terms of a transition period that Britain wants to put in place for two years after the divorce. In reality, commission officials expect it to be longer—the transition could be twice as long as Prime Minister Theresa May says—and a final accord signed and ratified by 2025, according to a person familiar with the EU’s thinking. Negotiations about the transi-
tion deal can start in January, although trade talks won’t start until February or March, according an EU official. That’s not necessarily a bad thing for the UK government, which is still to work out its common position on what it’s after. After eight months of haggling, which, at times, has been bitter, EU officials warned that the hardest part of the Brexit process lies ahead. Trade deals don’t usually cover the service industries that make up about 80 percent of the UK economy. May has agreed to pay the bill and make other concessions in order to secure a good trade deal, but the country wants that accord to include its crucial financial services. The risk is that if trade talks run into trouble, political support at home for those concessions might drain away. May has already faced down one attempted coup and there’s a sense she’s one crisis away from losing her job. Once the euroskeptics realize what kind of trade deal is on offer, their hesitant support of May’s concessions may disappear, Eurasia’s Mij Rahman said. “The rubber will hit in the road in phase two,” he added. The agreement May came to Brussels to sign covered the rights of EU citizens, the financial settlement, and a solution to keep the border between Northern Ireland and the Republic as open as it is now after Brexit. Bloomberg News
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With the US going rogue, world fumbles for new trade consensus
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RADE ministers will meet in Argentina with one of the traditional defenders of free markets, the United States, questioning the benefits of the international rules it helped to forge. Even though trade volumes are set to grow faster than the world economy this year for the first time since 2014, members of the World Trade Organization (WTO) will gather in Buenos Aires concerned about the outlook. While he hasn’t followed through on many of his threats to rip up trade accords or take on China, US President Donald J. Trump is questioning the WTO’s ability to police global commerce. He’s also threatening to walk away from the North American Free Trade Agreement (Nafta) after withdrawing from a 12-nation AsiaPacific trade pact early this year. With the United States doubting the WTO’s very purpose, it will be difficult for trade ministers to make headway in their meetings on anything but narrow issues, such as illegal fishing and agricultural subsidies. “Without US leadership for a positive agenda, there is a clear risk that energies of WTO members could dis-
sipate across the fragmented set of issues and that few policy proposals will advance to conclusion,” Douglas Lippoldt, chief trade economist at HSBC, said in a research note.
US interests
THE US played a leading role after the Second World War in negotiating a set of agreements, known as General Agreement on Tariffs and Trade, that committed countries to follow common rules and cut tariffs. The system formed the basis of the WTO, which was created in 1995 and now referees trade disputes. At the dawn of the millennium, the WTO was pushing trade talks that would lead to a sweeping reduction in tariffs. Those talks, known as the Doha round, have collapsed. In Buenos Aires ministers will be seeking progress on less-challenging topics, including subsidies. US Trade Representative Robert Lighthizer has said the WTO isn’t
A CONTAINER is loaded onto a cargo ship at the Tianjin port in China. The United States is joining a fight against China at the World Trade Organization in a decision likely to ratchet up tensions between Washington and Beijing. AP/ANDY WONG
equipped to deal with what his country sees as China’s mercantilist tactics. The US has been blocking appointments to the WTO’s appeals panel, a move the organization says is undermining its ability to handle disputes. Late last month, a top Treasury Department official said efforts at global cooperation were hurting the American economy, and called on other countries to join the United States in pushing back against China’s failure to transition to a market economy. At the summit, Lighthizer will push for US interests, including institutional reform at the WTO and fair trade, according to a statement from his office.
‘It’s dangerous’
“THE US is holding the WTO hostage without really stating its demands,” said Caroline Freund, a senior fellow at the Peterson Institute for International Economics in Washington. “It’s dangerous, because the dispute resolution system is one of the parts of the WTO that’s actually working.” The WTO meeting may reveal how serious the US is in acting on Trump’s tough trade talk, said Douglas Holtz-Eakin, president of the American Action Forum, and former chief economist to the Council of Economic Advisers under George W. Bush. Bloomberg News
Green Monday BusinessMirror
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Monday, December 11, 2017
www.businessmirror.com.ph • Editor: Lyn Resurreccion
109 NGOs raise alarm over attacks against environmental defenders
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A boy carries a goat to safety during a flood in Pacitan, East Java, Indonesia, on November 28. Rain-triggered landslides and floods have killed a number of villagers on Indonesia’s main island of Java. AP/Agus Salim
Should environmental refugees be granted asylum status?
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NITED NATIONS—The 1951 United Nations convention on political refugees—which never foresaw the phenomenon of climate change—permits refugee status only if one “has a well-founded fear of persecution because of his or her race, religion, nationality, membership in a particular social group or political opinion.”
But a proposal for an amendment to that convention—or an optional protocol—to include a new category of “environmental refugees” has failed to get off the ground. The threat of sea-level rise—and the possibility of tiny islands, mostly in the Pacific, including Tuvalu, Kiribati, Samoa, Solomon Islands, Nauru, Marshall Islands, Palau, Micronesia and Vanuatu, vanishing from the face of the Earth or facing economic calamities because of a projected sea-level rise triggered by climate change—has raised new fears and new challenges. Should the threat of environmental catastrophes be legitimate grounds for asylum and refugee status? A mbassador A nwar u l K . Chowdhury, a former UN high representative and undersecretary-general for least developed countries, land-locked developing countries and small island developing states (SIDS), told Inter Press Service (IPS) the rationale for the recognition of the category of environmental refugees has been established for quite some time. “As undersecretar y-General and high representative of the United Nations, I had highlighted the case of the most vulnerable countries affected by the degradation of the environment and had advocated for recognition of the resulting refugee situations,” he said. “These environmental refugees need to be recognized formally as refugees and entitled to be covered by the 1951 UN Convention on the Status of Refugees. It is high time for us to do that,” Chowdhury said. As has been the case with a number of other international treaties and conventions, an optional protocol to the 1951 refugees convention could be adopted to recognize the environmental refugees, he pointed out.
