Businessmirror december 22, 2016 by BusinessMirror

China Takes Island Building Skills to Duterte’s Backyard

mong the first to gain from Philippine President Duterte’s China pivot could be the people who live on rickety wooden stilt houses in a waterlogged area of his hometown of Davao City. Chinese investors are set to spend $200 million to raise three islands from the sea to create a new port. Residents in the area known as Isla Verde aren’t worried that one of the companies is CCCC Dredging Group Co. Ltd., which helped turn a handful of rocks and reefs in the South China Sea into a chain Continued on A2

CHILDREN play near rickety wooden stilt houses on Isla Verde, Davao City. bloomberg

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

Thursday, December 22, 2016 Vol. 12 No. 71

‘Financing 2018 budget difficult sans tax reforms’

By Cai U. Ordinario

@cuo_bm

nless Congress acts soon enough, the government will find it difficult to finance the multitrillion-peso 2018 national budget, according to the National Economic and Development Authority (Neda). Socioeconomic Planning Secretary Ernesto M. Pernia recently told reporters the proposed tax-reform measures must include compensatory measures, making it feasible to finance the national budget. The tax-reform measures include

not only reductions in the personal income tax, but also the removal of value-added tax (VAT) exemptions, including those for seniors. “They [tax-reform measures] should be approved. There is a need to balance between reduction

2016 ejap journalism awards

business news source of the year

P25.00 nationwide | 4 sections 36 pages | 7 days a week

the broader look

a6-a7

₧566B

The amount of additional revenues that will be generated by the proposed tax reforms of revenue and compensation for the reduction,” Pernia said. “[Otherwise] it will make the 2018 budget difficult.” T he proposed ta x refor ms involve foregone revenues of around P200 billion but, at the same time, will generate more or less P566 billion as prospective incremental collection. This was the reason the proposed tax measures formed part of the agenda of the Cabinet-level Continued on A2

PHL credit-card industry seen growing with new rules, tech »A6-A7

LIFTING OF QR WILL NOT GUARANTEE CHEAP RICE–PIÑOL S

Head turner Pedestrians can’t help but do a double take

as they pass by a window display featuring live mannequins at a mall in Makati City. NONIE REYES

PESO exchange rates n US 49.9840

By Jasper Emmanuel Y. Arcalas

@jearcalas

2 years

crapping the rice-import quota is not an assurance that Filipinos would always enjoy cheap rice, Agriculture Secretary Emmanuel F. Piñol said on Wednesday. The extension for the Piñol also said the benefits of lifting the quantitative restric- rice-import quota being tion (QR) on rice would only be sought by the DA temporary. “With many Filipino farmers flocking to the urban areas to find other means of livelihood and those who are unable to compete with cheaper imported rice shifting to other jobs, domestic rice production will drop, and the country will be increasingly dependent on rice imports,” he said in a statement. See “Cheap rice,” A2

n japan 0.4243 n UK 61.8002 n HK 6.4367 n CHINA 7.1930 n singapore 34.6102 n australia 36.2684 n EU 51.9334 n SAUDI arabia 13.3294

Source: BSP (21 December 2016 )

BMReports BusinessMirror

A2 Thursday, December 22, 2016

Montano. . . Continued from A12

Infrastructure and Enterprise Zone Au t h o r i t y, n o m i n ate d M o nt a no as COO, which was seconded by Margarita Munsayac of Bluewater Maribago Beach Resort, a private-sector representative. “It was just a formality,” separate sources who were there at the meeting said. After Montano’s election as COO was approved by the board, he took his oath from Tourism Secretary Wanda Corazon T. Teo, the same sources added. In a text message to the BusinessMirror, Montano said: “The first order of business is to get a briefing from all the department heads; I want to see if they have a five-year business plan. I want to be aware of the plans and directions they have set, before I give my inputs.” He added: “I also would like to know the extent of our participation in the Miss Universe pageant and coordinate with the DOT staff to ensure that there are no duplications of efforts, and see where we can pitch in.” O t h e r b o a rd m e m b e r s w h o attended the meeting were lawyer Leo Herrera Lim of the Department of Foreign Affairs, and Trade Undersecretary Nora K. Terrado (representing the government). The Department of Transporation did not send a representative. For the private sector, other board members who attended the meeting were Margarita Villarica of Destination Specialists (Cebu) Inc., Pamela Pascual of the World Trade Center and Edwin Vincent Ortiz of EVO Enviro Solutions/Cebu Solid Waste Management Inc. Another private-sector representative, Isagani Buenaflor of Diamond IGB Inc., failed to attend the meeting. A board member, who requested anonymity, said, after concerns were raised about Montano’s lack of qualifications to be COO, “we all agreed we will work together to ensure an effective and efficient TPB. And to move forward to be able to implement the 2017 work program soonest.” Another board member who asked not to be identified added: “[Montano] came across as a person willing to listen and learn. I saw the interest to help the industry.” Separate sources who attend the meeting said Montano “has lots of ideas on how to boost arrivals. He wants the TPB to look into each of the markets and identify the lucrative ones. The TPB should dissect each of these market’s interests more. He wants the staff to think beyond what has been done in the market,” they added.

‘Financing 2018 budget difficult sans tax reforms’ Continued from A1

Legislative-Executive Development Advisory Council (Ledac) next year. Pernia said Ledac plans to discuss the easing of restrictions on private investments and banksecrecy laws, as well as the taxreform measures. The Ledac provides policy advice to the President and integrates the Legislative agenda of the administration with the national development plan, among other functions. The Neda is the principal secretariat of the Ledac. “We are going to look at priority bills. There’s a long list of priority bills. There’s a lot,” Pernia said. One of the major items included in the Duterte budget was increased funding for infrastructure projects. The national government plans to increase infrastructure funding to 5 percent or more of local output or the GDP annually. Budget Secretary Benjamin E. Diokno earlier said the govern-

Cheap rice. . . Continued from A1

“We expect this to quickly exert pressure on rice demand in the thinly traded international markets and steadily increasing international prices. We may actually end up with higher rice prices of which we have no control or influence,” Piñol added. The challenges posed by climate change on farm production, he said, would make it more difficult for the Philippines to secure food for its growing population. “All our traditional and even prospective [rice] suppliers are just as vulnerable to climate-change impacts and rice, being highly dependent on water, is particularly most vulnerable,” Piñol said. “If we do not decisively develop our rice sector to a high enough level of resiliency and sustained sufficiency, a policy of dependence on rice imports will later pose even more challenging food-security issues,” he added. Given these reasons, the DA chief said he is urging President Duterte to seek a two-year extension for the quantitative restrictions (QR), a nontariff barrier which allowed the Philippines to limit rice imports.

ment plans to spend a total of P8.2 trillion up to P9 trillion between 2017 and 2022. This means the government needs to spend around P1.33 trillion a year to usher in what it calls the “golden age of infrastructure” for the country. The financing cost does not include public-private partnership (PPP) projects that will continue to be pursued under Duterte. Diokno said the Duterte administration will make changes to the PPP Program by accepting unsolicited project proposals and under ta k ing hybr id PPP projects, where the government builds the infrastructure and the private sector operates and maintains them. The budget secretary remains confident that, despite the few number of projects in the government’s pipeline, they are confident they will fill in the so-called infrastructure gap and undertake more projects in the coming years. “President Duterte has made clear that his administration will

keep a deliberate focus on developing the regions through connective infrastructure. That is why we are ramping up public infrastructure spending next year, allotting at least 5 percent of GDP to go to infrastructure projects, until 2022,” Pernia said. For 2017, the national government intends to spend P3.35 trillion. The budget has been ratified by the House of Representatives and Senate of the Philippines. Of the P3.35 trillion, 40.14 percent, or P1.34 trillion, will be for empowering human res ou rc e s t h rou g h e du c at io n , health care, social welfare and other social services. About P923 billion, or 27.6 percent, will go to economic services to fix broken infrastructure networks, boost agriculture and rural sector, as well as generate more jobs and livelihood. For general public services and defense, the government will allocate 22 percent, or P729 billion, of its total budget.

He said, the extension would allow the DA to put in place initiatives that would prepare rice farmers for the influx of cheap rice from neighboring Asean countries, such as Vietnam and Thailand. Piñol said some of the major programs that are have been initiated or about to be implemented include: a major push to enhance innovation through increased support to rice science and technology and the rollout of the recently completed color-coded guide maps. The DA is also targeting to construct more farm to market roads, expand its mechanization program and hike average yield to 6 metric tons (MT) per hectare under the Masaganang Ani 6000 program. Piñol said the President has yet to decide on whether to scrap the QR on rice, which will expire on June 30, 2017. The Philippines acquired the right to impose QR on rice as a result of the Uruguay Round of multilateral trade negotiations that led to the establishment of the WTO in 1995. Under the Agreement on Agriculture’s Special Treatment for Rice under Annex 5, the QR allows the Philippines to regulate and restrict rice imports entering the country beyond the mini-

mum access volume (MAV) or in-quota. The volume of the MAV then was 238,940 MT, with an in-quota tariff of 50 percent. The government’s availed this to help Filipino rice farmers become more competitive. It would have expired on June 30, 2005. Manila, however, successfully negotiated a seven-year extension of the QR under this special-treatment provision in the agreement, or up to June 30, 2012. As compensation for the support of interested parties for a consensus in the WTO for the extension, the rice MAV was increased to 350,000 MT at 40-percent tariff and also included some tariff concessions in other nonrice products “of particular interest to interested parties.” As the Philippine rice sector continued to remain uncompetitive, the QR was again negotiated to be retained, this time through a waiver that was also successfully negotiated, until June 30, 2017. The second extension resulted in the MAV increasing to 805,200 MT at 35-percent tariff and the retention of previous nonrice concessions, as well as a few more tariff lines of interest to negotiating partners. These concessions would revert to their 2012 levels after the expiry of the waiver.

www.businessmirror.com.ph

China Takes Island Building Skills to Duterte’s Backyard Continued from A1

of Chinese maritime outposts that threaten Philippine territorial claims. “I don’t care who builds the islands on the sea,” said Eddie Piling, 43, whose makeshift house with no plumbing may have to be demolished to make way for the development. “I heard about CCCC dredging in one of the village meetings, but we don’t mind as long as we benefit.” China’s involvement in developing the Davao coastline is a direct result of Duterte’s October visit to Beijing, when he secured investment and credit pledges worth $24 billion. It’s also a prime example of the economic pragmatism that he says justifies striking a balance between the US, the Philippines’s top military ally, and China, its top trading partner. Optimism is growing in the Philippine business community over closer economic ties with China, in part because few countries have similar amounts of capital to spend, according to Eufracia Taylor, Asia analyst at risk advisory company Verisk Maplecroft. Still, she said, cooperation “can go only so far before the issue of sovereignty rears its head.” “The relationship between the Philippines and China is at best a marriage of convenience, based on a shaky truce on the South China Sea,” Taylor said. Malcolm Cook, a senior fellow at the ISEAS-Yusof Ishak Institute in Singapore, points out that the actualization rate for Chinese foreign direct investment pledges in the region is lower compared with Japan and the US “Chinese investment and financing are likely to grow and give Duterte the opportunity to praise Chinese commitments as benefits of his changed foreign policy,” Cook said. “But I doubt that there will be $24 billion as promised.” Duterte is planning to implement an P8-trillion ($161-billion) infrastructure program over the next six years. The project in Davao, initially conceived while he was mayor, is a $780-million joint venture with local businessman Reghis Romero, chairman of Mega Harbour Port and Development Inc., which will build infrastructure for the three new islands, including roads, bridges and power and telecommunication lines. Romero said in an interview that CCCC Dredging would put $200 million into the land-reclamation project, with another $300 million to come from Chinese investors once the islands are finished. Work on the project is set to begin next June. The project would add more than 200 hectares of land to Davao and combine a hi-tech port facility with a new central business district,

DTI. . .

