Businessmirror december 14, 2016

BMReports

PHL coconut-rehab program in Yolanda-hit areas yet to bear fruit ROSALES: “Despite our effort to call [Sen. Francis N. Pangilinan’s] attention to the YRRP, he did not prioritize it as soon as possible.”

By Jasper Emmanuel Y. Arcalas Part Three

S

OMETIMES change may not be good. It could be in the case of the Philippine Coconut Authority (PCA), as the agency implemented the Yolanda Recovery and Rehabilitation Program (YRRP) for three years. “Changes in policies, in priorities and in leadership [affected] the overall performance of the agency,” PCA Deputy Administrator for Operations Roel M. Rosales told the BusinessMirror. Continued on A2

An aerial view of Tacloban City, Leyte, after Supertyphoon Yolanda (international code name Haiyan) ravaged the region on November 10, 2013. AP/Malacañang Photo Bureau, Ryan Lim

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror

www.businessmirror.com.ph

A broader look at today’s business

n

Wednesday, December 14, 2016 Vol. 12 No. 63

Foreigners can own public utilities, not land–Duterte Use it or lose it

P

free fire

O

F all things, it is the online magazine Slate that explains why it matters that Donald J. Trump is a TV news junkie, even if he is a Twitter addict. He gets all his news and views from TV news via cable. Obama scorned TV news and relied on expert studies only, which conduce to thought before action. Trump relies only on his eyes and ears to get news and views. Obama read and pondered long-form analyses in the manner of great statesmen— Kennan, Bullitt, Bohlen, Harriman and Acheson, the architects of American power.

Continued on A10

business news source of the year

P25.00 nationwide | 5 sections 28 pages | 7 days a week

By David Cagahastian

resident Duterte is endorsing the lifting of restrictions on foreign ownership of public utilities—now a subject of deliberations on the proposed changes in the Constitution in Congress—but would not allow foreigners to own land. See “Duterte,” A2

Teddy Locsin Jr.

2016 ejap journalism awards

DUTERTE: “They can buy the whole of Tondo and relocate there, and we’ll have nothing and everything sold.” AP/aaron favila

Final version of 2017 budget bill OK’d By Butch Fernandez & Jovee Marie N. Dela Cruz

A

Senate-House of Representatives conference committee approved on Tuesday the final version of the P3.35-trillion 2017 national budget, meeting a self-imposed deadline for Congress to quickly pass the annual money measure and have it enacted into law before the year ends to avert government operating under a reenacted budget in January. The House ratified the reconciled version late Tuesday. Ratification at the Senate is expected on Wednesday. Sen. Loren B. Legarda, Senate Finance

PESO exchange rates n US 49.8230

Committee chairman, said the 2017 budget bill will be transmitted to President Duterte for signing into law after ratification at both chambers. Lawmakers foresee no further hitches in the early enactment of the money measure, saying this was crafted in accordance with the Duterte administration’s 10-point socioeconomic agenda. “We ensured that it funds the necessary services needed by our citizens, such as universal health care, free tuition for all in state universities and colleges [SUCs], and additional funds for social services,” Legarda said. She added that lawmakers also agreed to allocate funds for “free irrigation, ad-

ditional funds for prisoners’ subsistence allowance, pension for post-World War II veterans and centenarians, among others.” The 2017 budget is higher by 11.6 percent than the current year’s budget of P3.002 trillion. As a percentage of GDP, the 2017 budget represents 20.4 percent compared to this year’s 20.1 percent of GDP. The total revenue next year is expected to reach P2.48 trillion, or around 10 percent more than the government targeted to collect this year. It is equivalent to 15.6 percent of the GDP. The national government budget deficit next year is expected at 3 percent

See “Budget,” A2

n japan 0.4333 n UK 63.1656 n HK 6.4223 n CHINA 7.2117 n singapore 35.0053 n australia 37.3075 n EU 52.9967 n SAUDI arabia 13.2879

Source: BSP (12 December 2016 )

A2 Wednesday, December 14, 2016

Budget…

BMReports

continued from A1

of GDP, or P478.1 billion. This funding shortfall is funded through borrowings. The total borrowings in 2017 will reach P631.3 billion. The GDP is expected to grow by 6.5 percent to 7.5 percent in 2017 through sustained expansion of the services and industry sectors, and the expected rebound of the agriculture sector. Legarda reported that other highlights of the final version of the 2017 budget bill provides strong support for education with an additional P8billion budget for the Commission on Higher Education (CHED) to ensure “all college students enrolled in any SUC in the country will not pay for their tuition fee.” Legarda noted that the budget for state-run universities and colleges was also provided additional funds for scholarship and capital outlay for all SUCs; along with increased funding for the Department of Education (DepEd) projects for site development

of public schools, as well as allocation to increase teachers’ cash or chalk allowance from P1,500 to P2,500 to purchase classroom supplies, like chalk, erasers and forms. Legarda added under the 2017 budget, the government’s health-care program was granted P3-billion increase in the PhilHealth allocation “so that all Filipinos will now be covered by the universal health-care program, while indigent patients will not have to pay for anything in government hospitals under the No Balance Billing policy.” At the same time, the bicameral panel, likewise, endorsed additional funds for the Department of Health (DOH) up to P1.521 billion for the Doctors to the Barrio program, construction of additional health facilities and medical assistance to indigent patients; as well as the P2.646 billion allocation for the establishment of DOH-Treatment and Rehabilitation Centers in regions which do not have such facility.

BusinessMirror

The Department of Social Welfare and Development (DSWD) also got P100 million to be granted to centenarians, on top of additional funding for the DSWD supplemental feeding program. “Moreover, all 4.4 million beneficiaries of the Pantawid Pamilyang Pilipino Program will now be entitled to a rice allowance in the form of cash grants, Legarda said. The senator confirmed that P2 billion was also allocated in the National Irrigation Administration budget “to subsidize irrigation fees that farmers have long been shouldering.” “For livelihood and microenterprises support, additional P1 billion is allocated under the Small Business Corp.,” Legarda added, “so it can provide loans at almost no interest to microenterprises,” even as additional funds were also provided for various programs of the Department of Labor and Employment, including employment facilitation and capacity-building services. For the Technical Education and Skills Development Authority, she reported that Congress approved funds for the Training for Work Scholarship

Underemployed Filipinos increased 18% in October

F

By Cai U. Ordinario

ilipinos who do not have a full-time job have increased in October, according to data released on Tuesday by the Philippine Statistics Authority (PSA).

Based on the results of the latest Labor Force Survey (LFS), PSA data showed underemployment increased to 18 percent in October 2016, from 17.6 percent in October 2015. This translates to 7.51 million Filipinos who were underemployed in October 2016, or an increase of over half a million, from 7 million posted in the same period in 2015. “The quality of jobs has not moved in the same direction as economic growth. At the same time, it reflects the fact that consumption and service sector-led growth isn’t generating the kind of jobs that can more hastily raise standards of living,” University of Asia and the Pacific School of Economics Dean Cid Terosa said. Former Labor Undersecretary Rene Ofreneo said the country’s informal sector remains large and estimates that two-thirds of the labor market is comprised of informal workers. Ofreneo said this is also because of the country’s large population. He added that the President Duterte’s plan to end contractualization is good, but there should also be an end to informalization. “[The] good news is that the economy is still positive, it is growing but what will happen next

7.51M The total count of underemployed Filipinos in October, or an increase of over half a million from 7 million posted in the same period in 2015, according to the PSA

year? Will Donald J. Trump have an impact? What does the Duterte government plan to do about this?” Ofreneo said. Socioeconomic Planning Secretary and National Economic and Development Authority (Neda) Director General Ernesto M. Pernia, for his part, said underemployment was prevalent among those working in private households and those employed in family business. Pernia said more than a third of those who are employed are vulnerable, citing that a large portion of those employed, especially in the agriculture sector, are susceptible to external shocks and economic downturns. He added that the government must seek to strengthen linkages

between academe, technical-education institutions and industry to ensure quality and relevance of education, and that students gain competencies that are essential to thrive in today’s changing world of work. “We must accelerate the improvement of local infrastructure and facilitate the linkaging of the sectors, primarily between the agriculture and industry sectors, to help raise the productivity of farmers and increase the value of their products,” Pernia said. “We must go beyond cramming information into our youth and foster the development of soft skills to enable the country’s youth to make informed career decisions and develop life skills necessary to succeed in a competitive workplace,” he added. Meanwhile, PSA data also showed the country’s unemployment rate declined to 4.6 percent, the lowest in 10 years. However, Pernia said that, while this is a cause to celebrate, youth unemployment remains high. He said data showed the unemployment rate of the youth is still​ more than​ twice the national unemployment rate and thrice the unemployment rate of 25-to-54 age group. “This shows that we need to equip our youth with the right skills and experience to be able to compete with seasoned workers,” Pernia noted. Meanwhile, the data showed the number of stable wage and salary employment grew to 25.3 million, or 60.8 percent of total employed persons, in October 2016. This is the highest for all October rounds since 2006. Private establishments employ nearly 80 percent of these workers, while the public sector employs just 13 percent. “The increase in stable wage and salary employment reflects our economy’s strength and the result of the government’s clamp down on unlawful contractualization,” the Cabinet official said. The government adopted a new unemployment definition in accordance with the International Labor Organization (ILO). Under the ILO definition, the unemployed include all persons who are 15 years and over as of their last birthday and are reported as those without work and currently available for work and seeking work. The ILO also said the unemployed include those without work and currently available for work, but not seeking work because they are tired/believed there was no work available; awaiting results of previous job application; had a temporary illness/disability; bad weather; and waiting for rehire/job recall.

Program/Livelihood, as well as Training Provision for Drug Dependents. Legarda said the Department of Interior and Local Government was, likewise, provided with additional funds for training and equipment of firefighters, support to the Philippine National Police’s (PNP) fight against illegal drugs, increased subsistence allowance of prisoners and rehabilitation and construction of jail facilities. She added that the Department of National Defense also got additional funding “to effectively defend the country from internal and external threats, as well as to fund programs, such as the repair of Veterans Center, expanded veterans hospitalization program and construction of cadet barracks.” Moreover, the Senate-House panels also approved allocation for combat and incentive pay of the military and police worth P12.1 billion, as well as funding for the Capability Enhancement Program of the PNP. For environment and resilience programs, Legarda said funds under the Department of Environment and Natural Resources (DENR) were al-

Duterte…

located for restoration of mangroves, which are effective buffers against storm surge and tsunami. In implementing the National Greening Program, the DENR should use planting materials that are responsive to the needs of the communities, such as fruit-bearing trees, bamboo, coconut trees, and trees that are important for traditional use and livelihood of indigenous peoples and local communities. According to Legarda, “this is a pro-people budget—one that will be felt by those at the grassroots, as it prioritizes rural development and social services. But these funds must be spent judiciously and expeditiously.” House Committee on Appropriations Chairman and National Unity Party Rep. Karlo Alexei Nograles of Davao City said the ratification of the P3.35trillion National Expenditure Program for 2017 was done despite disagreements on an item that was originally allocated by the House of Representatives to the Department of Public Works and Highways purposely for development projects in the Autonomous Region in Muslim Mindanao (ARMM). According to Nograles, the House

www.businessmirror.com.ph contingent in the bicam agreed to accept the Senate’s position to allocate some P8.3 billion, which was originally allotted for development projects in the ARMM, to the CHED to remove the impasse on the budget and avoid further delays on its approval, noting the importance of pursuing the Duterte administration’s agenda for change. “We are one with the position of President Duterte that we really need to develop Mindanao if we want to defeat the insurgency problem in the region, which is why we programmed infrastructure projects in Mindanao, including the ARMM. But some members of the Senate opined that this could be in violation of the ARMM Organic Act,” he said. “This created some sort of deadlock as the House stood its ground since we saw nothing in the Organic Act of the ARMM that prohibits the national government from implementing infrastructure projects in ARMM, especially if identified in the mediumterm development plan. In the end, we decided to give in just so that a budget is passed because we do not want a reenacted budget,” Nograles added.

continued from A1

During a business forum attended by representatives of big businesses held in Malacañang on Monday night, Duterte said he is willing to increase the foreign equity in public utilities to as high as 70 percent. “About the Constitution, I am ready to reverse the 60-40 [requirement]. As long as Congress is also ready, I will go along with it,” Duterte said. “I’m ready to do it. Just pay the taxes and get the profits and go away after. But you know, I am more after the opportunity for Filipinos, their employment; that is

my purpose. You build something here, and there has to be something that moves economically, and for me, it’s alright. The worry here is unemployment, actually,” he added. Duterte, however, said he will oppose any change in the Constitution that will allow foreigners to acquire land in the Philippines. “But you know, there is something which [I will oppose]—it’s a fundamental irreconcilable difference with me and some of the congressmen because even the Speaker before, who was my po-

litical enemy, already agreed to sell lands—selling lands to foreigners. I am sorry, but I am not ready for that kind because most of the Filipinos are poor. And with the growing economy of the supergiant, China and the rest, they can always come here and buy the land and they can buy the whole of Tondo and relocate there and we’ll have nothing and everything sold,” he pointed out. Duterte said these proposed changes in the economic provisions of the Constitution could be in place by the midterm election in May 2019 at the soonest.

PHL coconut-rehab program in Yolanda-hit areas yet to bear fruit continued from A1 Rosales recalled there were a lot of changes in terms of leadership in the course of the YRRP implementation. “There was [former Agriculture Secretary Proceso J.] Alcala first,” he said. “But even in the time of Alcala, the implementation of YRRP was distorted. Apparently, President [Benigno S.] Aquino was not pleased with the way we were working the debris management [component of the YRRP].” Rosales explained the agency initially planned to cut trees at the farm level. However, Aquino was concerned with having an ugly view of scattered dead coconut trees along the main thoroughfares of the devastated areas, Rosales added. He said Aquino then chose to appoint then-Bureau of Fisheries and Aquatic Resources (BFAR) National Director Asis Perez as lead implementer of the YRRP. “The priority of Asis then was to clear the roadside from dead coconut trees. So, the debris management focused on that,” Rosales said. “However, it was the clearing of trees at the farm level that was [left out].”

Going nuts

ASIS was replaced yet again by Sen. Francis N. Pangilinan, Rosales said. But Pangilinan’s focus back then was addressing the cocolisap, or coconut scale insect infestation, in the country, he added. “Despite our effort to call [Pangilinan’s] attention to the YRRP, he did not prioritize it as soon as possible,” Rosales said. “It was only around September or October that he [Pangilinan] realized that there was something wrong and that the Yolanda was the bigger issue. So, it was the only time they conceptualized a way on how to fast-track the cutting of the targeted coconut trees.” Of the 14 million devastated coconut trees, only 10 million would be cut while the rest would be left to rot

on nature’s time. According to Rosales, these trees were in the mountains, “in the hinterlands.” “So it was neither economically viable nor logistically possible to move them.” On top of the number of trees to be cut, the PCA changed the way of cutting them. “Before, we were preparing it by way of lumber quality,” Rosales said. “Ita-tabla na lang, ’yung basic cutting na lang, tapos ibinibenta na lang sa mga [traders] [They would be cut for lumber, only basic cutting and sold to traders].” The PCA completed the cutting of coconut trees some time in May last year. It was also only in the latter half of 2015 that the agency focused in replanting coconut trees and intercropping.

