BMReports PHL SEX STANCE IN FOCUS AS HIV/AIDS CASES RISE TAYAG: “With the P400-million funding for HIV/AIDS, the Department of Health would like to focus on prevention rather than treatment. Persons living with HIV/ AIDS who are enrolled in the Philippine Health Insurance Corp. [PhilHealth] can receive specific benefits and assistance.”
By Claudeth Mocon-Ciriaco Correspondent
Conclusion
A
S the Philippines emerged as one of the countries with accelerating rates of new cases of persons with human immunodeficiency virus (HIV), staging more efficient information dissemination on HIV is gnarly for health authorities. Assistant Health Secretary Enrique A. Tayag said that, with the P400-million funding for HIV/AIDS, the Department of Health (DOH) would like to focus on prevention “rather than treatment”. Red ribbons are seen in this photo, signifying awareness and support for those living with the human immunodeficiency virus and acquired immune deficiency syndrome. ALYSA SALEN Continued on A2
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A broader look at today’s business
Foreign investors opt to delay new projects T
By Cai U. Ordinario
n
Wednesday, December 21, 2016 Vol. 12 No. 70
@cuo_bm
he first three months of the Duterte administration saw a slowdown in the approval of fresh investment commitments, falling 20.4 percent in the third quarter of the year, mainly due to the apparent reluctance of foreign investors to register their new projects.
nuvali treats southern folk with its light show BusinessMirror E1 | Wednesday, December 21, 2016 • Editor: Tet Andolong
P25.00 nationwide | 5 sections 28 pages | 7 days a week
45 percent The percentage drop in fresh investments committed by foreign firms in Q3
However, the total approved investment pledges in the January-to-September period still jumped 16 percent, the Philippine Statistics Authority (PSA) reported on Tuesday.
Christmas trees
Nuvali treats Southern folks with its light show By Rizal Raoul Reyes |
@brownindio
Photos by Nonie Reyes
“This year we are ecstatic to introduce a magical and one-ofa-kind holiday treat to the south, bringing Ayala Land’s signature light-and-sound show to more cities and communities,” said Jennifer Chua, Nuvali marketing manager in a recent interview with the BusinessMirror. The reception of the Nuvali Lights Show is very pleasing. “We’ve been very happy with the reception of the light show. Since it was launched on November 25, Nuvali has been monitoring the visits and we are quite pleased with the results,”
Chua explained. “It has grown tremendously since the launch. The biggest foot traffic we got for a visit was 24,000 in one day,” she added. “There are also light shows currently running in Cebu and Davao.” The common denominator of all ALI’s light shows is having a single creative director mounting the four light shows this year. Chua noted the prep a rat ion and conceptualization lasted four months. For the music of their light show, Nuvali specifically tapped Krina Cayabyab, the daughter of the
DanDelion installation
illustrious composer Ryan Cayabyab. Ongoing until January 8, 2017, Nuvali’s grass fields light up like an enchanted field of tulips dancing to two fiveminute medleys enjoyable for the whole family. The show will run every 30 minutes from 6 to 10 p.m. daily. Aside from the show, the field also features a variety of attractions, such as the 50-meter long light tunnel, Christmas trees and dandelion light installation. It will also be complemented with a Christmas fair that showcases traditional Filipino Christmas treats, such as bibingka and puto bumbong. A variety of local goods perfect for gift-giving will also be available. Nuvali partnered with Estate Water, Qualimed Hospital,
REHAB CENTER The Taguig City government looks forward to the construction of a drug-
50-meter-long light tunnel
Amaia Steps Parkway, Ayala Malls Solenad, and Nestlé Kitkat for the lights extravaganza.For the shopaholics, it opened the Nuvali Christmas bazaar at Ayala Malls Solenad, which will feature unique local goods from Laguna. Solenad, in Nuvali will also have a roster of crowd-drawing events, including the “Christkindl Market” holiday village featuring traditional and modern gifts for sale from December 1 to 31. Meanwhile, Xavier School Nuvali joined the Christmas celebration with “Christmas in our Hearts: The MCN Lighting of the Christmas Star”. From sunup to sundown, Chua said the estate offers a wide range of activities for families and weekenders. With 50 percent of the de-
velopment dedicated to green and open spaces, Nuvali features an off-road biking and running trails approximately 50 kilometer in total length, a multifunctional lake and a wildlife and bird sanctuary. For people opting to have a relaxing a staycation, Chua said Nuvali Seda Hotel can offer a pleasant stay in an environment anchored on sustainability. As far as the Solenad mall is concerned, Chua said it draws the biggest crowds during weekends. “We’ve been expanding our parking spaces here in Nuvali,” she noted. “That is our biggest indicator on the growth of visitors in Nuvali.” Nuvali has experienced a drastic change since it was introduced in 2008. Before, Nuvali
has been the preferred stopover for people going to and from Laguna to Tagaytay. “It has now become the destination in the South,” Chua said. In response to the warm reception of the market, Nuvali has expanded its coverage from 1,800 hectares in 2009 to its current 2,290 hectares. As they say, the best is yet to come, as ALI hinted the possibility of expansion in the future if the opportunity arises. To get to Nuvali, private vehicles can pass through Mamplasan, Santa Rosa, Eton-Greenfield, Silangan, or Canlubang exit along South Luzon Expressway. Public transportation to Nuvali is available from major jumpoffs, such as Bonifacio Global City and Balibago.
Ridgewood Towers celebrates another milestone By Jacqueline SalvadorMarvida
C
5 mansions Development Corp., or better known as C5 Group, which delivers affordable yet world-class standard developments through ingenious design, planning and pricing, is expected to be delivered with the launch of Ridgewood Towers Premier. Just a stone throw away from leisure, entertainment and commercial establishments, Ridgewood Towers Premier is up to date living right within the heart of a thriving metropolis. With three towers that had already been established, Ridgewood Towers Premier is no doubt the highly anticipated global living within reach. Residents will look forward to the accessibility and convenience of BGC lifestyle. Strategically located along C5 Road in front of Mckinley Hill and directly connected to the South Luzon Expressway (Slex), Ridgewood Towers Premier is approximately 400 meters way from SM Aura and 500 meters
riDgewooD towers Premier
away to Banco de Oro C5 Branch. Shakey’s, Jolibee, Coffee Bean and Tea Leaf are just nearby whenever you need a quick run for food or coffee. The residential condominium is just 15- to 30-minute drive to the airport and 30- to 45-minute drive to the Makati Central Business District. Located near the area are eight exclu-
sive schools in BGC and four hospitals in Taguig, including Saint Luke’s Medical Center. The vital market of this expansion are the middle-class Filipino expatriate workers and local young professional with financial means and with their own preference and taste for condominium living. The property is flood-free. In comparison to the other condominiums in BGC and McKinley Hill, Ridgewood Towers Premier is the most practical investment in terms of price per square meter for a quality and affordable residential condominium. It is a real value for your hard-earned money. A typical one-bedroom unit at 24.8 sq m is being offered at just P12,500 monthly amortization. Private and classy units feature balconies facing the posh McKinley Hill Village and Township with views of the spectacular sunset, while those on higher floors offer a vista of Manila Bay. Security is one of the significant factors of Ridgewood Towers Premier—first-class building security
offering residents peace of mind with closed-circuit television cameras on all floors; security guards to safeguard the residents 24 hours a day; exclusive and controlled access to the residential floors and automatic fire detection, alarm and suppression system. The tower will also be outfitted with four high-speed elevators and back-up generators providing 100 percent of common areas and utilities. One of the highlights of the event was the signing of the first reservation agreement, symbolizing the official launch of Ridgewood Towers Premier. The launch was followed by an open house, where prospective clients visited the sales lounge and viewing of the model unit. Interior designer Krystel Blancas was present to answer inquiries about the interior design and décor, as well as the efficient implementation of space planning and maximizing of a condo space with great aesthetic design. The launch was officially attended by Manila’s top officials of C5 Mansions, including Rufo Colayco, chairman; George S. Go, president; Herbert Tan, executive
property resiDential lobby
PoDium
vice president; Arlene Keh, director; Mila Blancas; director; and Alfonso Keh Jr., general manager. The model unit is at the Sales Lounge, Ridgewood Square along
C5 Road (Northbound) across McKinley Hill. Ground breaking is targeted for November 2017. Visit www.c5mansions.ph for more information.
Need to think before acting Teddy Locsin Jr.
D
Teddyfire Locsin Jr. free
EEP thinking is indispensable in government. This is not as obvious as it sounds. Word’s gotten around that sincerity is enough. But as the Trump effect ripples across the globe, we cannot stick to instinct alone. We cannot do a Trump with our country, all feeling no thought. We don’t have the power to pull it off. America can afford to be whimsical. We must study and think before jumping to conclusions and into action. We need to wait and see. Continued on A10
See “Foreign investors,” A2
By Jasper Emmanuel Y. Arcalas
FTER the success of the Ayala Triangle Garden Festival of Lights, property colossus Ayala Land Inc. (ALI) decided to expand the project to be able to reach more communities and cities. As far as Nuvali is concerned, ALI’s eco-estate project, joined the act this year to launch its own version, called the Nuvali Lights Show.
business news source of the year
DA pins hope on hybrid seeds to hit rice self-sufficiency goal
inside
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2016 ejap journalism awards
e1
rehabilitation center in Camp Bagong Diwa after Wednesday’s contract-signing with officials of Megaworld Construction, the Department of Health and the Department of the Interior and Local Government. Gracing the event are (from left) Taguig Mayor Lani L. Cayetano, Health Secretary Paulyn Jean B. Rosell-Ubial, Executive Director of Alliance Global Kevin L. Tan, Interior Secretary Ismael D. Sueno, Cabinet Secretary Leoncio B. Evasco Jr. and Interior Undersecretary John R. Castriciones. ROY DOMINGO
PESO exchange rates n US 49.9300
T
@jearcalas
he Department of Agriculture (DA) will plant hybrid rice seeds in 1 million hectares of irrigated lands starting next year in its bid to achieve rice self-sufficiency by 2019. Agriculture Secretary Emmanuel F. Piñol said the government will identify 10 initial areas with 1,000 hectares of irrigated land under the Masaganang Ani (MA) 6000 program. “The DA is positive that it can be done. We are now in
3.9 MT per hectare
The current national average rice production the process of finalizing the MA 6000 program, which will initially target 1 million hectares of irrigated areas,” Piñol told reporters in a news briefing on Tuesday. “These areas will be supported with hybrid-rice seeds, sufficient fertilizer, and efficient irrigation system and See “DA,” A2
n japan 0.4265 n UK 61.9032 n HK 6.4281 n CHINA 7.1828 n singapore 34.4511 n australia 36.1793 n EU 51.9422 n SAUDI arabia 13.3143
Source: BSP (20 December 2016 )
BMReports BusinessMirror
A2 Wednesday, December 21, 2016
PHL sex stance in focus as HIV/AIDS cases rise Continued from A1
Tayag said persons living with HIV acquired immunodeficiency syndrome (AIDS) who are enrolled in the Philippine Health Insurance Corp. (PhilHealth) can receive specific benefits and assistance. Tayag was referring to the PhilHealth Outpatient HIV/AIDS Treatment (OHAT) package that covers antiretroviral treatment (ART) and laboratory exams based on specific treatment guideline. These guidelines cover CD4 cell determination, viral load test, drug-toxicity test and professional fees of providers. The package covers up to P30,000 worth of necessary medical expenses per memberpatient per year. PhilHealth will be paying a maximum of P30,000 ($599.41, at current exchange rates) per year without cap on how many times the patient will go to treatment hubs and how many medicines or tests the patient will avail himself or herself, as long as it falls within the given amount. The OHAT package goes in accordance with the guidelines set by the DOH. According to Tayag, who is also the DOH spokesman, the department is giving P15,000 ($299.71) per person per year for first line drug and P80,000 ($1,598.44) per person per year for second line drugs.