Continued from A12

of the national coffee production. HB 292, authored by Partido Demokratiko Pilipino-Laban Reps. Horacio Suansing Jr. of Sultan Kudarat and Estrellita Suansing of Nueva Ecija, seeks to impose an excise tax of P10 on SSB per liter of volume capacity to generate additional revenues for the government and “promote public health and wellness.” The measure, which is currently pending before the ways and means panel, will insert Section 150-A in the National Internal Revenue Code of 1997, as amended. The bill defines sugar-sweetened beverage as “a nonalcoholic beverage that contains caloric sweeteners/added sugar or artificial/noncaloric sweetener. It may be in liquid or solid mixture, syrup or concentrates that are added to water or other liquids to make a drink.” The authors of the bill said Pres-

Romero said. About 5,000 families of Isla Verde would need to be relocated to a nearby condominium, he added. “It’s good to know that people in the area approve of our project because the integration of an industrial port and a central business district will really entice investors and boost economic growth in Davao,” Romero said in a telephone interview on December 11. It will also help revive an initiative to boost trade with neighboring countries, like Brunei Darussalam, Indonesia and Malaysia, he said. Nevertheless, CCCC Dredging brings complications for the government. One of the company’s ships was seen in surveillance photos of an island-reclamation project in the disputed Spratly Islands in the South China Sea, accord ing to IHS Jane’s Defence Weekly. I n 20 0 9 t he Wo r l d B a n k banned CCCC Dredging’s parent company China Communications Construction Co. Ltd. and all its units from road projects financed by the bank for eight years due to alleged “fraudulent practices.” In a stock-exchange filing, China Communications said the bank ’s allegations had “no factual or legal merit” and that it complied with regulations. CCCC Dredging declined to comment on the allegations in an emailed statement responding to a series of questions about the Davao project. Duterte’s office also didn’t respond to e-mailed questions. “CCCC engages in investment and financing, advisory and planning, design and construction, as well as management and operation of infrastructure on a global scale,” the company said in a statement. “We understand that many countries and their people are looking forward to infrastructure improvement, especially in transportation, and we are committed to make the world more connected.” In Isla Verde, residents, such as 51-year-old Merita Potenciano, see Chinese investment as a ticket to a better life. She rises each day at about 3 a.m. in her 12-square-meter home above the water to bake the sweet bread that earns her P250 a day, about half the minimum wage in Manila. “My 15-year-old son dreams of becoming an engineer and he wants to build me a bigger house,” said Potenciano, who has lived in Isla Verde since the 1980s. “I may not have to wait long if the islands rise sooner.” “We’re for development,” said Isla Verde Councilor Roy Liza. While some aspects of the development plan remain unclear, including where the access road will be built and how many houses will have to be demolished, “the village council will ensure that nobody will get left behind.” Bloomberg News ident Duterte, Health Secretary Dr. Paulyn Jean B. Rosell-Ubial and groups, like the Philippine Heart Association (PHA), have already expressed support for “sin” taxes on sugary drinks. They said sweetened drinks and junk food are among the main culprits in the increasing cases of obesity, diabetes, heart disease, high-blood pressure, stroke and gall stones. “Studies have shown that consumption of sugar-sweetened beverages increases the risk of developing health problems, such as bloodsugar disorders, obesity, diabetes and other related diseases, like bone fractures, hyperacidity, tooth decay and heart problems,” they said. Citing data from the Department of Health (DOH), the lawmakers said the government has spent P50 billion for diabetes-related diseases from 2009 and 2012, based on PhilHealth claims. For diabetes alone, they said the government spends about P5 billion annually.

The Nation BusinessMirror

news@businessmirror.com.ph

Editor: Dionisio L. Pelayo • Thursday, December 22, 2016 A3

Malacañang ‘shelves’ ruling for better relations with China By David Cagahastian

@davecaga

ALACAÑANG said on Wednesday the Philippines is setting aside temporarily the United Nations Permanent Court of Arbitration’s (PCA) ruling in favor of the Philippines in the territorial dispute in the South China Sea, to take advantage of economic benefits resulting from better relations with China.

Chief Presidential Legal Counsel Salvador B. Panelo said it is better to set aside temporarily the arbitration ruling in favor of the Philippines, instead of trying to enforce it against China with minimal chances for success. This makes the ruling “a mere paper judgment,” he said. “Even if we have an arbitral ruling, it’s not being enforced. So instead of quarrelling about that issue of enforcing it, we found aspects which could be beneficial to both countries, and that became the policy of President Duterte,” Panelo said. Panelo, however, clarified the setting aside of the arbitral ruling is only temporary, and the Philippines will assert its rights under the ruling in the future.

DOJ recommends filing of criminal charges vs de Lima By Joel R. San Juan

@jrsanjuan1573

HE Department of Justice (DOJ) on Wednesday recommended the filing of criminal complaint against Sen. Leila M. de Lima before the Quezon City Metropolitan Trial Court for repeatedly ignoring the summons issued by the Lower House for her to attend its inquiry on the proliferation of illegal drugs inside the New Bilibid Prison in Muntinlupa City. The DOJ is also criticizing de Lima for advising her former driver not to attend the same hearing. In a resolution issued by Assistant State Prosecutor Vilma Lopez-Sarmiento, the DOJ said de Lima violated Article 150 of the Revised Penal Code (RPC) for disobedience to summons issued by the national assembly, its committee or subcommittees. The resolution stemmed from the complaint filed before the DOJ by House Speaker Pantaleon D. Alvarez, together with Majority Leader Rodolfo C. Fariñas and House Committee on Justice Chairman and Oriental Mindoro Rep. Reynaldo V. Umali. They said de Lima’s decision to advise Ronnie Dayan not to attend the hearing and even hide from the authorities was a violation of the RPC. De Lima was also cited for her repeated refusal to attend the House inquiry on the narcotics trade inside the national penitentiary on September 20, September 21, October 5 and October 6. The DOJ resolution was approved by Officer in Charge Prosecutor General Jorge Catalan Jr. “Respondent’s advice to Mr. Dayan through his daughter to hide and not to appear in the house inquiry constitutes an act amounting to restraining another to attend as a witness in the national assembly [now Congress of the Philippines] and inducing disobedience to a summon,” the resolution said. Violation of Article 150 has a penalty of arresto mayor or one month and one day up to six months of imprisonment or a fine ranging from P200 to P1,000 or both (fine and imprisonment). De Lima and Dayan had both admitted they were previously in a relationship. De Lima said it lasted for several years, while Dayan said they were together for seven years. She, however, denied having benefitted from the proliferation of illegal drugs inside the NBP. De Lima accused the administration of coming out with falsified evidence and testimonies in order to get back at her for blaming President Duterte in the series of extrajudicial killings in the country.

ASG kidnaps 4 crew members of fishing vessel

USPECTED members of the Abu Sayyaf Group (ASG) have snatched four crewmen of a fishing vessel, off Celebes Sea in Sulu on Monday, the military reported on Wednesday. Armed Forces Western Mindanao Command Spokesman Major Filemon Tan Jr. identified the boatmen as Noel Besconde, Reyjim Rocabo, Roy Ramos and Roel Liones, all of Tukuran, Zamboanga del Sur. All four were crewmen of FB Ramona 2, a service-type vessel owned by Ramona Fishing Corp. Tan said efforts were ongoing to locate the four, whom they have classified in the meantime as missing. The report about the possible kidnapping of the boatmen was relayed by its sister ship, FB Melissa 2, which claimed its last contact with Ramona, steered by Besconde as its captain, was around 3 a.m. on Monday. “FB Melissa 2 proceeded to the location of her sister ship at around 5 a.m. and found all crew members missing. The VHF Radio/GPS was stolen, while other belongings were intact,” Tan said. Tan added that the Joint Task Force Sulu has already deployed forces to search for the crewmen of Ramona, while the Naval Task Group Sulu has been instructed to conduct “appropriate action.” Likewise, the Joint Task Forces Tawi-Tawi and Basilan were also alerted to conduct patrols. The reported kidnapping happened just two days after Armed Forces Chief of Staff Lt. Gen. Eduardo Ano visited troops in Mindanao and prodded them to push on with the ongoing operations against all threat groups in the region. Rene Acosta

“If we can’t implement it, we might, as well, let it stay there for a while, until such time that we can do something about it. We can use it next time or in the future. The future will tell when the right time to use it will be,” Panelo said. Panelo also brushed aside the recommendations from Congress for the Philippines to file a diplomatic protest and try to enforce the arbitration court’s ruling. “All of these things may be discussed on the

diplomatic table. But if we protest, even as we cannot implement the ruling, it will only deepen the wounds inflicted by each country upon the other,” he said. Earlier, Duterte said any negotiations with China will not go beyond the four corners of the arbitral ruling in favor, which invalidated China’s “nine-dash line” on which China anchors its claim of sovereignty over most of the South China Sea, including the Spratly Islands close to the Philippines.

However, with the billions of dollars already starting to come from China as investments in infrastructure in the Philippines, that policy had apparently been already shelved in exchange for the financial assistance from China. “Is it not true that bilateral relations now are stronger? We can see there are a lot of offers, projects, loans and many other things which we need for our country to prosper because we’re being left behind,” Panelo said.

Economy

A4 Thursday, December 22, 2016 • Editors: Vittorio V. Vitug and Max V. de Leon

BusinessMirror

news@businessmirror.com.ph

COMP: Mining policy environment remains ‘positive’

By Jonathan L. Mayuga

@jonlmayuga

he Chamber of Mines of the Philippines (COMP) is confident that the economic policy team of the Duterte administration will prevail in bringing back investors’ confidence in the mining sector. Nelia Halcon, EVP of COMP, said that, while the policy environment is still positive, investors’ confidence in the mining sector has waned. She said if the current policy direction of the Department of Environment and Natural Resources (DENR) prevails, there might be some delays in the $23-billion mining projects COMP expects to pour in under the Duterte administration. “An enabling investment environment, which is what the economic policy team of the Duterte administration promised, [is needed] so that investments will flourish,” Halcon said. Halcon said metallic minerals production has already declined in view of the uncertainties, as well as the decline in prices of major commodities in the world market. COMP members composed of the big players in the mining industry are trying their best not only to follow the mining law, but are doing beyond what the law requires in terms of social and environmental management programs, in the wake of government’s tightening of screws on mining. So far, the DENR, under staunch env ironmenta l advocate and staunch mining operations critic Regina Paz L. Lopez, has caused the suspension of 10 large-scale metallic mineral mines with 20 others having been issued show-cause orders after an initial mining audit. Just last week, Lopez announced the cancellation of the environmental compliance certificates (ECCs) of six mining companies and a property developer for its housing project as part of a review process that involves all development projects. Lopez had also issued show-cause orders for 11 different development projects, including mining. By mid of January next year, the DENR chief vowed to reveal the result of the mining audit, which she said will be deliberated upon by the DENR and MGB. Lopez’s mining audit and ECC review is anchored on a campaign to promote social justice and common good, as she repeatedly said that under her watch, the policy is to stop development projects that cause environmental destruction and suffering to people in the communities. Under the Duterte administration, Halcon is hopeful of an increase in production brought about by the planned massive infrastructure program that will require industrial minerals, cement and other nonmetallic mineral resources. The industrialization program of government will boost mineral production “if this goes without let up.” COMP, she said, is communicating more about the industry,

which has been demonized, to improve current policy environment in the mining sector. According to Halcon, the Mines and Geosciences Bureau (MGB) under Undersecretary and Director Mario Luis Jacinto has undertaken a review of Executive Order (EO) 79, which they want repealed to improve the situation. Among the provisions of EO 79 COMP is protesting about are the establishment of “no-go zones” for mining, the periodic review of mining contracts, and the push for a new mining tax scheme, which they said would make mining in the Philippines uncompetitive. “We are waiting for the results of the study and we are hopeful the EO will be repealed,” Halcon said. According to Halcon, despite the suspension meted out to what Lopez describes as irresponsible mining companies, the relationship with Lopez remains “cordial.” However, Halcon said executives of mining companies belonging to COMP are more confident with Jacinto.

‘Passing mark’

Antimining group Alyansa Tigil Mina (ATM), which is part of the mining audit expressed satisfaction over Lopez’s performance as far as managing the country’s mineral resource is concerned. “On a scale of one to 10, with 10 being the highest, I would rate the Duterte-Lopez administration with a seven. Its above passing, but not perfect. To the best of my knowledge, the Duterte-Lopez administration has been the most clear about its position on destructive mining, and the directive has been to stop those mining operations that are violating the law or noncompliant with the provisions of the Mining Act of 1995 [Republic Act (RA) 7942] and other mining regulations,” Jaybee Garganera, national coordinator of ATM told the BusinessMirror. Garganera, however said Lopez’s performance during the past five months, is “far from perfect.” “We know that Duterte is not antimining per se, but his directives have been clear—to stop mining projects that destroy the environment. And he has stated that we should follow the Australian or Canadian models of responsible mining,” Garganera said. “We recognize the efforts of Secretary Lopez at the DENR to stop destructive mining. However, I feel that the reforms she wants to institutionalize inside the DENR are too few and too slow,” he stated. Lopez has been twice bypassed by the powerful Commission on Appointments (CA), which ATM

believes is because the top DENR official has many adversaries in the Duterte administration. Acording to Garganera, as far as ATM is concerned, the Duterte administration and the DENR under Lopez’s watch is on the right track. “The effort to protect the remaining forests and coastal resources is very evident. The suspension of mines that destroy protected areas and river systems has been done. And the mining audit to establish the conflict between conserving and utilizing our natural resources has been an intervention that is long needed,” he said. ATM said at least three initiatives from the directives of Duterte at the DENR that are being implemented will benefit the proper utilization of our natural resources, namely, the mining audit, review of the ECCs of all environmentally critical projects and the dismantling of illegal fishpens in Laguna Lake. According to Garganera, the mining audit process allowed communities and CSOs access to relevant documents that contribute to the negative impacts of mining. “For the first time, local organizations were able to access contracts, EIAs, ECCs and other attached documents. This is very important in exposing the violations or noncompliance of mining companies. I believe that the mining audit also contributed in the fast-tracked process of issuing the Freedom of Information [FOI] guidelines for DENR,” he said. ATM said a deeper and more comprehensive study on the social impacts of mining should be done. “Relying only on paper checklist of compliance is inadequate. Actual impact assessments on the livelihoods, human rights, health, mobility and participation of mining-affected communities must be clearly established,” Garganera pointed out. Garganera said it is desirable that a total economic valuation (TEV) of natural resources to be impacted by mining should be done, with state colleges and universities in areas that are hosting mining projects playing an important role.

