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DOLE places Peza firms under labor, safety watch 379 E By Samuel P. Medenilla
2016 ejap journalism awards
TRAIN from a consumer advocate’s point of view
@sam_medenilla
conomic-zone locators throughout the country will be subjected to thorough inspection by the Department of Labor and Employment (DOLE) to check their compliance with labor and safety standards, including possible use of illegal contractualization schemes.
Dr. Jesus Lim Arranza
Make Sense
The total number of Peza-registered economic zones in the country today
Labor Undersecretary Joel B. Maglunsod told the BusinessMirror he already drafted an order for DOLE’s regional offices to prioritize the inspection of Continued on A2
P
ardon me if I discuss a topic outside of the squatters’ issue, as mentioned in my previous column. But I find the issue on the Tax Reform for Acceleration and Inclusion (TRAIN) law and its impact on Filipinos more important to discuss in my column for this issue of the BusinessMirror for its timeliness and effect on the lives of Filipinos. Continued on A11
Elusive inclusiveness: Will federalism finally bring progress to rural PHL? By Cai U. Ordinario
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CHIPS AHOY Employees in white uniforms work inside a company assembling microchips. According to the National Economic and
@cuo_bm
uring the day, cranes atop unfinished skyscrapers cast long shadows over the concrete jungle that is Bonifacio Global City (BGC). By nightfall, they help illuminate the starless night sky of Metro Manila. These same skyscrapers also serve as a reminder of the glaring reality that progress has yet to reach rural Philippines. The 24/7 work that is currently ongoing in places like BGC is proof that the Philippines has achieved unquestionable economic success in the past few years. The past eight quarters has seen economic growth shoot up to above 6 percent. In 2017, even without election spending, the economy
grew an average of 6.7 percent. This is no small feat considering the Philippine economy has always been dependent on elections to boost GDP. The country’s average poverty incidence has also declined significantly. In 2015 the country’s poverty rate declined to 21.6 percent, from 25.2 percent in 2015; 26.3 percent in 2009; and 26.6 percent in 2006. While this is impressive, economists believe the Philippines continues to experience challenges in terms of achieving inclusive economic growth. Former Socioeconomic Planning Secretary Cielito F. Habito said the reason for this could easily be due to the fact that economic growth in the Philippines remains unequal, especially among regions.
“One aspect of inclusiveness moves in the wrong direction and that is the geographic inclusiveness of economic growth. I now say that we are even more Manila- and Luzon-centric,” Habito said.
Imperial Manila
In its Inclusive Growth and Development Report 2018, World Economic Forum (WEF) said the Philippines ranked 30th among 74 developing economies. The country lagged behind its counterparts in the Association of Southeast Asian Nations. The country had a score of 3.83 for 2018 and an average of 2.4 in the past five years out of a perfect score of 7. The country’s ranking this year was an improvement from 2017’s 40th out of 79 economies. See “Federalism,” A2
Govt’s investment-promotion campaign Central Bank chief: The peso is just fine now focused on ‘nontraditional partners’
Development Authority, it expects the manufacturing sector to recover this year, following three consecutive months of decline in output since September 2017. NONIE REYES
By Bianca Cuaresma
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@BcuaresmaBM
espi te wea ken ing by more than a peso in only a month’s time, Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. said the local currency is far from a meltdown, as it is supported by the country’s healthy economic fundamentals. “The peso is just fine. [It is] demonstrating flexibility reflecting day-to-day market conditions. There will be volatility, runs and corrections, and the public should plan accordingly and factor
in exchange risk in their decisions,” Espenilla said. Data from the PDS Group showed the local currency slumped further to the 51-to-a-dollar territory on Thursday, hitting 51.58 against the greenback. This is a significant weakening from the 51.295 to a dollar from the previous day’s trade. Traded volume during the day hit $878.15 million, down from the previous day’s $943.05 million. The peso at the start of the month was also significantly lower than its level at the start of 2018, which was at 49.81 to a dollar. This means that the local currency weakened
PESO exchange rates n US 51.3410
by P1.77 over a month’s time. But the BSP governor stepped in to calm the markets, saying the peso is likely to stabilize on its own, as the local economy remains strong amid the movement in the foreignexchange market. “The peso is not expected to melt down because the underlying economic fundamentals of the economy are healthy. The BOP [Balance of Payment] deficit is very manageable and is but a reflection of an economy that’s growing rapidly in a way that is sustainable,” Espenilla said. See “Peso,” A12
By Elijah Felice E. Rosales
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@alyasjah
he government is directing its investment-promotion campaign to the country’s “nontraditional partners” this year, as part of efforts to broaden President Duterte’s self-styled independent foreign policy. Trade Undersecretar y Nora K. Terrado said the Department of Trade and Industry is keen on establishing stronger ties with the country’s nontraditional partners, mostly those that were left hanging in the past administrations. Aside from the government’s
TERRADO: “Traditional markets will be there, but the goal is to diversify our investments portfolio this year.”
push to renew bilateral relations with China, she added the DTI is aiming to invite more investors from Russia and India. As a matter of fact, Terrado said the President’s official visit to India last week is significant to Manila’s renewal of ties with New Delhi. “The
other matter that the President is keen on is his independent foreign policy, and also diversification of investing markets,” she said at the BusinessMirror’s Coffee Club forum on Wednesday. “As you will know from our behavior, we go to markets that are, in previous years, not being visited. For one, we have gone to China. We have gone to Russia. Lately, we have also gone to India. We were not there for many years, for almost a decade. Now, we were back there in India,” Terrado said. In compliance with Duterte’s policy to veer the country from
n japan 0.4703 n UK 72.8991 n HK 6.5632 n CHINA 8.1669 n singapore 39.1527 n australia 41.3654 n EU 63.7501 n SAUDI arabia 13.6917
See “Govt,” A12
Source: BSP (1 February 2018 )
A2 Friday, February 2, 2018
BMReports BusinessMirror
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DOLE places Peza firms under labor, safety watch Continued from A1
companies in areas under the jurisdiction of the Philippine Economic Zone Authority (Peza). The inspection order is a result of the scrapping of two agreements between the DOLE and Peza. In a statement issued earlier, the DOLE announced the revocation of its accords with Peza signed in March 2006 and June 2016 “ceding
Federalism. . . Continued from A1
WEF explained that the Inclusive Development Index (IDI) is an annual assessment that measures how 103 countries perform on 11 dimensions of economic progress in addition to GDP. It has three pillars: growth and development; inclusion; and intergenerational equity—sustainable stewardship of natural and financial resources. In terms of indicators, the Philippines ranked in the bottom 20 percent of the index in netincome gross national income (GNI) and wealth Gini or inequality and bottom 40 percent in healthy life expectancy, poverty incidence, median income and dependency ratio. Net-income GNI measures the extent to which the net distribution of income (that is, post-tax, post-transfers), among individuals or households within an economy deviates from a perfectly equal distribution, while wealth Gini measures differences in income distribution. Healthy life expectancy, meanwhile, is the average number of years that a person can expect to live in “full health” by taking into account years lived in less than full health due to disease and/ or injury, while poverty rate is the percentage of the population living on less than $3.20 a day at
to the latter [Peza] the authority to inspect establishments in export zones.” “We are mainly responsible to ensure the occupational safety and health standards in various establishments and companies through our visitorial and enforcement powers vested in us by the Labor Code. We should not be passing on this responsibility to Peza or other agencies,” Labor
Secretary Silvestre H. Bello III said. The Peza, according to its web site, is currently managing 74 manufacturing economic zones; 261 information-technology parks; 22 agro-industrial economic zones; 20 tourism economic zones; and two medical tourism parks. Aside from ensuring the compliance of Peza locators with labor and safety standards, Maglunsod
said they will also assess if they are complying with government regulations on contractualization. “Business establishments [with violations] will be required to submit a list of their work force and their action plan for their regularization,” Maglunsod said. “I already finished the issuance. It is just awaiting the signature of the [labor[ secretary,” he added.