Testing
HEALTH Secretary Paulyn Jean B. RosellUbial said the DOH is continuously offering free and confidential HIV testing in social-hygiene clinics run by local government units and in 22 HIV
US. . .
Continued from A12
agreed location in the South China Sea, citing unidentified US officials. “We’re working out the logistical details,” Defense Department Spokesman Peter Cook said. Whether China found anything interesting remains to be seen. Underwater gliders like the one seized are used to collect environmental readings, such as water temperature, salinity and information on currents for use by the military as navigation aids for ships and submarines, according to Sam Bateman, a research fellow at the Australian National Centre for Ocean Resources and Security in Wollongong. “It was surprising the Chinese bothered to recover it,” he said. “They probably wouldn’t be able to read the data on it, and they might not
Treatment Hubs nationwide. Ubial added that the DO wH is also providing free condoms. Kits are not available to the public as counseling is required before and after testing, she explained. The DOH chief said treatment options are available to those who test positive for HIV. ARTs are applied to individuals who need to lower the viral load of patients and to improve their immune response. The DOH is seriously considering a recently-announced World Health Organization (WHO) recommendation on self-testing to improve HIV-testing rates and prevent treatment delays, according to Ubial. The Philippine National AIDS Council of the DOH is committed to end the spread of HIV and improving the lives of all who live with it, she added. She said the Sixth AIDS Medium Term Plan (AMTP), which “is the blueprint of our national response” on HIV and AIDS have determined the targets for 2022. Ubial said the government is optimistic on reversing HIV trends in the next six years but “only if an ‘All of Society’ and ‘HIV in All of Policies’ approaches are sought with renewed vigor and determination.” “The ‘All for Health towards Health for All’ line resonates for stopping HIV,” she said adding, that the global call for “Hands Up for HIV” prevention “has just turned a new leaf in the Philippines.”
Non-governmental
OUTSIDE of the government are initiatives by private groups and advocates addressing the HIV/AIDS pandemic. get a great deal of intelligence out of it.” Bateman, who is a former Royal Australian Navy commodore, said the incident is unlikely to prompt the US to start using warships for what it considers peaceful operations.
‘Bit naughty’
“The Chinese were probably a wee bit naughty taking this thing,” he said. “Some are making the argument that this is China demonstrating that they can do as they like in the South China Sea. That’s a stretch.” China has long opposed American patrols and surveillance within its exclusive economic zone, while the US views anything beyond 12 nautical miles as international waters in which military activities can take place. “The issue for the United States is less about a strong response to a specific incident
One is the Philippines’s business of Johnson & Johnson Inc. Weeks after losing a lawsuit in the US on its baby-powder product, Johnson & Johnson Philippines launched late last month a campaign the company calls “a comprehensive HIV disease-management program.” Developed by the Janssen Pharmaceutical Cos. of Johnson & Johnson, the program tapped non-governmental organization (NGO) Sustained Health Initiatives of the Philippines Inc. (Ship). Ship has been running a specialist HIV care center with the Philippines General Hospital in Manila. According to documents it provided, the organization “offers high-quality, affordable HIV and primary care directly to the communities that need it most.” According to Janssen, the program also targets to improve the understanding of the attitudes people hold toward HIV and the factors that affect patient adherence to their medicines, as well as how well treatments work and the availability of ongoing care. Working together, Johnson & Johnson (Philippines) Inc. and Ship “will undertake essential research into current awareness and attitudes toward HIV in the Philippines to generate the necessary evidence to guide education and treatment practices. “Our goal is to improve the lives of those affected by HIV and significantly reduce the incidence of the disease,” Janssen’s Disease Management Programs leader Dr. Randeep Gill said during the launch of the program called “Connect for Life”. “Health-care solutions and appropriate care planning must be centered around patients’ needs.”
According to Gill, the program will use an evidence-based approach in designing and developing “integrated healthcare solutions focusing on patients’ and health-care worker’s needs and support the implementation of structured interventions to turn the tide on an increasing epidemic.”
and more about a broader and resolute US response to what is seen as a pattern of sustained Chinese assertiveness in the region,” said Andrew Scobell, a senior political scientist at RAND Corporation. Any US response to future moves “would be measured and appropriate to the scope and scale of any Chinese action.”
and China in the South China Sea occurred in 2013 when the USS Cowpens and a Chinese military vessel had a confrontation in the South China Sea that required maneuvering to avoid a collision. In August 2014 a Chinese fighter buzzed within 20 feet of a US surveillance plane in international waters near Hainan island. The US must develop a strategy for responding to incidents involving underwater unmanned vehicles because they are likely to become more common, said Collin Koh Swee Lean, an associate research fellow at the S. Rajaratnam School of International Studies in Singapore. Even so, he said, the devices aren’t worth going to war over. “The good thing about the device is that it was unmanned,” Koh said. “The US understands they are meant to be lost.” Bloomberg News
No strategy
The location of this incident, about 50 nautical miles northwest Subic Bay, raised eyebrows. Defense Secretary Delfin N. Lorenzana said on Monday that, while the matter should be resolved between China and the US, it was “very troubling” because it occurred within the country’s 200-nautical-mile exclusive economic zone. The last major incident between the US
Leverage
THE Philippines is one of seven countries in the world where HIV infection rates are increasing. It had the highest proportional increase of infections among the 15- to 24-year-old age range from 2005 to 2015, documents provided by Janssen said. The number of people living with HIV is anticipated to increase substantially by 2022. The quality of HIV care in the country is varied, with time from diagnosis to treatment and level of stigma differing greatly between regions. The diverse geography of the Philippines often limits access to health-care services and improved interconnectivity between health providers could reduce variations in quality of care across the islands, according to documents provided by Janssen. The company said the program offers treating physicians a clinical information system to further engage with their patients and offers patients the means to stay connected across remote locations. Johnson & Johnson Philippines Inc. Managing Director Jeffrey Go said “the collaboration forms part of an ongoing effort to leverage the strengths of Johnson & Johnson and bring forth innovative programs to improve health outcomes.”
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DA. . .
Continued from A1
mechanization,” he added. Under the MA 6000 program, Piñol said they will only use 1 million hectares of the 1.3 million hectares of irrigated lands in the country, according to the latest report National Irrigation Administration (NIA) report. “The purpose of the Masaganang Ani 6000 is to address the issues that would contribute to productivity. It’s the existing irrigated area that we are going to utilize, we are not expanding,” he said. The DA said it is eyeing to improve the national average rice production to 6 metric tons (MT) per hectare from the current 3.9 MT per hectare. Citing farmers’ testimonies, Piñol said they are able to produce more than the national average yield by planting hybrid rice seeds in areas with proper irrigation system and efficient farm machines. “So we are in the process of coming up with a system on how we are going to implement the MA 6000 program and how we are going to extend the distribution of hyrbid-rice seeds, fertilizers, as well as the needed pest control materials,” he said. “If we can perfect that program then we can achieve rice self-sufficiency by 2019,” Piñol added. Increasing the productivity of the 1 million hectare areas targeted under the MA 6000 program by 2 MT per ha. would increase annual rice output by 2.4 million metric tons (MMT) and wipe out imports. “Considering that the areas being targeted are irrigated, the increase in rice output could reach 2.4 MMT. “We are currently short of 1.8 MMT of rice, according to data from the Food and Agriculture Organization [FAO],” Piñol said. Citing the FAO data, he said farmers lose about 20 percent of their harvest during the milling of rice due to the use of inefficient machines. “The old rice mills have a recovery rate of 60 percent against the 65 percent recovery rate of new rice mills, so that’s 5 percent being wasted,” he said. “Our intention is really to modernize the post-harvest facilities, hoping that at least we can cut post-harvest losses to as low as 10 percent,” Piñol added.
Foreign investors. . . Continued from A1
The country’s seven investment-promotion agencies (IPAs) approved some P133.8 billion worth of new projects registered by foreign and Filipino businessmen in the third quarter of the year, way below the P168.2-billion investment pledges approved in the same period last year. This was largely due to the 45-percent decline in foreign-investment pledges to P26.7 billion, from P 48.6 billion recorded in the same period last year. This meant that foreign investors were still on a wait-and-see mode—seen as normal during election years—prolonging the downward trend in approved projects registered by non-Filipino firms. In the January-to-September period, foreign-investment pledges posted a decline of 12.4 percent to P93.3 billion in 2016, from P106.6 billion last year. Combined investment pledges from foreign and local firms, however, increased to P411.2 billion in the first nine months of the year, from P354.6 billion committed in the same period last year. “The highest investments would go to electricity, gas, steam and air-conditioning supply at P140.1 billion, or 34.1 percent of the total approved investments,” the PSA said. These investment pledges are expected to generate a total of 146,917 jobs. This is a 12.9-percent increase from the 130,169 jobs expected in the same period last year. The approved investment commitments in the third quarter alone are projected to create 33,590 jobs. This, however, is fewer by 31.1 percent, compared to last year’s estimate of 48,776 jobs. “Out of these anticipated jobs, 83.2 percent would come from projects with foreign interest,” the PSA said. The investment pledges were coursed through the country’s seven IPAs: the Board of Investments, Clark Development Corp., Philippine Economic Zone Authority and Subic Bay Metropolitan Authority, the Authority of the Freeport Area of Bataan, Board of Investments-Autonomous Region of Muslim Mindanao and Cagayan Economic Zone Authority.
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Editor: Dionisio L. Pelayo • Wednesday, December 21, 2016 A3
Govt reneges on promised release of 400 detained activists By Marvyn N. Benaning | Correspondent
M
ORE than 400 detained activists are sure to spend Christmas in jail after President Duterte backtracked on his well-publicized promise to free them under a general amnesty.