Weathering storms

WHEN Pangilinan stepped down from his post as presidential assistant for Food Security and Agricultural Modernization to run for the Senate, his assistant secretary Edel Guiza took his place as YRRP lead implementer. However, at the same time in December last year, PCA Administrator Romulo Arancon resigned. A new officer in charge for the PCA was assigned in January. It was during this time that the YRRP’s implementation also got snagged in logistical problems, according to Rosales. “There was a scarcity in planting materials. It was quite ironic that there are coconut trees in Northern Samar but, unfortunately, these were in quarantined areas for the Kadang-kadang [coconut festival], so you cannot bring them in,” Rosales said. “What happened then [we had] to utilize what is in the Leyte and Southern Leyte areas and then import from Mindanao. So it was a little bit cumbersome because we had to resort to getting it from as far as south as Zamboanga.” He describes the implementation of the fertilizer component of the YRRP as “dismal”. Rosales said the PCA outsourced the bidding pro-

cess for the fertilization, tapping the services of the Philippine International Trading Corp. (PITC). “It is more than a year since we tapped the PITC for the activity of the bidding and up to now there has been no company awarded for the program,” Rosales said. “So, it’s like that it defeated the purpose of good intention, of having transparency in the bidding at that time.”

Untangling knots

THE PCA tapped the services of the PITC some time in May last year to facilitate the bidding process for the P100-million fertilization program of the YRRP. Rosales said to date the PITC has not awarded anyone yet for the said program. “Sooner or later, they should award that already,” he said. Rosales said, in the long run, the YRRP would face problems in procuring seeds if Manila-based companies are the only ones joining the bidding for the program’s intercropping component. He added that some of the seeds put into bidding are not really available in the locality of the Yolanda-affected areas. Rosales said they are advising potential bidders to be introspective and “they just procure the ones that the farmers can really use.” Rosales said the PCA sought to meet with the PITC to clarify the status of the procurement for the YRRP’s fertilization component. The PCA-PITC bidding deal is nearing its two years and there has been no update regarding the matter. “We even pay the PITC an agency fee of a good amount of more than 10 million to get that thing done,” Rosales said, adding the PITC was able to award some of the requirements to companies. “This is more than 50 percent of the requirement of what we have asked the PITC.” He said the PCA expects the PITC to say they are not the ones to blame for the delay in the YRRP implementation and part of the blame is on the PCA. “We just want to untangle what went wrong.”

The Nation BusinessMirror

news@businessmirror.com.ph

Alvarez files another case vs de Lima

S

By Joel R. San Juan

@jrsanjuan1573

PEAKER Pantaleon D. Alvarez on Tuesday filed a criminal complaint against Sen. Leila M. de Lima for allegedly advising her former chaufferparamour Ronnie Dayan to snub the House of Representatives’s investigation on the proliferation of illegal drugs at the New Bilibid Prison (NBP). In a complaint-affidavit, Alvarez, together with House Majority Leader Rodolfo Fariñas and Chairman of the House Committee on Justice PDP-Laban Rep. Reynaldo Umali of Oriental Mindoro, said de Lima violated Article 150 of the Revised Penal Code, which provides that “disobedience to summons issued by the National Assembly, its committees or subcommittees, by the Constitutional Commissions, its committees, subcommittees or divisions is punishable by arresto mayor [up to six months imprisonment] or a fine ranging from P200,000 to P100,000 or both.” “As an incumbent senator, former secretary of justice and a lawyer, advising and inducing Dayan to hide and not to attend and/or appear in

the House inquiry for which he was duly summoned is tantamount to inducing disobedience to summons issued by Congress, of which she is a sitting member,” the complaint said. The complaint was personally received by Justice Secretary Vitaliano N. Aguirre II. During his appearance before the House justice committee, Dayan disclosed that de Lima advised him to snub the invitation of the panel in relation to its investigation on the narcotics trade at the national penitentiary. During the hearing, Dayan’s daughter Hannah Mae showed to lawmakers a text message purportedly from de Lima advising her father to hide and not to

appear in the inquiry. De Lima and Dayan had both admitted that they were previously in a relationship. The complaint also cited de Lima’s repeated refusal to attend the House inquiry on the narcotics trade inside the national penitentiary on September 20 and 21, and October 5 and 6. “Respondent opted to ignore all invitations and failed to attend any of the hearings conducted by the committee. Worse, respondent even insulted the House of Representatives by calling its committee a kangaroo court-committee and its proceedings a sham,” the complaint said.

Senate panel wrapping up ethics case vs de Lima

THE Senate ethics committee has assumed jurisdiction over a complaint lodged against de Lima for allegedly inducing Dayan against appearing before a House inquiry into illegaldrugs syndicates at the NBP. This developed even as de Lima, in the absence of a court issued hold departure order, was able to leave the country over the weekend to attend speaking engagements abroad, despite efforts by airport authorities to delay her departure. Senate Majority Leader Vicente C. Sotto III, ethics committee chairman, said he was still reviewing other pending complaints filed against de Lima

and “will make a recommendation on what to do after I have reviewed it.” Sotto admitted, however, calling a hearing of the ethics committee to take up the complaints will likely be deferred until de Lima returns, when the Senate is already in recess for Christmas break. “For us to call a hearing already, if the recommendation would be to call for a hearing and ask Senator de Lima to answer the accusations that will have to be, when we come back in January.” He conceded the difficulty of resolving the pending complaint by House leaders against de Lima for “inducing a witness” to stay away from a congressional inquiry while the accused senator is abroad. “Out of the country siya [de Lima],” Sotto said. “I don’t know if I can muster a quorum by next week because everybody is in Christmas mode already; so ako na lang ang mag-aaral sa committee ko kung anong magandang gawin, kung ano ang mga recommendation na ibibigay ko sa mga [ethics committee] members namin.” He clarified that the question of jurisdiction had been resolved because the complaint that de Lima induced a witness in an ongoing House inquiry acts alleged to have been commtted when she was already a senator, unlike the revious complaints that dealt with her acts as then justice secretary.

Editor: Dionisio L. Pelayo • Wednesday, December 14, 2016 A3

Fireworks industry thanks Duterte for reprieve on nationwide ban

S

TRIKE up the band, get your fuses ready and light up the night sky in bright, colorful and sparkling bursts of aerial fireworks. The traditional highlight of the year’s holiday celebration would go on as scheduled. No, the Grinch would not get away with stealing Christmas holidays this year, the local celebration of which is the longest in the world. This, after President Duterte said it would be too late to impose total ban on firecrackers this coming New Year’s celebration. ”It’s too late already. Everybody... they all have invested. It would not be fair,” Duterte said. The announcement threw the legitimate local fireworks industry into a celebratory fit as they expressed deep gratitude for the President’s sensitivity to the viability of the local fireworks manufacturing and the welfare of workers, suppliers and other stake holder in the pyrotechnics trade. “We deeply appreciate the President’s decision,” Philippine Fireworks Association President Joven Ong said. Ong said Duterte’s move indicates that he “carefully weighs the interests on business, labor, other industry stake holders and the general public, and for this, we express our deep gratitude.” Aside from the Presidential reprieve on a nationwide ban on all forms of fireworks, workers in Bulacan’s firecracker industry were very happy over the news

that the Department of Labor and Employment (DOLE) has lifted a workstoppage order on 48 firecracker stores and factories after they were found to have complied with safety standards. Forty other establishments that were suspended last month are undergoing assessment, the Dole said in a statement. All in all, 48 establishments can continue operation guaranteeing employment for tens of thousands of people relying on the industry for a living. In this regard, Ong urged regulatory agencies and law enforcers to follow the presidential directive, as well as the department order. Ong said: “I just got word that some provincial police, fire and local government units are not issuing permits, which they normally did in the past. The President has already said he will allow selling [pyrotechnic devices] this year, but it seems that the rest of the people in the government didn’t get the directive.” He added: “The whole industry is in danger. The livelihood of a lot of people is in danger.” “The legal industry is being given a hard time to get all the permits required, while not a single illegal firework has beeen caught. As a result, more people will be forced to buy from the illegal manufaturers and traders who do not get permits and sell smuggled fireworks instead of the legitimate companies who comply with the regulations,” he added. Catherine Joy Maglalang

Economy

A4 Wednesday, December 14, 2016 • Editor: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

Global uncertainties, absence of poll spending seen slowing growth in 2017

T

By Cai U. Ordinario

@cuo_bm

he Philippines’s economic growth is expected to slow next year due to the global uncertainties and absence of election spending, according to the Asian Development Bank (ADB).

In it s A si a n De ve lopment Out look Supplement (A DOS) released on Tuesday, ADB said the Philippines’s GDP growth this year was mainly due to election spending. ADB earlier disclosed that it expects the country’s GDP growth to slow to 6.8 percent next year. In the first three quarters of the year, GDP growth reached 7 percent this year. “Suc h br isk g row t h is e xpected to ease as the impact of spending for the May elections fades, and in light of global economic uncertainties. “In 2017 domestic demand will continue to underpin economic growth,” the ADB said. “ This outlook assumes that investments w ill continue to be ex panded on ef for ts to upgrade public infrastr ucture and improve the business environment,” it added. ADB attributes the country’s high economic growth this year to domestic demand that was driven

@joveemarie

T

The ADB’s earlier growth forecast for next year after the Philippines notched 7-percent GDP growth in the first three quarters of 2016

“Asian economies continue their robust expansion in the face of global economic uncert a int ies,” A DB Deput y C hief Economist Juzhong Zhuang said. “Structural reforms to boost productivity improve investment climate, and support domestic demand can help maintain growth momentum into the future.” The ADB downgraded devel-

oping Asia’s 2016 growth to 5.6 percent, below its previous projection of 5.7 percent. For 2017, growth remains unchanged at 5.7 percent. The growth for the major industrial economies exceeded expectations in the update, ticking up 0.1 percentage point to 1.5 percent in 2016. Growth in 2017 is maintained at 1.8 percent.

LTO, Stradcom agreement signals search for new IT provider–DOTr By Lorenz S. Marasigan @lorenzmarasigan

T

hE government has agreed to settle P8 billion in debt to Stradcom Corp., the information-technology (IT) provider of the Land Transportation Office (LTO) since 1998, and is now seeking a new service provider to streamline interagency processes in the transportation sector. Hours before being confirmed by the Commission on Appointments (CA), Transportation Secretary Arthur P. Tugade said his group has signed a one-year phase-out agreement with Stradcom to allow the government to subscribe to a new IT service provider. The agreement requires the government to settle P8 billion of debt to Stradcom, given that the company shall observe payment rules set by the Commission on Audit (COA). Stradcom is also required to turn over the source code and database to the government in a year’s time. Tugade said he “made sure that Stradcom shall do its part in helping the smooth migration of data and computer operations to the next IT provider of the LTO.” It may take up to two years to change an IT provider, given that it includes data migration. The bidding process for a new provider will be set within the oneyear provision of organizing and transferring of data. Stradcom is allowed to join the bidding. It may be recalled that the procurement of the P8.2-billion tech system was ordered in 2011. A year later, the department decided to split the contract into two, due to the bidders’ failure to qualify for the project’s broad scope. The contract for software and data components was worth P3.4 billion, while hardware component contract was for P4.8 billion. But the bidding was delayed when the Regional Trial Court in Quezon City issued a temporary restraining order (TRO) due to internal owner-

House committee approves onetime debt-condonation measure for LWDs By Jovee Marie N. dela Cruz

6.8%

by election spending in May. In Southeast Asia, the ADB projects the region to book a growth of 4.5 percent in 2016 and 4.6 percent in 2017. T he A DB sa id it rev ised d o w nw a r d it s f o r e c a s t s f o r Brunei Darussalam, Myanmar and Singapore, but made upward revisions for Malaysia and the Philippines. It added that Cambodia, Indonesia, the Lao PDR and Vietnam are on track to meet growth forecasts for 2016.

news@businessmirror.com.ph

he House Committee on Ways and Means on Tuesday approved a measure imposing a onetime general amnesty or condonation of unpaid taxes incurred by Local Water Districts (LWDs). During a committee hearing, Deputy Speaker and Liberal Party Rep. Romero Quimbo of Marikina said House Bill (HB) 22 seeks to help LWDs without financial capability to pay their tax liabilities so they can consolidate their resources, and subsequently expand and improve water services and ensure the provision of reliable and affordable supply of water to consumers. “There are about 251 cases involving unpaid tax liabilities of 164 water districts from fiscal year 1997 to 2007, which should be covered by the implementation of the condonation clause of Republic Act [RA] 10026,” Quimbo said, quoting data from the Philippine Association of Water Districts (PAWD). The condonation, the lawmaker said is deemed necessary for the LWDs with no financial capability to pay their tax liabilities. “This would help them consolidate their resources in order to expand water services, improve water quality and ensure the provision of a reliable, secure and affordable supply of water to consumers,” he said. During the 16th Congress, both the Senate and the House of Representatives ratified the bicameral conference committee report on such proposal, which reconciled HB 3675 and Senate Bill 2518. Its enactment into law, however, did not push through after former President Aquino vetoed the measure. Under the bill, all unpaid taxes or any portion thereof due from a local water district for the period starting August 13, 1996, until the effectivity of the proposed act shall be condoned by the government, thereby relieving all LWDs from the payment thereof. Quimbo said during the 14th Congress, RA 10026 was enacted to resolve inconsistencies in tax treatment that may have hampered the growth and efficient provision of safe, adequate and potable water to more than 15 million people outside Metro Manila. “Thus, RA 10026 included LWDs in the list of government agencies exempt from the payment of income taxes and also allowed the

condonation of their tax liabilities,” he added. However, he said the tax condonation was not automatic, because RA 10026 provided that unpaid taxes will only be condoned subject to certain conditions, such as the Bureau of Internal Revenue (BIR), after careful review of the financial statements of water district applying for condonation of taxes due, establishes its financial incapacity; and the water district availing of such condonation shall submit to Congress a program of internal reforms duly certified by the Local Water utilities Administration (LWUA). “The condonation therefore, is not automatic but, rather is dependent on certain requirements which LWDs must comply with,” Quimbo, former chairman of the Committee on Ways and Means during the 16th Congress, said. In addition, he said, the BIR issued Revenue Memorandum Circular (RMC) 68-2012 on November 5, 2012, setting the procedures in the application and approval of the condonation of tax liabilities subject to the submission of the following requirements by a local water district: letter of application; conditional certificate of conformance; proof of its financial capacity; and proof that it has submitted to Congress a program of internal reforms. The RMC also set the deadline to apply for condonation of taxes which was on or before April 30, 2013. “However, two months after the deadline set in the RMC, only a fraction of the 164 LWDs with unpaid tax liabilities had complied with the requirements provided under RA 10026 and RMC 682012. The condonation is deemed necessary for the LWDs with no financial capability to pay their tax liabilities. This would help them consolidate their resources in order to expand water services, improve water quality and ensure the provision of a reliable, secure and affordable supply of water to consumers,” he said. The bill provides for the amendment of Section 289-A of the National Internal Revenue Code of 1997, as amended, pertaining to Support for Local Water District so that all unpaid taxes or any portion thereof due from a local water district for the period starting August 13, 1996, until the effectivity date of the proposed Act are hereby condoned by the government, thereby relieving all local water districts from the payment thereof.