“The international community owes it to these ill-fated hapless victims of environmental catastrophes whether manifesting as loud emergencies or the silent ones,” Chowdhury said. “The international community should also be forward-looking and flexible to accommodate the new realities our world faces,” he noted. Chowdhury added that it is not prudent to remain stuck with the sole category of “political refugees” while the world is watching a mass movement of people across international boundaries for economic reasons, now compounded by environmental causes. “We expect the UN SecretaryGeneral Antonio Guterres [a former UN high commissioner for refugees] to speak up for the cause of the environmental refugees, as he has the right background of managing the global refugees’ situation for a long time.” In an address to the UN Security Council in 2011, referring to the climate change, he said: “It is a challenge which is adding to the scale and complexity of human displacement; and a challenge that has important implications for the maintenance of international peace and security.” Even from this perspective, the environmental refugees turn out to have serious political implications for international peace and security, Chowdhury said. The proposal to recognize environmental refugees has surfaced once again, this time against the backdrop of a major conference of non-governmental organizations (NGOs)—the International Civil Society Week (ICSW)—in Fiji from December 4 to 8. An annual forum coorganized by Civicus and regional or national platforms, ICSW brought together NGOs from all over the world for a key global gathering for civil society and other stake-
holders to engage constructively in finding common solutions to global challenges. And for the first time in more than 20 years of international convening, Civicus held its flagship event in the Pacific region.” The theme of the forum was: “Our Planet. Our Struggles. Our Future.” According to the United Nations, about a third of the world’s 47 least-developed countr ies (LDCs), including SIDS, described as the poorest of the world’s poor, are threatened by global warming and sea-level rise. Selena Victor, director of Policy and Advocacy, Mercy Corps Europe, told IPS that global institutions and conventions must evolve to meet new and developing challenges, and climate change is one of the most pressing issues facing our world today. “At Mercy Corps, we recognize that people are forced to flee due to many factors; political persecution, war, violence, abject poverty and climate change are just some of them.” “It is absolutely critical that we maintain—and strengthen— the fragile protection available to those fleeing persecution—that does not lessen our obligation to help all those forced to flee for their own and their children’s survival,” Victor said. “When faced with a growing number of displaced people around the world, the question we must ask ourselves is if people are running for their survival, should we make the distinction as to their reasons, or focus our efforts on support and providing refuge?” she asked. Si mon Br ad sh aw, c l i m ate change specialist at Oxfam Australia and who coauthored Oxfam’s recent policy paper on climate refugees, told IPS that climate change is already forcing people from their land and homes, and putting many more at risk of displacement in the future. He said supercharged storms, more i ntense a nd prolonged droughts, rising seas and other impacts of climate change all exacerbate people’s existing vulnerabilities and the likelihood of displacement. “While climate change affects us all, the risks of displacement are significantly higher in lower-income countries and among people living in poverty. Women, children, indigenous peoples and other vulnerable groups are also disproportionately affected.” Bradshaw a lso said the world ’s atoll countries face a par ticu larly severe cha l lenge f rom c l imate c ha nge. R ising
seas, increased wave heights and higher storm surges are inundating land on which communities grow food, contaminating the thin groundwater lens of which they depend for freshwater, and swallowing homes. While relocation will always be an option-of-last-resort, even conservative projections for sealevel rise over the course of this century pose a grave threat to atoll communities and other low-lying populations around the world. He pointed out that the loss of homes, livelihoods and ancestral lands through displacement epitomizes the human cost and grave injustice of climate change. “Those least responsible for climate change are bearing the brunt of its impacts, and have fewer resources to cope with these new realities. However, much can and must be done to minimize the risk of displacement linked to climate change, and to guarantee rights, protection and dignity for those who are forced to move”. A first priority, he argued, must be far more rapid reductions in global climate pollution, in line with limiting warming to 1.5 degrees Celsius and thereby significantly reducing the risks and impacts of climate change. M i n i m i z i n g d i s pl a c e me nt a l so de pend s on suppor t i ng c o m mu n it i e s w it h b u i l d i n g resi l ience to t he i mpac t s of climate change, which means increasing the scale and accessibility of international finance for climate-change adaptation. “And while recognizing that all possible measures must be taken to avoid displacement, it is also necessary to support strategies to ensure that people who are forced to can do so safely, with dignity and on their own terms.” Bradshaw said the negotiation by September 2018 of a new Globa l Compact on Migration of fers a cr itica l oppor tunit y to help ensure safet y, dig nit y and lasting solutions for those displaced or at risk of displacement as a resu lt of the impacts of climate change. It must reaffirm the need to minimize displacement by addressing the root causes of climate change and factors in vulnerability; encourage expanded channels for regular migration for those who are nonetheless forced to move; begin a process to ensure status and legal recognition for those displaced in the context of climate change; and ensure all solutions uphold human rights and sovereignty, and are grounded in the perspectives and priorities of affected communities. IPS
total of 109 non-governmental organizations (NGOs) from 22 countries have expressed concern over the worsening human-rights situation in the Philippines—the third-deadliest country in the world and the deadliest in Asia in the 2017 Global Witness Report on Killings of Environmental and Land Defenders. The group released a statement condemning the attacks against environmental defenders in the Philippines. Sig n ator ies i nc lude NGOs from Bangladesh, the United Kingdom, Cambodia, India, Indonesia, Pa k istan, T ha i land, Finland, Nepal, Kenya, Ecuador, Vietnam, Bosnia and Herzegovina, Timor Leste, Kyrgyzstan, South Korea, Spain, the United States, Netherlands, Germany and Cameroon. “In just more than a year under the current administration of President Rodrigo Duterte in the Philippines, at least 42 environmental defenders have been killed, 240 have been slapped with harassment lawsuits and at least 18,263 [people] have been forcibly displaced because of their resistance to destructive projects,” the group noted. Clemente Bautista, national coordinator of Kalikasan-PNE said: “President Duterte is by far the worst human-rights violator to Filipino environmental defenders. Duterte is well on his way to making the Philippines the most dangerous country for environmental defenders by 2018.” The group issued the statement in the wake of what it described as “increasingly atrocious” humanr ights v iolations per petrated against Filipino environmental defenders and other activists over the past two weeks. It cited that on November 26, an exodus was begun by 1,688 indigenous Lumad people opposing coal mining in their ancestral lands in Lianga, Surigao del Sur. “This was spurred by intensified military operations of the 75th Infantry Battalion of the Philippine Army. Later, the evacuation camp was food blockaded by the 75th IBPA [Infantry Battalion of the Philippine Army] to prevent the entry of humanitarian aid,” the group noted. On December 3 elements of the
27th and 33rd IBPAs massacred eight indigenous T’boli and Dulangan Manobo tribe members opposing attempts by the DMCI company to establish a 3,000-hectare coal mine within their ancestral land in South Cotabato province. The group reported that various other incidents of extrajudicial killings, illegal arrests, enforced disappearances and forced evacuations occurred in just the past week in the provinces of Mindoro Oriental, Batangas, Agusan del Sur, Compostela Valley and Surigao del Sur. Affected communities mainly confronted mining, plantation and coal issues. They observed that, “civilians are systematically targeted by militar y operations under an increasingly aggressive ‘Oplan Kapayapaan’ counterinsurgency program and the dark shadow of martial law,” noting the recent systematic efforts of justifying killings and militarization by accusing environmental defenders as armed communist rebels or sympathizers. The group further said that “big mining has much to do with the mayhem” with 55 percent of the monitored killings and 100 percent of the monitored harassment lawsuits involving anti-mining activists and community members. T hey are demand ing the Duterte administration to free all remaining 16 illegally detained environmental defenders from prison and drop all 225 trumped-up charges still lodged against environmental defenders. “Urgent and concrete actions must also be taken to stop the killings of environmental defenders and bring to justice its perpetrators,” the groups said. The statement was initiated by Kalikasan-PNE, together with the Environmental Advocates against Repression and Tyranny in Defense of Human-Rights (EARTH), a recently established environment and human rights coalition united to oppose human-rights violations perpetrated against environmental defenders. Kalikasan-PNE and EARTH announced their intention to mobilize their ranks in time for the December 10 Human Rights Day as planned by various movements opposing the worsening climate of impunity in the country.