“After all that has been said and done, they will still spend Christmas inside cramped jails,” said Cristina Palabay, Karapatan secretary-general. “Since Duterte first talked about releasing political prisoners, one of them has died, several have been rushed to hospitals and many of them went into fasting and hunger strike to dramatize their demand for freedom while 15 have been arrested and are still detained,” Palabay claimed. “The December 3 to 10 hunger strike and fasting will not be the last action we will conduct. There will be more forms of protest in the coming days because we refuse to be taken hostage by the Duterte administration to force the National
Democratic Front [NDF] to sign a bilateral cease-fire agreement,” the activists detained in Special Intensive Care Area—1 (SICA-1) in Camp Bagong Diwa, Taguig City, said in a statement. Karapatan has monitored the release of only one activist since September 2016 in line with the peace negotiations between the government and the NDF. Martin Villanueva, a pardoned activist, was released on December 9. Pedro Lumantas, who was convicted and jailed for eight years, was freed under conditional parole on December 13. His freedom was won by the efforts of his relatives and Karapatan to have him released after serving
Recto to Duterte: Philippines should be friend to all, subservient to no one
T
HE Philippines would be better off pivoting to an independent foreign-policy position than siding with any of the big powers. “Our motto should be: “Friend to all, but subservient to none.” In other words, amity to all, hostility to no one, Recto said. He said foreign-policy rebalancing should not mean that “we dump old friends for new suitors.” “So what’s the advantage of running away from the claws of the American eagle only to rush to the embrace of a Chinese panda or Russian bear?” Recto asked. He said the Philippines must maintain friendship with all nations, even those it has “ongoing differences” with. “We must continuously engage, not disengage.” One of the “important engagement points,” Recto said, “is the matter of trade and aid, but preferably more of the former.” “We should reel in both, from all nations, but always doing so from our national interest. We should only accept aid without bad strings attached, the ones that will not cause dependency, or massive surrender of sovereignty, or ballooning of debts,” Recto said. One reason the Philippines should maintain close relations with all the big powers is “its unfortunate status as a climate change-threatened state.” “If the [RP-US] Enhanced Defense Cooperation Agreement [Edca] will be scrapped, then we should be ready to fill whatever logistical void in disaster relief that an American disengagement will cause,” he said.
“The vacuum will be felt more in disaster relief operations because in many typhoons in the past, Americans have been the first responders, even sending entire carrier battle groups to help in rescue and reconstruction,” Recto said. “Hindi rin naman maganda na mga Chinese na lang ang papalit sa mga Amerikano. Ang mas maganda meron tayong sariling kakayahan. At lahat ng ating mga kaibigan, handang tumulong,” Recto said. In this era of climate change, with its powerful typhoons, we need all the help we can get owing to our lack of resources to airlift aid to damaged places, he added. Recto said, “whatever will happen in the future, whatever changes in our relationship with the Americans,” Manila should see to it that Edca’s humanitarian assistance and disaster response (HADR) component will be retained. “Edca allows the ‘storage and prepositioning of HADR equipment, supplies and materials’. It is to our country’s benefit that such an arrangement will continue to be in force,” he said. In the aftermath of Typhoon Yolanda in November 2013, the US military sent the USS George Washington carrier strike group, dispatched 13,400 personnel, including Marines in two ships, deployed 66 aircraft and 12 other ships to help in the search, rescue and rehabilitation efforts. In June 2008 the USS Ronald Reagan carrier strike group also parked itself in the Visayan Sea to bring aid to victims of Typhoon Frank. Butch Fernandez
Christmas, New Year treat at Southern Luzon tollways
M
O TOR I S T S m ay pa ss through the Naia Expressway (Naiax), Skyway System, the South Luzon Expressway (Slex) and Star Tollway for free on the eves of Christmas and New Year. Toll will not be collected from 10 p.m. of December 24 up to 6 a.m. the following day; and from 10 p.m. on December 31, 2016, up to 6 a.m. of January 1, 2017. Vertex Toll Development Inc., Skyway O&M Corp. (Somco), Manila Toll Expressway Systems Inc. (Mates) and Star Tollway Corp. (STC), the respec-
tive operators of Naiax, the Skyway System, Slex and the Star Tollway, extend this toll-free privilege to the south tollway-using motorists in appreciation for their patronage. It is also their way of wishing them a Merry Christmas and a prosperous New Year. In their effort to further raise the standards of safety, speed and convenience on their tollways and deliver high customer satisfaction, Somco and Mates have embarked on improvement projects in 2016, a number of which have been completed in time for the Christmas holiday. Claudeth Mocon-Ciriaco
his minimum sentence. “However, instead of an unconditional release, Lumantas still has to report to Bohol Provincial Jail every two weeks. He is not allowed to travel far, which is tantamount to saying he is not free,” Palabay said. Lumantas is but one of 130 ailing activists in detention.
Nineteen NDF consultants and staff were temporarily released on bail in August 2016. From July to December, at least 21 detained activities, including Lumantas, were released on the basis of their legal defense and other remedies that they availed themselves of, along with their lawyers, families and
human-rights workers. These efforts are independent of the government-NDF peace process and unfulfilled promise of Duterte to release all political prisoners. Human-rights advocates still demand the immediate and unconditional release of at least 400 detained activists.
“Peace negot iat ions a ren’t betting games where one holds cards for a bluff, just like what is happening right now. We are being held as trump cards for the NDF to lay down its arms. It’s not about who will call the bluff but doing what is just and fulfilling commitments,” the pr isoners said in the statement.
Economy
A4 Wednesday, December 21, 2016 • Editors: Vittorio V. Vitug and Max V. de Leon
BusinessMirror
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Stakeholders ready for Malampaya’s 20-day scheduled shutdown in Jan
P
By Lenie Lectura
@llectura
ower-industry stakeholders have set a series of meetings to tackle the necessary preparations amid an impending 20-day shutdown of the Malampaya natural-gas facility scheduled in January next year.
“We are coordinating with all stakeholders affected to ensure sufficiency of supply and maximize protection for the consumers. We have met with SPEX [Shell Philippines Exploration BV], NGCP [National Grid Corp. of the Philippines], Meralco [Manila Electric Co.], PEMC [Philippine Electricity Market Corp]. on December 15 and will meet again including the affected gencos [generation companies] on December 22,” Department of Energy (DOE) Undersecretary Felix William Fuentebella said in a text message. SPEX, operator of the Malampaya deep water gas-to-power project, said the shutdown is necessary to keep the gas facility in good shape. Fuentebella said Energy Secretary Alfonso G. Cusi has asked stakeholders to submit on December 23 their plans on how to address the situation in order to avoid the possibility of a repeat of the November 2013 Malampaya 30day shutdown incident that led to the controversial high Wholesale Electricity Spot Market (WESM) prices. Three years after the record-high increase in Meralco’s charges was
announced, regulators have yet to release the result of its investigation into the possible collusion or abuse of power allegedly committed by industry players that resulted in an exorbitant rate hike yet in history. These rates include the P0.45 per kilowatt-hour (kWh) deferred increase for January 2014 billing period that Meralco intends to collect over a six-month period. An earlier P4.15 per kWh rate hike was also set to have been implemented in phases starting in December 2013, but was stopped by the Supreme Court. According to Meralco head for utility economics Lawrence Fernandez, the 2017 Malampaya shutdown is scheduled on January 28 to February 16. He said demand for power in the Luzon Grid is typically low at this time of the year, because the weather is cool. “For the Meralco area, the months of low demand has historically been January, February and March,” Fernandez said. The shutdown period will be reflected in the March 2017 billing to customers.
700 MW The projected power-supply deficit with the planned maintenance shutdown
The natural-gas plants fueled by Malampaya provide around 40 percent of Meralco’s supply requirements, the official said, adding that the rest are sourced from bilateral contracts with generation companies and the WESM. During the shutdown, Fernandez said Meralco would have to rely for power from other sources. “We will optimize other PSAs [power- supply agreements] and source from WESM.” Joe Z a ld a r r i a g a , Mer a lco spokesman, said there would be a projected electricity supply deficit of about 700 megawatts (MW) during the shutdown. “In the past, instances of shifting to liquid fuel has always been higher than the cost of Malampaya gas,” he said. The Luzon grid is dependent on Malampaya, which fuels three power plants: Santa Rita, 1,000 MW; San Lorenzo, 500 MW; and Ilijan, 1,200 MW. The Santa Rita and San Lorenzo power plants are owned by Lopez-led First Gen Corp., while Ilijan is owned by Kepco Philippines. These plants will use more expensive alternative fuel throughout the shutdown period. Fernandez said the Santa Rita and San Lorenzo gas plants will continue to run, but on liquid fuel. Ilijan plan, meanwhile, will be available, but its output will be lim-
ited up to 420 MW only. Fernandez said one block (600 MW) of Ilijan will go on scheduled maintenance while the other block will continue to run on biodiesel but only up to 420 MW. PEMC President Melinda Ocampo said the Malampaya shutdown would not lead to a repeat of the 2013 incident because existing mitigating measures are put in place to prevent abnormal price spikes. “There is a threshold that will prevent higher WESM prices,” she said. PE MC i s t he o p e r at or of WESM, the country’s electricity trading floor. Malampaya’s last maintenance shutdown in November 2013 significantly pushed up power rates and this led to reforms in the WESM. WESM’s primary offer cap was originally set at P62 per kWh but regulators lowered it to P32 per kWh starting December 2013 in a bid to prevent excessive price spikes. Besides the primary cap, the ERC also ordered the implementation of a secondary cap to further protect consumers from excessive price spikes triggered by supply tightening. Called the price threshold mechanism, the P6.245 per kWh secondary cap kicks in the market once an average threshold of P9 per kWh is reached over a 168-hour period. The thresholds were computed based on historical prices, with allowance for three intervals hitting high market-clearing prices. Fernandez also said that with these measures, the utility firm’s rates may not reach the record-high levels. “We don’t expect price spikes like in November and December 2013 supply months because of the lower
primary cap in the WESM and the secondary cap,” he explained. Besides this, he cited Meralco’s Interruptible Load Program (ILP) meant to prevent power outage incidents. ILP works by calling on business customers with loads of at least one MW to run their own generator sets, if needed, instead of drawing power from the grid. With the ILP, power supply from the grid that will not be consumed by participating customers will be available for use by other customers within the franchise area. Through this, the aggregate demand for power from the system will be reduced to a more manageable level, helping ensure the availability of supply. Meralco was earlier expecting to sign up more ILP participants that would aid the utility firm in addressing sudden power outage in its franchise area. Meralco’s ILP had helped avoid power outages in some incidents of yellow and red alerts. A yellow alert is issued by NGCP when contingency reserve is less than the capacity of the largest synchronized unit of the grid. In Luzon this is equivalent to 647 MW, or one unit of the Sual power plant. A red alert, meanwhile, means that there is severe power deficiency. The Malampaya facility’s previous scheduled maintenance was held in March 2015. SPEX, the upstream company of Pilipinas Shell, completed a 30day scheduled shutdown meant to install a $765-million platform in a bid to maintain fuel supply to power plants providing about half of Luzon’s electricity needs.