Not too strict

Meanwhile, ATM defended Lopez against allegations that the DENR chief is too tight against large-scale mines, while being lenient on small-scale miners. “Just looking at large-scale mining, I don’t think the Duterte-Lopez administration is being too strict or tight. They are merely implementing the mining law [RA 7942] and other regulations,” Garganera said. According to Garganera, the DENR has not been able to perform its mandate, but said local governments are equally accountable to the regulatory lapses on small-scale mining operations. Garganera said the DENR central office is not able to register, track or monitor where and who are doing the small-scale mining operations. Likewise, he said the local government units (LGUs) have been remiss in submitting reports and updating their own database of small-scale mining operations. “The conflict in regulating the small-scale mining industry is due

Pernia says PDP first draft ready for presentation

he National Economic and Development Authority (Neda) will present the first draft of the Philippine Development Plan (PDP) on Thursday, December 22. Socioeconomic Planning Secretary Ernesto M. Pernia said the Neda has completed all the regional consultations despite receiving the Memorandum Circular (MC) for the PDP only in October 2016. Pernia said the PDP is expected to be completed by the end of January or early February 2017. “That’s still going to be tight, because that only gives us three months since the MC,” Pernia said.

Pernia said the PDP 2011 to 2016 was completed over a period of seven months. The Neda, he said, received the MC in August 2011. Having sufficient time, Pernia said, is key to completing the PDP, the country’s medium-term socioeconomic blueprint. Since the MC was released, Pernia said the Neda conducted consultations across all 17 regions to involve the Legislative and Executive agencies, local government units, the business sector, academe, civil society and other stakeholders. “It’s not easy. Effectively, there’s so many authors because people are [be-

ing consulted],” Pernia said. The PDP 2017 to 2022 will be anchored on the President’s 10- point socioeconomic agenda, which aims to lay down a solid foundation for inclusive growth, a high-trust society and a globally competitive knowledge economy. The PDP serves as the backbone or bond that holds all government agencies together in aiming to achieve the administration’s goals. The Duterte administration’s PDP will also be anchored with AmBisyon Natin 2040, which is the 25-year vision of the Filipino people. Cai U. Ordinario

Lady’s choice A lady shopper browses through a display of assorted brasserie and lingerie at a stall in Divisoria, Manila, in the heat of the shopping mad rush for the holidays early this week. ROY DOMINGO

An enabling investment environment [for mining] which is what the economic policy team of the Duterte administration promised [is needed] so that investments will flourish.”—Halcon to the fact that we have two laws right now regulating the small-scale mining industry. RA 7076 [People’s Small-Scale Mining Act in 2001 and Presidential Degree (PD) 1899 in 1984],” he explained. In some cases, the problem on small-scale mining’s unchecked operation is because of the conflict of interest of many LGU officials. “Some of them are actual owners, financiers or subcontractors of small-scale mining,” he said. According to Garganera, the Duterte administration must introduce a new policy on small-scale mining that clearly repeals PD 1899 and adopting more strict policies on monitoring their operations, especially the use of illegal toxic chemicals, such as mercury.

Repeal Mining Act of 1995

ATM maintains its position that the Philippine Mining Act of 1995 should be repealed. The group believes that the law did not establish clearly the role of mining in the country’s development and industrialization effort. “RA 7942 was passed to make sure that foreign investors and mining companies will have access to our mineral resources in order to supply the global chain or industries and manufacturing of developed countries. There was little intent to develop the Philippine mineral downstream industry,” Garganera said. Garganera added that a clear downstream industrial plan is need-

ed. To do that, he said the government needs to harmonize existing laws and policies that are in conflict with the mining law. “For instance, why do we allow mining in protected areas and prime agricultural lands when these are clearly no-go zones, according to the Mining Act itself? Also, the decisions of local governments and indigenous peoples to reject mining must be respected. These two issues are clearly covered by the Local Government Code of 1991 and the Indigenous Peoples Rights Act of 1997. So these policy conflicts must be resolved,” he stressed. ATM said the government also needs to delineate clear no-go zones against mining projects. “These means already declared protected areas, watersheds, fragile island ecosystems and prime agricultural lands must not be opened for mining. We foresee that water would be a major issue in the next two decades, so we must protect our water sources,” he said. Meanwhile, to address the proliferation of illegal small-scale mining operations, Garganera said the DENR must complete an inventory and registration of all Minahang Bayan all over the country. LGUs, he said, must be compelled to report small-scale mining operations in their areas and the BIR must go after the taxes of small-scale mining. He added that some LGU officials must be charged at the Ombudsman or Sandigan-

bayan on their conflict of interest in owning or operating small-scale mining operations. He challenged COMP, which is blaming small-scale mining for painting a bad picture of the sector, should take the lead in exposing illegal small-scale mining operations. The MGB reports that for the last 10 years, the industry only contributed between 0.7 percent and 1.0 percent to the country’s GDP. Garganera said this is largely due to a mining-tax policy that only imposes 2-percent excise tax and 5-percent royalty payment, and allows export of raw minerals without imposing tax on mineral exports and by providing tax holidays to incentivize investments. Instead of pursuing mining liberalization, the government must invest on agriculture. “As an agricultural country, we need to reinvest in broadening and modernizing agriculture. This is imperative for rural development. Agricultre has far more better forward and backward linkages to the economy, and there are more families employed by agiruclture,” he said. T he gover nment, he sa id , should also sustain our services sectors including business-process outsourcing , construction, financial and ecotourism. “I think that the PDP [Philippine Development Plan] should clearly set the direction of balanced investments and focus on these economic sectors. “It makes more sense to improve the reliability and consistency of roads, airports, electricity and communications to really spur economic growth,” he said. Garganera also reminded that the government of the reality of climate change. “We should ensure that our water [fresh] and coastal resources are adequately protected and prepared for climate change factors,” he ended.

Developing countries told: Implement safeguard measures for infra projects By Cai U. Ordinario

@cuo_bm

he Independent Evaluation Department (IED) at the Asian Development Bank (ADB) has urged the Manila-based multilateral institution and developing member countries (DMCs) to implement stronger safeguard measures for infrastructure projects. In a news statement, the IED said infrastr ucture demand in Asia’s developing economies, including the Philippines, can reach $8 trillion until 2020. With this demand, IED said the ADB and DMCs like the Philippines

must be more vigilant in the financing and implementation of these projects. “Narrowing wide infrastructure gaps will be vital for Asia to secure strong and sustained growth,” Marvin Taylor-Dormond, director general of Independent Evaluation at the ADB, said. “Robust safeguards to protect the environment and affected communities are needed more than ever, amid the risk of increasing environmental degradation and the rising threat of climate change.” The IED report found that few government agencies employed regular environmental specialists to enforce safeguards on ADB-financed

projects, and that ADB’s specialists were overstretched. It added that there are also gaps in the involuntary resettlement of people affected by new infrastructure, such as roads, on land owned by them. IED said ADB’s safeguards policy also requires the government to provide compensation for lost assets at replacement value, and special livelihood support for the poor to get them to national minimum living standards. While progress was made on the compensation side, but the IED said, less evidence was found of governments providing livelihood support.

Agriculture/Commodities BusinessMirror

news@businessmirror.com.ph

Editor: Jennifer A. Ng • Thursday, December 22, 2016

‘Lack of data delays rollout of farm programs’

By Jasper Emmanuel Y. Arcalas @jearcalas

he Department of Agriculture (DA) said it is having difficulties crafting programs for the country’s cash crops due to the lack of “reliable and accurate” agricultural data and statistics.

“I believe we cannot do sound planning if the data that we use and the statistics we rely on are not accurate,” Agriculture Secretary Emmanuel F. Piñol said in a news briefing on Tuesday. Piñol said he has ordered the nationwide validation of all agricultural data, adding that the current and available agricultural data and statistics in the country are “inaccurate and outdated.” “I have ordered the nationwide validation of all agricultural data and statistics which I’ve proven to be inaccurate and outdated,” he added. However, when asked if he believes that the Philippine Statistics Authority (PSA)—the main government agency handling the country’s database and statistics— remain credible, the DA chief said, “I have no basis to question it.” Piñol added he wants to create a new database system for Philippine agriculture. “In fact, we’re currently designing a program wherein we will really go down to the village level

and we are going to use drone technology for the data collection,” he said. The DA chief added that he came up with the plan to put up a new agricultural database system after the Bureau of Plant Industry (BPI) could not provide him with data on the latest onion production. “It all started when I asked [BPI] Director [Vivencio] Mamar il, what is the current onion production of the Philippines, which he cannot answer,” Piñol said. “Then I asked him how much volume of onion do we need to import then? He cannot answer also. So, I saw the flaw in the data system, I saw the problem,” he added. Piñol did not disclose how much will be allocated for the creation of the new agricultural data and statistics system. But he assured that he will hire young people to work on the project. Previously, the Bureau of Agricultural Statistics (BAS), which has its own database and statistics on agriculture, was attached

File photo

to the DA. The BAS was created by virtue of Executive Order (EO) 116 to oversee the collection, compilation and official release of agricultural statistics. “The BAS shall be mainly re-

sponsible for the collection, compilation and official release of agricultural statistics; exercise technical supervision over datacollection centers; coordinate all agricultural statistics and eco-

Bfar warns against eating shellfish gathered from areas with red tide T he Bureau of Fisheries and Aquatic Resources (Bfar) urged the public to refrain from eating shellfish collected from areas affected by the toxic red tide. In Shellfish Bulletin 38 issued on December 20, Bfar said IrongIrong and Cambatutay Bays in Western Samar; Matarinao Bay in Eastern Samar; the coastal waters of Calubian and Cariga Bay in Leyte remain positive for red tide. A lso positive for para ly tic shellfish poison are the coastal waters of Naval in Biliran Island province; coastal waters of Gigan-

tes Islands in Carles, Iloilo; and the coastal waters of Dauis and Tagbilaran City in Bohol. “All types of shellfish and Acetes sp., or alamang, gathered from [these] areas are not safe for human consumption,” the bulletin signed by Bfar director Eduardo B. Gongona read. It added that fish, squids, shrimps and crabs are safe for human consumption provided that they are fresh and washed thoroughly, and internal organs, such as gills and intestines, are removed before cooking. The Bfar said all other areas and coastal waters remain

free from red tide. These inc lude t he coa st a l w aters of Cavite, Las Piñas, Parañaque, Navotas, Bulacan and Bataan in Manila Bay. Eating shellfish products with red tide can cause paralytic shellfish poisoning (PSP), an illness that can cause death. Early symp-

toms of PSP include tingling of the lips and tongue, which may begin within minutes of eating poisonous shellfish or may take an hour or two to develop. Depending upon the amount of toxin a person has ingested, symptoms may progress to tingling of fingers and toes and then loss of control of arms and legs, followed by difficulty in breathing. If a person consumes enough poison, the muscles of the chest and abdomen become paralyzed. Death can result in as little as two hours, as muscles used for breathing become paralyzed.

Tired of halal chicken? Try the eyeshadow or nail polish

n a visit this fall to BASF’s factory in Dusseldorf, Germany, Abdullah Hito inspected production lines and met with managers to discuss ingredients for soaps, shampoos and conditioners. Hito isn’t an engineer or a health department official; he’s an Islamic scholar who certifies the goods as halal—or fit for use by observant Muslims. “We control everything from the first step, when they buy raw materials, to the end,” says Hito, who holds a Ph.D. in Islamic studies from Kuwait University. Manufacturers “are not allowed to change raw materials or suppliers without informing us.” His company, Halal Quality Control, is one of dozens across Europe that certify products as halal. They can’t contain alcohol or additives of animal origin, and production must be isolated from substances considered impure under Islamic law, even cleaning products. BASF, which four years ago got its first such certifications for cosmetics ingredients, today makes 145 chemicals deemed halal for products like facial cleansers, bubble bath, or household detergents.

While BASF’s largest markets for the ingredients are Indonesia and other mostly Muslim countries, the company says demand is growing in the West. Even as US President-elect Donald Trump threatens to restrict Muslim immigration to the US, companies from BASF to sandwich maker Subway to fashion house DKNY are embracing the group’s growing buying power.

Foie gras

Muslims make up almost a quarter of the world’s population—1.6 billion people—and will outnumber Christians by the end of the century, according to the Pew Research Center in Washington. Consumers will spend about $27 billion on halal cosmetics this year, and sales could jump to $39 billion by 2019, researcher Technavio estimates. “This is a market that’s going to grow hugely,” says Shafiq Shafi, managing director of a consulting firm called Muslim Marketing. Halal products go far beyond traditionally butchered meat. There’s

halal foie gras and halal wine (alcoholfree, of course, but also guaranteed to not have come into contact with any banned substances). UK retailer John Lewis offers a school uniform with a hijab, and clothing chain Uniqlo sold a line by designer Hana Tajima that includes printed and dyed hijabs. When France’s Groupe Bertrand bought the Quick hamburger chain last year, it converted most of the 500 outlets to Burger Kings, but left the Quick brand on about 50 of them in Muslim neighborhoods, serving halal food. Some companies don’t do much to trumpet their halal cred for fear of a backlash among non-Muslims, says Shelina Janmohamed, a vice president of Islamic branding agency Ogilvy Noor and author of Generation M, a book about millennial Muslims.

Burkini brouhaha

“The challenge is a social and political climate that makes it difficult for businesses” to broadcast that they’re catering to Muslims, Janmohamed says. Animal-welfare activists have called for a boycott of stores and

restaurants serving halal meat because they say the halal method of slaughtering livestock is inhumane. And British retailer Marks & Spencer took some heat when it offered body-covering swimsuits called burkinis—the same suits that became a point of controversy in France last summer when the mayors of beach town,s such as Cannes and Nice, banned them. Although Pierre Bergé, cofounder of the Yves Saint Laurent fashion house, deemed the suits an “abominable thing used to hide women,” M&S says it sold out of them. An Illinois company called Maya Cosmetics makes nail polish that’s permeable—important to Muslims, who are barred from wearing anything that repels water while performing ablutions at prayer time. The web site, though, trumpets the product’s health benefits as prominently as its halal certification. While word-of-mouth on Muslim web sites and Facebook has helped sales in Britain and the Middle East, “halal carries a certain stigma with the average American,” says cofounder Javed Younis. BloombergNews

nomic research activities of all bureaus, corporations and offices under the Ministry,” EO 116 read. The BAS was merged with the National Statistics Office, the National Statistical Coordination

Board and the Bureau of Labor and Employment Statistics to form the PSA after then-President Benigno S. Aquino III signed the Philippine Statistical Act of 2013, or Republic Act 10625.