UPLB, Searca host intl meet on human ecology
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he first international conference on human ecology in Asia was held in the Philippines. It focused on global practices, initiatives and possibilities that contribute to shaping a more sustainable world. It was hosted by the University of the Philippines Los Baños (UPLB) and the Southeast Asian Regional Center for Graduate Study and Research in Agriculture (Searca). The 22nd International Conference of the Society for Human Ecology (SHE), held from November 28 to December 1, had the theme “Envisioning pathways to just and sustainable futures: Celebrating diversity, pursuing integration, and developing livable communities.” S o m e 2 0 0 g l o b a l a n d re g i o n a l practitioners, researchers, policy-makers, experts and academics gathered to discuss contemporary research and practices in promoting a just and sustainable future. It also aimed to strengthen partnerships among human-ecology institutions in the region, through the creation of an alliance or network of human-ecology institutions in Asia, and closely link it with SHE. For its part, Searca organized the session on Pathways to the Promotion of Human Ecology in Southeast Asia to promote human ecology as a field of study that would help address the problems or needs faced by the region, such as on food security and nutrition, natural-resource degradation and climate change. “Through this conference, we hope to put a face to human ecology and mainstream it as an important field of study and practice in addressing complex development
issues affecting Southeast Asia and other developing regions of the world,” Searca Director Gil C. Saguiguit Jr. said. “Our hope is for human ecology to be recognized for its unique and important role in agricultural and rural development,” he added. Searca convened key officials from members of the Searca-initiated Southeast Asian University Consortium (UC) for Graduate Education in Agriculture and Natural Resources that have existing colleges or faculty in human ecology presented their academic programs in human ecology education, research and extension. The presenters were Dr. Husniyah Abdul Rahim of Universiti Putra Malaysia, Dr. Arif Satria of Indonesia’s Institut Pertanian Bogor and Dr. Raden Piadozo of UPLB. On the other hand, representatives from other UC members discussed the relevance of instituting a program in human ecology in their institutions. They were Dr. Buncha Chinnasri of Thailand’s Kasetsart University, Dr. Dyah Hizbaron of Indonesia’s Universitas Gadjah Mada and Dr. Bagyo Yanuwiadi of Universitas Brawijaya, also in Indonesia. Dr. Jose V. Camacho Jr. of the UPLB Graduate School and Dr. Robert Dyball of the Australian National University discussed a number of strategies to promote human ecology in the region. One of which is the strengthening of networks among universities that offer and may potentially offer the program. More experts from Australia, Brazil, Japan, Portugal, the United States and Vietnam also shared their views on the promotion of human ecology.
Biodiversity Monday BusinessMirror
Asean Champions of Biodiversity Media Category 2014
Monday, December 11, 2017 A9
Editor: Lyn Resurreccion • www.businessmirror.com.ph
The 29-kilometer Kalinawan River is the cleanest inland body of water in the Caraga region. Since 2010, the Agata Mining Ventures Inc. (AMVI) adopted Kalinawan River, which was inspected by the Intertek Audit Team during the ISO audit along with other smaller tributaries that run through the Agata MPSA. TVIRD Philippines Inc.
For people’s safety and clean environment
‘Miners can do better’
A
By Jonathan L. Mayuga @jonlmayuga
t least 20 mining and quarrying companies that excelled in various aspects of operations were cited for their best practices during the 64th Annual National Mine Safety and Environment Conference (ANMSEC) held in Baguio City last month. Two companies—SR Metals Inc. and Coral Bay Nickel Corp.— were conferred the prestigious Presidential Mineral Industry Environmental Award (PMIEA), the highest award and recognition for best-industry practice in the Philippines. The awarding, highlighted in the annual mining conference, was witnessed by over 3,000 delegates representing government, mining companies and other stakeholders, including executives from companies in mining-related industries, academe, local government and nongovernmental organizations. A week later Rio Tuba Nickel Mining Corp. and OceanaGold Philippines Inc., the only entries of the Philippines in the first Asean Minerals Awards, bagged the Best Practice in Minerals Mining and Best Practice in Minerals Processing awards, respectively.
caring for the environment and affected communities. In his speech during the 64th ANMSEC and PMIE Awards Night on November 24, Cimatu challenged the industry to go beyond crafting slogans about responsible mining by actually showing how it is done. “Let me make our position very clear as mandated by the Constitution and the existing laws. No less than President Duterte has declared in no uncertain terms that the administration is for responsible mining,” Cimatu said. He added that responsible mining, as Duterte intends to see it, must be people-oriented and provide decent jobs. It must protect and enhance the environment, not run over the rights and welfare of indigenous people, must contribute its fair share to national income and must transform itself into a world-class industry.
Despite h av i ng world- c l a ss m ines, t he m ining indust r y, particularly those that are into large-scale mining operations, face strong opposition in the Philippines because of the massive environmental destruction and degradation linked to mining. Environmental and anti-mining groups like Alyansa Tigil Mina said large-scale mining operations continue to cause massive destruction of forest ecosystems, causing the deterioration of watersheds and pollution of water bodies; adversely affecting the way of life of people in mining-affected communities. The Duterte administration, with his Environment Secretary Roy A. Cimatu, have expressed dismay over the mining companies’ “ failures” in terms of
Large-scale mining companies, which started operation when Republic Act 7942, or the Philippine Mining Act of 1995, took effect are required to do progressive rehabilitation. That means companies must simultaneously do rehabilitation of mined-out areas, particularly reforestation, while extracting minerals in other areas. Besides their corporate socialresponsibility programs and projects, all mining companies are also required to have 1.5 percent of the total mining and milling costs of the company monetized and placed in a trust fund to be used for various programs and projects for mining-impact areas. Of the amount, 75 percent must be spent on community-develop-
Environmental destruction
Best practices
Miners check seedlings in one of the tree nurseries of AMVI in its mine site. The company produces over 280,000 seedlings a year in the tree nurseries. The company has grown 214,742 seedlings in 187 hectares. TVIRD Philippines Inc.
ment programs; 15 percent on mining technology and geosciences advancement programs; and 10 percent on information, education and communication program. Several mining companies are known for best practices in different aspects or fields of mining operations, including environmental programs that involve mine rehabilitation and reforestation.
Industry best
The Agata Mining Ventures Inc. (AMVI)—a joint venture between TVI Resource Development Philippines Inc. (TVIRD) and MRL Nickel Philippines—is “an industry best” in upholding the highest safety and environmental standards. A M V I was honored w it h back-to-back awards: the PMIE A-Pl at inum Awa rd in t he Su r face Min ing O perat ion C ategor y a nd t he B est M i n i ng Forest Aw a rd (second r u n ner u p) i n t he Me t a l l ic M i n i n g O perat ion C ategor y. The mining venture maintains an impressive 97.12-percent survival rate of its cultivated plants at the Agata Project. After a series of field validations, the committee that conducted an audit of AMVI’s operation shortlisted it for the PMIEA-Platinum Award based on its environmental management, including rehabilitation and environmental protection; safety and health, performance and compliance; the implementation of its social-development management programs and its information, education and communication (IEC) programs. Parallel to this, the Best Mining Forest Award was conferred on AMVI on the merits of its reforestation program: development plan, nursery operation, planting
activities, maintenance and protection, biodiversity conservation and IEC and research. To date, the mining firm has planted over 200,000 trees in and around the Agata Nickel Project area in Tubay municipality, Agusan del Norte province. It, likewise, conducts continuous environmental awareness activities, such as planting and growing of trees along the riverbanks, watersheds and waste dumps, as well as river and coastal clean-up and waste-segregation activities with community residents and local government units. AMVI’s coral relocation and coastal resource-management program is the first in the region and was previously recognized with an Outstanding Performance Award by the Department of Environment and Natural Resources . The company also boasted that since 2010, years before it started operation, it has adopted Kalinawan River, which was inspected by the Intertek Audit Team during an ISO audit along with other smaller tributaries that run through the Agata mineral production sharing agreement. The 29-kilometer Kalinawan River is the cleanest inland body of water in the Caraga region, and possibly in the entire province.