Bello said he made the decision to scrap the DOLE’s agreements with the Peza after the fire incidents in the House Technologies Industries Inc. (HTI) compound at the Cavite Economic Zone in February 2017 and the NCCC Mall, which includes the Survey Sampling International (SSI) office, in Davao City in December 2017. The SSI office, which is in the
fourth floor of the NCCC mall, is a special economic zone under Peza’s control. Five people died in the HTI incident, while 38 perished at the NCCC Mall fire. The DOLE later found out HTI violated occupational safety and health standards, while the Peza admitted it allowed NCCC Mall to continue its operation, despite its noncompliance with the Fire Code.
2011 international prices. The WEF also explained that the median income is the median of daily per capita income/consumption expenditure in 2011 purchasing power parity dollar, while the dependency ratio is the ratio of dependents, people younger than 15 or older than 64 years of age, to the working-age population, those aged 15 to 64 years old. This data of the WEF is not far from the Philippine Statistics Authority data obtained from the 2015 Family Income and Expenditure Survey. Data showed that for every peso earned by a poor Filipino, the rich raked in nearly P10. Data showed the average per capita income of the poorest 10 percent of Filipinos is P61,000 a year. The richest 10 percent, meanwhile, earn P556,000 on average. This is crucial given that in terms of magnitude, there are more poor Filipinos in the Visayas and Mindanao than in Luzon. Data showed 2.49 million poor Filipinos live in the Visayas and Mindanao and only 1.26 million live in Luzon. Not surprisingly, the top 10 poorest provinces, in terms of families, are all in the Visayas and in Mindanao—Lanao del Sur with 66.3 percent; Sulu, 49.6 percent; Siquijor, 48.9 percent; Maguindanao, 48.8 percent; and Northern Samar, 47.9 percent. The list also includes Saranggani with a poverty incidence of 47.3 percent; Bukidnon, 47 percent;
Zamboanga del Norte, 41.1 percent; Western Samar, 39.5 percent; Sultan Kudarat, 39.2 percent; and Negros Oriental, 38.7 percent. Habito said this is mainly because GDP growth has not been felt equally in the Philippines. Luzon’s share in the country’s GDP is at 73 percent in 2016. This share was at 66 percent in 2006 and 73 percent in 1996. In Metro Manila, Calabarzon and Central Luzon, the share is 63 percent, while in Metro Manila alone, the share is 37 percent in 2016. In 2006 the share of the industrialized areas in Luzon was at 56 percent, while Metro Manila’s share was 33 percent. In 1996 Habito said the share in GDP of Metro Manila, Calabarzon and Central Luzon was 53 percent. Metro Manila alone accounted for 30 percent. “In short, Luzon and Metro Manila and the surrounding areas are again, in fact, getting a disproportionate share of our GDP or are contributing a disproportionate share, as well. [This] tells us that this tag of ‘Imperial Manila’ being used by our compatriots in Mindanao really holds water,” Habito said.
(LGC) in 1991, which aimed to correct the impasse on the development front experienced by areas outside of Metro Manila. Apart from granting autonomy to local government units (LGUs) in terms of local affairs, the LGC also advocated the devolution of services, such as health and agricultural extension, as well as the creation of the Internal Revenue Allotment (IRA). The IRA is a subsidy provided by the national government to LGUs, especially those who have dire fiscal and development constraints. The allotment is computed based on land area and population, among others. However, the introduction of these “novel ideas” did not help the cause of LGUs nationwide. Studies have showed that devolution suffered from the lack of funds of LGUs and many L GUs b e c a me de p e nde nt on the IR A because of the lack of own-source revenues. The failure of the LGC has given rise to efforts pushing for the autonomy of regions, most notably the creation of the Bangsamoro Autonomous Region and the shift to a federal form of government. The latter was part of the campaign promises of President Duterte and efforts are already underway to achieve this. As for federalism, Habito said this may not be a solution to achieving inclusive growth. “I’ve always been a believer in
decentralization and devolution. Except I always believed also that just fixing the local government code is enough,” Habito said. The former National Economic and Development Authority chief ex plained that shifting to federalism may be “too financially taxing,” especially to smaller regions that may not have the capability to generate their own resources. Habito said it is important that the design of a federal form of government be carefully studied and perused otherwise there could be no telling how this shift can affect Philippine economy. Ateneo Center for Economic Research and Development Director Alvin P. Ang said not only will the capability of LGUs to generate resources be put into question but also the governance capacity of being able to carry out devolution accordingly. In the study titled, “Designing the Fiscal Features of a Federal Form of Government: Autonomy and Equity,” Philippine Institute for Development Studies Senior Research Fellow Rosario G. Manasan said the fiscal gap in regions could reach as much as P1.09 trillion under federalism. Manasan said this represents 84 percent of the total expenditure needs of subnational governments, or 57 percent of total revenues from taxes collected by the national government in 2017, or 7.5 percent of GDP.
With the increase in regional government functions, subnational governments will be hard-pressed to increase their revenues. According to Manasan’s calculations, subnational governments can only finance P213.59 billion of the total requirement of P1.3 trillion. Manasan earlier told BusinessMirror that the computation is based on her proposed shared and exclusive functions of the federal and subnational government. The estimates specifically cover the shared functions that subnational governments need to finance under a federalist regime. While most the exclusive functions of the subnational government are already being financed currently through the Local Government Code provisions concerning devolved services and the IRA, she said the shared functions under a federalist government may prove to be “costly.” Shared powers in the context of subnational governments, Manasan said, include mostly the delivery of services, such as infrastructure, education and agriculture, to name a few, which have since been financed nationally. Manasan explained that in terms of education, this includes the construction of classrooms, salary of teachers, purchase of supplies, such as textbooks, and repair and maintenance of facilities and equipment, which are currently being financed through the Department of Educatio.
Spreading growth
As far back as the 1990s, the Philippine government has been cognizant of the elusiveness of inclusive economic growth. This was among the reasons behind the legislation of the Local Government Code
Silver lining
Inclusive economic growth has been elusive but not impossible. This is the Philippines’s hope when it adopted the 17 Sustainable Development Goals (SDGs) in 2015. T he SD G s of fe r a s i l v e r lining that countries like the Philippines are committed to maximizing the gains of economic growth by achieving the “triple bottomline”—economic, social and environmental. The SDGs is a set of 17 socioeconomic goals that 193 membercountries of the United Nations, including the Philippines, had committed to meet by 2030. The goals are composed of around 169 targets and over 300 global indicators. The SDGs, or Global Goals, aim to end poverty and hunger, promote universal health, education for all and lifelong learning, achieve gender equalit y, sustainable water management, ensure sustainable energy for all, decent work for all, resilient infrastructure and reduce income inequality between and among countries. The goals also include creating sustainable cities, ensuring sustainable consumption and production, taking action against climate change, conserving and sustainably using oceans and marine resources, reduce biodiversity loss, achieving peaceful and inclusive societies and revitalizing global partnership for development. However, the means by which the Philippines can achieve these goals will depend on the policies implemented by the national government. Whether federalism is the answer or not remains unclear at this point. Nonetheless, there is hope that economic growth will reach all Filipinos, wherever they are in this 7,100-island archipelago.