Duterte, CSC honor Pangasinan for success in rice production

DUTERTE

de la rosa bala By Orly Guirao Correspondent

ALACAÑAN PALACE— President Duterte and the Civil Service Commission (CSC) conferred honors to Pangasinan provincial government’s agriculture office, in recognition of their diligence, hard work and innovative skills, which made the province a consistent top achiever in rice farming. The President, assisted by CSC Chairman Alicia de la Rosa Bala and Ombudsman Conchita Carpio-Morales, awarded the Pag-Asa plaque and individual 24-karat gold medals to the nine-member team of Acting Provincial Agriculturist Dalisay Moya and Assistant Provincial Agriculturist and director for Rice Farming Nestor Batalla. The others in the team are Fe Agas, Ramon Claveria, Irene Estrada, Peachy Lozada, Rita Prieto, Gemma Rosario and Danila Villamil. Moya’s team also received a cash incentive of P100,000 during the award rites held at the Heroes Hall here in the presence of Gov. Amado Espino III, Agriculture Secretary Emmanuel F. Piñol and family members of the awardees. T he prov ince’s ag r icu lture team crafted and implemented the innovative approach to rice farming called “Accelerated Palay

Certified Seeds Production” (APCSP), along with the “Agricultural Technology Enhancement” (ATE) program, during the first term of then-Gov. and now Rep. Amado T. Espino Jr. of the Fifth District of Pangasinan. Under APCSP, the provincial government distributes palay certified seeds to farmers to improve the quality of harvest, and provides a 50-percent fertilizer subsidy to farmers, an incentive package no longer extended by the national government. A full-scale irrigation program costing P100 million involving the construction of shallow-tube wells, distribution of irrigation pumps to irrigator groups, as well as massive repair and maintenance of irrigation canals, dovetails the baseline innovative approach. Owing to the success of the two-pronged program, the province was awarded thrice as “Outstanding Rice Achiever” in 2013, 2014 and 2015 by the national government. Pangasinan is now in the government’s Hall of Fame in rice production. Apart from its success in rice farming, the province also carved a niche in corn production as one of the top 3 achievers in the sector. To protect the gains in agricultural production, Espino III launched the Agro-Industrial Enterprise program to encourage the farmers to become entrepreneurs.

A6 Thursday, December 22, 2016

TheBroa

Business

PHL credit-card industry seen T

By Rea Cu

HE credit-card industry in the Philippines is seen to grow over the coming years, as more consumers rely on using financial cards for their transactions and payments, according to a report from the Euromonitor International. According to the 2016 Euromonitor report “Financial Cards and Payments in the Philippines,” the use of financial cards has been further driven by the issuance of credit cards or fleet cards that are tailored to a specific need. “As more consumers rely on financial cards for their purchases and transactions, the use of financial cards has been further driven by the launch of cards that address a specific need and by the expansion of card networks,” the report said. It pointed out that due to the efficiency and convenience brought about by the use of financial cards, Filipino consumers are now steering more toward using credit cards rather than cash. The efforts of industry players in marketing credit cards and fleet cards to provide better financial services also contribute to the increase in the number of users of financial cards. “This is largely due to combined efforts from industry players to provide better financial services and payment experiences. As a result, when new financial cards that target a specific need are launched, consumers are more receptive and this contributes to the continued growth of the respective card issuers,” the report added. The increase in access points, or where consumers can use their financial cards, has also contributed to the shift in using credit cards. “Expanded acceptance points, as pursued by card operators, have provided more opportunities for cardholders to use their cards,” the report said. The report explained that personal credit cards continue to dominate in the financial-card industry, with businesses being expected to be more open to using commercial credit cards as the general appreciation of the cards continues to increase. Based on a Consumer Payment Attitudes study conducted by Visa in the Philippines in 2015, more Filipinos are becoming more attuned to using contactless payments due to their security and ease of use. Contactless payment systems are financial cards that use radio-frequency identification or near-field communication for making secure payments. With the increase in preference, credit-card issuers responded by releasing new cards equipped with contactless technology. Among other new contactless cards are prepaid cards and credit cards from banks and nonbanks, the report said.

House bills

PRIOR to the administration of President Duterte, Congress approved a bill seeking to regulate the country’s credit-card industry under the authority of the Bangko Sentral ng Pilipinas (BSP). House Bill (HB) 5417, or the Philippine Credit Card Industry Regulation Act, issues rules of conduct or standards of operation for the local credit-card industry and prohibits issuers and collection agents from unfair practices against cardholders. Under the Act, the BSP shall supervise the issuance of rules of conduct for uniform application among all institutions covered and the imposition of penalties

for noncompliance, the conduct of examination as determined by the Monetary Board (MB) to determine compliance, and the oversight to ascertain that laws and regulations are complied with. While card issuers are mandated to exercise transparency in all transactions and are required to disclose finance charges for unpaid amounts after a payment’s due date, the percentage that the interest bears to the total amount to be financed expressed as a simple monthly or annual rate, penalty fees or similar delinquencyrelated charges payable in the event of late payments. Violation of any of the rules stipulated under the Act will face a fine of P50,000 to P200,000 or imprisonment of two to 10 years. HB 5417 was approved by Congress in May of this year. HB 5417 also mandates credit-card issuers, including their officers and employees, to strictly keep confidential the data presented by the cardholder, except under when disclosure of information is with the consent of the cardholder. Banks are also mandated to keep client data private, except when the customer information is released, submitted or exchanged with credit information bureaus, industry association, or card association, as well as upon the order of court of competent jurisdiction or any government office authorized by law.

Credit bureau

AS per the establishment of a Positive Credit Bureau that will help banks organize and maintain their credit portfolios, the country has tasked the Credit Information Corp. (CIC) to handle the bureau. In 2011 reports, the first private credit bureau in the Philippines was established through the partnership of Banco de Oro (BDO) Unibank, Bank of the Philippine Islands (BPI), Citibank Philippines, HSBC and the Metropolitan Bank and Trust Co. (Metrobank) and Chicago-based credit-information management TransUnion, which centralizes credit information in the country. With the establishment of the credit bureau, banks are now able to know whether clients have negative or positive credit, which helps manage the client’s ability to pay, among others. According to a 2015 report, the CIC issued accreditation guidelines for credit bureaus in the country, as well as special accessing entities (SAEs). Under Republic Act 9510, or the Credit Information System Act (Cisa), SAEs are accredited private corporations engaged in the business of providing credit reports, ratings and other similar credit-information products and services. As per the CIC, the enrollment of SAEs will further help the government bureau to become fully operational. Under Cisa, lending institutions are required to forward both positive and negative credit information of their borrowers to CIC. A centralized credit registry allows individuals to monitor and manage their respective credit exposures among institutions. This will also protect the individuals’ deposits in line with managing the risks of lending the deposits to borrowers.

aderLook

sMirror

www.businessmirror.com.ph | Thursday, December 22, 2016

n growing with new rules, tech CCAP

(ATM) debit and prepaid cards in card-accepting devices and terminals. This was issued so that customer information will be safeguarded, to reduce card fraud and maintain interoperability of payment networks. “The guidelines entail the adoption of a Philippine domestic EMV specification for proprietary debit cards. However, it does not preclude the issuers of cobranded cards from adopting established international schemes for said cards,” a statement by the BSP said. “The guidelines also highlight BSP’s expectations in terms of managing the risks, while the banking industry migrates the magnetic-stripe payment environment to chip-enabled technology based on the EMV standards.” According to China Bank, its move to shift to EMV technologyenabled cards is a means to further protect the consumers as the added security minimizes the chances of risk, including fraud and the like. Regulatory requirements underlining consumer protection and interests were explained to argue well in terms of the banking industry’s growth. “The credit-card industry is already heavily regulated anchored on the consumer-protection mandate of industry regulators,” de Borja said. “Regulatory requirements are meant to protect the interests of consumers or cardholders, which augurs well for the industry as it continues to grow and expand.” De Borja also said the banking industry is looking forward to the development of a positive credit bureau, which will be beneficial to the industry in terms of managing its credit portfolio, with it both protecting the cardholder and the issuer. “The credit-card industry works very closely with the regulators to ensure that requirements are carried out accordingly,” he added. “One of the industry developments that we are looking forward to is the establishment of a positive credit bureau, which will help the industry to manage the credit quality of the credit-card portfolio, which, again, is meant to protect the interests of consumers or cardholders, as well as the issuing banks.” De Borja added that for 2017, a growth of 1 percent to 2 percent can be seen in terms of credit-card users. “Credit-card users may increase by about 1 percent to 2 percent, while billings and receivables may grow by around 10 percent in 2017,” he added. In earlier reports, BDO Unibank Inc. eyed the second quarter of this year to roll out its EMV-enabled financial cards, with it being the first universal bank to release EMV-enabled cards. Its BDO MasterCard ATM debit card was explained to complement its EMV-ready ATM, which was de-

IN 2015 reports, the Credit Card Association of the Philippines (CCAP), which is made up of the 14 largest banks in the country, expressed confidence that the growth in credit-card holders is expected to grow by double digits in the next few years. The CCAP said 6.9 million credit cards have been issued to over 3 million cardholders in the Philippines, and pointed out that it is ready to increase penetration in the market by lowering the wage requirement for credit-card applications. The CCAP pointed out that 65 percent of point of sales in malls is still being transacted with the use of cash, while 35 percent is done with credit cards. The group also calls for the issuance of a national identification system in the Philippines for easy access to information, which will determine the client’s capacity for repayment, the lack of which poses a challenge for credit-card issuance. According to the CCAP, creditcard holders will be equipped with contactless technology, with the challenge only being the lack of infrastructure and terminals to support the advancement.

EMV

CHINA Banking Corp. (China Bank) has seen a steady growth over the years in terms of number of cards issued and the issuers of financial cards, according to Consumer Finance Group Head Renato K. de Borja. “The credit-card industry has grown steadily in the past few years in terms of receivables, billings, number of cards issued, as well as the number of credit-card issuers with new players, including China Bank,” de Borja told the BusinessMirror. But to adapt with the changes that are being presented by the credit-card industry, the bank has adopted the use of the EuropayMasterCard-Visa (EMV) technology in its financial cards to deliver added security for its clients and to provide convenience among customers. EMV technology allows financial cards to have boosted security features, including stronger encryption locks and keys to authenticate the card along with the owners’ transaction. “Credit-card issuing banks and institutions have invested heavily in customer-service convenience, as well as protection with the adoption of EMV chip technology for added security,” de Borja said in reply to questions sent through electronic mail. In November 2014, in line with the BSP’s efforts to strengthen the electronic retail payment network in the Philippines, the Monetary Board (MB) approved the EMV implementation guidelines governing the EMV implementation for automated teller machine

Holiday debt traps Three easy ways you can get into financial trouble this holiday shopping season:

Payday loans really add up

Accidental overdraft fees can cost you

If you took out a loan for these seasonal expenses...

If you bought one of these gifts...

Millions of American families spend billions of dollars on payday loans each year; these loans are typically sold as two weeks of easy flat-fee credit, but the reality is long-term expensive debt

Loan amount $375*

$75

$150

Last year, financial institutions took in $31.5 billion dollars in overdraft revenue; the median overdraft fee at the 12 largest banks was $35

Sweater

$37.49

Original price Tinsel

$8.39

Artisticco | Dreamstime.com

credit card

heating

gas

In debt 5 months* Fees paid $520* Total

$895*

...you would pay far more and be indebted far longer than advertised

E-reader

93%

417% Price after overdraft

General purpose reloadable (GPR) prepaid card use has grown over 600% since 2009, and in 2013 customers are expected to load $201.9 billion onto prepaid cards Prepaid cards versus checking accounts; if you don’t know, you need to find out ...

$119

$43.39 $72.49

Are you using a prepaid card to buy holiday gifts?

$154

29%

...you could pay this much after an accidental overdraft

? ...what sort of fees you will pay? ...what types of consumer protections apply to you? ...are your funds covered by FDIC insurance?

*Figures are averages

Source: The Pew Charitable Trusts, Pew Safe Small-Dollar Loans Research Project, Moebs Services, “Overdrafts Rebound Sharply in 2012” (9/24/12), Consumer Financial Security, Pew analysis Graphic: Carla Uriona, Stateline.org

Science Matters

Credit cards with chips The majority of banks and credit card companies worldwide use “smart cards,” which have embedded microprocessor and data chips for making purchases.

How much data in a card?

Four ways to use a smart card

Magnetic-strip card Written onto three digital data tracks

Enter PIN code; terminal is linked to bank computer

0.3 kb

(5-bit words)

Smart card with chip 16-bit microprocessor encodes, reads data

Enter PIN; terminal not connected

610 kb*

Known card number; accepted without verification

Write signature

*Up to 8 kb RAM, 346 kb ROM, 256 kb programmable ROM

World of smart cards • 1.5 billion EMV cards* have been issued in 80 countries

85% / 94% 15% / 68%

Nearly zero use in U.S.