Large scale vs small scale
“For me, the significance of ANMSEC stresses the fact that legitimate large-scale mining companies go by very, very high standard in contrast to illegal mining, which has no standard and does not contribute to the coffers of the government and provide social development for the community and safeguard for the environment,” Kaycee Crisostomo, Corporate
Communications and Marketing director at TVIRD told the BusinessMirror in an interview on November 26. “This is how we can differentiate large-scale legitimate mining from illegal small-scale mining. People don’t know where to throw a punch. We are taking the high road and we are levering on the ANMSEC to do this,” he said. A ccord i ng to C r i sostomo, TVIRD and its joint-venture partner for Agata were able to bag the Titanium Award based on the audit during its first year of operation. “Even before the company started its operations, it has maintained a high standard and is beyond compliance. We have been planning and doing reforestation in the area years before we brought operations on the stream. Before our operation, we were already reforesting around the areas by planting various native trees that will thrive in the area,” he added. “Responsibility starts even before mining activities begin. That is how we did in Canatuan in Zamboanga del Norte. We are now at a point in bringing best practices nationwide,” Crisostomo said, referring to the Canatuan mine, which had gone through successful mining operation and rehabilitation.
Continuous improvement
While saying that mining companies continue to improve operational efficiency—for safety and for the environment—the Philippine Mine Safety and Environment Association (PMSEA), which organizes ANMSEC and PMIEA, believe there is always room for improvement. PMSE A President L ou ie Sarmiento, in his speech during the awards on November 24 and affirmed in a telephone interview, told the BusinessMirror that the annual ANMSEC and PMIEA aim to encourage all mining companies and relevant industries— including cement and quarrying companies—to do better. “If the company did not make it this year, as I’ve said in my message, they should strive harder. Maybe the next time, they’ll finally get the prestigious award and recognition,” he said. Sarmiento said year after year, more companies are joining PMSEA and are actually vying for the awards. This year he said more companies were shortlisted for
various awards category. “ This means that they are confident that they are doing the necessary improvement in their operation and that they believe they will qualify for the awards. This is a good sign for the industry,” he said. On a smaller scale, Sarmiento said PMSEA has created a model for greening with its adoption of a Botanical Garden in Baguio City. In 2012, he said a portion of the Botanical Garden became a garbage dump. In rehabilitating around 5,000 square meters of the area, about seven trucks to 10 trucks of garbage were removed. The area was rehabilitated by planting indigenous tree species, including botanical plants. The Botanical Garden is now one of the famous, frequently visited tourist spots in Baguio City. He said mining companies should work to create a greener environment outside its areas of operation. “This means that miners can also be responsible caretakers and stewards of the environment,” he added.
Baguio Declaration
Responding to Cimatu’s challenge, as an organization, PMSEA will have a Baguio Declaration next week as a commitment of the industry based on the requirements of responsible mining as defined by Duterte. “There is always science behind mining operations. And we are glad because it is our part of our advocacy for all mining companies to do better. If we are doing better, we should not be satisfied. We should look at the negatives and correct them. There is no perfect mining operation, that is why we should keep on improving. It is unfair to the industry if you accuse it of being irresponsible. The mining industry has been keeping on improving its operation, and that is very important,” he said. He said mining companies shou ld a lways go beyond compliance, which is what a number of companies are actua l ly demonstrating. “We are doing it already. That is why some companies should open up and show the public what responsible mining is all about. This should erase the perception that mining is irresponsible. Miners can do better,” he added.
A10 Monday, December 11, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Philippine tourism: Rhetoric vs reality
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here is “rhetoric” and then there is “reality,” and sometimes the distance between the two is not a line but a wide abyss. During the first half of 2016, the United States, Australia, France and New Zealand issued travel warnings to their respective citizens about coming to the Philippines. While these warnings usually were something like “avoid travel to the Southern Philippines,” as usual, the public perception was “avoid travel to the Philippines.” The decline in tourist arrivals continued until after the national elections, with a large increase in July 2016. But then, the trend reversed sharply to the downside, perhaps in response to the negative rhetoric about the Philippines, as President Duterte changed the nation’s foreign policy focus and reacted strongly to any foreign government criticism of his administration. The international press also reacted strongly— and negatively—to Duterte, and they started casting the Philippines in a bad light. However, October 2016 saw an increase in arrivals until January 2017, which saw the largest monthly number of foreign tourists coming into the country since records have been kept. At the beginning of the year, the Department of Tourism (DOT) was looking at a target of 6.5 million foreign visitors in 2017. In May the Marawi siege started, and the controversy and extremely negative international reaction and publicity to the government’s war on drugs were in full bloom. While still at historically high levels, monthly arrivals showed a constant decrease through June 2017. The DOT reported that international arrivals reached 4.4 million from January to August, up 10 percent year-on-year. That was not a bad performance. The DOT had projected the average number of monthly arrivals in 2017 at 541,600 (6.5 million divided by 12 months) and the eight-month average was 550,000 (4.4 million divided by eight months). We know that rhetoric impacts—or should affect—reality. If governments are concerned about safety conditions for their citizens, then arrivals would be lower. That is the rhetoric. In October the United Kingdom issued a travel warning. However, the arrival numbers from the DOT showed something different. The overall trend of foreign tourism is up. Arguing that Philippine tourism is just a shadow of our regional neighbors is valid, but does not change the reality that we are still seeing an increase. According to a recent statement by Tourism Undersecretary Rolando Cañizal, South Korea accounted for 24 percent of foreign arrivals. The largest number of tourists is coming from North Asia, including China, Japan and South Korea. The United States is still number two, but this may be because of the balikbayan Filipinos holding US passports. However, in spite of the sometimes-rocky relations between the Philippines and China, arrivals from China are up 35 percent in 2017. While not a large player in our tourism market, arrivals by Russian citizens grew by 27 percent. The conclusion might be made that those countries that know and understand the Philippines are not put off by the negative rhetoric, understanding the fact that the Philippines is home to multiple cultures and traditions that continue to draw international interest. As a result of the most recent tourism numbers, the DOT has raised their estimate of total arrivals for 2017 to 7 million. Let’s hope that becomes a reality.