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Belgica files additional evidence vs Aquino, others over DAP mess By Joel R. San Juan @jrsanjuan1573
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he coalition of anti-pork barrel groups, led by former Manila Councilor Greco Belgica, on Thursday submitted documentary evidence before the Department of Justice (DOJ) on the alleged misuse of the Disbursement Acceleration Program (DAP) during the previous administration. Belgica, who was recently appointed commissioner of Presidential AntiCorruption Commission, expressed optimism that the evidence would help the National Bureau of Investigation (NBI) in its case buildup for possible filing of criminal cases against former President Benigno S. Aquino III and other officials. It can be recalled that in November last year, Justice Secretary Vitaliano N. Aguirre II directed the NBI to conduct an investigation to determine whether there is sufficient evidence to warrant the filing of malversation charges against Aquino, former Budget Secretary Florencio B. Abad and former Budget Undersecretary Mario Relampagos in connection with the anomaly. The probe was ordered by Aguirre based on the complaint filed by the Coalition for Investigation and Prosecution represented by Belgica. Aguirre directed NBI Director Dante Gierran to create a special task force that will investigate the complaint. Belgica said the new pieces of evi-
dence they gathered would show a conspiracy between the Aquino administration and some lawmakers on DAP misuse. Among the documents submitted by the group to the DOJ were a memorandum on DAP signed by Abad and official transcripts of Senate Committee on Finance hearing, both on October 12, 2011. “These documents would prove the ‘magic’ of DAP—that in one day [October 12, 2011] DAP was presented to the Senate, signed by PNoy [Aquino] and printed out in the official gazette and DBM [Department of Budget and Management] web site,” Belgica told reporters. “This is a clear conspiracy of Aquino, Abad, [former Interior Secretary Manuel A.] Roxas II, [former Transportation Secretary Joseph Emilio] A. Abaya, [Sens. Franklin M.] Drilon, [Antonio F.] Trillanes IV and [Francis N.] Pangilinan,” he alleged. Belgica expressed belief that the DOJ can now expedite its investigation as there are already enough evidence to warrant the filing of criminal cases against those involved in the anomaly. Prior to this, Belgica submitted last September documents on DAP and formally asked the DOJ to conduct a fact-finding investigation. He said the evidence showed a discrepancy of P2.6 billion from the DAP spending, asking the DOJ to pursue cases of malversation of public funds with aggravating circumstances against Aquino, Abad and Relampagos.
Editor: Vittorio V. Vitug • Friday, February 2, 2018 A3
Expert: PHL election system not prepared for data breach By Roderick L. Abad
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Contributor
@rodrik_28
ACKING the elections had been reported worldwide, but the Philippines seemed not prepared to fight online attackers, according to a cybersecurity expert. Speaking at the just-concluded PilipinasCon 2018 at the Enderun Colleges on McKinley Hill in Taguig City, Marc Goodman said that the susceptibility of the country’s electoral system to online threats was established in April 2016, when Filipino hackers committed data theft involving the government. A month before the presidential poll during the same year, a group named Anonymous took over the web site of the Commission on Elections. With this incident, over 55 million voter’s data, 200,000 e-mails, 2.3 million passport details and 15.7 million fingerprints were leaked and made available in the dark Web. “That was the largest government data breach in the world so far, and it was carried out by a
23-year-old Filipino,” he said. Goodman said the vulnerabilities of the election system is high, especially in this age of automation when it is easier to cheat merely with a click of a button. Voting machines, according to him, are “hackable.” This was proven during the recent staging of the DEF CON—the world’s longest running and largest underground hacking conference. “In that DEF CON, they were able to break into 25 different votecounting machines remotely and directly, which means that every single counting device is hackable,” Goodman added. The expert said that for as long as there are those who want to stay in power, there will also always be hacking of the elections because they
want to use all means available to hold on to their positions. But the bigger challenge, he added, is that governments, including the Philippines, are still not wellequipped to deal with the ever-advanced criminals lurking on the Web. “I think governments around the world will struggle on this more and more because people in power use everything available to them to fight their enemies and protect themselves from being removed from power,” he said. Cybercrime has grown exponentially in the last several years. Based on Juniper research data, it is going to cost businesses all over the world some $2 trillion by 2019. “The threat in cybercrime is growing exponentially but our defenses are not and that’s what we need to fix,” Goodman added. A longside the ex ponentia l growth of technology, Goodman warned that hacking is going to become more sophisticated. “Cybercrime has been growing exponentially, but our governments, policy -makers are on plateau,” he said. This is what the Filipino nation should consider addressing so as to cushion its impact it had to happen sometime in the future. Pressed on the signs of election fraud or hacking, Goodman
said if something is bizarre in the system, there is probably something going on. For this reason, he added, vigilance plays a pivotal role in making elections honest and credible. Goodman then called on the Filipinos to take a more active part in making the election system more transparent and hold government officials in charge of the elections accountable for violations in the system. “Democracy is always a good idea and we should protect it by holding our leaders accountable. Citizen activism is key, and I encourage you to come together and be vigorous in your pursuit to fight irregularities that threaten your democracy,” Goodman said. For the protection of both the public and private sectors, he suggested the need to invest in trustworthy machines and implement a cybersecurity plan to back up the system. “We have to think like hackers in order to protect ourselves, and [conduct] a cybersecurity fire drill so we will know what to do when we are under threat,” he said. Goodman is the author of the best-selling book Future Crimes. He is also the founder of Future Crimes Institute and chairman of Policy, Law and Ethics at Silicon Valley’s Singularity University.
Economy
A4 Friday, February 2, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon
Agham head asks SC to stop RE law, FiT implementation
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he Agham partly-list led by its president Angelo B. Palmones recently filed a petition in the Supreme Court (SC) against the implementation of the renewable-energy (RE) law and its features, including the renewable portfolio standards (RPS) and the feed-in-tariff (FiT) scheme. In the petition, the group raised concern not only for themselves as petitioners, but also to the entire nation, most especially electricity consumers, who the consumer group claims will be bound to take on the burden of ensuring the profitability of RE investors, and pay incentives amounting to roughly P821 billion over a period of 20 years to private entities engaged in the development of RE resources. Palmones said, “The sad part is that electricity consumers will bear the burden of these nonfiscal incentives so much, so that it amounts to an unlawful taking of private property under the guise of promoting renewable-energy resources. In other words, RE developers under the current setup are assured of minimum to zero risk in their investments due to the incentives given to them at the expense of electricity consumers.” In its petition, Agham warned that the implementation of the RE law will involve billions of pesos worth of payments by electricity consumers for the incentives of RE developers who will qualify under the FiT system as a result of the unilateral and
indiscriminate increase in the installation targets for solar and wind energy, as well as the implementation of the RPS. Under the RE law, the National Renewable Energy Board shall set the RPS, or the minimum percentage of generation from eligible RE sources, and determine to which sector it shall be imposed on a per grid basis. Palmones argued against this scheme. “The adverse impact of the increased installation targets is clearly evident since the solar FiT rate 2 of P8.69 per kilowatthour is way above existing rates offered by non-FiT eligible solar plants, the lowest we have seen so far is at P2.9999 per kWh.” In closing, Agham stated in its petition that, “while the RE law had all the noble intentions, [its] implementation reveals it has been utilized and misused to ensure that private entities investing in the development and utilization of renewableenergy resources are prioritized to ensure the profitability of their business venture at the expense of electricity consumers who have been saddled with the burden of paying the incentives enjoyed by these private entities.” With its petition, Agham said it hopes for the SC to issue a temporary restraining order on the RE law and its features, as they believe they are patently unconstitutional and violative of the rights of all consumers of electricity.