• They are accepted at 21.9 million payment terminals

85% / 94% EMVs as percentage of all cards

41% / 77%

Percent of terminals that accept EMV

ployed earlier in the country. The rollout of the EMV-enabled cards was explained to support BDO’s three-year migration plan for its EMV-embedded ATM debit card and is in line with the BSP’s mandate to shift to the use of EMV technology. THE Euromonitor report further pointed out that because of the shift to using financial cards, including credit and fleet cards, nonfinancial companies and agencies started to offer financial products that go hand in hand with financial card programs. “Nonfinancial entities have taken advantage of their existing customer bases and have aggressively developed and marketed financial products and services in recognition of the numerous benefits of card programs,” the report said. “The companies have targeted their existing pool of customers and have developed card products and services that address customers’ needs.” Among the sectors in the Philippines that have started to increase their presence within the financial-card market include telecommunication companies and transportation agencies, to name a few. While some companies in the country forge partnerships with financial institutions to offer cobranded prepaid cards that also target the interests of a specific group of customers. “Telecommunications companies, the food-service industry and transportation agencies, among others, have continued to improve their card-related offerings in order to establish a stronger presence within prepaid cards,” the report said. The government has also made available the use of financial cards among government agencies to fa-

28% / 51%

Source: Smart Card Alliance, Bankrate, How Things Work Graphic: Helen Lee McComas

*Europay, MasterCard and Visa standard

Shifting

21% / 76%

cilitate faster transactions when taxpayers pay their duties and taxes, among them the Bureau of Internal Revenue (BIR) and the Land Transportation Office (LTO), according to the Euromonitor report.

Changes

THE Euromonitor report explained that, “with the goal of increasing convenience when paying for public obligations, government agencies have begun to accept financial cards, such as debit, credit and prepaid cards.” “The BIR announced early [this year] that it will start accepting Philippine-issued cards for payment of taxes, interest and other fees,” the report said. “Other agencies, such as the Home Development Mutual Fund, the LTO and Valenzuela City have gone ahead and launched their cardpayment facilities.” But not all entities have turned toward the use of financial cards to conduct their transactions. Euromonitor pointed out that some banks within the country have yet to fully embrace the change as issues in the profitability of their use remain to be unanswered. The Land Bank of the Philippines (Land Bank) was noted to be a financial institution that has already undergone the changes. “However, apart from LandBank, issuing banks remain hesitant to participate, as there remains a question on profitability and operations,” the report added. “Issues aside, the development is expected to contribute to financial inclusion and to increase overall card transactions.” According to de Borja, changes are very much happening within the credit-card industry at present, focusing on how to better consumer protection and financial literacy among clients and future clients.

“I think the change is happening now. There will be more emphasis on consumer protection and financial literacy,” he said.

Technology

DE Borja said adding to the wave of change in the industry is technological advancements that are currently happening and will further happen that will also help the industry grow and which will enable banks to provide more programs and rewards to consumers. “The industry also enjoys the benefit of technological advances, which adds to the convenience and improvement in card products and services,” de Borja said. “The industry is very competitive. Hence, we see plenty of promotions and rewards programs, which again will benefit the consumers and cardholders.” He further points out that it may be advisable to own a credit card, since it provides security and convenience to the cardholder. But clients should determine if they are financially responsible to own and maintain one first before getting it. “It is advisable to get a credit card. However, owning a credit card also carries with it the responsibility of managing oneself in terms of finances,” de Borja said. Since the use of credit cards entails monthly or annual dues, cardholders must be ready to manage their own spending and budget to continue to benefit from the use of financial cards. “Credit-card holders should use their credit cards to enjoy the benefits and privileges that go with their credit cards but should also ensure that they spend within their means or budget, and also ensure that they pay at least their minimum amount due on a monthly basis, so they can continue to enjoy using their credit cards,” de Borja added.

Thursday, December 22, 2016

briefs

Japan decides to scrap ‘Monju’ fast-breeder nuclear reactor

TOKYO—Japan formally approved a plan on Wednesday to scrap an experimental fast-breeder nuclear reactor that drained government finances for decades without living up to hopes it would be a savior for the resource-poor country’s energy needs. Government ministers decided to decommission the troubleplagued “Monju” reactor. It has cost Japan about ¥1 trillion ($9 billion) while operating only 250 days since it started up 22 years ago. The so-called dream reactor was designed to burn a plutonium-uranium mix, while potentially producing more plutonium in the process that could be converted into more nuclear fuel. The reactor suffered a leakage of sodium, used as coolant, in 1995, months after it went online, a major accident that caused its initial years-long suspension before more recent safety problems. It was estimated that Monju would have required costly upgrades to meet new safety standards introduced after meltdowns at a nuclear plant in Fukushima that was flooded by a tsunami in 2011, with at least ¥540 billion ($4.6 billion) and eight more years of work estimated to restart Monju, officials said, citing their latest estimates. AP

China says smog blanketing cities may finally soon fade

BEIJING—Chinese weather forecasters and state media say the dense, gray smog that has smothered much of China, closing schools and grounding planes, may finally soon give way. The national weather authority said on Wednesday nighttime winds will push out much of the air pollution that has left Beijing and dozens of other cities under a five-day “red alert”, the highest level in China’s fourtiered warning system. By the calculations of Greenpeace East Asia, the red alert affects 460 million people. Authorities have closed schools, grounded hundreds of flights and announced emergency shutdowns of factories and highways. Still, Beijing’s air-pollution readings on Wednesday remained 15 times above the level considered safe by the World Health Organization. Readings in some cities outside the capital were even higher. AP

Massive fireworks market blast kills at least 29 in Mexico

TULTEPEC, Mexico—A powerful chain-reaction explosion ripped through Mexico’s best-known fireworks market on the northern outskirts of the capital on Tuesday, killing at least 29 people, injuring scores more and sending a huge plume of charcoal-gray smoke billowing into the sky. Video of the blast showed a dramatic staccato of rockets exploding in flashes of light, leveling the open-air San Pablito Market in Tultepec in Mexico State as it bustled with shoppers stocking up on fireworks to celebrate Christmas and New Year’s. Vendors’ stands were reduced to piles of rubble, ash and charred metal. It was the third devastating explosion and fire to ravage the market since 2005 and officials still have not said what caused this latest blast. AP

The World BusinessMirror

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

Libya reopens oil fields; biggest terminal set to load

ibya reopened two of its biggest oil fields and is set to load its first crude cargo in two years from its largest export terminal as the war-torn country pursues plans to almost double output in 2017. Benchmark Brent crude erased some of its rally on the news.

Pipelines connecting the Sharara oil field to Zawiya refinery, and the El-Feel deposit to the Mellitah energy complex reopened at the town of Rayayina, according to a statement by the state-run National Oil Corp. (NOC). The fields’ reopening will help boost the country’s oil production by 175,000 barrels a day within one month and 270,000 barrels a day within three months, it said. Also, a tanker is set to load the first export from Es Sider oil port since it was closed in 2014. “I welcome the statement by the Rayayina Patrols Co. of the Petroleum Facilities Guard, Western Branch, announcing lifting of the blockade on all the pipelines,” NOC Chairman Mustafa Sanalla said in the statement posted on Tuesday on the company’s web site. “There were no payoffs and no backroom deals. For the first time in nearly three years all our oil can flow freely. I hope this marks the end of the use of blockade tactics in our country.” Libya’s comeback will put more pressure on the Organization of the Petroleum Exporting Countries (Opec) and other major producers that agreed over the past two weeks to cut their output to rein in an oversupply and shore up

270K The expected volume of Libya’s barrels of oil production per day within three months

prices. The North African nation, which was exempted from Opec’s planned cuts because of its internal strife, is currently producing 600,000 barrels a day, less than half of the 1.6 million it pumped before a 2011 uprising. Brent crude futures rose as much as 31 cents, or 0.6 percent, to $55.66 a barrel on the Londonbased ICE Futures Europe exchange and traded at $55.52 as of 1:16 p.m. in Tokyo on Wednesday. The contract climbed 43 cents to $55.35 a barrel on Tuesday.

Repsol, Eni

The Opec member with Africa’s largest oil reserves is struggling to recover from years of conflict between rival governments and militias. It’s targeting production of 900,000 barrels a day

Oil reserves in Libya are the largest in Africa and among the 10 largest globally with 46.4 billion barrels as of 2010. The map shows the Libyan oil fields and pipelines as of 2011. Wikimedia Commons

by the end of this year and about 1.1 million barrels in 2017, Sanalla said on November 16. Sharara, operated by a joint venture bet ween NOC and a group of companies, including Spain’s Repsol SA, Total SA, OMV AG and Statoil ASA, has an output capacity of about 330,000 barrels a day and El-Feel, or Elephant, is operated by a joint venture between Italy’s ENI SpA and NOC with a production of about 90,000 barrels a day, the NOC statement said. The pipelines had been blockaded at a key valve at the town of Rayayina since November 2014, in the case of the Sharara line, and since April 2015, in the case of the El-Feel line, the statement said. The fields’ restart can add $4.5 billion to NOC’s revenue

next year at current oil prices, Sanalla said.

Biggest terminal

Tanker Alicante arrived on Monday at the country’s biggest port and will sail for Italy after loading about 600,000 barrels of crude, Adnan Omran, general manager of A l Omran International Maritime Agencies, said by phone. The ship hasn’t started loading yet due to bad weather, he said. Es Sider, on the central coast, had been closed since December 2014, when ar med groups attacked the facilit y and damaged storage tanks and infrastr ucture. It reopened in September, but maintenance was needed before loadings cou ld restar t. Bloomberg News

Fukushima’s $70-B cleanup leaves foreign firms in the cold

leaning up the Fukushima nuclear plant—a task predicted to cost 86 times the amount earmarked for decommissioning Japan’s first commercial reactor—is the mother of all salvage jobs. Still, foreign firms with decades of experience are seeing little of the spoils. Safely dismantling the Japanese power plant, wrecked by the 2011 earthquake and tsunami, will cost about ¥8 trillion ($68 billion), the Ministry of Economy, Trade and Industry said on December 9, quadrupling the previous estimate. While a contract to help clean up the facility would be a windfall for any firm with specialized technology, the lion’s share of the work has gone to local companies that designed and built most of Japan’s atomic infrastructure. The bidding process for Fukushima contracts should be more open to foreigners as Japan has never finished decommissioning a commercial nuclear plant, let alone one that experienced a triple meltdown, according to Lake Barrett, an independent adviser at Japan’s International Research Institute for Nuclear Decommissioning. While the Fukushima cleanup is unlike any nuclear accident in history, foreign firms that have e x per ience decomm ission i ng regular facilities could provide much-needed support, according to Barrett and even the plant’s operator, Tokyo Electric Power Co. Holdings Inc.

‘Cultural resistance’

“Internationally, there is a lot more decontamination and decommissioning knowledge than you have in Japan,” Barrett, a

former official at the US Nuclear Regulatory Commission, said in an interview in Tokyo. “I hope the Japanese contracting system improves to get this job done safely. There is this cultural resistance— it is almost like there is an isolated nuclear village still.” An opaque bidding process plays to the heart of criticisms tabled by independent investigators, who said in a 2012 report that collusion between the government, regulators and the plant’s operator contributed to the scale of the disaster. Of 44 subsidized projects publicly awarded by the trade and economy ministry since 2014, about 80 percent went to the International Research Institute for Nuclear Decommissioning ( Irid). The group was established in the wake of the Fukushima disaster and is comprised entirely of Japanese corporations, according to the ministry’s web site. Japan’s trade and industr y ministry awarded funds directly to only two foreign firms during the same period. Many of the contracts had only one or two bidders. Of about 70 contracts awarded since the March 2011 disaster, nine have gone to foreign companies, according to an official in the ministry’s Agency of Natural Resources and Energy who asked not be named citing internal policy. To provide opportunities for foreign companies, the ministry has created an English web site for bids and also provides English information sessions to explain the contracts, the official said.

Toshiba, Hitachi

Irid’s contracts are given to its

members, including Toshiba Corp., Hitachi Ltd. and Mitsubishi Heavy Industries Ltd., which have partnerships and joint ventures with foreign firms, Spokesman Yoshio Haruyama said by phone. While it doesn’t directly contract work to companies overseas, Irid taps foreign experts as advisers and participates in international collaborative projects, he said. Mitsubishi Heavy has about five or six contracts through Irid, but can’t share how many partnerships it has with foreign firms, Spokesman Shimon Ikeya said by phone. Hitachi has subcontracts with foreign suppliers related to the Fukushima cleanup, but can’t provide details about these agreements because they aren’t public, a spokesman said by e-mail. Toshiba doesn’t directly bid for ministry contracts, and instead works with Irid, company Spokesman Yuu Takase said by e-mail. Irid, which aims to “gather knowledge and ideas from around the world ” for the purpose of nuclear decommissioning and was receiving over ¥20 billion in government grants in March, doesn’t disclose how much of their funds ultimately go to foreign businesses, according to its spokesman. Barrett, its adviser, said he thinks it’s “very low,” but should ideally be 5 percent to 10 percent.