PCCI to Palace: Name new GOCC appointees

T

All aboard!

Carranglan, Nueva Ecija, commuters board a jeepney for a one-and-half-hour ride to Santa Fe, Nueva Vizcaya, unmindful of the risk to their lives and limbs. The jeepney, custom built to haul fresh vegetable produce, is utilized to ferry human passengers during the vegetable growing season. NONIE REYES

ship disputes in Stradcom. By February 2013, Stradcom’s contract expired. The stay order was still in effect back then. To avoid disruption of transactions and reversion to manual operations, the government extended Stradcom’s contract through emergency procurement under the provisions of Republic Act 9184, or the Government Procurement Reform Act. The court lifted the stay order

in the same year, and ruled that the government may proceed with the bidding for a new IT service provider. The Court of Appeals upheld the lower court’s decision in March 2016. The procurement for the LTO’s new IT system aims to provide a sustainable solution to address the current system’s issues. When it finally interlinks with the automation system of the Land Transportation Franchising and

Regulatory Board (LTFRB), the government will be able to eliminate cases of public utility vehicles (PUVs) securing an LTFRB franchise without LTO registration, as well as PUVs that are registered with the LTO, but do not have an LTFRB franchise. It will also make it easier for authorities to recover stolen vehicles, trace smuggled vehicles, prevent double registration and monitor unregistered vehicles.

he Philippine Chamber of Commerce and Industr y (PCCI) is urging the Duterte administration to fill in the vacant positions in government-owned and -control led cor porations (GOCCs) next year to ensure continuous government service. “On the government side, President Duterte asked for the resignation of heads of government agencies, including the GOCCs. The challenge now is how to fill up these positions, but that area is going on a slow pace. I’ve heard people are staying on a hold-over capacity, even if they’ve tendered their resignation, because no one’s there to replace them,” George T. Barcelon, PCCI president, said in a phone interview on Tuesday. GOCC Board members, including CEOs are defined as noncareer service officers under Administra-

tive Code of 1987, and as such, they’re considered coterminous with the appointing authority. Moreover, to recall, the chief executive issued Memorandum No. 4 in August, ordering the resignation of appointed officials from the Aquino administration. These have led to the vacancy of several positions in GOCCs, vacancies that should be filled to ensure effective continuation of policies, Barcelon said. “Those officers in hold-over capacity are in no position to act,” he added. The Governance Commission of GOCCs is the head agency tasked in overseeing the GOCCs, government financial institutions, government instrumentalities with corporate powers and government corporate entities. The agency also has the power to formulate and coordinate policies. Catherine N. Pillas

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Wednesday, December 14, 2016 A5

PHL’s 2016 rice output to hit 18.7 MMT

Drought, typhoon slashed banana output in Q3–PSA

B

File photo

F

By Jasper Emmanuel Y. Arcalas

@jearcalas

avorable weather conditions in 2016 would boost the country’s paddy rice output to 18.7 million metric tons (MMT), according to the latest report from the Food and Agriculture Organization (FAO).

The FAO’s forecast is higher than the 17.91 MMT rice output projected by the Philippine Statistics Authority (PSA) for this year. “After seeing the output depressed by precipitation shortages last year, abundant monsoon rains and improved water availabilities for irrigation are expected to lead to large recoveries in the Philippines and Thailand,” the FAO said in its report, titled Crop Prospects and Food Situation.

The FAO said the Far East Asian region’s combined paddy rice production for 2016 could go up to 673.4 MMT, from the 664 MMT estimated production in last year, on the back of increased growth from other countries fueled by favorable conditions. “Much of the subregion’s projected growth is expected to be sustained by an output recovery in India, where paddy production is forecast at a record of 161.5 MMT,” the FAO said.

“This level would stand 3 percent above last year’s weather-reduced outcome, reflecting a more normal pattern of the monsoon this year and sustained government support to the sector, namely, large public-sector purchases at higher minimum support prices [MSP],” it added. The FAO, however, said the paddy rice output of Indonesia, Vietnam, Malaysia and TimorLeste for 2016 could decline, as their cropping seasons were affected by the aftermath of El Niño last year. “The outlook is more subdued for countries along or south of the equator, namely, Indonesia, Vietnam, Malaysia and Timor-Leste, as the dry conditions linked to the 2015-2016 El Niño negatively affected the 2016 main season crops, which were planted in the last quarter of 2015 and early 2016 and harvested in the first part of 2016,” the report read. The FAO also said in the same

Duterte honors Dr. William Dar, 2 others

P

resident Duterte has honored Dr. William D. Dar and two others as recipients of The Outstanding Filipino (TOFIL) Award for 2016, for their “selfless dedication to their profession or vocation, resulting in significant contributions to the welfare of their countrymen and our country at large, as well as to the advancement of their respective fields of endeavor.” A native of Santa Maria, Ilocos Sur, Dar was recognized for his exemplary contribution in the field of agriculture, having served as former secretary of agriculture in 1998 to 1999, and director general of the International Crops Research Institute for the Semi-Arid Tropics (Icrisat), from 2000 to 2014. The President led the awarding ceremonies in Malacañang, on December 12 that, likewise, recognized two other TOFIL awardees, namely, former Philippine Ambassador to the United States Jose L. Cuisia Jr., for public service and diplomacy; and Fr. Antonio CT. Pascual, for humanitarian service, community, nongovernmental organization and cooperative. “I am humbled to be chosen as one of this year’s TOFIL awardees. Once again, I dedicate this recognition to my family, to the thousands of volunteers of InangLupa Movement, and the millions of small Filipinos farmers and fishermen nationwide,” Dar said.

To date, Dar is the only Filipino who has served as head of a global agricultural research institute. He led Icrisat for an unprecedented three five-year terms, leaving behind a legacy benefiting millions of farmers in India, Africa and other dry land countries in the world, including the Philippines. He has transformed Icrisat into one of the best agricultural research institutes in the world in terms of innovative research programs, impact to clienteles and financial health and stability. Further, through his strong leadership and governance, he has quadrupled the income and investments poured into Icrisat since he took over in 2000, from $21 million to $85 million in 2014. “We have turned around Icrisat into a financially stable and a leading global research institute, receiving several awards, particularly from the CGIAR,” Dar said. CGIAR is a consortium of 15 research institutes in the world that also include the International Rice Research Institute in Los Baños, Laguna, Philippines. Upon his retirement from Icrisat, Dar founded the InangLupa Movement Inc. a social volunteer group that advocates for the modernization and industrialization of Philippine agriculture, that is inclusive, science-based, resilient and market-oriented. Concurrently, he serves as the

strategic adviser for global expansion of Prasad Seeds Private Ltd., which operates a seed-processing facility in Pangasinan, and engages in contract growing of hybrid rice and corn seeds with farmers’ groups. His extensive research and professional experience has focused on crop management, farming systems development and technology sharing and upscaling. He also served as presidential advisor on food security in 1999, under the Estrada administration, and executive director of then National Agricultural and Fishery Council in 1998, which was recently renamed as Philippine Agricultural and Fishery Council. Dar completed a BS in Agricultural Education and MS in Agronomy from Mountain State Agricultural College (now Benguet State University), in La Trinidad, Benguet, and a PhD in Horticulture from the University of the Philippines Los Baños. For his outstanding achievements and accomplishments, he has been awarded eight doctorate degrees (Honoris Causa) in various fields by well-known universities throughout the Philippines. In 1988 he was awarded the Ten Outstanding Young Men of the Philippines and the Outstanding Administrator Award given by the Department of Science and Technology.

report that the Philippines’s coarse gains production will increase to 5.8 MMT, from 5.6 MMT recorded in 2015. “The subregion’s 2016 aggregate maize production is estimated at 294.4 MMT, marginally below last year’s record level, mainly reflecting a 9.6 MMT [or 4-percent] production decline in China,” the report read. Data from the PSA showed that the country’s rice output in the July-to-September period rose by 16.35 percent to 3 MMT due to the expansion in harvested areas. The PSA attributed this to the rehabilitation of irrigation canals and early occurrence of rains in Ilocos region, Cagayan Valley, Central Luzon and Northern Mindanao. “The increased volume of production was also attributed to the improvement in yield on palay farms. This was due to increased usage of high-yielding variety,” the report read.

anana production in the third quarter of the year declined by 1.9 percent to 2.3 million metric tons (MMT), from 2.34 MMT recorded a year ago, according to the latest data from the Philippine Statistics Authority (PSA). The PSA blamed El Niño, as well as Typhoon Nona (international code name Melor), which hit the country in December 2015, for the lower output of the banana sector in the Julyto-September period. “This could be attributed to the following reasons: smaller fruits harvested and lesser hills bore fruits in North and South Cotabato due to the effect of drought in the previous quarters,” the PSA said in its latest report. “Nona also caused a decrease in the number of fruit-bearing hills in Oriental Mindoro,” it added. Cavendish variety comprised 51.1 percent of the total banana production during the July-toSeptember period, according to the PSA. Cavendish banana output grew 2.6 percent to 1.17 MMT, from 1.14 MMT recorded a year ago. The output of lakatan and saba varieties posted declines during the third quarter. Lakatan production fell by 245,147 metric tons (MT), from 267,181 MT recorded a year ago, while saba declined by 6.7 percent to 654,018 MT. Saba and lakatan varieties accounted for 28.4 percent and 10.6 percent of total banana output, respectively, according to the PSA. Davao region was the top banana producer for the third quarter, accounting for 39.37 percent of output in the third quarter. The region’s banana production grew 3.2 percent to 907,501 MT, from 879,781 MT recorded in the same period last year. “Higher production was reported in Davao region due to increase in area and number of

bearing hills harvested for Cavendish variety,” the PSA report said. In the same report the PSA said pineapple production during the July-to-September period declined 1.6 percent, from the 2015 level of 662,756 MT to 673,474 MT. “The increase was brought about by the following: increase in area harvested in corporate farms in Bukidnon; and bigger fruits produced in Camarines Sur due to more fertilizer usage,” the report read. Northern Mindanao registered the largest production at 411,330 MT accounting for 61.1 percent of the national output, the PSA said. The PSA report also indicated that mango production declined 8.7 percent to 58,603 MT, from 64,206 MT same time period last year. The decrease in mango production was attributed to unstable climatic conditions resulting in stunted growth of trees, the PSA said. “The sudden change in weather resulted to shedding of fruits during the third quarter,” the PSA said. “Lesser trees induced in Misamis Occidental and Zamboanga City due to anticipation of rainfall in July. Lower yield and fewer trees bore fruits in North and South Cotabato caused by drought in the previous quarters.” Carabao mango accounted for 79.4 percent of the country’s total mango production during the reference period, the PSA said. However, carabao mango production decreased by 8.4 percent to 46,531 MT, from 50,775 MT recorded a year ago. PSA figures also showed that calamansi production posted the steepest decline among the major fruit crops. Calamansi output in the third quarter plunged 42.7 perent to 56,019 MT, from 97,716 MT recorded in July to September 2016. Jasper Emmanuel Y. Arcalas

Go ahead, splurge on Christmas chocolate as cocoa plunges

C

ocoa prices are spiraling lower, m a k i ng c hocol ate cheaper just in time to stuff those Christmas stockings even more full of treats. Futures in New York have tumbled to a three-year low as rains improve crops in West Africa, which grows more than two-thirds of the world’s cocoa each season. The output gains mean the market is shifting from a production deficit to the biggest surplus in six years, according to Citigroup Inc. Adding to the overhang: people are eating less chocolate. In the US and Europe, the largest consuming regions, snackers are seeking out healthier options. At the same time, confectioners have reduced the size of sweets and are using more fillers, the result of cost-cutting measures when cocoa surged in the four years through 2015. Investors are betting on ample supplies, reducing their net-bullish position to the smallest since 2012. Less demand and more supply is “a double punch for cocoa,” said Lara Magnusen, a La Jolla, Californiabased portfolio manager for Altegris Advisors Llc., which oversees $2.47 billion. “Prices will likely stay depressed for fundamental reasons.”

Shrinking wagers

Hedge funds cut their cocoa netlong position, or wagers on price gains, by 36 percent to 3,599 futures and options in the week ended on December 6, according to US Commodity Futures Trading Commission data released three days later. That’s

Bloomberg Photo

the smallest since June 2012, when the investors had a net-short holding. On ICE Futures US in New York, cocoa plunged 9.4 percent last week to $2,170 a metric ton, the biggest loss since 2009. Prices reached $2,144 on Monday, the lowest since July 2013, and have dropped 33 percent this year, averaging $2,881. That’s the biggest loss among the 24 commodities tracked by the Standard & Poor’s GSCI Index. The drop for cocoa is a boon for chocolate fans. Retail prices for the confections dropped 16 percent in the four weeks through November 6 from the prior four-week period, according to data from Chicagobased researcher IRI compiled by Bloomberg Intelligence. Costs are falling amid the peak period for demand in the US. The chocolate holiday season starts with Halloween, celebrated on October 31, and is followed by Christmas, Valentine’s Day and Easter, accord-

ing the Washington-based National Confectioners Association.