DENR reports expansion of PHL forests through greening program By Jonathan L. Mayuga @jonlmayuga
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he country’s forest cover expanded by approximately 250,000 hectares with the successful implementation of the National Greening Program (NGP) this year. In the final year of implementation of NGP, some 367,684,457 seedlings were planted, covering a total of 242,507 hectares. This is 98 percent of the year’s target of 247,683 hectares. The Department of Environment and Natura l Resources (DENR), the lead implementing agency of the NGP, is still collating data from field offices of the DENR and other NGP partners. A DENR accomplishment report as of October 2016 also said that a total of 555,794 jobs were generated through the NGP, employing a total of 90,912 individuals. The NGP aims to plant 1.5 billion trees in 1.5 million hectares of open, degraded and denuded forest. From 2010 to 2015, the DENR has already expanded forest cover by 1.2 million hectares. The NGP is a climate-change mitigation and adaptation strategy, anti-poverty and food-security program rolled into one. It also aims to provide support to the country’s wood industry by producing raw materials. The NGP eats up the bulk of the DENR’s annual budget since its launching in 2010. This year the DENR, through the Ecosystems Research and Development Bureau, also produced a total of 2.12 million seedlings from January to October, and 688 tons of mycorrhizal inoculants. The DENR, through its Forest Management Bureau, is now gearing up for the implementation of the Enhanced-NGP (E-NGP). Under Environment Secretary
Regina Paz L. Lopez’s watch, the DENR aims to engage in massive cultivation of bamboo and mangroves in coastal areas. The E-NGP aims to sustain the country’s forest-expansion program to increase its carbonabsorption capacity, in line with its commitment to reduce carbon emission by 70 percent by 2030, as stated under its Intended Nationally Determined Contribution submission to the United Nations Framework Convention on Climate Change. The NGP accomplishment report submitted by DENR Undersecretary for Policy and Planning Marlo Mendoza to Lopez highlights the agency’s performance this year. During the year, the DENR was able to issue a total of 4,033 agricultural patents and 30,748 residential patents under Republic Act 10023, or the Residential Free Patents. While the target for land disposition of agricultural patents of 3,322 was surpassed by 21 percent, the accomplishment for residential patent of 55,785 fell short by 45 percent. The shortage in distributing residential free patents was attributed to the incomplete requirements of the applicant, difficulty of securing requirements such as zoning certification, area limitation, policy of one lot per applicant and slow processing in the Provincial Environment and Natural Resource Offices due to lack of staff that w il l ver if y and assist in the transmittal of the patents. Meanwhile, for Protected Area and Biodiversity Conservation, the DENR approved a total of 817 Protected Area Management Board resolutions. A total of 56 ecotourism facilities were maintained as of October 2016, which represents 44 percent of the annual target.
Ambulance donations
Philippine Charity Sweepstakes Office (PCSO) Chairman Jose Jorge E. Corpuz and General Manager Alexander F. Balutan led the turnover of ambulance units on Sunday at the Ground Floor of the Conservatory Shaw Plaza Building, Shaw Boulevard, Mandaluyong City. The recipients were seven municipalities in Isabela, namely, Echague, Santa Maria, San Agustin Mondala, Santo Tomas, San Manuel, Gamu and Delfin Albano. The Municipality of Tayabas, Quezon, and Jala-Jala, Rizal, also received ambulances. Five hospitals were also recipients of ambulance unit; the Manuel A. Roxas Hospital in Isabela; People’s Gen.Hosp in Tuguegarao City; Cavite Naval Hospital; Claro M. Recto Hospital, Infanta, Quezon and Peter and Paul Medical Center, Candelaria, Quezon. The Fort Magsaysay in Nueva Ecija and First Scout Ranger Regiment, Southern Command unit of the Army in San Miguel, Bulacan, also received their ambulances. Laura M. Jacinto
DBM releases guidelines for LDF availment By David Cagahastian @davecaga
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he Department of Budget and Management (DBM) has issued the guidelines for processing and disbursing of payments to claims for reimbursement from the government’s Legal Defense Fund (LDF). The money appropriated for the LDF for 2016 is P200 million, and government officials and employees, including police officers accused of extrajudicial killings, may claim reimbursement or financial assistance from the said fund to help them in litigation expenses for cases filed against them as a result of their performance of duties. Budget Secretary Benjamin E. Diokno said in his National Budget Circular 566 that the LDF, which will be under the Miscellaneous Personnel Benefits Fund (MPBF) shall be used for actual expenses, including payment of premiums for posting of bail bonds and cash advance for expenses incurred by government personnel in relation to the defense of administrative, civil or criminal cases filed against them in court for acts committed in the performance of their actual functions. Under the new guidelines, each line department shall establish a claims board composed of five or seven members, which shall determine the eligibility of claimants and their claimed expenses to be charged against the LDF. Any favorable decision by the claims board shall be final and executory, but a denied claim shall be appealable to the Office of the President, which, as a matter of policy, had been very accommodating to the requests of the police and military, as shown by the increases in their salaries, improved equipment and the reported cash gifts to be given for Christmas from President Duterte himself. In his previous speeches, Duterte had been extolling the police and the military for carrying out his campaign against illegal drugs, and vowed that no police or military officer shall go to jail during his term for doing his duty. The LDF, which the DBM shall set aside for the legal expenses of government officials and employees, provides even for the reimbursement or cash advance for the acceptance fee of a private counsel up to a maximum of P50,000, fees for preparation of pleadings and other papers of up to P20,000 per case and appearance fee of P5,000 per hearing. The requirements for filing a claim against the LDF are: that the claimant is an incumbent, separated or retired government employee with a plantilla position; the case arose from his performance of responsibilities and functions; the case must be filed before any court or those under the supervision of the Supreme Court; and the claim for reimbursement or cash advance is filed with the agency where the claimant performed the responsibilities and functions subject of the case.
VAT exemption for PWDs on certain goods and services takes effect Dec. 23–Taguiwalo
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ollowing the publication of the implementing rules and regulations (IRR) of Republic Act (RA) 10754, or an Act Expanding the Benefits and Privileges of Persons With Disability (PWDs), the Department of Social Welfare and Development (DSWD) said PWDs can start enjoying the value-added tax (VAT) exemption in the purchase of certain goods and services on December 23. Social Welfare Secretary Judy M. Taguiwalo and former Lakas Rep. Martin Romualdez of Leyte, principal author of the law, said the RA 10754 would accord PWDs the same privilege being enjoyed by senior citizens. This is on top of the 20-percent discount they are already entitled to under RA9442, also known as An Act Amending RA 7277, or the Magna Carta for Disabled Persons, and for Other Purposes. According to Romualdez, at least
1.5 million PWDs will be exempted from the payment of 12-percent VAT on certain goods and services. “Our task now is to ensure and guarantee that all beneficiaries will fully enjoy the assistance that the law has been offering. We will make sure that all provisions are strictly followed,” Romualdez said. On the other hand, Taguiwalo said "this [law] will answer the wishes and aspirations of our kababayan in the sector. The grant of the 20-percent discount and VAT exemption is a big help for them and their family.” The R A 10754 granting VAT exemption benefits to PWDs was signed on March 24 by former President Benigno S. Aquino III. Under the law, the VAT exemption shall apply on the purchase of certain goods and services from all establishment for the exclusive use, enjoyment or availment of PWDs:
lodging establishments, restaurants, recreation centers, purchase of medicines and foods for special medical purposes, medical and dental services, diagnostic and laboratory fees and professional fees of attending doctors, domestic air and sea travel, land transportation travel, funeral and burial services for the death of a person with disability. The law also includes from VAT exemptions foods for special medical purpose, which are intended for the exclusive or partial feeding of patients with limited or impaired capacity to take, digest, absorb or metabolize ordinar y foodstuffs or certain nutrients contained therein, among others. It includes vitamins and minerals in the definition of drug/medicine, provided that these are in accordance with the Food and Drug Administration’s prevailing cut off. For
herbs, level and amounts, as well as registration status, is required when indicated for therapeutic use. The law also provides the reiteration of the rights of PWDs to educational assistance, social insurance, such as Government Service Insurance System, Social Security System, Pag-Ibig, special discount in the purchase of basic necessities and prime commodities and express lanes in all commercial and government establishments It also allows a relative of a PWD up to the fourth civil degree of consanguinity or affinity to claim a tax deduction of P25,000 yearly. The law is also applicable to Filipinos who hold foreign passport, but are registered as dual citizens and Filipinos who have reacquired their Filipino citizenship through RA 9255, or the Citizenship Retention and Reacquisition of 2003. David Cagahastian
Agriculture/Commodities
news@businessmirror.com.ph
BusinessMirror
Editor: Jennifer A. Ng • Wednesday, December 21, 2016
Q4 farm output to grow by 7%–Piñol By Jasper Emmanuel Y. Arcalas
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@jearcalas
he country’s agriculture production in the last quarter of the year will grow by at least 7 percent on the back of higher crops and livestock production, Agriculture Secretary Emmanuel F. Piñol said on Tuesday. Piñol said the continuous recovery of the farm sector following the onslaught of El Niño in many areas in the country have encouraged farmers to plant more crops. “I think the agriculture sector will grow by 7 percent to 8 percent in the last quarter because of its recovery,” he told reporters in an interview. Pinol’s latest projection is three percentage points higher than the 4-percent growth rate he has earlier forecasted for the sector. He noted that farm output in the October-to-December period will be driven mainly by the crops subsector, which includes paddy rice, which remains weather-dependent. “I’ve been traveling around the country lately and, actually, I can tell you as a farmer that this cropping season, farmers will have another bumper harvest due to favorable weather,” Piñol said. “Judging from what I saw and this is a farmer’s perception, output in the fourth quarter will be good,” he added. Piñol said Typhoons Karen (international code name Sarika) and Lawin (international code name Haina) did not affect the country’s farm otuput. “Typhoon Lawin’s impact was not that much. It was only Region 2’s rice production that was affected the most but the farmers there easily recovered due to our quick interventions.” Because of this, Piñol said he is confident that agriculture growth for the whole of 2016 would fall within the government’s target of 3 percent to 5 percent. The Philippine Statistics Authority (PSA) said farm output in the fourth quarter of 2015 declined by 0.96 percent due to the long dry spell and the damages wrought by Typhoon Lando
‘Developing agro industries to cut underemployment’ By Cai U. Ordinario @cuo_bm
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he development of agro industries will help reduce the country’s high underemployment rate, particularly in the agriculture sector, according to the National Economic and Development Authority (Neda). Socioeconomic Planning Secretary and Neda Director General Ernesto M. Pernia said underemployment is a bigger problem in the country and agriculture workers are among those who suffer from it. Based on the latest employment numbers, there are 7.51 million Filipinos who are looking for additional jobs or full-time employment. “There is a lack of full time jobs. They are employed but they still want to work, that’s underemployment,” Pernia said. “Underemployment is caused by insufficient income.” Pernia said agriculture workers are “critically underemployed” because many of them are unpaid family workers. According to the Philippine Statistics Authority (PSA), around 8.6 percent, or 358,310 Filipinos, worked without pay in familyoperated farms or businesses. Nationwide, there are 11.62 million agriculture workers, or 27.9 percent, of the total 41.66 million employed Filipinos. “Those in agriculture are critically underemployed. You need to have more nonfarm economic activities where they can go when they’re seasonally unemployed in agriculture. [These activities should allow them to] move to small and medium enterprises, nonfarm work, or semifarm and semi-industrial firms,” Pernia said. Neda Undersecretary Adoracion Navarro said underemployment is also affected by a mismatch of quality labor that is available and available jobs. To resolve this, Navarro said Neda’s regional offices, particularly in Calabarzon, support job summits and expos and engages the academe and industry leaders through dialogue to address jobsskills mismatch concerns. “We also convene state universities and technical vocational schools to offer education programs which directly address the need of the industries and then industries will have dialogue with line agencies,” Navarro said. In the October 2016 round of the Labor Force Survey, the country’s unemployment rate slowed to 4.7 percent, the lowest in a decade. However, the country’s underemployment rate increased to 18 percent from 17.6 percent in October 2015. The PSA said underemployed persons who work for less than 40 hours in a week are called visibly underemployed persons. They accounted for 53.7 percent of the total underemployed in October 2016. By comparison, the underemployed persons who worked for 40 hours or more in a week made up 45.1 percent. By sector, 43.5 percent of the underemployed worked in the services sector, while 39.1 percent were in the agriculture sector. Those in the industry sector accounted for 17.3 percent.