‘Nuclear village’

Japan’s biggest nuclear disaster isn’t void of foreig n technolog y. Toshiba, which ow ns Pennsylvania-based Westinghouse Electr ic Co., and Hitachi, which has a joint venture w ith Genera l Electr ic Co., are tapping A mer ican ex per tise. A

g iant crane and pu l ley system supplied by Toshiba to remove spent f uel from the w recked reactors employs tec hnolog y developed by Westinghouse. “We bring in knowledge from foreign companies, organizations and specialists in order to safely decommission the reactors,” Tatsuhiro Yamagishi, spokesman for Tokyo Electric, said by e-mail. While the company can’t say the exact number of foreign firms involved in the Fukushima cleanup, companies, including Paris-based Areva SA, California-based Kurion Inc. and Massachusetts-based Endeavor Robotics, are engaged in work at the site, according to Yamagishi. However, foreign firms independently securing contracts is still a tall task. “W hen it comes to Japan’s nuclear industr y, the bidding system is completely unclear,” Hiroaki Koide, a former assistant professor at Kyoto University Research Reactor Institute, said in an e-mail. “The system is designed to strengthen the profits of Japan’s nuclear village,” he added, referring to the alliance of pro-nuclear politicians, bureaucrats and power companies that promote reactors. Tok yo Electr ic’s annua l cost to decommission its Fukushima plant may blow out to severa l hu nd re d bi l l ion ye n a ye a r, up from the cur rent estimate of ¥80 bil lion, the trade and industr y ministr y said in October. A s of June, a lmost ¥1 tr il lion has been a l located for decommissioning and treating water at Fukushima, according to Tok yo Electr ic’s Yamag ishi. Bloomberg News

IS group claims Berlin Christmas market attack

ERLIN—The Islamic State (IS) group claimed responsibility on Tuesday for a truck attack on a crowded Berlin Christmas market that German authorities came right out of the extremist group’s playbook, inflicting mass casualties on a soft target fraught with symbolic meaning. The Monday night attack on the popular market by the Kaiser Wilhelm Memorial Church in the heart of former West Berlin left 12 dead and 48 injured—the first mass casualty attack by Islamic extremists carried out on German soil. German security forces were still hunting for the perpetrator after releasing a man from custody for lack of evidence. The claim of responsibility carried on the IS group’s Amaq news agency described the man seen fleeing from the truck as “a soldier of the Islamic State” who “carried out the attack in response to calls for targeting citizens of the Crusader coalition.” Germany is not involved in anti-IS combat operations, but has Tornado jets and a refueling plane stationed in Turkey in support of the coalition fighting militants in Syria, as well as a frigate protecting a French aircraft carrier in the Mediterranean, among other assets. The claim of responsibility came not long after German prosecutors said they had released a man picked up near the scene of the attack, initially suspected of driving the truck. The man, a Pakistani citizen who came to Germany last year, was taken into custody based on a description from witnesses of a suspect who jumped out of the truck and fled after the attack. Even before his release, officials had expressed doubt the man was behind the attack. “We may still have a dangerous criminal out there,” warned Berlin police chief Klaus Kandt, whose office urged people to be “particularly vigilant” and report “suspicious movement” using a special hot line. Though Germany had not seen any successful mass-casualt y Islamic extremist attacks until Monday, attempts and recent attacks in neighboring France and Belgium had made many feel it was inevitable. “We’ve all been prepared that something like this could happen, so we were not surprised,” economics student Maximilian Much said. The 24-year-old Berliner said the attack hit home because he’d often visited the Christmas market with his girlfriend, but that he wouldn’t let himself be led by emotion. “I’m not going to change my lifestyle now,” he said. “The chances that I get killed in a car or bike accident are bigger.” Germany’s top prosecutor, Peter Frank, told reporters the attack on the popular market was reminiscent of July’s deadly truck rampage in Nice and appeared to follow instructions published by IS. “There is also the prominent and symbolic target of a Christmas market, and the modus operandi that mirrors at least past calls by jihadi terror organizations,” Frank said. In Washington State Department Spokesman John Kirby said the attack “bears the hallmarks of previous terror attacks,” but said US officials didn’t have enough information to back up the IS claim of responsibility. “There is no direct evidence of a tie or a link to a terrorist organization,” he said. The man arrested near the scene denied any involvement in the attack. Under German law, prosecutors have until the end of a calendar day following an arrest to seek a formal arrest warrant keeping a suspect in custody. AP

Asean

BusinessMirror

www.businessmirror.com.ph

Where will we find economic growth in the future? Asean-EU Perspective

HENRY J. SCHUMACHER

he outlook for the world economy appears challenging. Many emerging economies face lower growth rates and financial markets remain volatile. The stability of the European market is challenged by the Brexit vote in June. In addition, noneconomic risks are rising. Markets in Asia (in Asean), however, continue to offer good opportunities. Global challenges demand innovation. Global economic growth remains fragile and difficult to predict. Although advanced economies show a further gradual economic recovery, the impact of Brexit and the result of the election in the US on the markets in the medium term remain to be seen. Growth in many emerging economies remains subdued and unstable. According to the International Monetary Fund (IMF), global economic growth rates for 2017 are only expected to pick up slightly to 3.5 percent. Asia is and will remain the most important growth region of the world. In 2016 growth for the region is expected around 5.5 percent, according to the IMF. With this, it will further establish itself as the economic powerhouse of the world. Asean—as part of the region—is becoming especially attractive. One of the factors contributing to this is the rebalancing of China’s economy. With the aim of making growth sustainable in the long run, the central government is shifting the economy away from manufacturing and exports toward services and domestic demand. As a result, growth rates in China have been falling and are expected to normalize at around 6 percent. Economies in Southeast Asia, such as those of Indonesia, the Philippines and Vietnam, are adding to Asia’s positive momentum. They offer important markets with middle-class consumers. A number of risks prevent the Asia region outlook from being more positive. A sharper-than-expected monetary tightening in the US could result in a further slowdown of growth in emerging markets. The high indebtedness of China’s local government units and government-controlled businesses will have to be watched as they pose a risk to economic stability. The longterm stability of China can only be secured through structural reforms. However, the potential for growth is also present. A multitude of global challenges require innovative solutions: uncontrolled urbanization in many emerging economies (including the Philippines), climate change and negative demographic developments in Europe and Japan are among these. These challenges can be best addressed when globalization, digitalization and the increasing use of human capital work together to provide new solutions. Productivity and growth can then reaccelerate. Cities will determine our future. Since 2008, more than half of the global population has settled in urban environments. This trend is set to continue for many years, with the UN forecasting that more than 70 percent of the world population will live in cities by 2050.

Editor: Max V. de Leon • Thursday, December 22, 2016 A9

Thailand holds key rate as Fed hike pressures Asian currencies

hailand held its key interest rate near a record low for a 13th straight meeting, opting for stability as the prospect of higher US borrowing costs weighs on Asian currencies and clouds the outlook for growth.

The Bank of Thailand kept its one-day bond repurchase rate at 1.5 percent, with monetary-policy committee members voting unanimously in favor, the central bank said in Bangkok on Wednesday. All but one of 25 economists surveyed by Bloomberg predicted the decision. Emerging nations are contending with capital outflows after the Federal Reserve (Fed) last week raised rates by a quarter-point and

signaled three more increases may be warranted in 2017. A yearlong mourning period for King Bhumibol Adulyadej and the prospect of a protectionist tilt in the US pose risks to the export-reliant economy, which is growing at the slowest pace among peers in Southeast Asia. “Unless domestic demand in Thailand falters and inf lation eases, we do not foresee a rate cut,” Tim Leelahaphan, a Bangkok-based economist at Maybank Kim Eng

Securities Thailand Pcl., said before the decision. “More likely, rates have upside risk, to stem portfolio capital outflows caused by any Fed monetary tightening.” The baht has been among the biggest losers in Asia this month, dropping 1.4 percent against the dollar.

Thailand’s economy struggled to gain traction this year as moderating consumer spending and a slump in trade curbed investment. Growth weakened to 3.2 percent from a year ago last quarter. Consumer prices rose 0.6 percent in November from a year earlier. Bloomberg News

Indonesia police kill 3 suspected militants, defuse bombs

Swiss man tied to Malay 1MBD scandal freed from Thai prison

IN this August 17, 2015, file photo, Swiss national Xavier Justo (left) is escorted by Thai Corrections officers as he leaves the Bangkok South Criminal Court in Bangkok, Thailand. Justo, who was convicted of blackmail linked to a Malaysian development-fund scandal, has been freed after serving over a year in a Thai prison. Justo was one of around 30,000 inmates released early under a pardon by Thailand’s King Maha Vajiralongkorn Bodindradevarangkun to mark his ascension to the throne on December 1. AP

ANGKOK—A Swiss man convicted of blackmail linked to a Malaysian financial scandal was freed on Tuesday after serving over a year in a Thai prison. Xavier Justo was one of around 30,000 inmates released early under a pardon by Thailand’s King Maha Vajiralongkorn Bodindradevarangkun to mark his ascension to the throne on December 1. Justo’s lawyer said his client will be deported to Switzerland. Justo was convicted in August 2015 of blackmailing his former employer, a Saudi oil-exploration company, by threatening to sell to the media documents related to the company’s dealings with Malaysia’s 1MDB state development fund, unless the company paid him $2.47 million. The 1MDB fund has been the focus of investigations in the US, Switzerland, Singapore and other countries over

allegations of a global embezzlement and money-laundering scheme. The US Justice Department says people close to Malaysian Prime Minister Najib Razak stole at least $3.5 billion from 1MDB, which was meant to promote economic development projects. The department acted in July to seize $1.3 billion it says was diverted from the fund to buy assets in the US. Najib has stymied government investigations into the fund, denies any wrongdoing and rejects calls for his resignation. Thai police had said Justo confessed to handing over documents to Sarawak Report, a London-based news web site opposing the Malaysian government. He was originally set to be jailed for six years, then his sentence was halved for pleading guilty and commuted further for good behavior. Stories in Sarawak Report and The Wall Street Journal first revealed the fund’s problems. AP

Police officers stand guard at a residential neighborhood where the police conducted a raid on a house used by suspected militants, in Tangerang, Indonesia, on December 21. Indonesian police said three suspected militants who were planning a holiday-season suicide bombing were killed in the raid on Wednesday on the outskirts of Jakarta in the second imminent attack to be foiled in less than two weeks. AP

ANGERANG, Indonesia— Indonesian police said three suspected militants who were planning a holiday season suicide bombing were killed in a raid on Wednesday on the outskirts of Jakarta in the second imminent attack to be foiled in less than two weeks. A residential neighborhood has been evacuated after several bombs were found in a house used by the men. Jakarta police chief Mochamad Iriawan said explosive experts had defused two bombs and were still in the house. The men planned to stage their attack on Christmas Day or New Year’s Eve, Iriawan said in a television interview. They were to stab police officers in order to attract a crowd and then detonate bombs, he said. The three men were killed in a gun battle with the police’s anti-terror squad after refusing an

appeal from authorities to surrender and come out of the house in a leafy residential compound in Tangerang, a Jakarta satellite city. National Police Spokesman Rikwanto said the men threw explosives and fired guns at the police. A fourth man, who was arrested in the neighborhood, had led the police to the house used by the militants. “Every year, Christmas and New Year’s events are the target of terrorists to carry out amaliyah,” Rikwanto told a press conference, using an Arabic term that’s a byword for suicide bombing in militant circles. Indonesia, the world’s most populous Muslim nation, has carried out a sustained crackdown on Islamic militants since the Bali bombings that killed 202 people. But a new threat has emerged in the past several years from militants who have switched allegiance to the Islamic State group and from new

recruits. An attack in the capital Jakarta in January by IS sympathizers killed eight people, including the attackers. The police said the holiday season plot was uncovered during the interrogation of militants arrested on December 10 on the outskirts of Jakarta, who were planning a suicide bomb attack on a guard-changing ceremony at the presidential palace the next day. The police have said foiled plot, in which a woman was to be the suicide bomber, was orchestrated by Bahrun Naim, an Indonesian with the IS group in Syria. They also say Naim was behind a bomb lab that was raided last month in West Java and contained enough explosive materials to make bombs three times more powerful than those used in the 2002 Bali bombings. The Australian government’s advice to travelers, updated on

Wednesday, said the terrorist threat level in Indonesia remains high. It notes that authorities have arrested people who were allegedly in the advanced states of attack planning. Awi Setiyono, a police spokesman, said one of the slain militants, who he named as Omen, was a convicted murderer who was radicalized in prison by a militant who had plotted an attack against the Myanmar embassy in Jakarta in 2013. The two other slain men were members of Jema’ah Anshorut Daulah, an extremist group led by radical cleric Aman Abdurrahman. The antiterror squad also arrested a suspected militant in North Sumatra’s Deli Serdang district on Wednesday and another in Payakumbuh, a town in the neighboring province of West Sumatra, TV reported citing local police. It wasn’t clear if those arrests were linked to the holiday season plot. AP