Price reversal

The losses are a reversal from just last year, when cocoa traded in New York capped a fourth straight annual gain that took prices up more than 50 percent over the period. At the same, prolonged drought in West Africa had hurt plants. The good news for chocolate addicts: T here are sig ns relief from high prices is here to stay. In the week ended on December 4, cocoa-bean arrivals from Ivory Coast, the top producer, surged 49 percent from a year earlier. That’s the third year-on-year gain in the past four weeks. Many analysts have reduced their expectations for the deficit in the 12-month crop year that ended on September 30, and Citigroup forecasts a surplus of 220,000 metric tons in the current season. Bloomberg News

A6

Business GOP leaders back Congress probes of Russia hacking

Wednesday, December 14, 2016

China warns: Trump’s Taiwan comments cause ‘serious concern’ W

B

EIJING—China’s foreign minister warned that any moves to damage Beijing’s core interests would be self-detrimental after US President-elect Donald J. Trump said he could use the way in which America deals with Taiwan as a bargaining chip. Wang Yi ’s comments late on Monday came a day after Trump said in a television inter view he didn’t feel “ bound by a OneChina policy.” Washington, however, reaffirmed the US government’s commitment to the policy that means it maintains only unofficial relations with Taiwan, a self-governing island that Beijing considers its territory. Since recognizing the People’s Republic of China in 1979, the US has adhered to the One-China policy, recognizing Beijing as the capital of China and maintaining only unofficial relations with Taiwan. American law, however, requires the US to ensure that Taiwan has the means to defend itself and to treat all threats to the island as matters of serious concern. China split from Taiwan amid civil war in 1949 and continues to regard the island as a breakaway province to be reunified with the mainland, by force if necessary. “I can clearly say, whether it is the authorities of Tsai Ing-wen, or anyone else or any power in the world, if they attempt to harm this principle or China’s core interests, the only result will be that they will smash their own foot while trying to lift a stone,” Wang said after meeting with his Swiss counterpart Didier

40 The number of years of US recognition to the OneChina policy

Burkhalter in Switzerland. Earlier on Monday Geng Shuang, a spokesman for China’s foreign ministry, said in Beijing that established policy is the “politica l foundation” of any diplomatic relationship between China and the US, and that any damage to it could render cooperation “out of the question.” “We urge the new US leader and government to fully understand the seriousness of the Taiwan issue, and to continue to stick to the oneChina policy,” Geng said. The comments by Wang and Geng are the strongest public condemnation China has made of Trump’s criticisms of current American policy toward Taiwan. Beijing was already angered by Trump’s December 2 phone

This combination of photos shows US President-elect Donald J. Trump (left) speaking during a “USA Thank You” tour event in Cincinatti on Thursday and Taiwan’s President Tsai Ing-wen delivering a speech during National Day celebrations in Taipei, Taiwan, on October 10. AP/Evan Vucci, Chiang Ying-ying

call with Taiwanese President Tsai, the first time an American president or president-elect has publicly spoken to a Taiwanese leader in nearly four decades. China considers any reference to a separate Taiwanese head of state to be a grave insult. Over the weekend, Trump told Fox News Sunday that he wouldn’t feel “bound by a One-China policy, unless we make a deal with China having to do with other things, including trade.” “Why should some other nation be able to say I can’t take a call?” he said. “I think it actually would’ve been very disrespectful, to be honest with you, not taking it.” In Washington the White House and State Department both reaffirmed the US government’s commitment to a one-China policy. White House Spokesman Josh Earnest said, “The United States government, under the leadership of President Obama, has been and remains firmly committed to our One-China policy.” He added that “the Obama adminis-

tration does not view Taiwan and our relationship with Taiwan as a bargaining chip.” State Depar t ment Spokes man John Kirby said the department had “continued what has been a bipartisan approach for the past 40 years with respect to a One- China policy.” Chinese officials have been restrained in their responses so far. They may be still trying to learn how to make their positions clear to Trump without feeding a vicious circle of insults and heightened tensions, said Dali Yang, a political science professor at the University of Chicago. However, Trump’s suggestion that he could negotiate on Taiwan likely went too far for China, Yang said. “He expected for China to bargain again for the One-China position, perhaps by giving up something on trade or something of that nature,” Yang said. “This is actually the foundation of the US-China relationship, rather than something to be bargained over.” Bloomberg News

Google Chairman Eric Schmidt and Mayra Arevich Marin, president of state telecom monopoly Etecsa, sign an agreement in Havana, Cuba, on Monday. AP/Ramon Espinosa

Google, Cuba sign deal for faster access on data

H

AVANA—Google and the Cuban government signed a deal on Monday, allowing the Internet giant to provide faster access to its data by installing servers on the island that will store much of the company’s most popular content. Storing Google data in Cuba eliminates the long distances that signals must travel from the island through Venezuela to the nearest Google server. More than a half century after cutting virtually all economic ties with Cuba, the US has no direct data link to the island. The deal removes one of the many obstacles to a normal Internet in Cuba, which suffers from some of the world’s most limited and expensive access. Home connections remain illegal for most Cubans and the government charges the equivalent of a month’s average salary for

10 hours of access to public Wi-fi spots with speeds frequently too slow to download files or watch streaming video. The agreement does not affec t Cuba’s a nt iqu ated communications infrastructure or broaden public access to the I nter net , but it cou ld m a ke Google web sites like YouTube or Gmail up to 10 times faster for users inside Cuba. Content hosted by other companies will not be affected. Neither Google Chairman Eric Schmidt nor Cuban officials spoke to the press after the signing ceremony in Havana. In a blog post, Marian Croak, Google’s vice president for access strategy and emerging markets, and Brett Perlmutter, head of strategy and operations for Google Cuba and the lead negotiator of the deal, said, “Cubans who

The W

already have access to the Internet and want to use our services can expect to see an improvement.” Cuban officials appear to be accelerating their approvals of deals with US companies in an attempt to build momentum behind US-Cuba normalization before Presidentelect Donald J. Trump takes office next month. T he G o og le pac t w a s a n nounced less than a week after Cuba gave three US cruise companies permission to begin sailing to the island next year. Officials familiar with the negotiations say other deals, including one with General Electric, are in the works. The US and Cuba have struck a series of bilateral deals on issues ranging from environmental protection to direct mail since the declaration of detente on December 17, 2014, but business ties have failed to keep pace. The

Cuban government has blamed the US trade embargo on Cuba. Many US businesses say Cuba has been moving on most proposals so slowly that some suspect the government has been deliberately limiting the development of economic ties. T he Google program could pro v ide a m mu n it ion for US advocates of closer ties w ith Cuba. Both pro-detente forces and those arguing for a hard line on President R aul Castro’s single-party government have been pushing for Cubans to have better access to information. If the Google deal proves to truly improve internet access for a significant number of Cubans, it ties information access to USCuban detente in a way that could prove politically difficult to undo for anti-Castro officials in the incoming Trump administration. AP

A SHINGTON— Congress’s top Republicans on Monday endorsed investigations into the Central Intelligence Agency’s (CIA) belief that Russia meddled in last month’s election to help Donald Trump win, suggesting potential battles ahead with the incoming commander in chief over Moscow and US intelligence. Meanwhile, Trump said he would announce his choice for Secretary of State on Tuesday morning. He has chosen Exxon Mobil CEO Rex Tillerson, two people close to Trump’s transition said on Monday night, insisting on anonymity because they were not authorized to disclose the decision ahead of that announcement. Congressional GOP leaders steered toward a path contrasting starkly with the president-elect’s belittling dismissal of the CIA and his past praise for Russian President Vladimir Putin. “The Russians are not our friends,” Senate Majority Leader Mitch McConnell declared. The Senate’s intelligence panel, led by Richard Burr, RepublicanNorth Carolina, will conduct a bipartisan inquiry, according to McConnell, who also expressed support for a related probe by the Armed Services Committee, chaired by Sen. John McCain, Republican-Arizona. Though declining to say whether he believes Russia tried tilting the election toward Trump, McConnell said, “I hope that those who are going to be in positions of responsibility in the new administration share my view” about Moscow. Shortly afterward, House Speaker Paul Ryan, Republican-Wisconsin, released a statement backing an investigation the House Intelligence Committee has already started on cyber threats posed by foreign countries and extremist groups. He called any Russian intervention “especially problematic because under President Putin, Russia has been an aggressor that consistently undermines American interests.” Underscoring the possible collisions ahead between Trump and the men leading his party in Congress, McConnell and Ryan struck tones markedly more confrontational toward Russia than he has. Trump on Sunday called the CIA’s contention “ridiculous” and blamed the disclosures concerning its assessment on Democrats who he said were embarrassed over losing last month’s election. The chairman of the House Intelligence Committee, Rep. Devin Nunes, Republican-California, released a letter on Monday to National Intelligence Director James Clapper complaining that recent reports of the CIA’s conclusion clashed with Clapper’s prior statement that he lacked “good

insight” about the connection between Russian hacking of Democratic campaign documents and their release by WikiLeaks. Nunes requested a briefing on the subject for this week. The GOP leaders expressed their views after a weekend in which Trump also said he would not need daily intelligence briefings, a staple of presidents’ days for decades and a flouting of a convention common for presidential transitions. The president-elect continued his cavalcade of meetings in his Trump Tower offices in New York on Monday, with potential appointees for his new administration and other leading GOP, congressional and corporate figures. Among them was Carly Fiorina, who unsuccessfully vied with Trump this year for their party’s nomination. Fiorina, the former HewlettPackard CEO, was there to discuss national security issues and is seen by some Trump advisers as a candidate to be director of national intelligence, overseeing the government’s 17 intelligence agencies. She chaired an external CIA advisory board under President George W. Bush, but has not worked for the federal government. Fiorina said her conversation with Trump included “hacking, whether it’s Chinese hacking or purported Russian hacking.” Others meeting with Trump included moderate Democratic Sen. Joe Manchin of West Virginia, No. 3 House GOP leader Steve Scalise of Louisiana and former Texas Gov. Rick Perry, another GOP presidential contender whom Trump defeated. The campaign chairman for defeated Democratic presidential candidate Hillary Clinton urged the Obama administration on Monday to reveal what it knows about any Russian efforts to help Trump win. John Podesta, whose e-mails were stolen and posted online, said the administration “owes it to the American people” to release details of the intrusions, which included the hacking of Democratic Party files. Podesta said the Clinton campaigns also supports a call by 10 of the 538 members of the Electoral College for Clapper to provide information that intelligence agencies have gathered on the subject. All 10 are unlikely to vote for Trump when the Electoral College meets next Monday. Nine are Democrats, and Texas Republican Chris Suprun has said he won’t vote for Trump. Other Democrats calling for congressional investigations of Russia’s role in the elections include House Minority Leader Nancy Pelosi of California. “ T here must be no equivocation or ig nor ing the ser iousness of the intelligence community’s conclusion about Russia’s actions,” she said. AP

Even before Brexit, London lost its status as derivatives center

A

s London’s financial industry braces for Brexit, a new report shows the capital has already lost its leadership in at least one key market. New York has now eclipsed the city as the biggest center for off-exchange derivatives trading. New analysis from the Bank for International Settlements (BIS) shows that the country’s share of the $2.7 trillion a day interest-rate derivatives market fell to 39 percent this year, from 50 percent in 2013. New York’s share of global trading has climbed to 41 percent, from 23 percent. New York usurped London because trading in US dollar derivatives surged at the same time that trading in euro contracts collapsed. Traders are doing less business in London because they expect the European Central Bank to leave interest rates at record lows for the foreseeable future, while anticipating that the Federal Reserve will increase rates next year, compelling them to trade dollardenominated derivatives, BIS said. “Nothing is going to happen with interest rates in the euro zone, so no one should have to

trade these derivatives,” said Andrea Vedolin, assistant professor of finance at the London School of Economics. “It’s natural that euro trades would go down quite a bit.” New York could extend its lead over London if US President-elect DonaldJ. Trump follows through on his vow to dismantle the Dodd-Frank Act. Part of the law requires banks to post collateral with clearinghouses for their derivatives trades, which increases costs. Similar rules in the European Union mean that trading expenses in both regions have risen in tandem. “Clearing trades is expensive,” Vedolin said. “So if you do not have to clear anymore in the US, you would trade those derivatives in the US.” The market shift revealed in the BIS figures may add to anxiety about the UK capital’s future as a financial center following the June vote to leave the EU. London needs to reach an agreement with the other member states to continue trading euro-denominated derivatives after Brexit. Bloomberg News

World

sMirror

Wednesday, December 14, 2016

A7

China retail, factory pickup show continued momentum in economy

C

hina’s economic stabilization held in November, offering policy-makers more room to switch focus away from stimulus and toward curbing financial risks. Industrial production climbed 6.2 percent from a year earlier in November, compared w ith median estimate of 6.1 percent in survey. Retail sales rose 10.8 percent last month, biggest gain since December. Fixed-asset investment increased 8.3 percent in first 11 months of the year, China monthly growth tracker picked up to 7.04 percent.

Big picture

The world’s second-largest economy has remained resilient in the final quarter of the year, as exports were cushioned by a weaker yuan and factory prices snapped out of their deflationary funk. With the expansion on pace to land smack in the middle of the government’s 6.5-percent to 7-percent full-year objective, attention is shifting to curbing excess corporate borrowing and industrial capacity and reining in surging property prices.

Economist takeaways

“ S t rong g ro w t h i n on l i ne sales, as well as buoyant growth in home furnishings for newly completed homes have helped underpin Chinese retail sales in recent months,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit in Singapore. “Consumer spending remains resilient despite economic restructuring and capacity reductions in some sectors.” “China’s data dump points to a

decent growth path of the economy, which will continue to support the reflation,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “This trend will persist into early next year, but we do see the risk of overall policy tightening, including property tightening and undergoing deleveraging in both stock and bond markets. “ “China’s economy is ending the year with a steady wind in its sails,” said Frederic Neumann, cohead of Asian economic research at HSBC Holdings Plc. in Hong Kong. “The industrial sector is holding up well, and Chinese shoppers are still splurging, including on largeticked items, like cars.”

Details

Sales of household electronics, communication appliances and office supplies lead gains in November. Online retail sales quickened last month, boosted by China’s annual online-shopping bonanza Singles’ Day on November 11. Property sales by value rose 37.5 percent in year to date. Private fixed-asset investment picked up to 3.1 percent in the first 11 months. Crude processing rises 3.4 percent from a year earlier, power output rises 7 percent and coal output drops 5.1 percent, data show November fiscal spending rose 12.2 percent from a year earlier, the Ministry of Finance said in a separate statement. Fiscal income climbed 3.1 percent. Runaway property prices in big cities have been contained, thanks to tightening measures, National Bureau of Statistics spokesman said at briefing. Bloomberg News

Modi turns to old tricks as cash experiment hurts India GDP

W

ith indicators revealing a difficult end to Prime Minister Narendra Modi ’s unprecedented c ash clampdown, he’s turning to time-tested methods to cushion India’s economy. Lawmakers last week cleared about 600 billion rupees ($9 billion) in additional spending for the year through March, which includes a 10-percent increase in a rural jobs program Modi once mocked. Recent growth has been slower than estimated and data due on Tuesday are expected to show that inflation slumped below the central bank’s target as Modi’s move dents demand. Public spending is needed because the cash ban will hit private investment, said J. Dennis Rajakumar, director of the Mumbaibased think tank EPW Research Foundation. “The employment guarantee program, to some extent, will help ease the rural crisis that the country is heading toward,” he said. Sustaining commerce in India’s cashbased hinterland is crucial for Modi before key state elections next year. Food prices are set to drop, as his November 8 move to scrap 86 percent of currency in circulation triggered distress sales of crops. Consumer prices probably rose 3.9 percent in November, according to the median of 32 estimates in a Bloomberg survey of economists before data due at 5:30 p.m. in New Delhi. That would be the slowest pace in 15 months and below the 4 percent midpoint of the Reserve Bank of India’s inflation target. Governor Urjit Patel kept interest rates unchanged at a six-year low on December 7 and lowered the full-year growth forecast. The Asian Development Bank on Tuesday cut its forecast for India’s 2016 GDP expansion to 7 percent, from 7.4 percent, citing weak investment, a slowdown in agriculture and the cash shortages. Sales of two-wheeler vehicles fell 5.9 percent, in November, the first decline since December 2015, according to the Society of Indian Automobile Manufacturers’ figures released last week.

Hurting the hinterland

Central among Modi’s concerns will be the 800 million Indians who live in

villages, slowly rebuilding their earnings after back-to-back droughts destroyed crops and trade. His currency clampdown, which was aimed at hurting those with unaccounted cash, may impact these folks instead, as they lack adequate access to banks or Internet services. Rural India’s support is important if Modi is to win elections in agrarian states, including Uttar Pradesh and Punjab, next year. He’s already pledged to double farmer incomes by 2022 and has raised spending on the rural jobs program twice this year from the 385 billion rupees budgeted. The latest boost includes 40 billion rupees on the world’s largest public-works program: the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Another 30 billion rupees will be spent on farm-related activities. “The government should immediately under take more rural development programs, like building toilets, houses and roads,” said Bhagwat Prasad, director of the Akhil Bharatiya Samaj Sewa Sansthan, a suppor t group for the poor in the Bundelkhand region, part of which lies in Uttar Pradesh. “No doubt MGNREGA could be the best option in providing relief to the rural people whose livelihoods have been made insecure by demonetization.”