Getting ready for the gig economy Atty. Jose Ferdinand M. Rojas II
RISING SUN
I
N the constantly changing landscape of work, one of the most significant movements in recent years is the increase in the number of freelancers versus regular employees who work at a desk from 8 a.m. to 5 p.m. Data from economic experts show that this trend will continue to rise. In fact, statistics from “Freelancing in America: 2017” show that the majority of the United States work force will be freelancing come 2027—that’s merely 10 years from now. There are 57 million freelancers at this time, which is about 36 percent of the US work force. It doesn’t take much to guess that the millennials are leading the way, with almost half of the millennial working population freelancing already. A nother related development shows that big companies like Pfizer and Samsung are looking at
freelance talents to fill their vacant posts. It’s not just the start-ups now, but even Fortune 500 companies are utilizing freelancers these days. A report by the Oxford Internet Institute reveals that large enterprises have increased talentplatform use by 26 percent in 2017. Another fact: Freelancers are paving the way and preparing for
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epublic Act (RA) 9160, as amended, otherwise known as the Anti-Money Laundering Act (Amla) was signed into law on September 29, 2001. The same was first amended in 2003, through RA 9194, which, among others, lowered the amount of covered transactions, defined suspicious transactions and provided additional functions to the Amla. RA 10365 further amended the Amla in 2012— expanding the list of institutions covered by the said law, as well as the list of unlawful activities or predicate offenses, just to name a few. And the most recent amendment made to Amla—to further enforce the country’s fight against money laundering and to make our country fully complaint with the standards provided under the Financial Action Task Force (FATF) Recommendations—is RA 10972, which includes casinos as covered institution. However, despite several amendments made to strengthen the Amla, there are some violations that are left uncovered. Hence, Resolution 468 was filed in the Senate in August this year by Sens. Vicente C. Sotto III and Panfilo M. Lacson Sr. directing the Senate Committee on Banks, Financial Institutions and Currencies to conduct an inquiry, in aid of legislation, into the possible violation of RA 9160 (the Amla) by
certain “covered institutions.” This Senate Inquiry is based on reports that the former Chairman of the Commission on Elections (Comelec) Andres D. Bautista, has 35 separate accounts with Luzon Development Bank (LDB)—30 accounts at the Fort Bonifacio, Taguig City, branches and five accounts at the Makati City branch—totaling to P329 million. The Senate inquiry, likewise, revealed a recent report by the Presidential Commission on Good Government (PCGG), which discovered that 316 accounts of sequestered and/or surrendered companies were transferred by the then-PCCG Bautista from government banks to LDB. The Comelec chairman, as an individual who holds a prominent public position in the Philippines, is considered as a Politically Exposed Person (PEP), as defined in the Amla, to wit: PEP refers to an individual who is or has been entrusted with prominent public position in: (a) the
happening globally, most especially in the labor landscape.
their individual careers toward the freelancing path. Among those people that reskilled in the last six months, 55 percent are freelancers. Now, what do these numbers mean for Filipinos, especially for the younger set who are about to enter the world of work or those who are just in the early phases of their careers? There is a definite need to assess one’s skills and look objectively at potentials and experience. Aside from a personal review, it is also important to study trends, both local and global. Having done this, those who find that they don’t have an adequate set of marketable skills would have to—you guessed it— upskill (or reskill). This is where further education or training comes in. It is never too late to study new things, or to move to a new industry or field altogether. Now is the best time to do that, especially if you want to cope with all the big technological, economic, societal changes that are
I would like to extend my warm congratulations to the winners of the 2017 Philippine Racing Commission (Philracom) Chairman’s Cup on December 3 at the Saddle and Clubs Leisure Park in Naic, Cavite. Salt and Pepper won the race, which was held in my honor as Philracom head from 2008 to 2011. Congratulations also to Electric Truth (second place), Pangalusian Island (third place) and Shining Vic (fourth place). I am very happy about the race and its outcome, most especially for Philracom’s good work to improve the racing industry. I am also happy for the Philippine Thoroughbred Owners and Breeders Organization (Philtobo) for successfully staging its 18th Annual Racing Festival and Grand Championship— congratulations! May the organization continue its passionate work in promoting the sport of horse racing in the Philippines.
Philippines with substantial authority over policy, operations or the use or allocation of government-owned resources; (b) a foreign state; or (c) an international organization. The term PEP shall include immediate family members, close relationships and associates that are reputedly known to have: 1. Joint beneficial ownership of a legal entity or legal arrangement with the main and/or principal PEP; or 2. Sole beneficial ownership of a legal entity or legal arrangement that is known to exist for the benefit of the main and/or principal PEP. The Senate Committee noted that LDB, as a covered institution under the Amla, should have taken reasonable measures to determine whether its customer is a PEP. The Bangko Sentral ng Pilipinas (BSP) Circular 950, series of 2017, provides that covered institutions shall specify criteria and description of the types of customers that are likely to pose a low, normal or high money-laundering and/or terrorist financing risk to their operations as well as the standards in applying reduced, average and enhanced due diligence. The same BSP circular implies that the enhanced due diligence shall be applied by the covered institutions to those individual customers who are considered as PEP. Moreover, whenever enhanced due diligence is applied, the covered institution shall, in addition to profiling of customers and monitoring of their transactions, require additional information and/or documents from
the customer; conduct validation procedures; obtain senior management approval for establishing business relationship; conduct enhanced ongoing monitoring of the business relationship; require the first payment to be carried out through an account in the customer’s name with a bank subject to similar customer due diligence standards, where applicable; and perform such other measures as the covered person may deem reasonable or necessary. This Senate Committee chaired by Sen. Francis G. Escudero with Sen. Grace Poe as cochairman, has, so far, conducted two hearings. In both hearings, Bautista was a “no-show.” Predictably, LDB hid under the mantle of the bank-secrecy laws and refused to answer probing questions of the Senate committee. The committee observed that there were enough “red flags” for the BSP to require LDB to explain the multiple accounts opened by Bautista and the enormous amounts involved, albeit broken down into amounts less than the threshold P500,000 so as not to be under the radar of the Amla. And yet, the BSP and the Amla appear not to be too concerned about these glaring red flags. A third Senate hearing is scheduled for January next year. Will Bautista again be a no-show? Will LDB again claim protection under the bank-secrecy laws? Hopefully, next year will be a better year—and the bad guys finally get to account for their bad deeds. But for now, let’s just hope Santa doesn’t reward them with more “gifts.”
nnn
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Super bookkeepers or accountants?
Chill and relax Siegfred Bueno Mison, Esq.
THE PATRIOT
Dr. Eliseo A. Aurellado
DEBIT CREDIT
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y old college textbook described accounting as a process with the analysis and interpretation of the output as the real job of the accountant. The process of recording, classifying and summarizing financial information is the job of the bookkeeper. Yet, there seems to be so much fascination in the process that the end goal of adding value to the output through its interpretation appears to have been downplayed. Dr. Manuel A. Tipgos thought so. I first met Dr. Tipgos and his lovely wife, Mary Lou, early this year at Resorts World. He was taking time from his teaching duties in the United States. The appointed meeting capped a series of e-mail messages over a period of two years where I got to know him. He had prepared a paper on restructuring the system of education in the country, particularly on accounting, which he sent to the Board of Accountancy (BOA) for possible appropriate action. As a Certified Public Accountant (CPA) in the 1960s who had found a new home in the US, Manny had practiced his profession mainly in academe as director of the doctoral and master’s program in accounting at the University of Kentucky and Professor Emeritus of Business Administration at the Indiana University Southeast. One of Manny’s advocacies was the shortening of the accounting curriculum in this country because of his concern that it was producing super bookkeepers rather than accountants. His thinking was that current accounting students are drilled too often on accounting rules in countless problems and exercises in the classroom. This “longest drill of accounting rules in the universe,” as he called it, is carried over into the review schools in preparation for the CPA licensure examinations. Manny’s advocacy struck a chord in me at that time, as I was also on a similar path. I had started to advocate in my talks with students and academe that, perhaps, the accounting curriculum should consider several tracks, since not all future accountants ended up in public practice. I called it a ladderized system where I proposed a progression of accounting curriculum starting with a two-year course on bookkeeping, four-year courses on management accounting, internal auditing, taxation and the current five-year course in public accounting. Although my aim was to shorten accounting education for those who would not follow the public accounting path, Manny had a more radical approach. He wanted to shorten accounting education, period. He claimed that our accounting education was producing super bookkeepers and not accountants. He compared our curriculum with that in the US where 130 units were all that were needed to
finish the course whereas we had 210 units in our accountancy course. For certain schools this had even gone up to 273 units. This situation prompted Manny to call our curriculum as antipoor because it took so long and the costs were high. As a member of Commission on Higher Education (CHED) Technical Council on Accountancy, we took up the challenge of Manny to try to rationalize the accounting curriculum. With the onset of K to 12, it was possible to shift some of the subjects in the accountancy program to senior high. As a result, the Bachelor’s degree in accountancy was reduced to 173 units. There were also three other accounting tracks created: Accounting Information Systems, Management Accounting and Internal Auditing. Recently, CHED came up with CHED Memorandum Orders (CMO) 27 to 30 on these new degrees mandating all schools offering accountancy programs to start implementing the new curricula in 2018. It was now possible to complete these accountancy courses in four years. Only the accountancy course will qualify the graduates to take up the CPA licensure examination; the other three degree courses will prepare the graduates to pursue a career other than public accounting with no compulsion to take the board examinations. Manny Tipgos passed away this year. He would have been glad to know that his dream of a shorter and more economical accounting course in this country had finally come true. NOTE: The CHED and theBoard of Accountancy (BOA) will conduct the first of a series of public orientation on the new accountancy programs on the recently issued CMO 27 to 30 on December 11 at the Cebu Parklane International Hotel. Eliseo A. Aurellado, PhD, is a CPA and a member of the BOA. He teaches at the Ateneo Graduate School of Business and is vice chairman and COO of Metro Stonerich Corporation, a Triple A ISO-certified construction firm. This column accepts contributions from accountants, especially articles that are of interest to the accountancy profession, in particular, and to the business community, in general. These can be e-mailed to boa.secretariat.@gmail.com.