(international code name Koppu). PSA data showed that farm production growth in the first and second quarters of the year contracted by 4.53 percent and 2.34 percent, respectively. Agriculture production in 2015 grew by only 0.11 percent, according to PSA.
Rice production
Piñol said paddy-rice output this year would ex-
ceed the 17.91 million metric tons (MMT) projected by the PSA. He said the PSA’s forecast was a “conservative” estimate. “Our production [for this year] is closer to the FAO’s [Food and Agriculture Organization] rice production forecast,” he said. Earlier, the FAO projected that Philippine rice output this year would reach 18.7 MMT, 4.4 percent higher than the PSA’s estimate.
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“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. Paddy-rice output usually accounts for 15 percent of the country’s annual farm production.
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Wednesday, December 21, 2016
briefs
Pentagon: China has returned unmanned underwater drone
WASHINGTON—China has returned to the US an unmanned underwater drone the Chinese Navy seized unlawfully last week in international waters, the Pentagon said. China’s defense ministry said it handed the drone back after “friendly consultations.” The Chinese Navy vessel that had seized the drone returned it near the location where it had been taken, Pentagon Press Secretary Peter Cook said in a statement issued late Monday. The incident occurred last Thursday near the Philippines. The USS Mustin received the vehicle for the US in international waters about 50 miles northwest of Subic Bay, according to Cook. The US said the drone was being operated by civilian contractors collecting unclassified scientific data in international waters. Officials say a noncombat ship was recovering two drones when a Chinese ship approached, launched a small boat and picked up one of them. Cook said the US will continue to investigate the incident. AP
2 kids who died saving others among 21 Carnegie Heroes
PITTSBURGH—Two children who died saving the lives of even younger children are among 21 people being honored with Carnegie medals for heroism.The Carnegie Hero Fund Commission, based in Pittsburgh, announced the winners on Tuesday. Natalie Renee Martin, 11, of Sheboygan Falls, Wisconsin, led her 9-year-old sister, Jenna, to safety when their house burned on January 26. Natalie went back into the house attempting to rescue two other siblings, 10-year-old Benjamin Martin and 7-year-old Carter Maki, but all three were trapped and died later of complications from smoke inhalation. Kiera Vera Larsen, 10, was killed on February 22 when she pushed 2-yearold Emmah Gusich out of the way when a parked vehicle began rolling down a sloped driveway toward the toddler in El Cajon, California. Kiera was struck and killed by the vehicle. The commission is named for the late steel magnate and philanthropist Andrew Carnegie, who was inspired by stories of heroism during a coalmine disaster that killed 181 people, including a miner and an engineer who died trying to rescue others. AP
U.N. chief warns of S. Sudan genocide unless world acts
UNITED NATIONS—Secretary-General Ban Ki-moon warned on Monday that South Sudan would be heading toward genocide unless immediate action is taken to impose an arms embargo and pressure leaders of the world’s newest nation to end hate speech, incitement and violence. The UN chief said instability in South Sudan is threatening the region and he urged the Security Council to impose an arms embargo, which would “diminish the capacity of all sides to wage war.” “If we fail to act, South Sudan will be on a trajectory toward mass atrocities,” Ban warned. There were high hopes that South Sudan would have peace and stability after its independence from neighboring Sudan in 2011. But the country plunged into ethnic violence in December 2013, when forces loyal to President Salva Kiir, a Dinka, started battling those loyal to Riek Machar, his former vice president who is a Nuer. AP
Truck attack that killed 12 in Berlin ‘intentional’–police
BERLIN—The police said on Tuesday the driver who rammed a truck into a crowded Christmas market in the heart of the German capital, killing at least 12 people and injuring nearly 50, did so intentionally and that they are investigating a suspected “terror attack.” The truck struck the popular Christmas market outside the Kaiser Wilhelm Memorial Church late Monday as tourists and locals were enjoying a traditional pre-Christmas evening out near Berlin’s Zoo station. “Our investigators are working on the assumption that the truck was intentionally driven into the crowd at the Christmas market on Breitscheidplatz,” Berlin police said on Twitter. AP
The World BusinessMirror
Editor: Lyn Resurreccion • www.businessmirror.com.ph
Irrational despondency now passé as world economy risks tilt up
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ay good-bye to irrational despondency. It came to a head in 2016 as investors—seeing nothing but bad times ahead—piled into government bonds that yielded less than they cost.
“It was the opposite of irrational exuberance,” said Joachim Fels, global economic adviser for Pacific Investment Management Co., referring to the phrase coined by then-Federal Reserve (the Fed) Chairman Alan Greenspan in the late 1990s boom years. “Everyone was worshiping at the secular stagnation church” with its belief in scant economic growth. Now, as 2017 approaches, investors, economists and policymakers are starting to focus more on what could go right with the global economy rather than just fretting about all the things that might go wrong. Behind the lifting of the gloom: Hopes that a combination of easier fiscal policies, bigger wage gains and stepped-up business investment will break the world free of the slow-growth trap it’s been caught in for the last five years. “ The surprise going forward may well be far better times than anybody had expected,” said Allen Sinai, CEO of Decision Economics Inc. in New York. It starts with the US, where Donald Trump’s presidential election victory and a Republican sweep in Congress has raised expectations of big tax cuts and less regulation. “ The US economy is going to be very strong,” said Kenneth Rogoff, the former chief economist at the International Monetary Fund (IMF) who is now a Harvard University professor. “ There will be a huge boost to business confidence.”
Wage growth
With the unemployment rate at a nine-year low, workers should also benefit, as companies are forced to pay more for the labor they need. “There are some signs that the pace of wage growth has stepped
11% The drop of yen against the dollar since Donald Trump won the US presidency on November 8
Two men talk to each other with the London Bridge at the background. Bloomberg News
up,” Fed Chairman Janet Yellen told lawmakers on November 17. T he t ight jobs ma rket cou ld prompt t he US cent ra l ba n k to ra i se i nterest rates more q u ic k l y i f a Tr u mp - i ndu ce d budgetar y boost leads to faster g row t h a nd h igher inf l at ion. But t hat wou ld n’t be a l l bad for rest of t he world economy as it wou ld a lso l i kely lead to a n apprec i at ion of t he dol l a r. “ The shift to a more balanced fiscal monetary policy mix in the US is actually quite good for Europe and Japan because it weakens their currencies, improves their financial conditions and reduces pressure on their central banks to take further easing measures,” said Charles Col ly ns, c hief economist for the Institute of International Finance in Washington. The result: “Some of the additional demand being generated by the US is going to f low to foreign producers” made more competitive by the stronger greenback, said David Stockton, a former Fed official now at the Peterson Institute for International Economics in Washington. The biggest winner could be Japan, which has already seen the yen drop around 11 percent against
the dollar since Trump won the presidency on November 8. Combine that with the country’s own expansionary fiscal policy, a tight labor market and a new monetary regime of capping bond yields and Japan may face what Bank of America Corp. economists call an “historic moment” to emerge from decades of distress. “The deep pessimism about Japan is overdone,” said Ethan Harris, Bank of America Merrill Lynch’s head of global economics in New York. The euro area, another longterm source of investor angst, i s c losi ng t he yea r st ronger than it started as consumption and investment firm, European Central Bank President Mario Draghi told the region’s finance ministers on December 15. With unemployment in the 19-nation currency zone falling faster than expected and fiscal policy gently supportive, there’s room for upside surprises on wages and inf lation in 2017. H a ng i ng over t he reg ion, though, is a series of elections in France, the Netherlands and Germany that will test its resiliency after Britain voted in June to leave the European Union. “The big concern is France,” where far right
leader Marine Le Pen has gained popularity with her attacks on the EU, Collyns said.
Trump benefits
While Europe and Japan should benefit from a Tr ump-fueled dollar rally, the picture is more mixed for emerging markets. Yes, companies in those countries will be more competitive on world markets. But many will also find it harder to service their dollardenominated debts as the greenback and US interest rates rise. Two potential bright spots: Bra zi l a nd A rgent ina, Sout h A mer ica’s largest economies, where reforms pushed through this year could result in stronger GDP in 2017. The biggest question mark is what will happen in China, which confounded pessimists’ predictions of an economic crash with a surprisingly steady expansion in 2016. The world’s second-largest economy faces what senior economic official Yang Weimin has called a “flurry of risks,” including excessive corporate leverage and a bloated property market. Yet, “Beijing’s got a big arsenal of weapons to throw at the economy,” inc lud ing possible interest-rate cuts and an easier
UN OKs Aleppo monitors as evacuations proceed
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EIRUT—The leaders of Russia and Iran, military allies of Syria’s president, talked on Monday about joining forces to reach a quick political settlement in Syria, as the country’s largest city, Aleppo, was poised to return to full government control. Syrian state TV said it expected the evacuation of thousands of civilians and fighters from the last opposition footholds in Aleppo to be completed by early Tuesday. As more people left the city, the UN Security Council approved a compromise French-Russian resolution urging the immediate deployment of UN monitors to watch over the evacuation and “the well-being of civilians” remaining in the city. UN officials said more than 100 UN humanitarian staff already on the ground in Aleppo, most of them Syrian nationals, could be used in that role. France’s UN Ambassador Francois Delattre said the goal of the resolution is “to avoid new mass atrocities by the forces on the ground and the militias in particular.” But thousands of people have already been evacuated from the city and the operation could be completed before the observers arrive.