‘Stay cautious’

Modi needs to do more to cushion the economy, as the rural jobs program creates fewer jobs than needed, said Jay Shankar, a New Delhi-based economist who studied India’s rural economy. While public spending is needed to boost demand, any new program would take about one-and-a-half years for implementation, he said. The Nifty Fast Moving Consumer Goods index has fallen 7.2 percent since Modi’s November 8 announcement, steeper than the 4.4-percent decline in the broader gauge. Recovery in rural demand will be delayed until October to March 2018 and companies selling goods, such as soaps and cookies, could report profit declines through January to March 2017, analysts at Religare Securities Ltd., including Varun Lohchab, wrote in a report on Monday. Bloomberg News

Republican presidential candidate Donald J. Trump, accompanied by (from left) Donald Trump Jr., Eric Trump, Melania Trump, Tiffany Trump and Ivanka Trump, speaks during the grand opening of the Trump International Hotel-Old Post Office in Washington on October 26. Experts on government ethics are warning President-elect Trump that he’ll never shake suspicions of a clash between his private interests and the public good if he doesn’t sell off his vast holdings, which include roughly 500 companies in more than a dozen countries. They say just the appearance of conflicts is likely to tie up the new administration in investigations, lawsuits and squabbles. AP/Evan Vucci

Trump says no deals while he is in office; sons will run firm

P

resident-elect Donald J. Trump gave his first clues as to how he’ll step away from his businesses, saying he would put his two sons Don and Eric in charge by Inauguration Day on January 20, but offering no information about his own role.

In a series of tweets late on Monday night, Trump said he would make no new business deals during his time in the White House. The tweets came on the same day Bloomberg first reported he was postponing a December 15 news conference to announce his business plan. Sources said he would make an announcement sometime next month. He also promised he would hold a press conference “in the near future to discuss the business, Cabinet picks and all other topics of interest. Busy times!” Trump had planned to make the announcement this week but wants more time because he’s been occupied with filling out his Cabinet and top administration posts, according to the officials, who spoke on condition of anonymity to discuss internal deliberations. The president-elect has consulted various legal specialists, as well as Don McGahn, his pick for White House counsel, about how to deal with his organization, the officials said. A new date for the announcement hasn’t been set, but it will be before his inauguration on January 20, they said. “Even though I am not mandated by law to do so, I will be leaving my businesses before January 20 so that I can focus full time on the presidency,” Trump said on Twitter on Monday night. “Two of my children, Don and Eric, plus executives, will manage them. No new deals will be done during my term[s] in office.” Trump’s latest tweets did not mention what role his daughter Ivanka and her husband Jared Kushner might play in either his administration or his businesses. Kushner is one of Trump’s most trusted advisers; and accompanied Trump on his postelection visit to

500 The number of companies President-elect Donald J. Trump has with about $3.6 billion of assets and $630 million of debt

the White House and spoke with President Barack Obama’s aides. The couple has been house hunting in Washington, CNN reported on December 5.

Bipartisan concern

Trump has about $3.6 billion of assets and $630 million of debt held in more than 500 companies, according to a July analysis by Bloomberg. His golf developments, tenant rosters, loans and licensing arrangements tie him to businesses and governments in 20 countries. Those ties risk hobbling his presidency with questions about motives for his policy and may raise constitutional issues. His businesses have been the subject of bipartisan concern since winning the election, and on November 30 he said via Twitter he would have a news conference on December 15 to announce his plans for dealing with potential conflicts of interest. The president-elect tweeted that he would be leaving his business “in total” to focus on the White House. He added that “legal documents are being crafted, which take me completely out of business operations,” suggesting he might not be participating

in day-to-day decisions but also didn’t necessarily suggest he was planning a sale. Among those who’ve called on him to sell his companies to avoid conflicts are the ethics lawyers for the George W. Bush and Obama administrations. Trump’s refusal to release his tax return has also added to concerns about his commitment to transparency. His next personal financial disclosure, a less detailed document, isn’t due until after he takes office. Trump said in an interview with the New York Times last month that sitting presidents “can’t have a conflict of interest” because the laws don’t apply. While they are exempt from many government ethics laws, some do apply, as does a constitutional prohibition on income and gifts from foreign governments. Even transferring ownership to his adult children is unlikely to quiet Trump’s critics. Norman Ornstein, a political scientist at the American Enterprise Institute, a conservative policy group in Washington, has said Trump has a self-interest in enriching his children. Brad Malt, a partner at Ropes and Gray Llp. in Boston, who managed Mitt Romney’s blind trusts during his time as Massachusetts governor, has said Trump must sell. A lready, Tr ump’s daughter Ivanka, an executive in his organization, sat in on her father’s meeting with Japanese Prime Minister Shinzo Abe and participated in a phone call with Argentine President Mauricio Macri. Two other children, Don Jr. and Eric, also are Trump Organization executives who also have acted as informal advisers to their father throughout his run and the transition. Trump has also met with Indian business partners since Election Day, and his partner in the Philippines was in Trump Tower while he was talking with potential appointees. The lease for his hotel in Washington appears to bar elected officials from profiting from the arrangement. Trump’s transition team said on December 6 the president-elect had sold all his stock holdings in June, though it gave no details.

Trump said the stock ownership was “a conflict of interest.”

Wide holdings

Trump has a variety of business interests beyond the real estate and licensing deals for which he’s best know. For example, he’ll remain an executive producer on the upcoming season of The New Celebrity Apprentice, the reality show in which he once starred. The show is broadcast on Comcast Corp.’s NBC, which is regulated by the Federal Communications Commission, whose leaders are political appointees. Trump has said he won’t spend any time working on the show, though he’ll be paid and get credited. Estate planners say there are several structures Trump could use to create formal distance between himself and his companies while keeping them in the family. The president-elect could put his businesses into a limited-liability company and sell it to a trust for his children in exchange for a promissory note that would ensure him regular interest payments, said David Scott Sloan, cochairman of Holland and Knight Llp.’s national private-wealth practice. Alternatively, a bank could finance the deal by paying Trump cash and receiving the payments in his stead. That wouldn’t solve concerns that Trump would work to benefit his children, or concerns that he’d talk to them about the business. For that latter problem, the family could appoint an independent trustee charged with enforcing strict confidentiality rules, said John Olivieri, a partner at White and Case Llp. in New York. Previous US presidents and vice presidents have also grappled with how to deal with potential conflicts. Dick Cheney sold his shares in Halliburton Co., where he’d served as chairman and CEO, prior to taking office. Jimmy Carter sold his family peanut farm in Georgia. Nelson Rockefeller subjected himself to congressional hearings and to investigation by 400 agents from agencies, including the Federal Bureau of Investigation and the Internal Revenue Service. Bloomberg News

A8

Wednesday, December 14, 2016

The World BusinessMirror

Editor: Lyn Resurreccion • www.businessmirror.com.ph

Gorbachev: US shortsighted on Soviets

M

OSCOW—As the Soviet Union was breaking up 25 years ago, Mikhail Gorbachev expected the United States and its allies to provide vital aid. The former Soviet president thinks their failure to offer significant help wasted a chance to build a safer world and resulted from shortsighted gloating at a Cold War rival’s demise. In a w ide-rang ing inter v iew w ith T he A ssociated Press, the 85 -year-old Gorbachev voiced hope that Russia and the US wou ld do better dur ing Dona ld J. Tr ump’s presidenc y. “The relations between us are so important and concern everyone else, so we must take the interests of others into account,” said the leader credited with helping to end the Cold War. Gorbachev said he was surprised by Trump’s victory, but declined to offer an assessment of the president-elect. He said it remains to be seen what policies the new US administration will pursue. “He has little political experience, but, maybe, it’s good,” he said.

25 The number of years that have passed when the Soviet Union broke up

Gorbachev walked slowly with a cane, but his smile was as captivating as always, his wits as sharp as usual and his reactions

Former Soviet President Mikhail Gorbachev speaks to The Associated Press during an interview at his foundation’s headquarters in Moscow, Russia, on December 9. Gorbachev said the West has wasted a chance to build a safer world after the Cold War while the US has gloated at the Soviet Union’s demise. AP/Ivan Sekretarev

quick during the rare, hourlong inter view in his foundation’s office in Moscow. Gorbachev, who helped end the Cold War by launching liberal reforms, cutting nuclear stockpiles and allowing Soviet bloc nations in Europe to break free from Moscow’s diktat, spoke bitterly about the West’s failure to embrace the new era of cooperation he says his policy of “perestroika” offered. “ T he y were r ubbi ng t hei r hands, saying, ‘How nice! We had been trying to do something about the Soviet Union for decades, and it ate itself up!’” Gorbachev said. He blasted what he described as Western “triumphalism,” saying it remains a key factor in tensions between Russia and the West.

Russia-West ties are at their worst since the Cold War era following Moscow’s annexation of Ukraine’s Crimea peninsula in March 2014 and its support for a pro-Russian separatist insurgency in eastern Ukraine. The US and the European Union responded with several rounds of economic sanctions, which along with low oil prices have driven Russia’s economy into recession. Gorbachev said Russian and US leaders must sit down for talks and “stay at the table until they reach agreement.” “The world needs Russia and the United States to cooperate,” Gorbachev said. “Together, they could lead the world...to a new path.” Gorbachev also praised

outgoing US President Barack Obama. But he deplored what he described as a misguided policy toward Russia pursued by the US and its allies both during his presidency and now. “They have been badgering Russia with accusations and blaming it for everything,” Gorbachev said. “And now, there is a backlash to that in Russia. Russia wants to have friendly ties with America, but it’s difficult to do that when Russia sees that it’s being cheated.” Asked his opinion about Putin’s leadership, Gorbachev said he sees him as a “worthy president,” even though he has assailed the Kremlin for a crackdown on freedom of speech and rigid political controls. “I almost fully supported him first, and then I began to voice criticism,” Gorbachev said of Putin. “I can’t renounce my views.” Gorbachev has received global accolades for his “perestroika,” which eased government economic controls, and his role in ending the Cold War. At home, many held him responsible—and still do— for economic hardships, political turmoil and the loss of superpower status resulting from the Soviet Union’s collapse. His voice trembled with emotion as he recalled the waning days of the Soviet Union, when his archfoe, Russian President Boris Yeltsin, and leaders of other

Soviet republics were plotting his ouster while pretending to support a treaty that would give the republics broader powers. “Yeltsin took part in that and supported it, but he was conspiring behind my back how to get rid of Gorbachev,” he said, saying that the Russian leader was driven by a hunger for power. “Russia was spearheading the Soviet breakup.” Meeting secretly in a Belarus forest, the leaders of Russia, Ukraine and Belarus on December 8, 1991, signed an agreement pronouncing the Soviet Union dead and setting up the Commonwealth of Independent States (CIS). The move caught both Gorbachev and the West by surprise. Two weeks later, other ex-Soviet nations joined the CIS. Driven into a corner, Gorbachev stepped down on Christmas Day 1991. Hours later, Yeltsin and his lieutenants took over his office in the Kremlin. Amid the meltdown, the loyalties of the 4-million-strong Soviet army and the massive KGB apparatus were split. Asked if he considered using force to keep the Soviet Union intact, Gorbachev said launching a violent domestic conflict in a nuclear superpower was never an option for him. “The country was loaded to the brim with weapons,” he said. “And it would immediately have pushed the country into a civil war.” AP

Syrian rebels in ‘terrifying’ collapse as they retreat Aleppo

B

EIRUT—Syrian rebels retreated from former strongholds in eastern Aleppo in a “terrifying” collapse on Monday, holding onto a small sliver of territory packed with fighters and thousands of civilians as government troops pressed on with their rapid advance. The Syrian military said it had gained control of 99 percent of the former opposition enclave in eastern Aleppo, signaling an impending end to the rebels’ four-year hold over parts of the city as the final hours of battle played out. “The situation is very, very critical,” said Ibrahim al-Haj of the Syrian Civil Defense, volunteer first responders who operate in rebel-held areas. He said he was seeking shelter for himself and his family, fearing clashes or capture by the government. Retaking Aleppo, which has been divided between rebel- and government-controlled zones since 2012, would be President Bashar al-Assad’s biggest victory yet in the country’s civil war. But it does not end the conflict: Significant parts of Syria are still outside government control and huge swaths of the country are a devastated wasteland. More than a quarter of a million people have been killed. On Sunday the Islamic State (IS) group reoccupied the ancient town of Palmyra, taking advantage of the Syrian army and

The United Nations Secretary-General designate Antonio Guterres (left) is sworn in by Peter Thomson, president of the UN General Assembly, at the United Nations Headquarters on Monday. AP/Seth Wenig

its Russian backers’ preoccupation with the fighting in Aleppo. On Monday the Britain-based Syrian Observatory for Human Rights said IS fighters were on the verge of imposing a siege on a nearby army base known as T4. The IS recapture of Palmyra nine months after it was retaken by Syrian government and Russian troops led to mutual recriminations between Western officials and Moscow. French Foreign Minister Jean-Marc Ayrault accused Russia of “pretending to fight terrorism” while it concentrated on Aleppo, leaving room for the militants to retake Palmyra. Russian Foreign Minister Sergey Lavrov lashed back, accusing the US-led coalition of orchestrating the Palmyra takeover “in order to give a respite to the bandits sitting in eastern Aleppo.” In Aleppo staff members of the last remaining clinic in rebel-held territory huddled in a shelter as Syrian government forces pushed in. “Those killed and wounded are left on the streets,” said the clinic’s administrator, Mohammed Abu Rajab. “The collapse is terrifying,” said Bassam Haj Mustafa, a rebel spokesman in contact with fighters in the city. Opposition fighters were “doing their best to defend what is left,” he said. AP

Indonesian governor sobs Guterres sworn in as UN secretary-general as blasphemy trial begins

U

NITED NATIONS—Former Por tug uese Pr ime Minister Antonio Guterres was sworn in Monday as SecretaryGeneral of the United Nations, becoming the ninth UN chief in the body’s 71-year history. The former UN refugee chief was elected to the top job by acclamation in the General Assembly in October. He takes over from Ban Ki-moon on January 1. Guterres, 67, performed well in answering questions before assembly members and his executive experience as prime minister and as the UN High Commissioner for Refugees from 2005 to 2015 propelled him to first place among 13 candidates vying for the job in informal polls in the Security Council.