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ur human tendency is to worry over uncertainties, pondering and wondering to the point of unnecessary anxiety. Most companies have recently finished their respective strategic plans as they set departmental targets and goals. As in most companies, the plan, year after year, is focused on revenue maximization and cost reduction. In the case of the Philippine Airlines (PAL), more routes will be launched as Clark, Cebu and Davao airports will be developed as international hubs. As PAL anticipates a four-star rating from Skytrax within the next few weeks, it will continue to pursue several customer-centric activities, acquire more aircraft—including the fuel-efficient and long-range Airbus 350—and aggressively digitize most of its systems and processes for the benefit of its passengers. The direction has been set. Human assets are in place. Information-technology infrastructure will soon be transformed. PAL seeks to achieve a five-star rating by year 2020. There should be nothing to worry about. But still, some worry. Talking about strategies, perhaps I can safely surmise that my law students’ sole objective is to pass my
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tunning mini-revolutions have erupted in recent months in two of the world’s largest Muslim countries. The first shock came in Indonesia, where a little-known group of activists led a mass protest against the Christian governor of Jakarta. Accused of disrespecting the Prophet, the governor, a close ally of the country’s President Joko Widodo, is now in prison. In Pakistan in late-November, another pop-up political outfit besieged the capital city Islamabad, forcing the government to concede to all their demands, which included the harsh implementation of blasphemy laws. Neither country suffers from a scarcity of laws aimed at detractors of the Prophet. And persecution of Muslim minorities, such as the Ahmadi, has been intensifying in recent years in Indonesia as well as Pakistan. A police bodyguard who assassinated the governor of Punjab in 2011 for the latter’s
opposition to blasphemy laws, and “westernized” lifestyle, became an instant hero, showered with rose petals by lawyers in court. What’s new and more disturbing is growing support for anti-blasphemy activists among a population believed to be largely moderate. What explains this widespread popularity of the politics of outrage? It’s not hard to blame political opportunists, such as the Pakistani army, which has a long record of nurturing Islamists and is again seeking to consolidate its power. The Pakistani opposition leader Imran Khan has sidled closer to Islamic hardliners in recent days. Indonesia’s secular military-business elites were also quick to realign themselves with anti-blasphemy activists. It’s easy, too, to finger “radical Islam,” and its international sponsors, such as Saudi Arabia, for the exponential rise in intolerance. But what then explains the Hindu nationalist vigilantes who currently rampage across India, proscribing whatever “offends” their sentiments?
was paired with a dancing diva, Ms. Esteban. Everyone was so chillax! When I was asked to give a few remarks about how to pass my course and the bar examinations, I simply told them to go back to that party, cast aside their worries and simply chill. Whenever people are relaxed, they tend to deliver peak performances. One student looked and sounded nervous when she sang one of my all time favorite songs (When You Say Nothing At All). I’m sure she can sing far better in the bathroom shower while more relaxed. In any academic exam, students who are nervous cannot think better and write better. I told my students that everything they need to know is already in their systems. Their writing skills have been honed after several semesters in law school. The target is clear. There should be nothing to worry about. But, somehow, our natural tendencies overwhelm us, and we start worrying. Although very successful in business, one classmate, LSG, is one anxious person. Her spirit was shattered when she lost her husband due to cancer. After being widowed for more than five years, LSG eventually found a partner who made her want to live and love again. They lived a blissful partnership to the point that she was ready to marry again. For some odd reason, however, he decided to marry someone else. She was and
still is very heartbroken. She worries a lot lately knowing that she will have extreme difficulty trusting men now and in the future. I reminded her of one of my favorite Biblical passages regarding worrying, Philippians 4:6, which says, “Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God.” Whether the area of concern is hitting a business target, making the grade in school, or finding the one true love in our lives, we must and should not worry. We must learn how to chill and relax. After all, God is in control. In every situation, even if painful, we must give thanks. Everything is a blessing, as Our Father will not give us what is not good to us. In the case of LSG, she still cannot find the answers to questions like, “Why did he leave me? Does he not love me anymore?” Her friends and I can only speculate. Answers to those questions will come when we are not anxious. Similar to my law students, answers to seemingly difficult questions in the final examination, which they are taking as of date of this publication, will come to them when they are relaxed. Everything we need has already been given to us. We just have to chill and relax. For questions and comments, please e-mail me at sbmison@gmail.com.