A10 Thursday, December 22, 2016 • Editor: Angel R. Calso

Opinion BusinessMirror

editorial

Loud and clear

resident Duterte has declared in no uncertain terms that he is ready to step down from power if his children or any of his relatives were proven involved in corruption. He made the vow on Monday during a boodle fight he hosted for the Presidential Security Group, the composite team of the police and military personnel tasked to secure the Chief Executive. His words: “I have mentioned this to my family and I will stand by my word. I have said don’t do it. Don’t ever do it. If any of my relatives or my children are engaged in corruption, I will resign immediately.” It might be still too early to pass judgment on him, but all indications show that Duterte could be the country’s savior in our struggle with graft and corruption. Former President Benigno S. Aquino III, who assumed the presidency in 2010 on a good governance platform, vowed to combat corruption as critical to inclusive growth and poverty reduction. Like his predecessors, he failed to stop corruption, which comes in various forms, such as bribery, extortion, fraud, nepotism, pilferage, theft, embezzlement, falsification of public records, kickbacks and influence peddling. Corruption has been a pervasive problem in the government. It’s difficult to quantify the amount of people’s money that’s lost to graft every year. However, the Philippine Chamber of Commerce and Industry estimated in 1988 that one-third of the annual national budget was lost to corruption. In other words, all these years corrupt government officials have been lining their pockets with billions of pesos in taxpayers’ money. Not a few economists and political pundits have said the Philippines is consistently on the list of countries whose potential for development has been eroded by corruption. For example, in the 1960s the Philippines ranked second to Japan in economic might. Unfortunately, corruption in the country stunted the growth of foreign and local investments, earning for the Philippines the reputation of “a country of missed opportunities”. Ironically, the 1987 Philippine Constitution provides the legal framework against corruption. Article XI Section 1 states: “Public office is a public trust. Public officers and employees must, at all times, be accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency; act with patriotism and justice; and lead modest lives”. On top of this, we have good laws to prevent graft and corruption in the government. The Philippine Revised Penal Code, Anti-Graft and Corrupt Practices Act, and Code of Ethical Conduct for Public Officials all aim to combat corruption. The Office of the Ombudsman is there to investigate and prosecute cases of graft and corruption involving public officials, with the Sandiganbayan or anti-graft court adjudicating those cases. Notwithstanding the presence of various laws that provide criminal penalties for graft and corruption, government officials for the longest time are often engaged in corrupt practices with impunity. Now comes Duterte who has demonstrated in all seriousness his desire to stamp out corruption in the government. He has started to purge bad elements in the so-called centers of corruption in various agencies. He has instituted mechanisms for all Filipinos to report corruption in the government. The President needs our cooperation and help for this campaign to succeed. In the spirit of the season, here’s hoping that all government officials and public servants will get the President’s message loud and clear. Since 2005

BusinessMirror A broader look at today’s business ✝ Ambassador Antonio L. Cabangon Chua

Why stock-market investors are clueless John Mangun

OUTSIDE THE BOX

ince November 1, the Philippine Stock Exchange Composite Index (PSEi) has fallen by 2 percent on six days and by 1 percent on six more days. The PSEi is down about 9 percent in the past six weeks.

Investors have one thought on their minds: “Why?” The response to that question has been—in no particular order of inaccuracy—the US Federal Reserve interest-rate increase, China’s economic numbers, President Duterte, the falling peso, foreign selling and the all-encompassing “global woes”. Yet, other regional and global stock markets are facing the same conditions and are booming. The quick answer that they are not facing a depreciating currency and socalled problems with the President is inaccurate also. South Korea’s president has been impeached after seeing her approval rating fall

to 4 percent. The Korean won has depreciated against the US dollar to near its lowest level since 2009. And the Korean stock market is near its historic high. As to foreign selling causing the PSEi to be in steady decline, note that foreigners sold the equivalent of P57 billion in Jakarta and P26 billion in Thailand, respectively, in November. While the capitalization of the markets are not equal, the point is that money has been flowing out from markets like the Philippines. “If it looks like a duck, swims like a duck and quacks like a duck, then it probably is a duck” is one of

The question of heroism

Founder

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

T. Anthony C. Cabangon

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

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

BusinessMirror is published daily by the Philippine Business Daily Mirror

HOM

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

www.businessmirror.com.ph

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

database

Max V. de Leon Jennifer A. Ng Dionisio L. Pelayo Vittorio V. Vitug

Online Editor Social Media Editor

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

Cecilio T. Arillo

Jun B. Vallecera

Conclusion

Conspirators

N his 1981 book Progress and Martial Law, President Ferdinand Marcos enumerated eight assassination attempts against him in 1972 alone, the first seven of them being from February 13 to August, the eighth undated.

He named the conspirators as Sergio Osmeña Jr. (whom he thrashed in the 1969 elections), Sergio Osmeña III, Larry Tractman, explosives expert Sam Cummins, arms dealer Brian Borthwick, gunmen August McCormick Lehman and Robert Pincus, Manila politician Eduardo Figueras, Jesus Cabarrus Jr., Manuel Crisologo and Antonio Arevalo. Their trail led to Geny Lopez and Steve Psinakis. As usual, as in the cases of the PlazaMirandabombingofAugust21, 1971, and the MV Karagatan armslanding by the Communist Party of the Philippines/New People’s Army in July 1972, the revelations made by Marcos regarding those

assassination attempts were greeted with disbelief. Years of tussling with a hostile press had eroded his credibility and the damage has persisted to this day. But these assassination attempts, in fact, did happen, although probably the bungling was not all that comical as Marcos described them. One of those who gave independent confirmation of the conspiracy was the writer James Hamilton-Paterson. In his award-winning 1998 book America’s Boy: The Marcoses and the Philippines, Hamilton-Paterson had gotten in touch with a property agent from whom Eduardo Figueras had rented a flat, which he never got to occupy, but to which he hauled boxes

the most misleading logical arguments ever created. Based on those perceptions, the animal in question could just as easily be a goose, grebe, loon, swan, or brant—not a duck. The same is true for stock markets. The local stock market may look like all the others but it is not for several important reasons that change the way prices move. Two particular factors differentiate the local market from many others. Local companies, especially the large ones, are not inclined to buy their own shares to support the stock price, as happens frequently in the West. The last two buy-backs were done by RFM Corp., which purchased 247,000 shares. This is a negligible amount, considering the number of outstanding shares is 3.5 billion. Smaller firm Xurpas Inc. bought 567,000 shares, again insignificant in comparison to its 1.84 billion outstanding shares. Large firms, like Ayala Corp. or SM Investments, very rarely, if ever, buy shares to support the price. Small companies that may buy back shares have little effect on the broad market index movement. The local stock market is not perceived as a critical indicator of the

night after night, with the instruction that the air conditioner must never be turned off. When the janitor, using a duplicate key, opened the flat to clean it, he saw explosive caps. When the lessor was summoned and opened some boxes, they found electronic detonators, aluminum tubes and other paraphernalia for making bombs. The property agent’s uncle happened to be a pal of then Defense Minister Juan Ponce Enrile. The flat was placed under military surveillance. Lawmen pounced on Manuel Crisologo when he showed up at the flat one night with a lady in tow. He fingered Figueras, who disclosed the plot, and who, in turn, implicated Lopez, Psinakis and future Sen. Sergio “Serge” Osmeña III.

Osmeña III admits role in assassination plot

OsmeÑa III himself admitted his role to assassinate President Marcos. In his four-page letter to the President on July 24, 1973, Osmeña III said: “I come to you now, Mr. President, in all humility and with much trepidation, to beg your forgiveness for my past wrongdoings and for your amnesty. I have erred grievously, Sir, and I am truly sorry. I have no excuses. “May I also beseech you, Mr. President, to grant mercy and compassion

Philippine economy. While in the Aquino administration and as the market was hitting historic highs, the stock market was touted as an indication of economic success, investors know otherwise. Further, unlike in the West, Philippine government institutions and corporations, like the Bangko Sentral ng Pilipinas and the Social Security System (SSS), have not been used to prop up stock prices. Under the administration of Joseph Estrada, the SSS did appear to push prices but not really since. While the SSS may have even extensive local stock holdings, active buying to push prices is not evident on a wide scale if and when it might happen. Finally—although not easily quantifiable—Filipino investors are flexible and smart. As I have said before, with a growing economy in 2016, do you make more investing in a siomai kiosk or buying a declining stock market? Eventually, the trend will turn.

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

to my dear father and to find it in your heart to forgive the injustices he may have done to you.” In his letter, Osmeña said he was asked by his father, Sergio Osmeña Jr., to accompany Figueras to the place of Herman Lacson in Bayawan, Negros Oriental, where they tested the explosives to be used in the assassination plot. Osmeña said Borthwick, who was detained for sometime in Singapore under the latter’s internal security law, tested in their presence some of the explosives on a live cow, whose head was totally severed as a result. Osmeña’s letter was presented to the joint Defense-Justice Panel investigating the assassination attempts against Marcos. Some of the explosives were kept in a flat near the junction of the Manila International Airport road that Marcos mentioned in his book Progress and Martial Law. It was rented in preparation for the first assassination attempt: the planting of pipe bombs along the route of the presidential motorcade from the airport to Malacañang, where Marcos and President Suharto of Indonesia were to pass in a state visit on February 13, 1972. To reach the writer, e-mail cecilio.arillo@ gmail.com

Opinion BusinessMirror

opinion@businessmirror.com.ph

Thursday, December 22, 2016 A11

Dissolution of a corporation Christmas defines humanity Atty. Julie Ann L. Aranda

Msgr. Sabino A. Vengco Jr.

Tax Law for Business

Alálaong Bagá

hen the going gets tough, the tough gets going. Like in business, there are many challenges encountered along the way but the strong will keep moving. This does not mean, though, that those who choose to stop are weak; there are many reasons for closing business operation. In case of a corporation, this may result in dissolution. A corporation maybe dissolved either voluntarily or involuntarily. There are three ways by which a corporation can be dissolved voluntarily. The most common method of voluntary dissolution is by shortening the corporate term through the amendment of the articles of incorporation. Other than that, if no creditors are affected, a corporation may be dissolved by filing an application for issuance of certificate of dissolution with the Securities and Exchange Commission (SEC). If creditors will be affected by the dissolution, a formal petition for dissolution must be filed with the SEC, with due notice and hearing. On the other hand, a corporation may also be involuntarily dissolved by the SEC upon filing of a verified complaint and after proper notice and hearing on grounds provided by existing laws, rules and regulations. Regardless of the mode of dissolution, a corporation shall remain a body corporate for a limited purpose, despite the revocation of its license or termination of its corporate existence. Once dissolved, a corporation’s existence continues only for purposes of liquidation and winding up of its affairs and can no longer conduct the usual business provided in its primary purpose. The Supreme Court defined the term “liquidation” as the process of settling the affairs of a corporation, which consists of adjusting the debts and claims, that is, collecting all that is due the corporation, the settlement and adjustment of claims against it and payment of its just debts. Winding up the affairs of the corporation means the collection of all assets, the payment of all its creditors and the distribution of the remaining assets, if any among the stockholders in accordance with their contracts, or if there be no special contract, on the basis of their respective interests (Yu v. Yukayguan, et al., GR 177549, June 18, 2009). From a tax perspective, there are many considerations that a dissolving or dissolved corporation ought to be aware of. But for this issue, we will limit our discussion to the often forgotten requirement of filing short-period income tax return. The tax law requires that every corporation shall, within 30 days after the adoption by the corporation of a resolution or plan for its dissolution, or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the SEC, or for its reorganization, render correct return to the commissioner. Essentially, this imposes upon a dis-

solving or a dissolved corporation the obligation to submit a return to the BIR within 30 days from the adoption by the corporation of a resolution for its dissolution. Such return is usually referred to as a “final tax return” (since this should be the last income-tax return to be filed precisely because the corporation is dissolving). It is also often referred to as a “short period return” (because the taxable year is shortened as it covers only the period from the beginning of the taxable year up to the date of dissolution). There is no requirement to file the usual annual income-tax return. The 30-day period for the filing of the short-period return has been interpreted to mean 30 days from the approval by the SEC of the dissolution. Thus, a dissolved corporation needs to file the final adjustment return within 30 days from the approval by the SEC of its dissolution. If, for some reason, the filing cannot be done within the period, the dissolved corporation may ask for an extension of time to file the income-tax return. The nonfiling of this short-period return sometimes has negative repercussions. Dissolved corporation is actually allowed to file a refund claim for excess tax payments or withholding tax credits that remain unutilized as of the date of dissolution. A dissolved corporation is granted the opportunity to claim a refund of its excess creditable withholding taxes for previous years upon dissolution. But there were some instances where the refund claim of a dissolved corporation had been denied on the ground that the shortperiod return was not filed. According to the Courts, it is only the filing of the short-period return that the dissolved corporation will be able to ascertain whether a tax is still due, or a refund can be claimed. It is the filing of the short-period return, where it can be ascertained that the excess tax credits remain unutilized as of the date of dissolution, hence, the necessity of filing the short-period return.

The author is a senior associate of Du-Baladad and Associates Law Offices (BDB Law), a memberfirm of World Tax Services (WTS). The article is for general information only and is not intended, nor should be construed as a substitute for tax, legal or financial advice on any specific matter. Applicability of this article to any actual or particular tax or legal issue should be supported, therefore, by a professional study or advice. If you have any comments or questions concerning the article, you may e-mail the author at julie.aranda@ bdblaw.com.ph or call 403-2001 local 312.

oseph and Mary were there for each other and the two of them for the Child to be born (Luke 2:1-14). Christmas is for the whole family, and so for the entire nation, a most important celebration highlighting the defining role of each one toward the communion that is our future.