After the sixth poll, the council nominated him by acclamation and his name was sent to the assembly for final approval. After being sworn in by General Assembly President Peter Thomson, Guterres addressed the 193 member-nations, saying the world body must work to simplify, decentralize and make more flexible its sprawling bureaucracy. “It benefits no one if takes nine months to deploy a staff member to the field,” he said. “The United Nations needs to be nimble, efficient and effective. It must focus more on delivery and less on process, more on people and less on bureaucracy.” Guterres also said he would send a clear signal that gender parity “from top to bottom” within

the organization would be among his first priorities. The swearing-in came after the 193 General Assembly members paid tribute to Ban, ending with a standing ovation for the native South Korean. T he swear ing-in ceremony included the UN’s top leaders and was attended by dignitaries including Myanmar politician and Nobel peace prize winner Aung San Suu Kyi. US A mbassador to the UN Samantha Power lauded Ban’s accomplishments while in office and said she was confident Guter res is the r ight person to replace him. “He is the man for the job in such challenging times,” she said. Louis Charbonneau, the UN

director at Human Rights Watch, said rights abuses are abundant around the globe, not just in war zones like Syria. He said Guterres should use his position and authority to “call out rights abuses wherever they occur.” The selection of a new secretary-general had traditionally been decided behind closed doors by a few powerful countries. But this year, the process involved public discussions w ith each candidate who was campaigning for the job. UN chiefs are charged with promoting sustainable development, working for peace around the globe, protecting human rights and dealing with humanitarian catastrophes. Ban served two five-year terms. AP

J

AKARTA, Indonesia—The minority Christian governor of Indonesia’s capital sobbed in court on Tuesday on the first day of his blasphemy trial as he recalled the role of Muslim godparents in his childhood and said he would never intentionally insult Islam. The national upheaval over the governor’s alleged blasphemy has challenged Indonesia’s reputation for practicing a moderate form of Islam, shaken the government and exposed religious and racial fault lines in the world’s most populous Muslim nation. Protests against Gov. Basuki “Ahok” Tjahaja Purnama, led by hard-liners and which drew hundreds of thousands of people, have kept Jakarta, the capital, on edge in the past six weeks. A November 4 protest there turned violent, with one death and dozens of police and protesters injured. Ahok, an ally of President Joko “Jokowi” Widodo, faces up to five years in prison if

found guilty. He is the first ethnic Chinese governor of Jakarta and the first Christian in more than half a century. “As a person who grew up among Muslims, it is not possible for me to intentionally insult Islam because that is the same as disrespecting the people I appreciate and love,” Ahok said. He broke down in tears twice while making his statement, in which he talked about the affection of his godparents and remembered how he helped poor Indonesians perform the Hajj pilgrimage when he was a district chief a decade ago. The blasphemy controversy erupted in September when a video circulated online in which Ahok lightheartedly said people were being deceived if they believed his detractors who asserted that the Koran prohibits Muslims from having a non-Muslim leader. He is seeking a second term as governor in elections due in February. AP

ExportUnlimited BusinessMirror TRADE Undersecretary for Industry Promotion Group Nora K. Terrado (right), joins Department of Trade and Industry’s Export Marketing Bureau Director Senen Perlada (left) and PhilExport President Sergio Ortiz-Luis Jr. (second from left) in awarding Shin-Etsu Magnetics Philippines Inc. represented by Dennis Constantino (third from left), Vice-President and Melody Icay (second from right), Senior Manager, as a Top Sectoral awardee.

DTI honors 2016 top exporters

T

By Victorino Soriano

Chief, Knowledge Processing Division DTI-EMB

HE Export Marketing Bureau (EMB) of the Department of Trade and Industry (DTI) recognized 20 of the country’s topperforming exporters during the recent National Export Congress (NEC), jointly organized by EMB, the Export Development Council (EDC) and Philippine Exporters Confederation Inc. (PhilExport).

Trade Undersecretary for Industry Promotion Group (IPG) Nora K. Terrado, EMB Director Senen M. Perlada, and PhilExport President Sergio R. OrtizLuis Jr. presented the award as one of the highlights of the NEC 2016 held at the Philippine Trade Training Center (PTTC) on December 7. “We want to equip exporters with the necessary tools for them to be competitive. We also want exporters to cooperate with government agencies in simplifying procedures and documentations,” Perlada said. Top Sectoral Awards for Products were awarded to 12 top export performers who were able to achieve the highest value of exported goods in 2015 from their respective product sectors based on Philippine Statistics Authority (PSA) data.

These were mostly large companies that have significantly contributed to the export value of the country, working together with Philippine micro, small and medium enterprises (MSMEs) and communities, and remaining committed as major partners for the creation of jobs and investments in the Philippines. Meanwhile, three top MSMEs from Luzon, the Visayas and Mindanao able to achieve top export values based on PSA data and geographic distinction were recipients of the Most Outstanding Ripples Plus Awards. Ripples stands for Regional Interactive Program for Philippine Exporters—EMB’s program that aims to grow the number of exporters in the country to help local industries become export ready through training, capacity building, product development, marketing and promotions.

EMB also conferred five awards to companies under the Services Sector: information technology and business-process management franchising, education and construction services based on their nominations from their respective business-support organizations. These companies were selected based on their contribution to the services industry for their ability to innovate and provide competent skills relevant and responsive to the ever-changing needs of international clients. Awardees of the Top Sectoral Awards were Texas Instruments Philippines Inc., Hanjin Heavy Industries and Construction Philippines Inc., Wukong Singapore Pte. Ltd., PKI/Pilipinas Kyohritsu Inc., Pilipinas Kao Inc., Metro Wear Inc., Taganito HPAL Nickel Corp., Cargill Oil Mills Philippines Inc., ShinEtsu Magnetics Philippines Inc., Del Monte Philippines Inc. (won awards for processed food and fruits sectors) and SuperL Philippines Inc. Given Most Outstanding Ripples Plus Awards were Peter and Paul Philippines Corp. as Most Outstanding Ripples Plus Enrollee for Luzon; Alter Trade Corp. as Most Outstanding Ripples Plus Awardee for the Visayas; Celebes Coconut Corp. as Most Outstanding Ripples Awardee for Mindanao; Ripples Awardee for Mindanao; EEI Corp., Outstanding Global Players Award; Atlantic Gulf & Pacific Co. of Manila Inc. (AG&P Construction Services); Pointwest Technologies Corp., Most Outstanding SME Award; Philippine Food Asia Corp. (franchising) and Visaya Knowledge Process Outsourcing (knowledge-process outsourcing).

Education Summit 2016: Crafting the education agenda under Duterte

M

ORE than 600 stakeholders from the government, private sector and civil society gathered last month at the SMX Convention Center for the 2016 Education Summit to tackle the urgent concerns of the education sector in the country. The summit aimed to take a stock of where the country is in terms of education; define the medium- and long-term education vision and agenda for the trifocal education system in the country; identify and address the urgent concerns of the education sector; relate education with the agenda of other allied government agencies, as well as regional and international partners; and listen and respond to the issues, feedback, aspirations and proposals of relevant stakeholders. The Department of Education (DepEd), the Commission on Higher Education (CHED) and the Technical Education and Skills Development Authority (Tesda) agreed to organize the two-day event as a result of the Social Initiatives Development Summit held in Davao City in August. During the summit, the heads of the three education agencies shared their respective agenda for the education sector, taking into consideration the mandates of the constitution, laws and international commitments, and the directions they have set for their respective agencies. The National Economic and Development Authority’s (Neda) 25-year development planning guide adopted by the Duterte administration stated 79.2 percent of Filipinos commonly share the aspiration to have “a comfortable

life, free of hardship and worry.” To fulfill this, average Filipino families strive to send their children to school, and ultimately see them finish college and land gainful employment. Education Secretary Leonor B. Briones sees otherwise. With the nationwide implementation of the senior high school (SHS) this school year, the DepEd is looking forward to a change in the mind-set of most parents and students when it comes to getting a college degree and gaining success. She believes “in this world of ours now, you can be a successful artist, designer, without having to finish college.” Formal education is no longer today’s measure of success, moreover, of the capacity to provide and sustain a simple and comfortable life. But still, some parents think otherwise. According to the DepEd, 60 percent of parents still want their children to finish college. The CHED believes Philippine higher education should also be positioned as one of the major drivers of economic competitiveness. Working with professional institutes, colleges or research universities, both public and private, CHED views its role as setting the agenda, strategies and facilities to: (a) strengthen the so-called triple helix of government, academe and industry as growth accelerators; (b) create an army of job creators; (c) respond to the needs of the labor market; (4) spur entrepreneurship and universitybased start-ups; (e) generate relevant scientific-technological solutions and commercial-ready innovations; and (f) build the capital and institutional infrastructure needed for income and

wealth generation, such as laboratories, libraries, business incubators, intellectual-property offices, research boards and office for global partnerships. Across these interlocking economic mechanisms, the end in mind is inclusiveness, that is, to guarantee that these will yield spaces for growth and mobility for all. In consideration of these pursuits, CHED shall advocate for purposive investments that steer career interest toward science, technology, engineering, agri-fisheries and mathematics, which are the building blocks of the knowledge economy; foster a healthy and vibrant relationship with industry, as well as small- and medium-scale businesses; accelerate local and global inter-university research collaborations; establish institutional scientific-technological niches and economic centers; and create an innovation ecosystem among many others. In terms of trade in education, the Philippine Chamber of Commerce and Industry (PCCI) commissioned a study to complete the coverage of an educational road map for the country covering both higher and technical/vocational education training (TVET) by providing an initial mapping of the ways in which a stronger trade focus could support existing education initiatives. It coincides with the publication by the CHED of a draft memorandum order on the internationalization of higher education. Trade in educational services could result in greater economies of scale, access to new resources, increased knowledge transfer and, if exports exceeds imports, net earnings of foreign exchange. Grace T. Mirasol

Editor: Efleda P. Campos • Wednesday, December 14, 2016 A9

The European Union–A strong economic partner of the Philippines By Jose Antonio Buencamino

Foreign Trade Service Corps Department of Trade and Industry

MARKET DEVELOPMENT UPDATE

T

Conclusion

rade in services between the European Union (EU) and the Philippines was worth €3.1 billion in 2015.

The Philippines services exports have been very robust with an average growth rate of 20 percent from 2013 to 2015. Philippine services exports to the EU are dominated by sea transport, travel and telecommunication services. EU services exports to the Philippines are information-technology (IT) services, telecommunication, and sea- and air-transport services. The EU is a very large investor in the Philippines with €300.16 million in foreign direct investments (FDI) in 2015 and €6.15 billion in FDI stock. EU FDI to the Philippines came predominantly from five EU member-states: the Netherlands, the United Kingdom, Germany, Denmark and France. The potential to increase EU investment to the Philippines should be very high, especially if one looks at the EU FDI figures in other Asean countries, such as Vietnam (€1.3 billion) and Thailand (€700 million) in 2015, and Malaysia (€1.563 billion in 2014).

GSP and GSP+

THE Generalized System of Preferences (GSP) was created in 1971 following an United Nations Conference on Trade and Development (Unctad) recommendation to developed countries to provide developing countries better access to their markets. Under the EU GSP, developing countries can export goods with reduced tariffs entering the EU to stimulate economic growth and job creation in their economies. The European Commission said the GSP is solely an economic instrument focused on the reduction or removal of tariffs and does not deal with political or societal challenges developing countries face. There are two important dimensions of the GSP: First, it is a nonreciprocal arrangement; and second, under the enabling clause under the Tokyo Round of the General Agreement on Tariffs and Trade (GATT), developed countries (e.g., EU) may provide trading preferences to developing and least-developed countries at the risk of discriminating against the trade of developed countries. The GSP has three different approaches: general/ standard arrangement; special incentive arrangement for sustainable development and good governance (GSP+); and Everything But Arms (EBA), which is reserved for the least-developed countries. The current GSP program covers the period 2014 to 2023. The general/standard arrangement provides developing countries tariff discounts for around 66 percent of all EU tariff lines. Low- or lower-middleincome countries are only eligible to apply. Currently, 30 countries, such as Georgia, Ethiopia, Fiji and Cook Islands, are under the GSP scheme. The Special Incentive Arrangement for Sustainable Development and Good Governance, or the GSP+, provides developing countries the opportunity to export their products to the EU at zero tariff on more or less the same 66 percent of EU tariff lines outlined in the general arrangement. The EU GSP+ scheme is an essential component of the Philippines’s Europe trade and investment strategy, as it has given an important opportunity for the Philippines to broaden its market access to the EU. In December 2014 the EU granted the Philippines GSP+ status. As a beneficiary country, the Philippines can avail itself of the zero preferential duties on 6,274 products (tariff lines). In order to be a beneficiary country under GSP+, an applicant country must meet two conditions: (i) nondiversification of exports (e.g., concentration of exports in a few HS Chapters) and low proportions or share of global EU imports; and (ii) the ratification and effective implementation of 27 international conventions on human and labor rights, environment and governance principles. Currently, there are nine GSP+ beneficiary countries: Armenia, Bolivia, Cape Verde, Georgia, Mongolia, Pakistan, Paraguay, Kyrgyzstan and the Philippines. Sri Lanka may be readmitted after years of being disqualified for violations of the second condition. Sectors where there are wide margins between the most favored nation duty and the GSP+ zero duty are prepared food stuff (at least 9.3 percentage points), garments (nine percentage points), textile products ( percentage points), live animals and animal products (4.2 percentage points) and footwear, headwear and umbrellas (four percentage points). In principle, these are sectors that should benefit most from the GSP+. In the first year of the GSP+ for the Philippines, GSP+ trade accounted for €1.38 billion of the €6.8 billion of total exports in 2015. This is an increase of 22.2 percent compared to €1.13 billion under the GSP in 2014. The following product groups had the strongest overall (i.e., MFN plus GSP+) growth rates in 2015; in comparison to 2014: meat products, which grew from practically nothing in 2014 to about €72,000 in 2015, products made of wool (+4,307 percent); aircraft and spacecraft parts (+1,524 percent);

products made of silk (+1,046 percent); ships and boat structures (+849 percent); products made of tin (+302 percent); products made of lead (+293 percent); prepared animal fodder (+255 percent); footwear (+225 percent); beverages (+210 percent); photographic or cinematographic (+165 percent); ores, slag and ash (+129 percent); cereals (+120 percent); dairy and animal products (+100 percent); and jewelry, pearls and precious metals (+93 percent). The fastest-growing product groups under GSP+ alone in 2015 were textile fabrics (+1,783 percent); products made of copper (+366 percent); tobacco (+291 percent); products made of wood (+249 percent); beverages (+246 percent); clocks and watches (+242 percent); footwear (+221 percent); fish (+179 percent); pyrotechnic products (+143 percent); articles of cork (+107 percent); salt, sulphur, earths, stone and plastering materials (+100 percent); albuminoidal substances (+100 percent); modified starches (+100 percent); products made of silk (+100 percent); products made of zinc (+100 percent); and products made of metal (+100 percent). In terms of absolute magnitudes, the biggest product groups exported under the GSP+ in 2015 were animal or vegetable fats (€315,591,560); electrical machinery and equipment (€135,857,041); preparations of fish or meat (€127,069,275); photographic or cinematographic goods (€102,148,659); pre pa r at ion s of ve ge t a ble s (€ 7 3, 3 4 5, 267 ); chemical products (€70,442,747); machiner y and mechanical appliances (€59,260,977); vehicle parts (€57,879,039); products made of rubber (€57,014,025); tanning or dyeing extracts (€39,530,291); tobacco (€31,709,651); organic chemicals (€31,133,461); not knitted or crocheted clothing accessories (€28,146,680); products made of steel or iron (€27,045,850); and furniture (€26,964,138). The following product groups under the GSP+ saw their share to total trade increase the most: articles of zinc (which gained 68 percentage points); products made of cork (53 percentage points), tobacco (52 percentage points); textile fabrics (47 percentage points); fish (38 percentage points); products made of wood (26 percentage points); products made of copper (21 percentage points); umbrellas (20 percentage points); preparations of meat or fish (19 percentage points); pyrotechnic products (16 percentage points); cocoa preparations (14 percentage points); products made of silk (13 percentage points); felt and nonwovens (12 percentage points); products made of cement, plaster and asbestos (12 percentage points) and headgear parts (11 percentage points). As another condition under GSP+, the Philippines must agree to be monitored by the EU in implementing the international conventions. The first monitoring mission took place in September 2015 and—on the basis of a scorecard that the EU provides before a monitoring mission, and which the Philippines fills up—produced a report which showed the Philippines satisfactorily complied with substantive and reportorial obligations under the international conventions. The next GSP+ monitoring mission is scheduled in November 2016. The mission will include visits to companies benefiting from GSP+.