The departure of the last rebels from Aleppo would close another chapter in Syria’s civil war and would give President Bashar alAssad a significant symbolic and strategic victory. A lmost six years after the outbreak of an armed rebellion against Assad, the Syrian leader will be in charge again of the country’s five largest cities and the Mediterranean coast. The presidents of Russia and Iran spoke by phone on Monday to discuss the next moves. The Kremlin said Vladimir Putin and Hassan Rouhani “underlined the need for joint efforts to launch a real political process aimed at a quick settlement in Syria.” The leaders noted that a quick launch of talks between the Syrian government and the opposition in Kazakhstan’s capital, Astana, would be an important step toward that goal, a Kremlin statement said. The conversation came a day before a scheduled meeting of foreign and defense ministers of Russia, Turkey and Iran in Moscow. Russia and Iran have backed Assad, while Turkey has supported the opposition. The UN special envoy for Syria, Staffan De
Mistura, welcomed the Moscow meeting and any effort that results in a cessation of hostilities. He announced that the United Nations hopes to arrange negotiations between the government and opposition in Geneva on February 8. In the Turkish capital of Ankara, meanwhile, the Russian ambassador was shot to death by a man shouting, “Don’t forget Aleppo. Don’t forget Syria!” The gunman fired at least eight shots, killing Ambassador Andrei Karlov, 62, at an embassy-sponsored exhibition, and was then slain by the police. Discussing the Security Council resolution calling for monitors in Aleppo, UN Spokesman Stephane Dujarric said there would also be observers from the International Committee of the Red Cross and the Syrian Arab Crescent. The resolution also demands that all parties allow unconditional and immediate access for the UN and its partners to deliver humanitarian aid and medical care, and “respect and protect all civilians across Aleppo and throughout Syria.” Syria’s UN Ambassador, Bashar al-Ja’afari, claimed that one of the “main purposes” government
opponents pushed for the resolution was to get people into eastern Aleppo to rescue foreign intelligence officers still in the former rebel-held area. He named 12 alleged officers still trying to get out of Aleppo— six from Saudi Arabia and one each from Turkey, the United States, Israel, Qatar, Jordan and Morocco. He said: “We are going to catch them...and show them to you.” The rebels captured eastern Aleppo in July 2012 and held on to it despite a ferocious assault in recent months by Syrian government forces, backed by Russia and a host of Shiite militias from Iraq, Lebanon, Iran and Afghanistan. The evacuation of Aleppo began last week after Turkey and Russia brokered a cease-fire, as government forces were closing in on the rebels’ last redoubt, but has been repeatedly delayed. The evacuation of more than 2,000 sick and wounded from the rebel-besieged Shiite villages of Foua and Kfarya was tacked onto the deal at the last minute. The opposition’s Britain-based Syrian Observatory for Human Rights and the pan-Arab Al-Mayadeen TV said 10 buses left those villages with civilians on Monday. AP
fiscal stance, Philip Shaw, chief economist at Investec Bank Plc. in London, told Bloomberg Television on December 16. He sees GDP growing at about 6.5 percent next year, in line with this year’s expected outcome. Of course, there’s a lot that could go wrong with the world economy in 2017, not least of which is the possible outbreak of a trade war between China and the US if Trump follows through on his campaign threats against the Asian nation. And it’s also the case that most economists haven’t marked up their projections for next year and beyond by nearly as much as many investors are seemingly betting on. The number-crunchers at JPMorgan Chase and Co., for instance, see global growth strengthening to 2.8 percent in 2017 and 2018, from 2.5 percent this year. What’s changed though is the balance of probabilities surrounding the forecasts. “We’ve been living in a world for most of this year where we’ve been feeling maybe the risks were a little skewed to the downside,” JPMorgan Chase Chief Economist Bruce Kasman said in a December 16 video distributed by the bank. Now “growth risks have shifted to the upside.” Bloomberg News
Shots outside US embassy in Turkey after Russian envoy killed
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NKARA, Turkey—Turkish police on Tuesday detained a man who fired shots in front of the US embassy in Ankara, several hours after the Russian ambassador to Turkey was killed in an attack. The man took out a pump action shotgun he hid in his coat and fired around eight shots in the air before the embassy’s security guards intervened and apparently overpowered him. No one was hurt in the incident, which occurred hours after a Turkish policeman, appearing to condemn Russia’s military role in Syria, fatally shot Russian Ambassador Andrei Karlov in front of a shocked gathering at a photo exhibit in Ankara. The embassy said its missions in A nkara, Istanbul, and the southern city of Adana would be “closed for normal operations on Tuesday.” The US embassy is just across the street from the art exhibition center building where the attack against the ambassador occur red. It was not immediately known if the two incidents were connected. AP
ExportUnlimited BusinessMirror
National Exporters’ Week brings MSME products to limelight
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By Roderick L. Abad
@rodrik_28
OCAL products highlighting Filipino ingenuity once again top billed the Tubong Pilipino RIPPLES Plus Showcase at the Glorietta 5 Activity Center, Makati City, as part of the just-concluded National Exporters’ Week (NEW) celebration.
Around 42 company-exhibitors participated in this “ultimate flea market” to bring and show in the Metro their own products that are, more often than not, found only in the far-flung provinces across the country. The Export Marketing Bureau, under the Industry Promotion Group of the Department of Trade and Industry (DTI), has designed this weeklong event to become a platform for micro, small and medium enterprises (MSMEs) who are mostly exporters and artisans alike to widen their reach by displaying their own unique artistry and craftsmanship. RIPPLES Plus is the improved and expanded version of the Regional Interactive Platform for Philippine Exporters (RIPPLES) implemented nationwide, in close coordination
and with the cooperation of the DTI Regional Operations Group. Tubong Pilipino provides a springboard for local manufacturers to be seen, known and appreciated by Filipinos who maynothavetheopportunityandmeans to visit the provinces where the products are mostly crafted and created. Also, it doubles as a lifestyle event highlighting handcrafted items, ranging from furniture to furnishings, home décor, fashion wares and accessories, as well as delicacies native to the municipality or province. Since many of these products are not readily available in local malls, department stores and even handicraft or specialty stores, the fair has brought the RIPPLES Plus MSME enrollees closer to the domestic market in preparation for their entry
into the global export trade. The MSME sector has been playing a pivotal role in buttressing the Philippine economy over the years. They generate income, employment and develop small business activities in the rural and urban areas. At present, there are 950,000 DTI-listed MSMEs in the country. Approximately, they account for 35 percent of the country’s GDP. More than half, or 63 percent, of jobs come from this sector. With globalization now on the rise, local MSMEs need to be strengthened and integrated with the international value chains. This year’s observance of NEW is timely to reflect on the export momentum in the Philippines, which, at the latest, grew by 3.7 percent to $4.8 billion in October this year from $4.6 billion in October 2015. This was the second straight increase in a row after languishing for 17 months of consecutive decline in a row up to August this year. By virtue of Presidential Proclamation 931, Series of 1996 and House Resolution 33, the first week of December is declared as the NEW for both the government and the private sector to reaffirm their commitment to sustain export promotion and development. The Tubong Pilipino RIPPLES Plus Showcase was one of the three events highlighting the products of RIPPLES Plus enrollees during the NEW.
Editor: Efleda P. Campos • Wednesday, December 21, 2016 A9
¡Salud!: Export opportunities in the Mexican alcohol market By Vichael Angelo Roaring
Trade Service Officer Philippine Trade and Investment Center-Mexico Foreign Trade Service Corps
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MARKET DEVELOPMENT UPDATE
HE average Mexican downed 64 liters of alcoholic drinks in 2014. That’s roughly the amount of water required to fill up a decent-sized kiddie pool.
And, according to Euromonitor International, this will continue growing to almost 70 liters per person per year come 2019. With a population of around 123 million people, that’s an untapped market Filipino alcohol exporters shouldn’t ignore. The year 2015 saw a rise in alcohol consumption in Mexico, particularly because there are more and more international brands entering the market and giving the consumers more choices. Lifestyle trends, such as an increase in households’ average income boosted by more women getting full-time jobs, also contributed to the sector’s positive growth. Beer is still the favorite alcholic drink in Latin America. Of that 64 liters of alcohol drank in 2014, 53 percent of it was downed as cerveza. The drink has a rich history in Mexico and brings in around $20 billion to the national economy. Mexico is the seventh-largest beer producer in the world, and the top exporter, but they also import a lot of it to meet local demand, from 142 million liters imported in 2007, to 256 million liters in 2015. The beer market has been traditionally held by two local brands: Heineken Mexico and AB InBev; but in the last few years, craft beer and international brands have been slowly pushing back with their innovative and exotic flavors and packaging.
After beer, vodka and whiskey take up 32.6 percent of the market. Between 2010 and 2015, whiskey consumption has risen by 142 percent and is preferred by the growing middle class, incorporating it as a status symbol; while milennials—which make up about 30 percent of Mexico’s population—prefer vodka over what they consider drinks their parents prefer. Rum sales have stagnated for this reason, but it still saw a 3.5-percent growth in 2015. Tequila, an original product of Mexico, but which unfortunately used to suffer from the label that it was a poor man’s drink, is making a comeback, and is projected to become one of the favorite spirits of the middle to upper class. The trend here seems to be taking traditional drinks, such as rum and tequila, and rebranding them as premium or artisanal—this will not only attract the younger crowd, but reinvigorate the current market. International brands are coming in and doing this: In the last few years, we’ve seen Heineken, Stella Artois and other brands enter the Mexican market and even partner with local producers and distributors in order to get their foot in the door, and then implementing aggressive marketing campaigns to get their messaging in. To be concluded
A10 Wednesday, December 21, 2016 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial Govt complacency to hurt farm sector
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he Philippines has always regarded coconut oil as one of its major exports. Latest data from the Philippine Statistics Authority (PSA) indicated that it is the country’s top farm export. From January to October, export receipts from coconut oil reached $887.38 million. If we include the receipts from other coconut-based products such as copra meal, the Philippines raked in $1.1 billion in revenues. In contrast, earnings from shipments of bananas—the second top farm export winner —reached only $500.37 million during the same period. Clearly, the coconut sector is a significant dollar earner for the Philippines. Despite this, it appears that the coconut sector is not getting the attention it deserves. In a special report published by the BusinessMirror, for example, an official of the Philippine Coconut Authority (PCA) cited the government’s lack of focus on rehabilitating and fertilizing coconut-planting areas, particularly in Leyte, after Supertyphoon Yolanda (international code name Haiyan) hit the province, which has slowed the efforts of farmers to get back on their feet. The PCA said it lacked the budget to expand some components of a fourpoint program aimed at rehabilitating typhoon-hit areas. There’s so much that the government can do for this dollar-earning sector. If we can maximize the production of our 3 million hectares of coconut farms, we can uplift the lives of hundreds of thousands of poor Filipinos. These are the families of coconut farmers whose sole livelihood is being threatened. Increasing the budget for coconut-growing areas is a good first step. The PCA, an agency that remains attached to the Office of the President, is also coming up with a road map to ensure the growth of the coconut sector. According to the PCA, it takes about five years for a coconut tree to bear fruit. Even before Yolanda hit major coconutgrowing areas in the Visayas, the Philippine government has yet to replace millions of senile trees. Government attention is also needed by the rice sector, which is being threatened by the possible removal of the import quota. The Philippines has less than six months to prepare for the lifting of the quantitative restriction (QR) for rice traded under the World Trade Organization. Economic managers have earlier said they are more partial to removing it. But until now, they have yet to roll out a plan to help rice farmers cope with stiffer competition from neighboring countries like Thailand and Vietnam, which have found a way to make rice production more cost-efficient. Running a Third World country with myriad problems is no easy task. The Duterte administration, however, must get its act together to win its battles in so many fronts. Its efforts on the war against illegal drugs, its efforts to eradicate graft and corruption, and its peace efforts are all commendable. However, while the peace and order situation is a major concern of many Filipinos, the government should not lose sight of other priority areas, such as food security and the need to boost farmers’ income. As the Duterte administration must spend the next five years untangling the mistakes of previous governments, it has to realize it can’t afford any semblance of bureaucratic foot-dragging or grandstanding. Complacency usually comes with a high price. Since 2005
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Susie G. Bugante
All About Social Security
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ne of the milestones laid out by the new administration of the Social Security System (SSS) is the improvement of the delivery of social-security services to members and the public. High on the agenda is how the hundreds of thousand of SSS members and their beneficiaries who troop to the agency’s offices every day may be served expeditiously without having to queue up for a long time. Social Security Commission (SSC) Chairman Amado D. Valdez had earlier stated that partnerships with other relevant government agencies, such as the Philippine Statistics Authority, Department of the Interior and Local Government, National Bureau of Investigation and the Professional Regulation Commission, will be further enhanced, specifically in terms of data-sharing, to facilitate faster delivery of services and ease the documentary requirements of members. He said the enhanced partnerships will complement SSS plans to improve internal systems through automation of procedures to cut down the turnaround time in processing members’ benefits, SSS
registration and other transactions. The SSC also instructed the SSS management to consider implementing flexible working hours for its employees, as well as allowing them to work in SSS offices closer to their residences to improve service delivery, as well as to help ease traffic problems in the metropolis. Valdez said that, with the current traffic condition, some employees, despite leaving home early, usually arrive late for work due to the traffic gridlock, and the same goes when they go home in the evening, resulting in having workers who are stressed out with not enough rest and time for family. With the flexitime schedule and assignment to
Valdez said that, with the current traffic condition, some employees, despite leaving home early, usually arrive late for work due to the traffic gridlock, and the same goes when they go home in the evening, resulting in having workers who are stressed out with not enough rest and time for family. With the flexi-time schedule and assignment to branches closer to their residences, employees can avoid heavy traffic without sacrificing quality service to members. branches closer to their residences, employees can avoid heavy traffic without sacrificing quality service to members. The SSS has 165 branches and 77 service offices nationwide to cater to the needs of more than 34 million members. SSS branches operate from 8 a.m. to 5 p.m., Monday to Friday, while service offices—which are usually in shopping malls—are open from Tuesday to Sunday, 10 a.m. to 7 p.m. Out of the 165 SSS branches, 10 branches are open on Saturday, namely, SSS Diliman, Makati-Ayala and Makati-Gil Puyat in NCR; Cebu, Lapu-Lapu, Bacolod and Iloilo in the
Need to think before acting
Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos
Online Editor Social Media Editor
Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager
Improving service delivery
Teddy Locsin Jr.