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LRT 1 riders jumped 16% in last three years–study
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By Roderick L. Abad Contributor
@rodrik_28
IVEN the perennial traffic problem faced by Filipino commuters on a daily basis, the riding public has remained confident of the pioneering Metro system in the country as a reliable mode of transportation, a study released on Thursday by PHAR Philippines Inc. and TNS of Kantar Media showed. In a sideline interview during the research results’ announcement in Makati City, TNS Business Director Jose Mari Villabroza told the BusinessMirror that from a satisfaction rate of 40 when they first conducted the survey in 2015, Light Rail Transit Line 1 (LRT 1) got a score of 52 in 2017. While the rating for the second installment of the study is not “exemplary” yet, he emphasized, though, that it’s still “a good number” considering the it’s an improvement from a low score three years ago. “This is actually telling us that people are happy with LRT 1. The main reason they’re happy is be-
cause they feel it’s cleaner now, it’s safer and its more convenient. And I think that resulted to more patronage, especially in 2017,” he said. Due to improved commuting experience of the riding public on the back of developments happening at LRT 1, the Light Rail Manila Corp. (LRMC) has seen a 16-percent increase in the number of daily riders between the two periods in review. Likewise, passengers belonging to socioeconomic classes A, B and C1 also grew by 37.5 percent between 2015 and 2017. “Before, we had an average number of passengers reaching 400,000 per day. And now, it’s
500,000 plus. So there’s a big increase,” LRMC COO Rodolfo Chansuyco said. The top executive attributed this to their improved fleet, wherein the number of light rail vehicles now operating from the time they took over the management of LRT 1 three years ago had increased from 77 to 109. Alongside the enhanced capacity is the reduction in the length of time of commute. Per the results, the average passengers spend about 62 minutes per day in LRT 1 trains and stations. Chansuyco revealed that peak hours in the morning and in the evening span for four hours, with the foot traffic becoming heavier on Monday, Wednesday and Friday. Among the 20 stations, he cited that Monumento, Gil Puyat, Edsa and United Nations are the routes where the bulk of the passengers come from. What make the commuters to continue to ride on LRT 1 to their destinations is the spic and span condition and improved operation of the system. In the study, there was an improved cleanliness factor by 177 percent, with Abad Santos and Gil Puyat garnering the highest scores. The respondents have also agreed that the entry to LRT 1 has also become more efficient. In fact, it was rated with 260 percent improvement in terms of queues
Fuel-efficient Duterte trimaran boat in the works, DOST says
Group seeks Asean ban on ‘obsolete’ iron, steelmaking furnace from China By Elijah Felice E. Rosales
By Jun N. Aguirre | Correspondent
@alyasjah
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HE Asean Iron and Steel Council (AISC) is urging the region’s governments to ban the entry of Chinese induction furnaces commonly used for the production of substandard steel products. In a news statement, AISC told their respective governments to implement a crackdown on furnace facilities imported from China. These induction furnaces, the council said, are responsible for low-quality steel products that are not only unsafe to use for construction, but also destructive to the environment. Beijing rolled out a measure that eliminated the use of these steelmaking machines last year. However, the program permitted the use of these furnace facilities for the purpose of foundry industry that uses it as melting equipment to produce various types of casting products; in the production of ferroalloys with specific properties; and in stainless steel and high alloy steel production process. In spite of the crackdown on these induction furnaces, the AISC said China has yet to issue a law restricting the export of this apparatus. “Just as in the case of finished steel products, [the] Asean has also become a preferred destination for the export of the obsolete and unwanted equipment from China,” the council said. According to the AISC, there has been a rise of reported importation of this furnace facility to Indonesia, Malaysia, the Philippines and Thailand. “Our main concern arising from the above development is that [the] Asean is becoming a dumping ground for these obsolete and outdated machinery and equipment, which, because of their inherent technology limitations and constraints, could adversely impact the orderly development of the iron and steel industry in the region,” the council argued. As a resolve, the AISC is asking Asean leaders to look into the option of pro-
for tickets, wherein the Vito Cruz station was singled out as the most improved in terms of convenience in train-ticket purchasing. “We’re focused on improving the customer service,” LRMC President and CEO Juan F. Alfonso said of the company’s effort to further improve the riding experience in LRT 1. As part of their strategic plan, he bared that they will enhance further the speed of their trains this year. “The new thing that we’re going to implement is what we call the 60 kph. The trains currently are running at 40 kilometers per hour. So we’ll run the trains faster,” Alfonso said. The increase in speed, according to him, will be adding about 10 percent or 15 percent more trips per day using the same trains. “So people will be spending less time at the station,” the president and CEO said. “We feel that if the system is more efficient, then people will use it more. So it’s going to drive [our growth].” Titled “Unlocking LRT 1 Riders: Research and Data on Consumers,” the sophomore edition of the research was done in 2016. About 5,500 LRT 1 passengers were interviewed between 2015 and 2017. In the latest research, about 65 percent of the riders are aged 18 to 29 years old. The gender ratio is 50 percent male and 50 percent female.
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Wall climbers A group of construction workers use iron scaffoldings to apply paint on the wall of a newly completed building in Makati City. ALYSA SALEN hibiting the entry of these steelmaking machines into their respective countries. The council is also calling for the strict implementation of China’s restriction on the use of these induction furnaces. The AISC said the substandard steel products born out of these furnace facilities are unsafe for construction use. “Unlike steelmaking through the electric-arc furnace [EAF] process, which is the predominant technology favored by established steelmakers in [the] Asean, induction furnace lacks refining capability to remove harmful elements in liquid steel,” the council said. Aside from this, these induction furnaces are also reported to consume as
high as 800 per kilowatt-hour (kWh) for every ton of steel it produces. This is far expensive as compared to the EAF counterpart that averages about 450 kWh for every ton of steel it manufactures. The AISC also noted the environmental consequences of having this apparatus for the production of steel products. “Induction furnace facilities lack proper environmental control and are not equipped with waste gastreatment system,” the council said. “As a consequence, the process releases harmful gases and generate high degree of pollutants to the environment. EAF, on the other hand, adopts advanced technology with strong environmental
control. It usually comes with excellent fume extraction and good waste-management system,” the AISC added. The AISC claimed there are still about 600 of these furnace facilities in China as of last June. The combined capacity of these induction furnaces was at 120 million tons of steel, but its total output in 2016 was around 30 to 50 million tons. Beijing has been trying to resolve the issue since 2002, but was not able to completely address it due to its rampancy in different parts of China. Chinese authorities refer to the steel products from these induction furnaces as di tiao gang, or ground steel.
ew Washington, Aklan—The Department of Science and Technology (DOST) has given the go signal to start the assembly and construction of the first trimaran vessel in the country to be fueled by a mix of gas and sea water. Science Secretary Fortunato T. de la Peña, who came to visit the project site this week, said that he considers the project a part of the three topmost priority to be undertaken by the department this year. The two others include the space program and artificial intelligence. The DOST has pledged some P76 million to fund the trimaran project, which will be implemented with the collaboration of other agencies, such as the Aklan State University (ASU), Maritime Industry Authority, Philippine Council for Industry, Energy and Emerging Technology Research and Development, Metallica Consultancy and the Aklan Congressional Office. “This project is responding to the call of the Duterte administration, which is economic empowerment to the different regions. I am committing the entire force of the different DOST agencies if needed,” de la Peña said in an interview. It was learned that while de la Peña was discussing the details of the project implementation, the DOST Central Office in Manila had already deposited an initial P43 million to the bank account of the ASU as manifestation that the project will start. Engr. Jonathan Salvador of the Metallica Consultancy, who conceptualized the project, said that he would finish the project as early as a year and a half. He dubbed the project as the dual stroke cylinder pumps with 30 units working, or simply Duterte. “The first phase would be the construction of the vessel, while the second phase is the creation of the needed technology for the vessel to be able to operate using ocean energy,” he said. The vessel is being envisioned to be a combined passenger and cargo vessel similar to that, but smaller than a Roro (roll- on, roll-off) ship. Gas combustion would still power the trimaran during port maneuvering, but the so-called ocean wave energy would propel the vessel when it sails in open water. “In my estimate, the vessel could conserve at least 20 percent of the overall regular consumption of gas. I see this project as a feasible because the Philippines is an archipelagic country,” Salvador said, assuring the boat project is both environment friendly and cost-efficient. “I am also planning to use Euro 4 or Euro 5 technology for the project,” he added. Salvador worked as chief engineer for several shipping companies in Europe, and has been into local shipbuilding. Salvador, likewise, bared future plans to build smaller boats for fishermen.
Agriculture/Commodities BusinessMirror
www.businessmirror.com.ph
Editor: Jennifer A. Ng • Friday, February 2, 2018
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Abaca output seen hitting 75,000 MT
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File photo
SLAC may not hit income target for FY 2017-2018 S
L Agritech Corp. (SLAC) said its net income for fiscal year (FY) 2017-2018 may not reach P700 million, as sales of its hybrid rice seeds fell short of the company’s target. “Definitely, we will be surpassing last year’s net income, but whether we can reach P700 million, we are not sure yet,” SLAC Chairman and CEO Henry Lim Bon Liong told reporters in a recent interview. “We rely on the Department of Agriculture [DA] for support but because of budget constraints, [hitting P700 million] is unlikely to happen,” Lim added.