Google and Facebook too can be disrupted By Leonid Bershidsky Bloomberg View
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have long considered today’s Internet advertising model a scam: It’s a system in which giant, monopolistic companies—Google and Facebook —are selling inflated user numbers and overhyped targeting opportunities to advertisers while collecting way too much information about users and cheating content creators out of their fair share of revenue. It may not be too late to fix it, though. Just ask Brendan Eich, founder and CEO of Brave Software, a San Francisco-based start-up whose attempt to change the standards could be considered quixotic if not for Eich’s track record. Eich created the JavaScript programming language while working for Netscape, and then cofounded the Mozilla project, which developed the Firefox browser. He had to leave Mozilla for reasons that had nothing to do with his vision or technical prowess. His current company makes a browser, too, but it’s different from others in that it prevents sites from tracking a user and blocks ads, while also bypassing the anti-ad-blocker protection used by major news sites. I’ve tried it, and it works better than the ad-blockers in other browsers, such as Chrome and Safari. The browser is built on Google’s opensource Chromium code, and its usage isn’t tracked by browser market-share statistics: It shows up as Chrome. “We hide in the Chrome crowd,” as Eich put it to me in a conversation on the Telegram
Asia’s new politics of outrage By Pankaj Mishra
subject, wills and succession. Realizing that the subject I teach can dictate their destiny in Ateneo, most of my current students are in panic mode. More are worried, as close to half the class failed the midterm examinations. Prior to the last day of class, I showed them their class cards, which indicated 70 percent of their final grade. That way, they know exactly what they need in the final exams to pass or to make it to the dean’s list. On the last day of class, my students threw a party where one student, Mr. Cortez, even enthusiastically performed a rap song (Stupid Love). The energetic host Mr. Virata even managed to make me participate in a newspaper dance where I
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A fuller explanation lies in the momentous socioeconomic shifts in Pakistan and Indonesia: the dramatic reduction of poverty in the previous two decades and a great expansion in the size of the aspiring urban middle class. Historically, such an extensive escape from rural hierarchies and into relatively egalitarian urban areas has rarely led to social peace. For, as Tocqueville pointed out, “the desire for equality always becomes more insatiable as equality is greater.” Urbanization and the arrival of uprooted masses into politics plunged much of 19th century Europe into instability, empowering demagogues and turning the hatred of minorities and cosmopolitan liberals into a political sport. In our age of accelerating communications, much larger populations in Asia and Africa desire prosperity, equality and dignity. And many more people experience faster social mobility than before. But this also means that these ambulant individuals soon collide with social, economic and cultural
messenger. That must come in handy for a product that undermines the business model of most top websites its users visit: It’s difficult to block. At first glance, what Brave does should only make things worse for content creators who rely on advertising income. But Eich is looking to build a different model that should work better for them, and for advertisers, than the current one. Eich appears to think and talk faster than most people can follow: We get direct brand and agency deals that result in a catalog, same for all users in a given region and natural language, who opt in. No tracking. Local machine learning studies multiple inputs from search and e-commerce query logs, to click logs and tab constellations, to ad views (if we have a third-party partnership) and actions, to e-commerce consummations, to YouTube and other big site interactions. This is the full dataset Google sees via remote tracking (and so misses where Doubleclick or another tracker they own is not embedded in remote content). This bears explaining. Brave’s idea is to take Google’s (and Facebook’s) place as an intermediary between advertisers and Internet users by offering precise targeting based on what the browser learns about each specific user. The targeted ads would reach real humans, and not bots or multiple accounts set up by the same user, who must actually agree to see ads. In fact, Brave envisions “banklevel” know-your-client rules. As for the browsing data, Brave doesn’t want to collect it and sell it on: It’s supposed to
remain, and be analyzed, on the user’s computer. Why would people agree to see ads? Well, because they’d get paid for that. Starting in the first half of next year, Brave intends to hand over to users 70 percent of gross revenue from ads directly sold by the company. If publishers partner with it as an advertising conduit, the publishers will get 70 percent of revenue, and users will get 15 percent. That’s one revenue stream for publishers. Another is supposed to come directly from browser users. Even now, Brave allows them to make voluntary payments for content from a cryptocurrency wallet attached to the browser. A user sets up a monthly catch-all subscription payment, and creators and publishers are compensated from it according to how much content the user has consumed. But one can easily imagine how a media company’s own subscriptions could be integrated with the wallets, and how users could spend part of their ad revenue share for the subscriptions. It’s a win-win scheme for advertisers, users and publishers. Its weakness, though, is that it needs massive adoption to become interesting to them all. Eich says Brave has 1 million monthly active users, and he expects that to get to five million next year. As browsers go, these are tiny numbers. But, Eich says, “1 million, 5 million, all those are numbers I grew Firefox through to get to 10 million, 50 million, 100 million. I also went through Netscape going from 40 percent of market to 80 percent [and then the downhill side].” In May Brave held an initial coin
offering, selling 1 billion so-called “basic attention tokens,” it’s local currency that’s convertible into common cryptoor fiat currencies. The tokens were sold for 156,250 ether, worth almost $67 million now, so Brave has plenty of cash on hand—but it has also kept some of the tokens it issued to give away to users so they could pay content creators. This week, it started handing out the token grants. It’s a nerdy way to stimulate adoption; but then Eich says he doesn’t need a giant user base to drive standard change. He quotes Nassim Taleb’s salt example: All salt sold by grocery stores is simultaneously kosher and halal, though neither Muslims nor Jews make up the majority of buyers. “Standards get moved by up-andcomers who disrupt old models,” Eich told me. “Firefox did this. Mozilla has punched above its weight on standards.” The idea appears to be to show a better, more equitable model to the world and force the Internet advertising duopoly, Google and Facebook, to take notice. There’s a good reason for them to do so: Brave offers effective ad-blocking and privacy protection at a time when people are getting tired of the Internet giants’ use of their personal data as a freely donated commodity they can sell on. So what does Brave want Google and Facebook to do once they realize the danger? “Buy us at right price, possibly,” he replies. “I think Google might, as they would, not be able to duplicate our model now without antitrust issues. They would, of course, consider copying, rather than buying.”
disparities, which, long-established, are always widening. Old feudal, business and professional classes have visibly expanded their disproportionate privileges, which include assets abroad, superior education and consumer indulgences. Those making the arduous rural-urban transition for the first time without adequate social and professional networks, the right accent in English or glamorous Instagram feeds can thus feel cruelly marginalized. They expect to be rewarded for their talent and hard work in a meritocracy. Instead, they find themselves cowed by the entrenched power of dynasty, or inherited advantages. Such sharp class divisions offer near-perfect growth conditions for the tumor of ressentiment—one that political opportunists from the right, in the absence of any progressive politics, are best placed to nurture. And they do so, yet again, by redirecting the frustrations of social mobility against scapegoats: religious and ethnic minorities, or blasphemers among a “liberal” elite.
It’s in this context of aggravated social and economic inequality and undeclared class war that some very unlikely class warriors have emerged. In India, the corporate-backed Narendra Modi presents himself as a champion of the hard-working “neo-middle class” (his own shrewd word for Hindus emerging from poverty) against India’s decadent, minority-pampering dynasts. In Pakistan, Imran Khan, a darling of London’s jet-set, routinely works up his young Pakistani supporters through denunciations of “westoxified” and “bloodthirsty” liberals. The neo-nativists may seem hypocritical to their critics. However, they offer to many people a deeply gratifying substitute for actual political, social and economic power: the language of moral opprobrium, which is weaponized through anti-blasphemy legislation. For many lowly strivers and stragglers, laws aimed at the godless, the dissolute and the traitorous have a visceral appeal. Of course, the self-styled defenders
of the prophet’s honor aren’t the best advertisements for Islamic virtue and dignity. Both Khan and the Indonesian rabble-rouser Rizieq Shihab have been accused of sending lewd text messages to women. But their plastic haloes aren’t dented, largely because their neo-middle class fans are also not wholly or exclusively motivated by religious principle. Rather, as an insightful new book, The New Pakistani Middle Class by Ammara Maqsood, points out, their aspirations are diverse and seemingly contradictory. Many upwardly mobile people wish to assume a showy Muslim identity even as they pursue the secular totems of success. With their headscarves and long beards (and iPhones), they want to be seen as individuals moving forward confidently in the modern world. They may not indulge for long in a fundamentally disruptive politics of blasphemy. For now, however, it represents an aggressive will to power of a rising—and thwarted—class against an old elite.
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A12 Monday, December 11, 2017
Membership of PHL, 4 other countries to boost gains from TPP $486B T By Cai U. Ordinario
@cuo_bm
he new Trans-Pacific Partnership (TPP) could trump the economic benefits of the Regional Economic Comprehensive Partnership (RCEP) if the Philippines and four other countries would join the free-trade pact.