Free fire Continued from A1
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he Trump effect is already felt in Israel. Plans to build 7,000 housing units are now on go; bleeding heart liberals are gone from Washington. Expect war to break out all over and oil prices to go…who knows? Prices are soaring of businesses that stand to win from Trump’s protectionist pronouncements, while share prices of those that stand to lose are plunging. So are currencies of exporting countries, including those exporting services from here. There go BPOs. Deutschebank shares are rising, expecting Trump to condone fraud like Deutsche-
bank committed in the 2008 global financial crisis. The company that built the Israeli wall against Gaza is anticipating an American wall against Mexico, where share prices are plunging. Countries covered— or rather exposed—by Trump’s threat to pull back from American overseas-defense commitments are planning higher defense spending.
So far, Duterte’s reflex reactions and prophetic anticipation have served us well. But those qualities go only so far. It is no longer a cool Obama with an experienced finger on the missile button but Trump. The Germans are studying every word Trump said in the long New York Times interview.
In that sense, President Duterte saw it coming when he struck out to make new friends. Though making new enemies out of old friends may not be the way to go. The New York Times reports that leaders, executives and multinationals are making bets on how Trump will rewrite the rules by which America did business under Democratic and Republican presidents. Trump won without a party. He is an American president above parties, like the first four.
Visayas; and Cagayan de Oro, Davao and Zamboanga in Mindanao. If they can’t visit SSS branches and service offices, members can also check their records through the SSS web site: www.sss.gov.ph. By just clicking a few buttons, they can verify their records and even submit benefit and claim applications online. The SSS web site allows individual members to submit their salary-loan applications, and maternity notifications and reports of newly hired workers, employee maternity notifications, contribution and loan collection lists and certification of employee salary-loan applications by employers. Aside from the My.SSS facility at the SSS web site, members can also access their records using their mobile phones through TEXTSSS. To get the list of keywords, just text SSS HELP to 2600 with a service fee of P2.50 for Smart and Globe and P2 for Sun subscribers. 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.
China was elated at first over Trump’s victory. His isolationism meant an American withdrawal from the South China Sea to make only America safe across an ocean. But China is thinking again that Trump will return “to traditional policies that rely on the role of the US dollar and seek expansion overseas.” America is safer when her defenses are spread farther and wider from her shores. So far, Duterte’s reflex reactions and prophetic anticipation have served us well. But those qualities go only so far. It is no longer a cool Obama with an experienced finger on the missile button but Trump. The Germans are studying every word Trump said in the long New York Times interview. The Japanese are reprinting it. Responsible governments are studying Donald down to his follicles if any, because there is a limit to reliance on just gut feeling and intestinal response.
Opinion BusinessMirror
opinion@businessmirror.com.ph
A chance to fix the way the IMF picks its leader
Direct action against reinsurers Atty. Dennis B. Funa
INSURANCE FORUM
Mohamed A. El-Erian
BLOOMBERG VIEW
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he board of the International Monetary Fund (IMF) was right to reaffirm its full confidence in Christine Lagarde as the institution’s managing director despite her conviction for negligence on Monday by a Paris court. She has done a good job as the head of one of the world’s most important multilateral institutions. But there’s more to be done by the country representatives who govern the IMF. They should be taking the latest set of legal problems as an opportunity to modernize an antiquated and feudal selection process. Monday’s ruling against Lagarde pertains to the handling of a business dispute that goes back almost a decade to when she was France’s minister of finance. The court found that she didn’t do enough to gather information about a conflict between a businessman and the former stateowned bank Credit Lyonnais over the 1993 sale of adidas, thereby undermining a proper assessment of whether the disagreement should go to arbitration. The court, however, refrained from imposing any financial penalty or prison term. It’s not the first time that an IMF director has faced legal issues. Both of Lagarde’s predecessors, Rodrigo Rato, who served from 2004 to 2007, and Dominique StraussKahn, who led the organization from 2007 to 2011, found themselves embroiled in messy legal proceedings. T he resu lt i ng emba r ra ss ments coincide with the IMF beginning to appoint politicians to its top management position, replacing a long series of technocrats who had dominated the managing directorship since its establishment in 1944. These included Per Jacobsson, Pierre-Paul Schweitzer, Johannes Witteveen, Jacques de Larosiere and Michel Camdessus. The Lagarde case risks amplifying long-standing credibility challenges facing an institution whose member-countries, led by the advanced economies, have been too timid about reforming key elements of its governance—particularly those relating to representation. Voting power on the board is still tilted in favor of the advanced economies, and Europe in particular; the managing director’s position is still de facto reserved for a European national; other senior managerial appointments remain influenced by nationality considerations; and country interactions are still seen as lacking even-handedness, particularly when it comes to
LAGARDE
developing countries. The antiquated nature of IMF governance is even harder to defend in the context of the publicity surrounding the repeated legal problems of recent managing directors. Still, the board had good reasons to keep Lagarde despite her conviction. She has been highly effective, well liked and much admired, and she has significantly improved the IMF’s external standing and deepened important relationships. Moreover, the lack of any penalties softened the bite of Monday’s ruling. Had the board decided to opt for a new director, it would have had to fall back on what is still a flawed selection process. Specifically, it is too nationality-centric and insufficiently meritocratic; it involves backroom deals and horse trading among a small set of countries; it is influenced more by the defense of national prestige than adherence to a well-crafted job description; and the way it is conducted undermines the needed due diligence. In short, it is outmoded and biased and lacks legitimacy, inclusiveness, transparency and, therefore, credibility. The IMF board should take this opportunity to go beyond reaffirming its full confidence in Lagarde’s leadership. It should also move decisively toward creating a selection process that is genuinely open to all nationalities based on merit, that allows for deep due diligence by an internationally balanced and credible committee, and that involves a fair final vote by member-countries. Without all that, the IMF risks another blow to its credibility, thereby undermining its much-needed contribution to global policy coordination and well-being, as well as its role as a trusted adviser to national authorities.
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ection 100 of the Amended Insurance Code provides: “The original insured has no interest in a contract of reinsurance.” There is no privity of contract between the original insured and the reinsurer. Thus, the original insured would have no cause of action to recover insurance proceeds from the reinsurer. Conversely, the reinsurer, as a general rule, is not liable to the original insured of the ceding insurer. The reinsurer is not a cosigner of the policy issued. It is also not jointly and severally (solidarily) obligated to the policyholder. The reinsurer is only in contractual privity with the ceding insurer. Likewise, the insurer (or ceding insurer) may not raise the defense to an insurance claim that the insurer had obtained reinsurance from other companies to cover its liability. The insured can only move for enforcement of its insurance contract with its insurer. A reinsurance contract is generally a separate and distinct arrangement from the original contract of insurance, whose contracted risk is insured in the reinsurance agreement. The case of Artex Development Co. Inc. v Wellington Insurance Co. Inc. upheld the doctrine that “a third party not privy to a contract that contains no stipulations pour autrui in its favor may not sue for enforcement of the contract.” Hence, an insured, not being a party or privy to the insurer’s reinsurance contracts, could not directly demand enforcement of such insurance contracts. Consequently, a reinsurer is not a party in an action by the insured against the insurer. In Gibson v Hon. Revilla et al., the reinsurer was not allowed to intervene in an action filed by the original insured against the insurer. The petitioner filed a motion to intervene in his capacity as one of the 63 syndicate members of
BLOOMBERG VIEW
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t had become something of a ritual. Every three years, the Organization for Economic Cooperation and Development would release the results of its PISA exams, which are given to hundreds of thousands of students in dozens of countries. And every three years, an American freak-out would ensue, as Chinese students seemed to be outperforming their US counterparts by a wide margin.
In 2009 Shanghai students did so well—beating the world in math, science and reading—that President Barack Obama declared it a “Sputnik moment,” requiring immediate action. A similar panic broke out in 2012. But this year proved to be a surprise. The results from the 2015 tests, released this month, showed Chinese students ranked sixth in math, 10th in science and 27th in reading. What happened?
On one hand, the answer is simple. Instead of merely testing Shanghai’s elite, the 2015 exams included a broader selection of students across China, which dragged down scores. But the results also highlighted an important problem: China’s muchlauded education system remains riven by inequality, with far-reaching consequences for schools, students and, ultimately, the economy. Unequal access to education is
Lloyds, the reinsurer. The Supreme Court denied the intervention and cited the general rule in the law of reinsurance that the reinsurer is entitled to avail itself of every defense which the reinsured might have in an action by the original insured, to point out that the reinsurer will not be prejudiced anyway. The legal basis of this doctrine is Article 1311 of the New Civil Code, which provides: Article 1311. Contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. The heir is not liable beyond the value of the property he received from the decedent. If a contract should contain some stipulation in favor of a third person, he may demand its fulfillment provided he communicated his acceptance to the obligor before its revocation. A mere incidental benefit or interest of a person is not sufficient. The contracting parties must have clearly and deliberately conferred a favor upon a third person. The second paragraph of Article 1311 provides the legal basis for stipulations pour autrui.