Free-trade negotiations with the EU

THE free-trade agreement (FTA) is another essential component of the Philippines’s trade and investment strategy for Europe. (Unlike GSP+, an FTA—a free trade agreement—is a reciprocal arrangement and has no expiry date.) The negotiations for the EUPhilippines FTA were formally launched on December 22, 2015. An FTA is when two or more trading partners aim to reciprocally open up their markets to each other for goods and services, by eliminating barriers to trade and custom duties, establish common rules and standards that will govern economic relations and develop joint commitments on important trade policy issues that include intellectual-property rights, competition rules and dispute settlement. In the EU-Philippines FTA, the following topics are being negotiated: trade in goods (market access, sanitary and phytosanitary measures, technical barriers to trade); rules of origin; intellectual-property rights; competition; trade in services and investment; trade and sustainable development; and legal and institutional issues (including dispute settlement). The first round of negotiations took place in Brussels in May 2016. The second round is scheduled in Manila in December 2016. Ideally, there should be three rounds every year. The average length of negotiations for an FTA with the EU, based on the experience on recent partners (e.g. South Korea, Singapore and Vietnam) was about four years. We come back to the EU’s FTAs in our next article.

A10 Wednesday, December 14, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Food and poverty

D

espite being ranked as one of the fastestgrowing economies in Asia, the Philippines is often characterized as a country marked by inequality. Millions of Filipinos do not enjoy food security, which was defined at the 1996 World Food Summit as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life”.

The Philippine Statistics Authority (PSA) reported earlier that nearly 42 percent of total annual expenditures of Filipino households went to food products last year. The PSA survey also revealed that for Filipino families in the bottom 30-percent income group, the percentage was much higher, at nearly 60 percent. This means the average Filipino family spends about P42 for food, but the poor shells out more at P60 out of the P100 they earn. Increments in food prices would hit the poor the hardest. The National Economic and Development Authority (Neda), for example, said in August that millions of Filipinos remain poor because of high food prices. In particular, the Neda said rice prices increased by almost 30 percent between 2009 and 2015. Rice is the staple food of Filipinos, but the poor consume more of it, as they cannot afford other protein sources, such as pork and chicken. Unfortunately, Filipinos have yet to get a respite from high food prices, according to the latest inflation data from the PSA. In November the PSA report indicated that the annual movement of the food alone index accelerated to 3.5 percent, which outpaced the 2.5-percent average inflation rate recorded for the whole country during the period. A year ago, the food alone index averaged only 1.7 percent. Making local food prices competitive should be the paramount concern of the Duterte administration if it wants to make the Philippines an attractive investment destination. A lower pay will not be acceptable to a Filipino worker, who has to pay P200 per kilogram for pork, P140 per kg for chicken and P36 for every kilo of commercial rice. In terms of food prices, the Philippines simply could not compete with other Southeast Asian countries, such as Thailand and Vietnam, which have found a way to boost the production of rice and other essential food items. One of the campaign promises of President Duterte is to revitalize the agriculture sector to make it a significant contributor to the country’s economy. The Duterte administration has yet to release its economic blueprint, which would show the strategies it would undertake to increase farm output. Pending its release, the Department of Agriculture has already enumerated some of the programs it would undertake to hike food production. Hopefully, the economic plan of this government would contain the necessary components to boost the agriculture sector. It is worth remembering that any anti-poverty program will not succeed if there is no meaningful effort to increase farm production and make food more affordable to poor Filipinos. Since 2005

BusinessMirror A broader look at today’s business

Selecting the ‘win-win’ solution for SSS pension increase Susie G. Bugante

All About Social Security

S

hortly after his appointment as the new Social Security Commission chairman, Dean Amado D. Valdez expressed his strong support for granting the P2,000 across-the-board pension (ATBP) increase.

In a news briefing during Valdez’s first few days in office, he proposed different implementation strategies to make the P2,000 pension increase more feasible—granting an ATBP increase of either P500 annually in four years or P1,000 in 2017 and 2022; opening of providentfund accounts, where pensioners can deposit the funds allocated for their additional benefits to earn interest in four years; or prioritizing those who would first receive the pension increase based on their age and economic standing. The rising costs of living has made the clamor for higher pensions from the Social Security System (SSS) more persistent. However, the SSS can never disregard its obligation to ensure the long-term financial

viability of the pension fund. The SSS knows that this situation necessitates a “win-win” solution that would satisfy the needs and concerns of the various parties concerned. After in-depth discussions on the P2,000 pension increase among the top policy-makers within the SSS, Valdez and other SSS officials have presented in separate sessions with members of Congress and the Senate what the institution considers as the sought-after the win-win solution—granting the pension hike in two tranches, with the P1,000 ATBP increase in 2017 and another P1,000 in 2022 or earlier. But why provide the additional P2,000 pension on a two-tranche basis? According to the SSS, immediately releasing the full P2,000 will

Use it or lose it

✝ Ambassador Antonio L. Cabangon Chua Founder

Publisher Editor in Chief Managing Editor Associate Editor News Editor City & Assignments Editor Senior Editors

Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Dante S. Castro

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines. Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025. (Advertising Sales) 893-2019; 817-1351, 817-2807. (Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

Printed by brown madonna Press, Inc.–San Valley Drive KM-15, South Superhighway, Parañaque, Metro Manila MEMBER OF

Free fire

Jun B. Vallecera

Online Editor Social Media Editor

Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager

Teddy Locsin Jr.

T. Anthony C. Cabangon

Continued from A1

R

eading made Obama one of the most powerful presidents in US history. He killed more people than any president before him excepting Truman, who committed what Goldhagen said was mass murder by nuking Hiroshima and Nagasaki on the brink of Japan’s surrender just because he could—and to show the Russians that he would if it came to that. Obama dressed his decisions with research and thinking. That made him elegant in mind and mode of action. Trump is not elegant in those respects, but he is president. Since he is addicted to TV news, he offers the last chance of TV news to retain its relevance. And that is true of any president anywhere. No matter what—social-media addiction notwithstanding—it bothers a president to know that in a specific place which everyone knows is reachable by just switching on a flatscreen, there are news and views about him, as opposed to the World Wide Web, where you can find everything, so everything seems lost in the plenitude.

TV news cannot be countered by Internet; only by personal appearance in TV news or personal interviews by newspapers. Our President’s latest outburst against the UN was justified. The nerve of a South Korean clown to rank us with African countries, where our boys in blue helmets keep the peace and save lives while he did nothing to stop the sex trafficking of Syrian children. Duterte’s rant in a public forum was provoked by an item in the mainstream news and not in social media. However, just owning broadcast and print is not enough. You need to mind your content and presentation. At its best, TV news is

require an extra P64 billion for the first year of implementation alone. Based on SSS actuarial projections, it would shorten SSS fund life from 2042 to 2025, and lead to billions in annual net losses if there are no specified funding sources, such as government subsidies. With the initial grant of P1,000 eyed for next year, SSS fund life is projected to last until 2032. The maximum five-year “dormant” period, from 2017 to 2022, will enable the SSS to use the differential amount resulting from granting P1,000, instead of the P2,000, pension increase for investments, such as tollway projects and other infrastructure through public-private partnerships. Under its current charter, the SSS can allot up to 30 percent of its investment-reserve fund on infrastructure projects, such as roads, bridges, ports, telecommunications and basic utilities, as long as these carry a government guarantee and ensure the SSS’s share in the earnings. The SSS is also exploring the possibility of seeking significant ownership in utility corporations, which offer the added advantage of giving SSS members greater representation in deliberations on electricity- and water-rate hikes. These investments are intended

to generate additional income for the SSS, making the institution more capable to afford higher pensions and benefits for its millions of members and beneficiaries. With the two-tranche implementation, the SSS stands a greater chance of successfully mitigating the financial impact of the pension increase and preserve the long-term viability of its funds. Apart from its objectives to drive up revenues from investments and provide more meaningful benefits, the new SSS management also plans to focus on how to improve SSS operational efficiency, coverage and contribution collection. To better achieve these reforms, the SSS will need the support of the legislators, SSS members and other SSS stakeholders.

stunning. It doesn’t need to explain; it just needs to show to leave a deep impression—like the short sharp BBC documentary about a Filipina vigilante. The only thing that can compromise mainstream news is the base instinct to flatter people in power, which is what made people turn away from mainstream news. People believe the worst of government, Duterte was the first to note. That is why he said not to take his word on anything, not take him on trust, but to let him show us what he has done. He knew we had gotten tired with talk. He would be the strong and silent type, the best for TV news: showing, not telling. Clint Eastwood in a handier version. That said, TV news stories need to be written sharper before telling them; imagery must be better taken and edited before showing. Tightness is key, yet, tightness is the hardest to achieve. You can be so tight with the news—especially with budgets— that you get very little news across that sticks with the viewing public and decision-makers. Every tidbit of news must be cut well and polished like a gemstone, smooth yet penetrating, like a copperhead bullet; and fair like an arrow shot in the air—who it hurts the archer doesn’t care. Social media has been the wave of

the future for 20 years now—that’s a wave long in coming to shore. Yet, it’s made no dent on the shape of the present. Even on the Internet the respected sources of online news are online versions of mainstream reporting and analysis—AP, AFP, Reuters, BBC and CNN, The New Yorker, the New York and the LA Times. Great Internet sites, like Huffpost, Slate and Salon.com are superb in analysis and entertainment, but not yet authoritative in telling and analyzing news. Social media cannot weed out what’s not fit to put out and is best ignored. Sure, teleserye are where the big money is but influence and prestige come only from putting out mainstream news. Radio, TV and print shouldn’t lose it. But if they don’t use it well, they will. The difference between purely online news and mainstream news is that the people telling it are real, like the risks they take in telling it are real. When news can only be found on the Internet—and print and broadcast news are gone—social media will be random flickers of light in the darkness with everyman sitting alone, making up stories for no public, in particular, addressing really no one who cares at all.

To all my readers, my apologies for not being able to write my column in the past weeks due to medical reasons. For more details on SSS programs, members can drop by the nearest SSS branch, visit the SSS web site (www.sss.gov.ph), or contact the SSS call center at 920-6446 to 55, which accepts calls from 7 a.m. on Monday all the way to 7 a.m. on Saturday. Susie G. Bugante is the vice president for public affairs and special events of the SSS. Send comments about this column to susiebugante. bmirror@gmail.com.

Opinion BusinessMirror

opinion@businessmirror.com.ph

Why China can’t lure tech talent

Wednesday, December 14, 2016 A11

The problems of ‘sweeping the dust in the air’ Michael Makabenta Alunan

on the contrary

Adam Minter

BLOOMBERG VIEW

D

onald J. Trump’s campaign promise to crack down on visas for skilled foreign technology workers has a cheerleader in China. Robin Li, the head of Baidu, recently told a conference that he hopes talented workers who are no longer welcome in the US will “migrate to China and help China play a more important role on the stage of global innovation.” He shouldn’t get his hopes up. Whatever Trump’s immigration policy turns out to be—he may yet be swayed by the business luminaries he’s meeting with this week—China won’t be luring foreign tech talent any time soon. And its struggles hold a lesson for every other country hoping to become the Silicon Valley of the future: The competition for global talent will be won by countries that foster the culture of openness—to new ideas and new people—that defined the American tech business for decades before Trump. At first glance, China does seem like a logical destination for talented tech workers. For years, its government has offered them lucrative incentives to come to Chinese universities and companies. Its online population is the world’s largest, and the local e-commerce market is booming. Private and public research budgets are increasing quickly. Recently, there’s been steady growth in Chinese returning home after earning degrees overseas. So what’s not to like? The biggest problem is government control of the Internet. For a software developer, the inconvenience goes well beyond not being able to access YouTube during coffee breaks. It means that key software libraries and tools are often inaccessible. In 2013 China blocked Github, a globally important open-source depository and collaboration tool, thereby forcing developers to seek workarounds. Using a virtual private network to “tunnel” through the blockades is one popular option. But VPNs slow uploads, downloads and collaboration. That slowness, in turn, can pose security risks: In 2015 hundreds of developers opted to use infected iOS software tools rather than spend days downloading legit versions from Apple Inc. And it isn’t just developers who suffer. Among the restricted sites in China is Google Scholar, a tool that indexes online peer-reviewed studies, conference proceedings, books and other research material into an easily accessible format. It’s become a crucial database for academics around the world, and Chinese researchers—even those with VPNs —struggle to use it. The situation grew so dire this summer that several state-run news outlets published complaints from Chinese

scientists, with one practically begging the nationalist Global Times newspaper: “We hope the government can relax supervision for academic purposes.” The cumulative impact of these restrictions is significant. Scientists unable to keep up with what researchers in other countries are publishing are destined to be left behind, which is one reason China is having difficulty luring foreign scholars to its universities. Programmers who can’t take advantage of the sites and tools that make development a global effort are destined to write software customized solely for the Chinese market. And that’s precisely what’s happening. China’s most successful innovations—services like WeChat, its top social network—have consistently failed to gain traction overseas, where competing services thrive. That leaves one Internet for China and one for the rest of the world, with predictable results. WeChat, which dominates China, has 846 million monthly users; Facebook, which is blocked in China, has 1.79 billion. The latter is the more promising market, as any tech worker will quickly calculate. Worse, China has made clear that foreign tech companies hoping to do business there will need to make concessions—which those companies say would threaten security, brand value and intellectual property. A recent survey of American Chamber of Commerce members in China found that “threequarters of respondents feel that foreign businesses are less welcome than before in China.” Robin Li’s warm words aside, foreign workers might wonder if the same goes for them, especially given China’s longstanding aversion to immigration. Perhaps most crucially, tech workers contemplating a new home after Palo Alto have plenty of other places to go. India is home to one of the world’s fastest-growing and most dynamic start-up scenes. Southeast Asia, with 280 million Internet users, a largely unhindered online culture, and generous government support for start-ups, also beckons. Canada has been trying to attract migrant tech workers from the US with promises of easier visas, a business-friendly environment and a tolerant culture.