He said the company and the DA had initially targeted to plant SLAC hybrid rice seeds in 1 million hectares, but only around 600,000 hectares had been planted with the high-yielding rice variety. Lim attributed this to cuts in the budget of the DA, which had earlier targeted to plant hybrid rice seeds in at least 1 million hectares to boost paddy production. The company slashed prices last year to encourage more farmers to plant SLAC hybrid rice seeds. Because of this, Lim said SLAC’s net income in the current fiscal year ending May 31 would be less than
its target of P700 million. “From P500 million [in the previous fiscal year] to P700 million is a big jump, but definitely SLAC is still a profitable venture. We might earn more than P500 million for the current fiscal year,” Lim said. SLAC’s net income in FY 20162017 grew by nearly 11 percent year-on-year to P509.225 million. Lim also disclosed that the company will be issuing P2 billion worth of short-term commercial paper within the first quarter to fund the company’s expansion this year. “This will allow us to expand aggressively.” Jasper Emmanuel Y. Arcalas
Two American chicken producers fall as another lawsuit alleges price fixing
Bloomberg
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wo large United States food distributors added to a string of lawsuits that accuse chicken companies of illegally conspiring to raise poultry prices. Sysco Corp. and US Foods Holding Corp. made the complaints on Tuesday in separate lawsuits filed in the northern district of Illinois. Both claim that numerous companies, including Tyson Foods Inc., Sanderson Farms Inc., Pilgrim’s Pride Corp. and closely held Perdue Farms Inc., made illegal agreements and reduced chicken supply to boost prices. Shares of the poultry producers fell in New York. The chicken industry has faced similar lawsuits since mid-2016. On Tuesday Tyson shares fell as much as 5.1 percent, the largest intraday loss since May. Sanderson and Pilgrim’s Pride dropped the most since mid-December. “The addition of US Foods and Sysco, which represent one quarter of food distribution, add fuel to the prosecution,
which could elongate the process,” Jeremy Scott, an analyst at Mizuho Securities, said in a note. “We expect the industry to fight the allegations and come out successful.” Follow-on complaints are common in antitrust litigation, and Tyson maintains its position that the claims are unfounded, Spokesman Gary Mickelson said in an e-mail. “We will continue to vigorously defend our company,” he said. Sanderson Farms plans to defend itself vigorously, CFO Mike Cockrell said in a telephone interview. Pilgrim’s Pride Spokesman Cameron Bruett said in an e-mail that the company believes the case is “completely without merit,” and “we look forward to defending our interests through the appropriate l egal process.” Perdue, Houston-based Sysco and Rosemont, Illinois-based US Foods said separately that they don’t comment on pending litigation. Bloomberg News
By Jasper Emmanuel Y. Arcalas @jearcalas
he Philippine Fiber Industry Development Authority (PhilFida) said the country’s total abaca production this year could grow by as much as 2.73 percent to 75,000 metric tons (MT), from last year’s estimated output of 73,000 MT. “[Production] this year could reach 73,000 MT to 75,000 MT. The activity of Mayon Volcano would not affect abaca production,” PhilFida Executive Director Kennedy T. Costales told the BusinessMirror. Costales also revealed that the agency is spending P15 million this year to expand the country’s abaca plantations by at least 1,428 hectares to increase production. He expects output to register increases by 2020 as abaca matures within 18 months to 24 months from planting. “ We h av e id e nt i f ie d ne w expansion areas, areas in which there have been no abaca plantations, such as Iloilo, Mindoro and in Biliran,” he said. “So, by 2020
you will notice the improvement in production.” Costales said the agency is still gathering and validating abaca production figures for 2017. He said 2017 output likely reached 73,000 MT, slightly higher than the previous year’s 72,819 MT. Latest available data from the attached agency of the Department of Agriculture (DA) showed that the countr y’s abaca output from January to November registered flat growth and settled at 67,057.65 MT. Data obtained by the BusinessMirror showed that Bicol remained as the country’s top abaca-producing region during the 11-month period, accounting for 36.56 percent of the total output.
₧15M
The amount the government will spend this year to expand the country’s abaca plantations
However, the region’s abaca output during the January-toNovember period declined by 6.8 percent to 24,517.57 MT, from the 26,316.72 MT recorded in the same period in 2016. Costales also said the eruption of Mayon Volcano in Albay would not affect the abaca output of the Bicol region this year. “The activity of Mayon will not affect our total production this year. It will not have any effect at all. I expect the Bicol region’s output to remain the same. However, harvesting may be delayed due to the eruption,” he said. On an annual basis, abaca production in Albay province during the Januar y-to-November period expanded by 9.5 percent to 2,526.21 MT. As of January 30, the DA said farmers planting fiber crops, particularly abaca, in Albay have registered production losses amounting to P478,000 due to the eruption of Mayon Volcano. The DA added that the estimated volume loss was pegged at 6 MT planted in 99 hectares.
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Friday, February 2, 2018
briefs Train carrying G.O.P. lawmakers slams trash truck; 1 killed CROZET, Virginia—A train carrying dozens of Republican members of Congress to a strategy retreat in the countryside slammed into a garbage truck in rural Virginia on Wednesday, killing one person in the vehicle and sending several lawmaker-doctors rushing to help the injured. No serious injuries were reported aboard the chartered Amtrak train, which set out from the nation’s capital with lawmakers, family members and staff for the luxury Greenbrier resort in White Sulphur Springs, West Virginia. At least two other people in the truck were reported seriously hurt. Authorities gave no details on the cause of the wreck, which took place at a crossing protected by gates, flashing lights, bells and warning signs. AP
U.N. reviews 206 firms over their links to Israeli settlements GENEVA—The United Nations (UN) human rights office said on Wednesday that 206 companies— mostly Israeli and American— are facing a review of their business practices involving Israeli settlements, which are considered illegal under international law. In a long-awaited report, the office said more resources were needed to handle the complex and unprecedented task of compiling what some critics call an unfair “blacklist” and a sign of anti-Israel bias at the UN. Proponents insist that companies must be held accountable for their activities in the settlements, arguing that those actions can contribute to injustices against Palestinians. The governments of both Israel and the United States criticized the UN effort. AP
Syria’s Kurds push U.S. to stop Turkish assault on key enclave BEIRUT—Syria’s Kurdish militia is growing frustrated with its patron, the United States, and is pressing it to do more to stop Turkey’s assault on a key stronghold in Syria. The issue reflects a deeper concern among the Kurds over their alliance with the Americans, which proved vital to defeating the Islamic State group in Syria. The Kurds fear that ultimately they and their dream of self-rule will be the losers in the big powers’ play over influence in Syria. Already, the US is in a tough spot, juggling between the interests of the Kurds, its only ally in war-torn Syria, and its relations with Turkey, a key North Atlantic Treaty Organization ally. AP
FBI in public fight with Trump over releasing Russia memo WASHINGTON—In a remarkably public clash of wills with the White House, the Federal Bureau of Investigation (FBI) declared on Wednesday it has “grave concerns” about the accuracy of a classified memo on the Russia election investigation that President Donald J. Trump wants released. The FBI’s short and sharp statement, its first on the issue, laid bare a Trump administration conflict that had previously played out mostly behind closed doors in meetings between top Justice Department and White House officials. “As expressed during our initial review, we have grave concerns about material omissions of fact that fundamentally impact the memo’s accuracy,” the FBI said. Further complicating the memo’s release, the top Democrat on the House intelligence committee said late on Wednesday that his committee’s vote to release the memo was now invalid because it was “secretly altered” by Republicans who wrote it. California Rep. Adam Schiff said in a letter to House Intelligence Committee Chairman Devin Nunes that committee Democrats had discovered changes that were made after the panel voted on Monday to send it to Trump for review. AP
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Editor: Lyn Ressureccion | www.businessmirror.com.ph
Trump’s speech leaves 2 sides further apart on immigration