In a working paper, the Washington-based Peterson Institute for International Economics (PIIE) said the existing TPP framework can even be strengthened with the addition of five other countries who have initially expressed interest in joining—Indonesia, Korea, the Philippines, Taiwan and Thailand. The addition of these countries to the TPP, which the think tank referred to as “TPP 16,” is expected to generate income gains amounting to $449 billion globally and $486 billion for member-economies. “The TPP 16 gains are large because such an agreement would apply high-quality provisions to trade among those three industrialized economies, which do not
currently have a trade agreement with each other. Also, the agreement would go further than the others analyzed in establishing new supply chains in the AsiaPacific region,” the PIIE said. In a blog, Asian Development Bank (ADB) Economic Research and Regional Cooperation Department Principal Economist Jong-woo Kang said the withdrawal of the United States brings down the scale of economic benefits from the TPP. With the US, total exports of the 12 members would have accounted for 26.6 percent of world trade but with 11 members, their world trade share falls to 15.2 percent and intraregional share to a mere 2.3 percent.
The income gain that member-economies could derive from the new TPP
Kang said this is due to the US being the largest trade player among the original 12 TPP countries, representing 11.4 percent of world trade and 41 percent of trade among members. However, he said that by pulling out of the TPP, the other members of the TPP will have more incentive to invest in Canada, particularly among those that still do not have free trade agreements with Canada and the US. “The remaining 11 countries still have good reason to maintain the TPP momentum in one way or another, as shown by the ongoing push to finalize the deal,” Kang said. “Furthermore, the pact’s members should proactively consider expanding the scope to encompass additional members who are willing to commit to similar obligations.” The additional members, the PIIE said, could prove to be the best option for the TPP. Based on
its calculations, the institute said the original TPP framework, which includes the United States, was expected to generate global income benefits of $492 billion. The income benefits are expected to be lower if the remaining 11 countries continue the TPP on their own. The PIIE said the global income benefits will only reach $147 billion. Other trade agreements, such as the RCEP, would also pale in comparison to TPP16. The RCEP can generate only global income gains of $286 billion. However, RCEP and TPP 16 are still better alternatives than just an 11-member trade agreement, such as the current membership of the TPP. “High-quality agreements lead to substantially larger gains than less rigorous ones. For example, the TPP 16 agreement could produce more than double the gains of RCEP, even though the TPP 16 economies have only half the GDP of the RCEP region,” PIIE said. Former Tariff Commissioner George Manzano earlier admitted that without the US market, the TPP is a “less interesting” trade agreement for the Philippines. However, should the US decide Continued on A2
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Lawmakers move closer to finalizing TRAIN bill Continued from A1
Committee on Ways and Means Chairman Dakila Carlo E. Cua of of the Lone District of Quirino said the congressional bicameral conference committee tackling the Duterte administration’s taxreform program is eyeing to finish the bill on Monday. “We hope to finish [the tax-reform bill] tomorrow [Monday] and have a final bicameral committee version of the measure,” Cua said. Fariñas said the Senate and the House have until December 13 to pass the tax-reform bill and submit it to Malacañang for President Duterte’s signature. “The target is, of course, on Wednesday, December 13, at the latest. That is, if the bicameral conference committee will be able to resolve conflicting provisions in the [tax-reform bill],” Fariñas said. Over the weekend, Sen. Juan Edgardo M. Angara, chairman of the Senate Committee on Ways and Means, said members of the bicameral committee have already agreed on 75 key provisions, or 90 percent, of the tax-reform bill. However, still pending before the bicameral committee are “contentious” provisions which include excise taxes on coal, minerals and cosmetic procedures, which were inserted by the Senate. Earlier, Speaker Pantaleon D. Alvarez vowed to block Senate insertions of the additional taxes, particularly on coal, as they run counter to the constitutional mandate that all revenue measures must originate exclusively from the House of Representatives. Article VI, Section 24 of the Philippine Constitution, which provides “all appropriation, revenue or tariff bills, bills authoriz-
ing 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, while adopting a 10-percent excise tax on cosmetic procedures for aesthetic purposes. The senators also want to double excise taxes on minerals and mineral products and quarry resources. The proposed TRAIN Act is targeting to raise P130 billion in revenues to finance the Duterte administration’s ambitious infrastructure program. The bicameral conference committee is composed of members from each House of Congress—both from the majority and minority blocs—to settle, reconcile or thresh out differences or disagreements on any provision of the bill. Once the bicameral committee finalizes its version of the bill, the measure will immediately be transmitted to the Senate and the House for ratification and will be submitted to Malacañang. The congressional committee should approve the consolidated version of tax reform this week to ensure its passage before Congress goes on Christmas break on December 13. The government is eyeing to implement TRAIN by January 1, 2018.
Concerns of farmers
Former Labor Secretary Ruben D. Torres of the Trade Union Congress of the Philippines (TUCP) affirmed over the weekend the TUCP supports the appeal of various farmers’ organizations opposing the inclusion of tobacco tax in Package 1 of Continued on A2
Martial-law extension a must to curb terror sympathizers: DND T
he extension of martial law in Mindanao is essential to completely curb threats from sympathizers of the Maute-Islamic State of Syria and Iraq (ISIS), the Department of National Defense (DND) said on Sunday. “It will help us to continue our momentum in our campaign against the Daesh [Arabic word for ISIS] and their sympathizers and not to do so will allow them to regroup again. [And] as you know, there have been reports that they are recruiting already in the Lanao area, so I think this will help curb their activities on the ground,” DND Public Affairs chief Arsenio Andolong said in an interview. “If we dont have martial law, it will be very difficult for the rehabilitation of Marawi and the other war torn areas in the area,” he added. “We’re going to move logistics ano ’yung mga equipment, pagka sila’y nakakaikot ng malaya d’un, they can hamper ’yung pagre-rebuild natin di ba, kasi paano natin matutuloy ’yun eh kung hindi natin ma-secure yung area, papunta pa ’yung mga engineers natin e baka ma-ambush na ”yung mga gan’un ba,” Andolong said. When asked whether terror threats remain in Mindanao, Andolong said “there is a threat. In terms of seriousness kasi relative ’yun sa iba-ibang areas eh, pero meron, it is there, it is credible.” On July 23, Congress, voting 26118, extended martial law in Mindanao until year-end. In October Lorenzana announced the end of the five-month long conflict between government forces and Maute terrorists in Marawi City following the death of top terrorist leaders Omar Maute and Isnilon Hapilon. Andolong, meanwhile, echoed Defense Secretary Delfin Lorenzana’s stand saying there would be no holiday ceasefire with Communist Party of the Philippines-New People’s Army-National Democratic Front (CPP-NPA-NDF).
“Nagsalita na si Secretary Lorenzana dyan that he is not inclined to declare a suspension of military operations this Christmas because it will give them [NPA] a chance also to continue their attacks on our outpost, they are taking potshots at our troops and policemen and he does not relish that. PNA THESE three file photos show the state of Marawi before and after government security forces clashed with Islamic State of Syria and Iraq-inspired Maute Group. In the two photos, Maranaos pose in front of the King Faisal Mosque and Marawi City’s largest masjid (in its official Islamic colors) before government launched an all-out war on May 23 against alleged terrorists operating in the Islamic City of Marawi, the capital and the only city in the province of Lanao del Sur. A damaged mosque with holes blasted out of its dome is seen in the battle-scarred Marawi on October 19, two days after President Duterte declared the liberation of the city from militants. George Tapan and AP Photo/Bullit Marquez