In Uy Tam v Leonard, the court ruled that the “intent of the contracting parties to benefit a third party by means of such stipulations pour autrui must be clearly expressed”. Hence, it was held that a clause in a contractor’s bond pertaining solely to a municipality and conditioned to pay for all labor and material cannot be construed as a stipulation pour autrui available to material-men. The history and rationale of stipulations pour autrui was extensively discussed in the Uy Tam case. Stipulations pour autrui has been applied to a number of insurance cases. In Coquia et al. v Fieldmen’s Insurance Co. Inc., a common carrier accident insurance policy provided that the insurer “will indemnify any authorized driver who is driving the motor vehicle” of the insured and, in the event of death of said driver, the insurer shall, likewise, “indemnify his personal representatives”. The court ruled that the policy is a contract pour autrui, which allowed the heirs of the deceased driver to directly sue the insurer. In Guingon v Del Monte et al., a jeepney operator entered into a contract with Capital Insurance & Surety Co. Inc. to insure his jeepney against accidents with third-party liability. The court ruled that the “right of the person injured to sue the insurer of the party at fault [insured], depends on whether the contract of insurance is intended to benefit third persons also or only the insured. And the test applied has been this: Where the contract provides for indemnity against liability to third persons, then third persons to whom the insured is liable, can sue the insurer. Where the contract is for indemnity against actual loss or payment, then third persons cannot proceed against the insurer, the contract being solely to reimburse the insured for liability actually discharged by him through payment to third persons, said third persons’ recourse being, thus, limited to the insured alone.” In this case, the
policy involved is “one whereby the insurer agreed to indemnify the insured ‘against all sums...which the insured shall become legally liable to pay in respect of: death of or bodily injury to any person...’ Clearly, therefore, it is one for indemnity against liability; from the fact then that the insured is liable to the third person, such third person is entitled to sue the insurer.” A stipulation pour autrui that intends to benefit an insured should be provided in the reinsurance contract or a specific agreement between the reinsurer and the original insured. In addition to stipulations pour autrui, there are other exceptions to the general rule stated in Section 100. One is when an insurer, after acknowledging a claim payable, has assigned to the insured the reinsurance proceeds collectible from the reinsurers. The insured, as assignee and original insured, may institute a collection suit directly against the reinsurers (see Avon Insurance Plc. et al. v Court of Appeals et al., GR 97642, August 29, 1997). In the United States one exception to the rule on lack of privity is when an insured is considered as a thirdparty beneficiary where the direct insurer is found to be insolvent or bankrupt and is considered merely as a fronting company (see Koken v Legion Ins. Co., 831 A. 2d 1196). Another exception is when there is a cut-through provision (or cutthrough endorsement) in the underlying policy, which gives the insured a contractual right to take direct action against the reinsurer. The insured is then considered as a third-party beneficiary. Cut-through provisions are usually provided for in case of insolvency of the direct insurer. In the US, many states allow cut-through provisions, among them the California Insurance Code and the Texas Insurance Code. Dennis B. Funa is currently the deputy insurance commissioner for Legal Services of the Insurance Commission. E-mail: dennisfuna@yahoo.com.
Unitary tax system will only benefit foreign monopoly
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unitary tax system for the tobacco industry does not equate to pro-health and ultimately promotes monopolism, according to a veteran industrialist. “Health advocates may have a noble objective, but they are overlooking a glaring issue,” said Engr. Ped Salvador, PhD, a prominent member of the National Economic Protectionism Association (Nepa). “A unitary [tax] system will cause upshifting to premium brands and will only benefit foreign tobacco players.” Nepa is a prestigious organization founded by genuine Filipino industrialists—including the late great Salvador Araneta—in 1934, which focuses on the protection of Filipino industries.
Are China’s schools failing? Adam Minter
Wednesday, December 21, 2016 A11
a centuries-old challenge in China. Traditionally, most Chinese have lived in the countryside, where the time, money and even the need for education was limited. Starting in the 1950s, the government began a largely successful effort to build a literate modern work force. Between 1950 and 2001, China’s literacy rate improved from 20 percent to more than 85 percent. In 1986 the government adopted a nine-year compulsory education requirement. Paying for that requirement, though, hasn’t been easy. Although the central government allocates some money to China’s schools, the bulk of funding is local. In rich cities, such as Shanghai, that generally works fine. Not so for China’s countryside, where money is so short that some schools can’t even provide desks, let alone books. Rural teachers typically earn one-third what their urban peers do—if they get paid at all. Inevitably, this leads to tension: Between 2014 and 2015, there were at least 168 “strike and protest”
When lawmakers passed House Bill 4144, health advocates mainly argued that keeping the two-tier system is antihealth, since it causes consumers to downshift to cheaper cigarette brands, instead of quitting altogether. “However, the narrow price distinction between local and foreign brands will be negligible and, therefore, the average buyer will upshift to foreign brands instead,” Salvador said. Comparatively, a study by World Health Organization’s Collaborating Center for Tobacco and Economics at Beijing’s University of International Business and Economics (UIBE) revealed that in China, drastic price increases
in low-end cigarettes encouraged smokers to upshift to middle and premium cigarettes. “If the [upshifting] trend continues, it will kill off local manufacturers and be beneficial only to multinational companies…. We should preserve our own,” the pro-Filipino industrialist stressed. UP Economics professor Dr. Ernesto Gonzales, likewise, supported the notion, saying Filipino-owned corporations, like Mighty Corp. invest their money in the country and provide long-term employment to Filipinos. “On the other hand, multinationals [companies] remit income to their mother entities, enjoy the tax privileges of foreign direct invest-
ment, invest their money overseas and worry about their stock health in the New York Stock Exchange,” Gonzales said. The existing law provides a twotier system where cigarette packs priced P11.50 and below have a P25 excise tax, while those priced P11.50 above have P29, which converts by 2017 to a unitary (single excise) tax system or P30 tax regardless of category and imposes a 4-percent increase thereafter. HB 4144, however, seeks to discard the unitary system and maintain the two-tier system, thereby increasing the current rates to P32 and P36, respectively, per category plus a higher 5-percent increase starting 2018.
For the 61 million children who have been left behind, the educational outlook is grim. According to one study, only half of rural children have parents who read to them, compared to 78 percent of urban children. Rural kids would benefit greatly from preschool and kindergarten, but fewer than half have access to such programs, compared to 76 percent in the cities.
hands of relatives. For the 61 million children who have been left behind, the educational outlook is grim. According to one study, only half of rural children have parents who read to them, compared to 78 percent of urban children. Rural kids would benefit greatly from preschool and kindergarten, but fewer than half have access to such programs, compared to 76 percent in the cities. In 2010 government researchers administered math and vocabulary tests to a broad range of students, and the results were damning: Rural students performed consistently worse than their urban counterparts, and the gap persisted even for children of intact rural families. Those scores are indicative of a simmering economic dilemma. At a time when China’s leaders are trying to transform the economy from one reliant on factories to one based on services and knowledge-work, the country’s social and educational policies are blunting the ambitions of rural children. One survey found
that 77 percent of urban children aspire to college, while only 59 percent of rural kids do. That’s a recipe for developing another generation of unskilled rural workers. Fixing these problems won’t be easy. And many of them are out of the hands of government. But there are natural places to start, beginning with repealing the residency permit laws that too often separate children from their parents or relegate them to second-rate schools. Investment in early-childhood education for rural kids could go a long way toward bridging achievement gaps. (China has lagged behind the global average in education spending as a percentage of GDP for years.) And the government should lower the notoriously high fees that rural parents pay for public education. In time, such steps might help transform China’s educational system into one better suited for the 21st-century economy. They might even ensure that China’s schools are worthy of the admiration they earn around the world.
actions by rural teachers. Ironically, China’s economic boom is worsening these problems. With plenty of jobs beckoning in the cities, tens of millions of Chinese have moved out of the countryside. But thanks to strict residency permit laws, their children aren’t allowed to attend city public schools. That leaves two options. Parents can enroll their children in local “migrant schools,” which tend to be inferior. Or they can leave them behind in the
2nd Front Page BusinessMirror
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www.businessmirror.com.ph
Wednesday, December 21, 2016
SMC, MVP to invest ₧3B in Sulu–Piñol U.S. HAS FEW REASONS TO FAN DRONE SPAT
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or all the outrage after China seized a US naval drone last week, it’s far from clear whether it will herald a new era of confrontation on the high seas between the world’s biggest economies. China’s unprecedented move last week drew condemnations from the Pentagon, the Philippines and President-elect Donald J. Trump, who accused the nation of stealing the drone. China rejected that characterization on Monday, saying it made the seizure to protect shipping in the area, while agreeing to return the unmanned vehicle. Either way, further escalation is unlikely for a few reasons: China’s response has been muted, the drones are relatively common and unsophisticated and the US has little reason to send warships on what it considers peaceful operations. Moreover, the incident fell into what strategists call a gray
zone, too mild to provoke a military response that risks destabilizing the region. “Allies in the region do want to see a steadfast American presence and maintenance of the rulesbased order, but they don’t want to see overly assertive or prematurely assertive American behavior that might be making things worse,” said Ashley Townshend, research fellow at the US studies center at the University of Sydney. China sought to downplay the episode on Monday, with Foreign Ministry Spokesman Hua Chunying likening the drone to an object found on the street.
Drone intelligence
“You have to take a look and investigate it to see if the thing belongs to one who wants it back,” Hua said. Fox News and other media outlets reported the glider may be returned as early as Tuesday at an See “U.S.,” A2
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an Miguel Corp.; PLDT Chairman, President and CEO Manuel V. Pangilinan; and other big firms have committed to invest P3 billion in Sulu to bring peace and socioeconomic development to the province.
The commitment of big firms were contained in the Save Sulu project, which was presented by the Departments of Agriculture (DA) and Trade and Industry and non-governmental organization Go Negosyo Group to President Duterte in Malacañang on December 19. The initiatives under the Save Sulu project include livelihood programs, mentorships, establishment of infrastructure and other rural facilities. “ T h is is i n response to t he
President’s directive last September to come up with a povertyalleviation program for Mindanao, particularly for Sulu,” Agriculture Secretary Emmanuel F. Piñol said in a statement. Piñol added that Philippine Airlines Chairman Lucio Tan, Bounty Fresh Group of Companies, W Group, Federation of Fi lipino- Chinese Chambers of Commerce and Industry (FFCCCI) and Gawad Kalinga also threw their support behind the project.
“A l o n g s i d e t h e c a m p a i g n against terrorism, we should also have soft hands to help people from Sulu,” he added. Piñol said companies under Pangilinan have committed to rehabilitate and upgrade Smart Communication facilities in Sulu, establish a coconut oil mill, and provide medical equipment and trainings to the health workers in the four Sulu hospitals. He said San Miguel is planning to build a 50-megawatt coal fire power plant and to rebuild the Hajibuto School of Arts and Trade. As for Philippine Airlines, Piñol said Tan committed to introduce commercial flights going directly to Sulu.
“The FFCCCI pledged to provide 15 school buildings or around 30 classrooms in the Autonomous Region in Muslim Mindanao,” he added. Piñol also said the DA w ill a l lot P50 m i l l ion u nde r t he Special Area for Agricultural Development to be used for various rural development program and foster inclusive growth. The DA will also distribute five farm tractors in the province. The DA chief said these initiatives are in support of the Duterte administration’s goal of reducing poverty incidence in the country by at least 25 percent in three years. Jasper Emmanuel Y. Arcalas
This is in response to the President’s directive last September to come up with a poverty alleviation program tfor Mindanao, particularly for Sulu.”–Piñol