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ASHINGTON—For years, immigration advocates have defined hundreds of thousands of young people brought to the country illegally as children by the sympathetic term “Dreamers.” Long irritated by the rhetorical branding, President Donald J. Trump finally came up with his own rejoinder: “Americans are Dreamers, too.” The point was to shift the terms of the polarizing immigration debate and reinforce the argument that those born in the United States or living here legally deserve sympathy, as well. But if Trump believed the line in his State of the Union address would help bring the sides together for the bipartisan agreement he says he seeks, he received little encouragement on Wednesday. The two sides appeared farther apart than ever. A lthough Trump characterized his immigration proposal as a “down-the-middle compromise,” his speech further alienated him from the bipartisan group of lawmakers trying to negotiate a deal. Rather than act as a catalyst for cooperation, it seemed to only deepen the divide. And it underlined the political ramifications of the nativist language the president used in the 2016 campaign and during his first year in office. The president faces a year in which a bitterly divided Congress and a swirling Russia scandal could rob him of any high-profile legislative successes. He is sure to play up the benefits of the landmark tax cuts he helped push through last year, as he did at the White House on Wednesday in an appearance with families who will benefit from the plan. But his proposal for a $1.5-trillion building program to fix the nation’s roads, bridges, airports and other structures generated little enthusiasm, and he offered few other major concrete ideas for legislation. It was the starkly divergent reactions to his discussion of immigration, however, that stood out most on Wednesday. Democrats saw his speech as a dark and hard-edge portrayal of immigrants as gang members and killers, and they seemed more, rather than less, resistant to a deal
with Trump that would upset their liberal base. While some conservatives were unhappy that Trump had, in their view, gone too far, Republican officials focused their ire on the Democrats for what they considered their intransigence. “The Democrats are going to be even less disposed to do anything the president sug gests even if it’s in their interest,” said Mark Krikorian, the executive director of the Center for Immigration Studies, which advocates more limits on immigration. And “it hardens attitudes among Republicans that the Democrats are simply unreasonable and you can’t talk to them.” Jason Grumet, the president of the Bipartisan Policy Center, an organization in Washington that favors an agreement, said Trump clearly wanted to reach an immigration deal but was not receiving good advice about how to achieve that. “Last night’s speech didn’t preclude a deal, but it sure squandered an opportunity to advance one,” he said. In the address, Trump offered what he called an “open hand” on the issue of immigration and challenged Congress to “finally get the job done” on a long-delayed overhaul of the system. But in describing the outlines of a plan he said “fulfills my ironclad pledge to sign a bill that puts America first,” Trump turned to the disturbing imagery of teenage girls murdered by immigrant members of the MS-13 gang. With their parents in the audience, Trump described the night that “these two precious girls were brutally murdered while walking together in their hometown.” Asking the parents to stand, the president said: “Tonight, everyone in this chamber is praying for you. Everyone in America is grieving for you.”
Cabinet members and Republican lawmakers applaud during President Donald J. Trump’s State of the Union address at the US Capitol in Washington on January 30. Tom Brenner/The New York Times
Last night’s speech didn’t preclude a deal, but it sure squandered an opportunity to advance one.”—Grumet Democrats, in particular, reacted angrily, saying the president was linking immigration to gang violence and murder. Rep. Nancy Pelosi of California, the Democratic leader, called the remarks “dangerous” and counterproductive to resolving the debate over the fate of the Dreamers. “The president presents himself as generous toward Dreamers, but he’s holding them hostage to the most extreme anti-immigrant agenda in generations,” Pelosi said. “We heard more insulting words of ignorance and prejudice—prejudice toward patriotic immigrant families last night.” They also heard Trump try to appropriate the term Dreamer with his applause line about Americans. Publicly and privately, the president has recoiled at using the nickname, instead referring to them as “the Daca people” or the “folks from Daca,” after the acronym for President Barack Obama’s program, Deferred Action for Childhood Arrivals, that gives them work permits and protection from deportation. During a White House dinner with the top Democrats in Congress in the fall, Trump urged
them not to use the word Dreamers in public. He has ex perimented w ith phrases to turn the argument around for months. “We must also have heart and compassion for unemployed, struggling and forgotten A mericans,” Trump said in September when he ordered an end to the Daca program. “Above all else, we must remember that young Americans have dreams, too.” The term Dreamers was tied to legislation that has never passed Congress called the Development, Relief, and Education for Alien Minors Act, or the DREAM Act. Krikorian said that for too long, liberals had been able to set the terms of the debate. “The very notion, Dreamers, was a marketing coup quite frankly,” he said. “The president’s attempt at taking back the term Dreamers is likely to resonate.” Stephen Mi l ler, t he president’s top immigration adviser, and other aides dev ised a fourpart plan to carefully nav igate the difficult political terrain that has prevented numerous earl ier attempts to overhau l immigration dur ing the past two decades.
Part 1 was a concession to immigrant activists that would give 1.8 million young immigrants a path to citizenship, effectively restoring and expanding Obama’s Daca program by enshrining it into law. Part 2 would create a $25-billion trust fund for a border wall. Part 3 would end decades of rules allowing legal immigrants to bring their families to the country. And Part 4 would shut down a lottery program aimed at encouraging immigration from underrepresented countries. The White House described the plan last week as “extremely generous” and predicted it would gain wide support from both sides of the aisle. That was probably overly optimistic. Senators from both parties met before Trump’s speech on Tuesday to continue negotiations—but without much regard to his four-point plan. One Democratic aide said the group was largely ignoring the president’s proposals and was making good progress toward a measure that could receive at least the 60 votes needed to break a filibuster. Staff members for the group are scheduled to continue discussions over the weekend. W hite House officials dismissed the criticism, pointing to instant polls that showed that large numbers of people agreed with the president’s immigration comments and noting the speech drew positive reaction from Republicans, conservatives and law enforcement officials. New York Times News Service
6,900 Syrians win permission to stay in the U.S., for now
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early 7,000 Syrians who were granted temporar y permission to live and work in the United States as a civil war devoured their country will be allowed to stay for at least another 18 months, the Trump administration announced on Wednesday, in an acknowledgment that Syria continues to be rattled by conflict. The decision came as a major relief to Syrians and their advocates. During the past year, the administration has ended Temporary Protected Status (TPS), as the humanitarian program is known, for Salvadorans, Haitians and Nicaraguans, decisions that will collectively expose more than 326,000 people to deportation when they formally lose their status. The homeland security secretar y, Kirstjen M. Nielsen, said that the situation i n Sy r i a j u s t i f i e d a l l ow i n g Sy r i a n s
to remain in the US. “After carefully considering conditions on the ground, I have determined that it is necessary to extend the Temporary Protected Status designation for Syria,” Nielsen said in a statement. “It is clear that the conditions upon which Syria’s designation was based continue to exist, therefore an extension is warranted under the statute.” But the extension arrived with a caveat: Those who came to live in the United States after August 1, 2016, will not be eligible to join the program, a distinction that the Syrian community and its advocates said left some Syrians vulnerable. Though he was relieved to hear of the final decision, “it’s been very stressful the last few months, especially seeing other countries, that they were terminated from their TPS status, so we were preparing for the worst,” said Nawwar Kabbani, 33, a software architect from Aleppo who was
able to start working when he received the temporary permission five years ago. “I’ve been looking at the news every five minutes for the past two days.” Kabbani, who first came to the US as a Fulbright scholar in 2008 and now lives in Jacksonville, Florida, where he works for a major financial services company, said he had been preparing to leave his elderly parents behind to move to Canada or another country. Returning to Syria was never an option, he said: He had been vocal in his criticism of the Syrian government, and feared being persecuted if he was sent back. The 6,900 Syrians covered by the protected status, many of whom came to the country as students or visitors and remained after their visas expired, make up only a sliver of the roughly 90,000 Syrians living in the United States, most of whom arrived as refugees or by other legal means.