Love is communion

he continued reinvention of today’s classroom with the immersion of electronic and wireless technology calls for a more diligent teacher who can, as well, adjust to the challenges brought about by advanced technology in the new millennium. Education in this new generation needs responsive and responsible educators. Teachers are suddenly faced with multiple roles: To guide the students to learn and become globally competitive and, at the same time, instill in them proper discipline and behavior as they explore a bigger sphere of learning. What is responsive teaching? This refers to evolving practices of attending and responding to students’ thinking and eliciting engagement by a question and answer system to identify their strengths and weaknesses. With this approach, teachers

can pinpoint a specific student need and build a learning and teaching plan specifically designed to address that need. In a sense, advanced technology is enabling educators to tailor-fit lessons according to a student’s learning need or requirement. This practice is different from the conventional practice of lesson planning, since there is a target level of understanding in responsive teaching, and teachers must adapt plans and objectives within particular lessons. Students also need a responsible mentor who can be a model for a lifelong learning. Teacher-leaders are experts in their subjects and they can advocate changes because they understand what is required for excellence for their students. Students, according to research, were greatly impacted by the influence of their loving and caring teachers. Science has found that students who have caring

To be there for the little one

The Son of the Most High became a little one for us, and Christmas is our commitment to be there in turn for

‘Quo vadis?’ Val A. Villanueva

Businesswise

any economists are one in saying that the Philippines will have a slightly stronger growth in 2017 due to the improving economies of the United States and the European Union (EU), and President Duterte’s avowed plan to crank up infrastructure outlay and public expenditures. But spreadsheets too often do not see what’s really happening on the ground. They do not take into account the growing displeasure among the populace on how Duterte treats Malacañang as if it were his personal fiefdom and the public, his subjects. Although fourth-quarter polls showed that he still enjoys excellent satisfaction rating of 77 percent, Duterte’s rating is, however, down from July’s 91 percent. Also, while many people applaud his relentless war on drugs, more than half of them fear being caught in the crossfire. The Philippine National Police (PNP) reported that the overall index crime rate went down to 31 percent, but the murder rate soared to over 50 percent

Responsive and responsible teaching By Venus de Guzman

ity from Him. Our unworthiness did not keep God away from us; His love is overwhelming and has moved Him, as love alone can be said to move God, to do what is humanly impossible and what is conceivable only in terms of divine inspiration: to be with us and for us by being one like us, subject to the limitations and imperfections of the human condition. Coming from the eternal communion of love that is the Most Holy Trinity, the incarnation of Jesus Christ imbedded in our recreated humanity the program of love in communion as the fulfillment of life. Christmas is our recurring affirmation that it is truly so.

relationships with teachers are academically more successful and show greater “pro-social” behavior. A caring teacher can transform the school experience, especially for students who face enormous difficulties, such as dropping out or dysfunctional home lives. One student who faced these kinds of hardships told a researcher that the greatest thing a teacher can do is to care and to understand. Here’s food for thought for our fellow educators: Reflecting on how you were cared for as a child will give you insight into the kind of care you might be extending to your students, and allow you to adjust your care to fit their needs. As teachers, we often don’t realize how kindness or the smallest caring gesture we show to our students can have a huge impact on their lives. The author is Principal 1 at David M. Puzon Memorial National High School in Pamplona, Cagayan.

during Duterte’s first five months. These figures show that slowly Duterte’s once almost-invincible popularity is experiencing a steady slide, and such could affect the country’s overall economic performance. The economy is largely dependent on the remittances of overseas Filipino workers and robust consumer spending. The mushrooming of malls nationwide makes sure the Filipinos’ spending habits stay as vibrant as ever. The growing fear among the public of being collateral damage in Duterte’s war on drugs, however, could negate whatever gains this administration may have accomplished. The World Bank predicts that the Philippine economy will stay robust until 2017, mainly because of its large

The story of Christmas is the love of God for humankind to the extent of His Son being born human to be with us as one of us. It is the paradox of Christmas that actually the Child in the manger, wrapped in swaddling clothes against the winter cold, was there for us; that it is for our sake He came, to be our “Jesus” and savior from sin. one another, especially the little ones and the least, to love as we have been loved. The familiar belen picture of Joseph and Mary hovering lovingly over the Child Jesus has etched into our Christian consciousness that parents and, in fact, all believers should be there to protect the little ones and those in need. For Jesus, both Mary and Joseph responded to God’s invitation that they be there as “parents” of God’s only begotten Son for the fulfillment of the divine plan of salvation for all. They were chosen so that Jesus can carry out His mission for all humanity. Their fidelity as Jesus’ mother and legal father in the face of trials and difficulties allowed the first Christmas to happen. The birth of any human being is a proclamation of the gospel of life, of life so precious to God He sent His only Son to save it from everlasting ruin. Born in our world of unending

working-age population and stable fundamentals. A World Bank report, called “The Global Economic Prospects” (GEP), paints a rosy economic forecast of 6.3 percent for 2017. The GEP says that, despite a weaker first-quarter performance, the Philippines benefited from inexpensive fuel prices and the solid recovery by major economic partners US and Japan. Other economists see a temperance of the country’s economic growth with support coming from strong domestic demand, an augmented fiscal impulse and stronger exports. What should be worrisome is US President-elect Donald J. Trump’s plan to kindle the US economy, together with the Federal government’s approach to tighten its monetary policy. This could increase investment costs, which pose the highest drawback risks to growth. In 2017 analysts see the growth of our GDP slowing to 6.3 percent. The recent peso devaluation was caused by several influences. It echoes the consolidation of the US dollar on the prospect of an imminent Fed rate hike. On the domestic front, the current-account surplus in the Philippines has been contracting, as remittance growth slowed somehow in the second half of this year compared to the strong growth rates

poverty and violence, human life, for many so disposable, is, nonetheless, intended to be consummated in the eternal community of the Trinity. In an environment dominated by the culture of death, Christians must make a stand and countenance opposition and do one’s part in “parenting” life in accord with the Creator’s command, upholding that we are a “family”—the original and irreplaceable experience and school of communion, as the story of Christmas reminds us. Alálaong bagá, Christmas is larger than our individual version or reinvention of it. Every time around it must be an evangelizing experience going deeper into its core and rediscovering what it proclaims. Its message of divine love for us in spite of our sins defines our Christian vision of humankind destined for eternal communion. The season’s icon of the infant Jesus, Mary and Joseph, together in communion at a manger, united in love and each one for the others, gives us hope that there is, indeed, a way out of our human mess of endless poverty and violence—in being a “family” of persons united in love and in the service of life. A blessed and Merry Christmas to all! Join me in meditating on the Word of God every Sunday, 5 to 6 a.m. on dwIZ 882, or by audio-streaming on www.dwiz882.com.

observed in past years. Still, much will depend on how long Duterte can sustain his populist approach to governance. I believe that there is a threshold as to how far he can get away with practically snubbing the rule of law to meet his personal expectations. It may take a while, but the people will see through his flawed intentions. If there is any institution more sensitive to what the future holds for the Philippines, it is the stock market which, more often than not, serves as a mirror into the future. So far, sell-out of Philippine stocks by foreign investors continues to rise due to concern over policy uncertainty surrounding Duterte’s administration. If this were any indication, 2017 will prove to be the year of economic anxiety for us all. nnn

Your BusinessWise will take a break during the holidays. Many thanks to those who have followed this corner since May of this year, especially those who have taken the time to send me their insights on various economic issues. Here’s wishing all of you the joys of Christmas and the blessings of the New Year! BusinessWise will resume on January 5, 2017. For comments and suggestions, e-mail me at mvala.v@gmail.com

Poland’s populists run into trouble

little over a year ago, Poland’s Law and Justice Party (PiS) swept to power, promising to challenge the political elite, restore national control of the country’s affairs, and realign government with traditional conservative values. Since then concerns have grown, at home and in Europe’s capitals, that Poland has taken a wrong turn. The government’s most recent moves do nothing to dispel that fear. Though less popular than it was, PiS is still widely supported and firmly in charge, thanks mainly to the country’s steady economic growth. But its heavyhanded methods are arousing protests, including formal declarations from the European Union. Soon they may exact an economic price, as well. Poland’s government needs to reconsider. PiS has devoted too much energy on consolidating power and not enough on bolstering Poland’s economic prospects. It has tightened its grip on the media— firing managers and more than 100 journalists at the country’s public broadcasters, and undercutting the regulator’s

authority. It put a friend of the party in charge of the intelligence services, brought the prosecutor’s office under political control, and replaced scores of executives at state-owned companies. When it moved to undercut the country’s constitutional court, the European Commission launched a probe that might lead to sanctions. (Tensions are only bound to increase as the court’s chief justice completed his nine-year term on Monday, leaving a key seat for PiS-supported President Andrzej Duda to fill.) Last week opposition lawmakers blocked voting on the 2017 budget to protest plans to curb media access to parliament. In response, the governing party moved the vote out of the main chamber and prevented the media from recording it. Protesters blocked the parliament’s exits and demanded a new vote, leading to clashes with the police. Backtracking a little, the government suspended plans to curb media access. That is unlikely to appease PiS’s increasingly outspoken critics. Up to now, financial markets have yawned at these developments. Inves-

tors have grown accustomed to Poland’s steady growth. They know, in addition, that Poland relies on aid from the EU, and expect Europe to keep the government in line. This may be too complacent. The zloty has taken a beating this year, and S&P Global Ratings downgraded Poland’s debt last January. Investment is declining. Meanwhile, long-term problems—including low productivity and a too-rigid labor market—badly need tackling. The government has given families cash handouts, introduced a new minimum wage and made other popular promises, but it hasn’t advanced the structural reforms Poland needs if it’s to catch up to Western Europe. Modern infrastructure and a restructuring of the country’s deeply inefficient and pollutive coal industry are high on that list. PiS will surely weather this first wave of protest: Its opponents aren’t strong, as yet. But the party should take neither its popularity nor the economy’s continuing growth for granted. Its present course puts both in jeopardy. Bloomberg View

2nd Front Page BusinessMirror

A12

Thursday, December 22, 2016

DTI thumbs down tax on sweetened drinks

By Jovee Marie N. dela Cruz

@joveemarie

he Department of Trade and Industry (DTI) is opposing a measure that seeks to impose a P10 excise tax per liter on sugar-sweetened beverages (SSBs), saying this would cut jobs and burden the poor.

In a position paper submitted to the House Committee on Ways and Means, the DTI said the P10 excise tax is “anti-poor.” The DTI noted that most SSBs are soft drinks, juice, and 3-in-1 coffee, which are cheap and are considered the main sources of energy of low-income Filipino households. “The beverage industry, along with allied industries, will be negatively affected [by the tax]. This will also lead to lower demand and employment in the industry,” the paper, prepared by the DTI’s

₧10/liter The proposed excise tax on sugary drinks

planning bureau, read. “While the department has no mandate on taxation, it generally supports measures to improve tax collection and balanced taxation measures, provided that these will not impede the growth of the

country’s industries,” it added. The DTI also said obesity is not caused by sugar or by other sweetened beverages alone, saying the problem is really more about “improper nutrition.” “We wish to suggest to the government to explore other strategies, including public-awareness campaigns and the promotion of healthy lifestyle, that could help curb obesity and also improve taxation,” it added. The DTI said the proposed P10 excise tax and a 4-percent annual increase will affect the competitiveness of local beverage makers and other allied industries. “At present, local sugar prices are already high as compared with other Asean countries. In 2015 our wholesale price of refined sugar is calculated at $1.05 per kilogram, compared with the wholesale price in Thailand at $0.59 per kg and Indonesia at only $0.91 per kg,” the paper read. “This puts pressure on the pricing of locally manufactured beverages to compete with imports that are cheaper and shipment of these

beverages come in at mostly zero tariffs,” it added. The decline in the sales of SSBs, the DTI said, would also affect sugarcane farmers, millers and small business owners. The agency noted that House Bill (HB) 292 not only covers artificial sweeteners, which are normally imported, but also locally produced sugar. “The resulting loss in sales would affect a lot of stakeholders, both in the upstream and downstream value chain of the SSBs from the sugarcane farmers, to the sugar millers and traders to the truckers, and logistics and storage providers, wholesale marketers and retailers,” it added. The DTI said HB 292 can also affect the coffee industry. “SSBs include instant coffee and this may affect the coffee industry comprising of 120,000 hectares of coffee plantation around the country, supporting 60,000 to 80,000 farmers.” The agency noted the top coffee regions—Soccsksargen, Davao and the Autonomous Region in Muslim Mindanao—account for 64 percent See “DTI,” A2

www.businessmirror.com.ph

ACTOR MONTANO FORMALLY TAKES OVER AS TPB C.O.O. By Ma. Stella F. Arnaldo

@akosistellaBM Special to the BusinessMirror

‘G

IVE me a chance‘.’ This was the appeal made by actor Cesar Montano to his fellow board directors of the Tourism Promotions Board (TPB), when he sought their confirmation to elect him as the government corporation’s chief operating officer (COO). The board meeting took place at 11 a.m. on Tuesday at the Department of Tourism (DOT) multipurpose hall, at the building’s penthouse, and lasted around 4 p.m. But before the elections took place, BusinessMirror sources said an executive meeting among the board members first took place, sending other TPB staff out of the meeting room. “[From the private sector], issues and concerns were raised,” said one source, foremost of which was Montano’s apparent lack of qualifications to lead the govern-

ment firm tasked to implement tourism marketing programs for local and foreign tourists. Montano’s predecessor, Domingo Ramon Enerio III, was a 30-year veteran at tourism marketing. Private-sector tourism stakeholders had been the most vocal against the 54-yearold actor’s appointment as COO. (See, “Montano’s Tourism Promotions Board appointment questioned,” in the BusinessMirror, December 8, 2016.) “Cesar came out to be sincere and passionate in his desire to promote the Philippines in his new appointment as the COO of TPB,” said the same source. “As he said ‘give me the chance. I will do my best and I will not disappoint you.’” After the executive session, the board meeting commenced, presided by DOT Undersecretary for Tourism Regulation Coordination and Resource Generation Alma Rita Jimenez. Separate sources said during the board meeting, Guiller Asido, COO of the Tourism See “Montano,” A2