S

weeping the dust in the air is an idiomatic way of describing the efforts of cleaning air pollution in the atmosphere, and attempts to figuratively sweep the dirt under the rug can no longer be kept hidden as the mound of dirt is now showing. Too good to be true? On daily TV news, you will notice the air pollution index to be always either “good” and “fair” and, therefore, tolerable almost anywhere in Metro Manila, which gives us this sense of uncanny comfort and complacency, owing to the contrasting facts that we still visibly see the widespread vehicle emissions that you see on the streets of the metropolis. This begs the question on whether we are measuring our ambient air pollution properly, which, in all likelihood, we are not measuring to expectations, as other facts and manifestations of the problem are, in fact, already getting alarming. For one, the World Bank, in its 2002 Environmental Monitor on air pollution, cited its funded study that as much as $393 million are spent on health costs alone in Metro Manila because of air pollution. It is said that 9,000 people die directly from pollution every year, mostly from billowing smoke from house fires. And over 85,000 Filipinos die every year from all sorts of respiratory diseases, like lung cancer, asthma, pneumonia, emphysema, bronchitis, pulmonary disease, etc., all of which are aggravated by air pollution. A second factor is the importance of state-of-the-art technologies. In one clean-air forum about two years ago, it was admitted that most of the air-monitoring stations acquired by Department of Environment and Natural Resources’s (DENR) Environmental Management Bureau (EMB) have high standard deviation errors of 25-percent, compared to more advanced technologies with lower 2.5-percent errors. The high 25-percent chance of errors all the more make these equipment surely miss their target of measuring accurately. Measure or sure miss? Although there are many provisions in the law that remain unimplemented to date, over 95 percent of the DENR’s air-pollution measures have focused solely on the yearly acquisition of hundreds of millions of pesos worth of ambient air-monitoring stations. Unlike measuring pollution directly at source from motor vehicle exhaust pipes and factory smokestacks, measuring pollution in the air needs ever-improving sophisticated technologies for two reasons, otherwise we are sure to miss what must be measured. One reason is that, unlike many inland continental countries, which have more stagnant air, an archipelagic Philippines experiences

regular sea breeze that affects airpollution concentrations. n Soot is a carbonaceous aerosol resulting from an incomplete combustion of biomass or fossil fuel. n The color of soot is black, therefore it is also called “Black Carbon”. Black carbon particles can have significant impacts on human health Alfred Wiedensohler Leibniz Institute for Tropospheric Research Round Table Discussion Lung Center of the Philippines May 25, 2015 In a study done by Emman Anglo, PhD, about a decade ago when he was still with Ateneo University, he noted that air turbulence could radically alter and dilute ambient air measurements. We can, thus, say this could understate ambient air pollution. Nonetheless, this can be neutralized, if we can do real-time and log in regular patterns and averages. Otherwise, we will miss to measure air pollution for sure. Favored supplier gets the “bite”? Raising these issues against the DENR for some time now are the Coalition of Clean Air Advocates of the Philippines led by its chairman Atty. Leo Olarte, MD, its president Herminio Verano Jr., activist priest Fr. Roberto Reyes; and Airboard partner Manny Galvez, who submitted to Environment Secretary Regina Paz L. Lopez on September 9 an assessment on these stations. It revealed that the same favored supplier, Electrobyte, who apparently gets the entire “bite” of procurement budgets, has been supplying the same extremely obsolete imported equipment, allegedly phased out already abroad. Galvez said these Continuous Ambient Air Monitoring System (CAMS) stations are a misnomer, as they cannot measure “continuous” real time. Electrobyte’s CAMS, called Differential Optical Absorption Spectroscopy (DOAS), only make manual readings at far intervals, with their data allegedly manipulated and computed to acceptable averages. Worse, many of them are not working, he said. Not contented, E-Byte bites more? In 2003 the first CAMS, about 10 units worth $10 million funded on loan by the Asian Development Bank were procured by DENR-EMB, all of which have not worked. Unfazed by the dismal experience, EMB ordered in 2006 four

more DOAS from Electrobyte, all allegedly failing to deliver consistent and reliable data. By 2010, four more DOAS were procured; and by 2011, particulate matter 10 and PM2.5 analyzers, also from Electrobyte, were bought. In 2013 10 more DOAS were procured, whereby Electrobyte received full payment prior to installation. On the same year, five more DOAS audit equipment were procured to certify that all past DOAS work. “Again in 2013, 17 more DOAS or CAMS were purchased for EMB-NCR, but only 14 were finally turned over. EMB-NCR inspected the 14 stations and discovered they were not calibrated, could not produce reliable data nor can they do real time. Being obsolete, they were non-US Environmental Protection Agency (EPA) PM2.5 analyzers, Galvez said, claiming the findings were shelved by EMB officials. Not contented, again in 2013, Electro-Byte supplied 10 more units for installation in other regions, which did not report any data nor were their locations known publicly. ln 2014 a mercury analyzer was procured, but is lying idle. In 2015, seven more DOAS (CAMS) were again purchased, and Electrobyte allegedly got fully paid prior to installation, despite poor performance, contrary to rules allowing 30-60 days tests before acceptance and full payments are made. In 2015 the EMB tried to bid out 37 more DOAS (worth P370 million), while for 2016, it has programmed to procure more analyzers for particulate matter, mercury and black carbon, all totaling P314 million. All’s not lost, but solution neither found. Galvez said, “‘there is partly good news’ as we did ‘damage control at our cost’ just to prove the government can do things right. We converted EMB-NCR’s 14 stations into functional units, by installing real-time loggers, but reading at real-time only solves half the problem, at least for NCR’s stations.” Unfortunately, they still cannot monitor accurately. They need to be calibrated, rehabilitated and upgraded, but EMB has allegedly refused to subject them to scrutiny, for whatever reason, he added. The bigger problem is reading

actual pollution levels. It is probably for this reason reports of pollution that is reported daily on TV are positively either “good” or “fair.” This is a total contrast to the findings of the 2015 Manila Aerosol Characterization Experiment (MACE) study conducted by RESCueAIR, the organization of local scientists and researchers led by Dr. Mylene Cayetano from University of the Philippines and Dr. Edgar Vallar from La Salle, who all unfairly forked out their own personal money, to fund a team and equipment from the Leibniz Institute for Tropospheric Research of Leipzig, Germany. One micron “black carbon” taken from Katipunan and Taft Avenue were as much as twice to four times the levels in Leipzig. Government sincerity, now put to the test. Government sincerity is now put to the test as the feisty Lopez, who was deterMINED to go headstrong against big mining firms for destructive OVERMINING, is now under watch on whether she will soften this time to an issue, closer to home, involving her top subordinates. It may be recalled only last month that Undersecretary Leo Jasareno, who headed the DENR’s mining audit team, was sacked by Malacañang, but Lopez declared she wants him back. How the DENR fixes its mess and whether it will pursue numerous unimplemented provisions of the law are crucial. The World Bank’s 2002 Environmental Report says $393 million is the cost of health because of air pollution, considering 85,000 Filipinos die every year because of respiratory diseases, like lung cancer, pneumonia, TB, bronchitis, etc. With factories moving to the regions and the increasing volume of vehicles and traffic, vehicles as a percentage of total air pollution in Metro Manila has increased from 70 percent two decades back to 88 percent, and finally to 92 percent as of 2015. It’s high time the government launches solid programs to reduce emissions at source and not focus solely on measuring pollution in the air. I hope they imbibe my mission, which is “Emission Impossible.” E-mail: mikealunan@yahoo.com

Teachers face the challenges of a changing educational landscape CA confirms Locsin as PHL envoy to UN By Monica Agcaoili

T

eaching is a multifaceted profession. The role of dedicated educators is not only confined to the classroom but extends into the homes of students, including the whole community. As molders of the youth, teachers play an important role in the development of students to become good and productive members of society. This is why teaching is recognized as one of the most challenging and respected career choices, absolutely vital to the social cultural and economic health of our nation. As we enter a world that is changing in all aspects—technological, political, economic, social and cultural—we are also seeing the outlines of a knowledge-based society of the future. All of these developments will result in a major

paradigm shift that will alter the educational landscape. Herein lies the greatest challenge for teachers. Gone are the days when they simply stood in front of the class and delivered the same lessons year after year. In the 21st century, teachers are society’s foremost agents of change. Sooner or later, Philippine education will need to come to terms with advanced technologies. Inside the classroom, for example, new technologies are starting to challenge conventional concepts in both teaching and learning methods and approaches. How to use the new technologies for educational purposes is itself an emerging field of knowledge. With the instant access to information and learning opportunity that technology has enabled, students today have computers to

help them with their schoolwork. Teachers, on the other hand, also use the Internet for research to spice up their lessons. Not a few of them are using digital tools—images, videos, audio clips, hypertext and Web pages—to enhance or make learning more productive and enjoyable. Not surprisingly, the teacher’s role is shifting. Educators are transforming themselves to become “guide on the side” as students take more responsibility for their own learning with the help of advanced technology. Schools and universities across the country are beginning to redesign learning spaces to enable this new model of education, foster more interaction and use advanced technology as a powerful enabler. More possibilities are emerging with powerful impact on meeting basic learning needs, and it is clear

that educators have barely tapped the potential of these new possibilities. For one, advanced technology has brought the information available in the world to an exponentially greater quantity than that available only a few years ago, and the rate of its growth is accelerating. Second, the Internet has accorded educators a new capacity to communicate not only to students, but to the entire community, as well. The future of the Philippine educational system holds a lot of promise. But challenges also abound. The advent of powerful learning tools could result in the reinvention of the role of teachers inside and outside the classroom. Hopefully, the desired results are well-rounded and better-educated students. The author is Head Teacher 3 at New Orlins Elementary School in Lasam, Cagayan.

T

he Commission on Appointments (CA) unanimously confirmed on Tuesday former Makati Congressman Teodoro Locsin Jr.’s nomination as the Philippines’s permanent ambassador to the United Nations based in New York. Also confirmed at Tuesday’s session of the bicameral body were Interior Secretary Ismael Sueno, Transportation Secretary Arthur P. Tugade and Public Works Secretary Mark A. Villar, along with the promotions of 21 chiefs of mission and foreign service officers of the Department of Foreign Affairs (DFA). In endorsing Locsin’s nomination as ambassador to the UN, as well as the 21 DFA career officers, Sen. Panfilo M. Lacson Sr., chairman

of the CA Committee on Foreign Affairs, said the screening panel ruled that “the nominee and all the appointees possess the fitness and qualification to perform their duties, and recommended that their nomination and appointments be submitted to the plenary for confirmation.” “Mr. President, it is my privilege to move that the commission gives its consent to the nomination of Mr. Teodoro Lopez Locsin Jr. as permanent representative of the Republic of the Philippines to the United Nations,” Lacson said, adding: “I also move for the confirmation of the ad interim appointments of the following career officers of the Department of Foreign Affairs.” Butch Fernandez

2nd Front Page BusinessMirror

A12 Wednesday, December 14, 2016

BusinessMirror

PHL buying only light firearms from China

C

By Recto L. Mercene

HINESE Ambassador to the Philippines Zhao Jianhua on Monday said the Philippines is buying light firearms, and not heavy weapons, from China. Zhao made the statement during a Christmas celebration he hosted for members of the media and friends in Makati City on Monday night. However, contrary to what President Duterte said earlier that the weapons are ready for pickup, the ambassador said the arms deal is still in the initial stages of negotiations. “Very initial, we’re exploring possibilities,” he said. “At the end of the day, it is up to the Philippine government to decide from which country they would buy weapons they need at a reasonable price,” Zhao added. When asked what kind of arms China is going to provide in case the arms deal pushes through, Zhao

Zhao: “At the end of the day, it is up to the Philippine government to decide from which country they would buy weapons they need at a reasonable price.”

said: “Most likely, some light arms, not heavy equipment.” “The arms that the Filipino side is interested in are arms for fighting terrorists and drug traf-

fickers...things like that. It’s not heavy weapons or equipment.” “You need it because you have so many new members of the police and the Army,” Zhao added. He refused to reveal the cost of the arms package, saying, “we’re not at that stage yet.” At the same time, Zhao announced many positive developments between China and the Philippines in the immediate future. “People-to-people contact will increase in the year 2017,” he said, and then, with feigned seriousness, he announced: “Let me say this to be very precise, in 2017 there will be more tropical-fruits exports to China. There will be more groundbreaking ceremonies of infrastructure projects.” “Last, there will be more Chinese tourists coming to the Philippines.” “We are friends and relatives. We should always advance our common interests; these are the things that unite us,” he added. “Of course, our differences cannot go away tomorrow. What is important is that we handle this difference properly, so that we can continue to focus and enhance our common interests.”

www.businessmirror.com.ph

MONTANO SWORN IN, BUT STILL NEEDS BOARD’S APPROVAL By Ma. Stella F. Arnaldo Special to the BusinessMirror

A

DONE deal. Despite the loud opposition from stakeholders to his appointment, actor Cesar Montano took his oath of office on Tuesday as a member of the Board of Directors at the Tourism Promotions Board (TPB). It is expected that he would assume the post of COO of the marketing agency, a government-owned and -controlled corporation, attached to the Department of Tourism (DOT). Tourism Secretary Wanda Corazon T. Teo administered the oath of office to Montano on Tuesday morning at the DOT building in Makati City. “It’s a done deal,” said a ranking DOT source, who was aware of the opposition to Montano’s appointment within the agency and among private tourism stakeholders. The TPB, however, confirmed that the board of directors’ meeting, where Montano is supposed to be elected as COO, has been moved to January 2017, instead of December 15. “The TPB meeting was reset to January 2017 as per directive of Secretary Teo,” said an agency official, who requested anonymity. Teo will be in Cambodia as a member of President Duterte’s delegation. Meanwhile, in a statement sent via text to the BusinessMirror, Montano said: “I would like to take this opportunity to express my gratitude to President Duterte

for my appointment to the office of the Tourism Promotions Board.” He added that after taking his oath of office on Tuesday, he and Teo “had a productive meeting regarding the agency’s programs. I am confident that with the collaboration of the entire tourism department, we will be able to fulfill our goal of doubling our tourist arrivals.” Montano also stressed that: “I personally believe that it will not be difficult to promote our country, knowing fully well that we are blessed with a rich nation that is known for unparalleled hospitality. This makes our country a world-class tourist destination.” Under the new National Tourism Development Plan from 2016 to 2022, the DOT is targetting to attract 12 million visitor arrivals by the end of Duterte’s term of office, from 6 million arrivals this year. Well-placed government sources said several phone calls from Malacañang were made to Teo following up on the implementation of Montano’s appointment to the TPB, which the DOT had received in the first week of December. “Siguro nagsusumbong sya [Montano] sa Malacañang, bakit ’di pa sya nag-oath-taking [Maybe he was complaining to Malacañang, asking why he wasn’t yet being given his oath of office],” the same sources said. The sources also added that there seemed to be some confusion on the actor’s exact scope of powers while he has yet to be confirmed as COO by the TPB Board of Directors. “Aside from the Malacañang appointment as TPB board

of director, the DOT also received an order saying that [Montano] would take over from [former COO] Chicoy Enerio.” The said directive, however, stopped short of saying Montano was appointed actually as COO, since Malacañang is aware that there is a process to be followed in electing the head of the agency, the same sources explained. On the part of the DOT, agency officials were firm in saying Montano cannot issue any orders or directives at the TPB, unless the board actually elects him as COO. “He can go there and use his office already, but unless he is confirmed as COO, he cannot issue any orders yet,” said an official, who asked not to be named as he had no authority to speak on the matter. Under Republic Act 9353, otherwise known as the Tourism Act of 2009, the TPB “shall be responsible for marketing and promoting the Philippines domestically and internationally as a major global tourism destination, highlighting the uniqueness and assisting the development of its tourism products and services, with the end in view of increasing tourist arrivals and tourism investments. Specifically, it shall market the Philippines as a major convention destination in Asia. To this end, it shall take charge of attracting, promoting, facilitating, and servicing large-scale events, international fairs and conventions, congresses, sports competitions, expositions and the like. It shall, likewise, ensure the regular advertisement abroad of the country’s major tourism destinations and other tourism products....”