There was no official estimate available on Wednesday of the number of Syrians who lack full legal status but arrived after the August 1, 2016, cutoff. More than 18,000 have been admitted as refugees since Oc tober 2011. But the Trump administration has significantly thinned the flow of refugees, and officials said this week t h at t h o s e f ro m Sy r i a a n d s e ve r a l other countries will be let in only after undergoing new vetting on top of the screening they already receive. The temporary status is granted to certain groups of people in the wake of natural disasters, wars, outbreaks of disease and other catastrophes that would make it difficult for them to return safely to their home countries. Government officials periodically review the program to decide whether to extend it, and most groups have received
regular extensions in the past. The administration ended protected status for people from Haiti and El S alvador on the grounds that both countries had recovered sufficiently from the earthquakes that were the reason for their original inclusion in the program. The protections can be extended for six, 12 or 18 months at a time. The Obama administration extended them for Syrians three times, and each time it allowed new applicants to join. Homeland security officials did not say on Wednesday evening why they had decided to offer an extension to Syrians who already had the status, but not to offer it to those who did not. Syria was originally included in the program in 2012 because of the armed conflic t among government forces, anti-government insurgents and the Islamic State. New York Times News Service
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The World BusinessMirror
UK, China leaders see no problem with Brexit
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NITED Kingdom Prime Minister Theresa May and her Chinese counterpart Li Keqiang set thorny political issues aside and offered a bullish vision of the two countries’ blossoming trade relationship after Brexit. T he t wo leaders put t heir countries on the path toward negotiating a future free-trade agreement, setting up a highlevel panel to review and expand commercial ties. A British official said China promised to open up its market for UK financial services, a move likely to start with new deals announced in the coming days, potentially focusing on the insurance sector. “The UK and China are global partners for the long term,” May said at a joint news conference in Beijing on Wednesday, outlining plans for a joint trade and investment review of bilateral ties. “China is a country that we want to do a trade deal with.” Li said May’s visit would further improve the “golden era” in UK-China relations and “bring new fruits.” May’s business mission to China is meant to demonstrate her government’s intent to forge a global trade policy after leaving the European Union next year. W hile the UK can’t sign any deals outside the EU before leaving the bloc—and wouldn’t be able to implement them before at least 2021—she’s hoping to strike now. UK companies will also sign deals worth £9 billion ($12.7 billion) during her visit, she said, without giving details. May’s delegation—which includes 50 business leaders, Trade Secretary Liam Fox, a clutch of officials and her husband—are optimistic about progress toward formal trade talks. The group includes Pascal Soriot, chief executive officer of AstraZeneca; Mark E. Tucker, chairman, HSBC Holdings Plc.; Ralf Speth, CEO, Jaguar Land Rover; Bill Winters, group chief executive, Standard Chartered Bank; and Nikhil Rathi, CEO, London Stock Exchange Group. China is also keen to build greater ties with a key United States ally and long time pillar of Europe. May’s predecessor, David Cameron, hosted Chinese President Xi Jinping on a state visit in October 2015. A commentary published on
Wednesday by the state-run Xinhua News Agency said the “‘liberating effect’ of Brexit” could help ties between the two sides reach a “new high.” China and t he UK plan to step up cooperation in energ y, nuc lear technolog y, highspeed ra i lways, aerospace and ar tif icia l intel ligence, it sa id. The two sides are discussing the feasibility of a bond-trading link that would mark a fresh step in opening up the world’s largest emerging debt market, Bloomberg reported last month, citing people familiar with the matter. May had said she would raise the sensitive topics of China’s human rights record and Hong Kong democracy in talks. She has also shown reluctance to formally endorse Xi’s global “Belt and Road” trade-and-infrastructure initiative, potentially putting at risk her pursuit of more robust ties. Li confirmed that the two had discussed human rights, while May said she also raised the issue of overcapacity in the steel market, an issue that has led to job losses in the UK and Europe since exports from China surged. Asked about China’s Belt and Road initiative, May struck a diplomatic tone, saying the plan had the “potential to further prosperity and sustainable development across Asia and the wider world.” “We will work together to encourage free and fair trade, ensure a transparent, rules-based multilateral trading system and build an open global economy that works for all,” she said. May declined formally to endorse the Belt and Road Initiative by signing a memorandum of understanding, as Br itain s t i l l ne e d s a s s u r a nc e s o v e r transparency in supply chains and tendering for contracts so there is a fair split bet ween Chinese companies and others w inning business. Li said China wanted to import more British food, especially beef and dairy products. May’s team welcomed the offer, which they estimate could boost the UK economy by £500 million over five years. Standard Chartered said in December that it plans to facilitate at least $20 billion of financing for the Belt and Road initiative by 2020. Bloomberg News
Friday, February 2, 2018
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China’s $11-T bond market is luring foreign investors
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hina’s efforts to open up its domestic bond market, the world’s third largest, are starting to pay off, by pulling in foreign investors drawn to relatively high yields in a newly stable currency.
It’s a crucial step to balancing pressures on capital f lows in and out of China, and if sustained would make it less risky for policy-makers to relax controls on domestic companies and households taking money out of the country. It also helps China narrow the gap between its economy’s status as world No. 2 and its currency’s marginal role in the global financial system. China pulled 346 billion yuan ($55 billion) of foreign funds into bonds in 2017, central bank data show. About one-third of the flows since the start of July came via the Bond Connect launched that month with Hong Kong, Bank of China (Hong Kong) Ltd. says. While the total inflow is a fraction of the $337 billion of foreign net purchases of United States Treasuries for 2017 through November, it marks a 41-percent surge from 2016. The acceleration will pick up this year, to 700 billion yuan, Deutsche Bank AG predicts. Foreigners still hold less than 2 percent of China’s domestic debt, according to data compiled by Bloomberg. By comparison, foreigners hold 11 percent of Japan’s debt. “We are definitely going to add allocation to Chinese onshore bonds this year—China has become an attractive opp or t u n it y,” s a id Dav id Ta n , chief investment officer of Asia Pacific fixed income at A llianz Global Investors Singapore Ltd. “The deleveraging has increased yields and nobody talks about yuan depreciation any more.” Sustained inflows are potentially a game changer for China’s bond market. One hope is foreign investors will apply greater scrutiny to credit quality and demand more transparency on financial
records, helping establish wider differentiation between stronger and weaker borrowers. They could also improve liquidity in onshore bonds, the bulk of which are held by banks and rarely traded compared with other major markets. Linan Liu, a greater China rates and currency strategist at Deutsche Bank in Hong Kong, sees all of those dynamics “boosting the long-term prospects of renminbi internationalization.”
She says that, “China is accelerating its financial integration with the global market.” Not ever yone is conv inced China’s market reforms have been enough to put it in the same set as other major bond markets for global fund managers. Critics point to the lack of an independent judiciary and the Communist Party’s dominance of all aspects of policy-making, including the central bank, as a potential bar for some investors. Even so, the chance to buy three-year gover nment notes at around 3.63 percent yield in China, versus 2.31 percent on comparable Treasuries and a negative 0.30 percent in Germany, is enough to tempt many. “Interest in China’s onshore bonds is picking up from Europe, Southeast Asia, Middle East and even Africa,” said Ken Hu, chief investment officer of Asia Pacific fixed income at Invesco
We are definitely going to add allocation to Chinese onshore bonds this year—China has become an attractive opportunity.”—Tan
Hong Kong Ltd. “The circulation of yuan offshore has increased, thanks to more trade with and investments from the country. People are looking for a place to invest their yuan holdings.” China has continuously opened up its onshore bond market over the past few years, first allowing institutional investors to register on the mainland, then starting in July letting fund managers buy in Hong Kong, via the Bond Connect. Several changes are in the works to help the Bond Connect operate more effectively—read about that here. Similar to the way that China’s Stock Connect channels helped win onshore equities entry into global benchmarks, analysts anticipate the country’s bonds will at some point get included in world bond indexes. Deutsche Bank sees index inclusion helping pull in $700 billion to $800 billion of overseas funds over the next five years—about 60 percent of that public funds, such as central bank purchases. Government bonds are the top target for foreign investors, followed by certificates of deposit, according to data compiled by China Central Depository and Clearing Co. and Shanghai Clearing House. Bloomberg News
Shanghai’s skyline
Bloomberg
Castro freezes Cuban private sector, throws future in doubt Iraq oil-export ambitions seen
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AVANA—Two years after taking office, President Raul Castro widened the niche for private enterprise in Cuba’s state-dominated economy. Capitalism came pouring in. Slowly at first, then gaining speed, spare rooms for rent became rental homes, which became boutique hotels. Backyard cafes became elegant restaurants and bustling nightclubs, backed with millions in capital from the prosperous Cuban diaspora in Miami, Latin America and Spain. English tutors started citywide private after-school programs. And the booming private economy reached into the Communist-led bureaucracy—paying off inspectors, buying stolen state goods and recruiting talented employees with salaries dwarfing those in the public sector. Eight years later, on the verge of leaving office, Castro has thrown the brakes on private enterprise in Cuba again, warning of the rapid pace of change and criminal activity. The decision has raised fundamental questions about the nation’s economic path. The Cuban government proclaimed in August that it was
putting a temporary halt on new licenses for bed-and-breakfasts, restaurants and other businesses until it could issue new regulations to control illegality. E nt r e p r e n e u r s w h i s p e r e d about new regulations coming in a month, maybe two. But summer stretched into fall, fall into the new year and six months later, Cuba’s private economy remains frozen. The state-run economy responsible for 70 percent to 80 percent of gross domestic product is stagnant. A once-promising workerowned cooperative sector has shown little recent growth. Cubans are increasingly wondering when the private economy will be allowed to grow again, and, more broadly, how their government intends to deliver on promises of a sustainable, prosperous socialist system. “We’ve already been this way several times before,” economist and Communist Party member Esteban Morales wrote on his blog last week. “Many of us think that these measures aren’t just to organize private enterprise better, as they’ve said, but to restrict it. Self-employment generates jobs that the state
can’t. That’s something that hasn’t been taken advantage of before, and would be very smart to do.” The freeze has led to a slowdown in private investment in Cuba at a time of economic fragility and uncertainty. The flow of subsidized oil from Venezuela is dropping as its economy collapses. In 2016 Cuba had its first recession in 20 years and growth last year was 1.6 percent, meaning the economy has remained essentially flat for two years. United States tourism, a bright spot, is dropping in the wake of new US restrictions. The number of self-employed Cubans has grown from 157,000 in 2010, the year of Castro’s reforms, to 567,000 at the start of last year, roughly 12 percent of the workforce. “Self-employed workers a ren’t ask ing for neol ibera lism or political change, just that they let us work,” said Camilo Condis, a 32-year-old industrial engineer who rents out an apartment and has a license to work in a restaurant. Entrepreneurs interviewed by The Associated Press said they and relatives who backed them from overseas were canceling
plans to invest in new or expanded businesses. In 2010 the Cuban government began allowing 201 types of self-employment, from child’s party clown to real-estate agent. It started issuing licenses for other categories—like restaurant and bed-and-breakfast—that were approved by Castro’s predecessor and brother Fidel during Cuba’s post-Soviet crisis in the 1990s, then frozen again for years. Some categories of self-employment became vehicles for small businesses with dozens of employees. Their owners’ conspicuous consumption became a source of social tension in a country where the average salary still hovers around $25 a month. A first sign of trouble came in July, when Castro told the National Assembly that “crimes have been committed.” “There’s information on cases where the same person has two, three, four, even five restaurants. And not in one province, but in several. Someone who’s traveled more than 30 times to different countries,” Castro said. “Where did he get the money? How did he make it?” AP
putting strain on Opec accord
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he Organization of Petroleum Exporting Countries (Opec) likes to trumpet its record-breaking compliance with output cuts. Yet, one of its largest members has been opening the taps and doesn’t plan to scale back any time soon. Iraq shipped a record 3.55 million barrels of crude a day from Basra, the country’s southern outlet to the Persian Gulf, in January, according to port-agent and Bloomberg tanker-tracking data. It sees capacity at 5 million a day by yearend, clouding prospects for keeping its commitment to the Opec deal. Among Opec, “it’s the country with the most aggressive growth plans that have some chance of becoming reality,” said Robin Mills, chief executive officer of Dubaibased consultants Qamar Energy. “At some point it’s going to put some strain on the Opec agreement.” Opec and its partners have agreed to maintain output cuts to the end of 2018 to drain the oil glut. Saudi Arabia, Opec’s largest producer, is exceeding its obligations to the group, while others, such as Venezuela, have seen sup-
ply constrained by internal strife. That’s masked quota-busting output in Iraq, Opec’s No. 2 producer. As crude prices have rallied, Iraq has ramped up sales from the south, more than offsetting lost production in the north where a territorial dispute with its Kurdish region has crippled exports. At the giant northern Kirkuk field, where clashes have disrupted output, Iraq has revived a deal with BP Plc. to study boosting production, Oil Minister Jabbar Al-Luaibi said in London this week. Brent crude has climbed more than 30 percent over the last six months as Opec’s cuts helped the benchmark surpass $70 a barrel in January for the first time in three years. It gained 0.2 percent to $69.02 a barrel at 9:22 a.m. in Dubai. The market is balancing and most Opec members and allied producers favor keeping cuts in place for the rest of the year, Luaibi said. The minister said Iraq is pulling its weight in the oil-cuts deal, even though external data—from Bloomberg surveys to the International Energy Agency—show it’s overproducing. Bloomberg News
The Regions
A4 Friday, February 2, 2018 • Editor: Efleda P. Campos A8
BusinessMirror
SBMA closes ranks with BOC in fight vs smuggling
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By Henry Empeño | Correspondent
UBIC BAY FREEPORT— The Subic Bay Metropolitan Authority (SBMA) has approved plans to put up a new facility here for the proposed Customs Academy to help improve the proficiency of Bureau of Customs (BOC) personnel and strengthen the freeport regime in this growing economic hub.
SBMA Chairman and Administrator Wilma T. Eisma and Customs Commissioner Isidro S. Lapeña signed last week a memorandum of agreement for the construction of a new building here to house the BOC office for the Port of Subic, as well as a training facility for the proposed Customs Academy. The Philippines is reportedly one of the few remaining countries in the world that lacks an official school for its Customs personnel. Eisma said the SBMA is throwing its full support to the project to help in the government’s national campaign to stop smuggling and has extended full cooperation to the BOC in flushing out illegal activities in this free port. “We’re 100 percent in support of this project because we are aware what this means to the Philippine economy, to law enforcement, as well as to the local industries and image of the Subic Bay Freeport as a center of commerce,” Eisma said on Thursday. “Smuggling bleeds the economy dry, and everything we have been building in Subic all these years would come to naught if illegal activities like this were not stopped.” Eisma said last December that SBMA law enforcers foiled an attempt to bring out of the Subic Freeport P40 million worth of expensive liquors. The contraband was turned over to the BOC after an inventory. She added the agency’s Seaport Department also blacklisted the brokers found to be involved in that smuggling operation. Last week Eisma and Lapeña, along with Port of Subic District Collector Fidel Villanueva and Philippine International Trading Corp. President and CEO Dave Almarinez, also inspected three shipments seized by the Subic BOC for various violations of customs laws. The shipments included Thailand white rice estimated at P10 million, which lacked the required import permit from the National Food Authority; 18 units of undervalued Vespa scooters from Italy that were part of a 112-unit shipment worth P30 million; and the 8,865 bottles of expensive liquors and spirits the SBMA seized and turned over to the BOC late last year. SBMA and the BOC officials also recognized last Friday the top 10 companies in the Subic Bay Freeport that contributed the most revenue to the Port of Subic last year. Eisma said the aggressive anti-smuggling campaign and the recognition program for top revenue generators here “are two sides of the same coin.” “We seize contraband to deter smuggling, but we also praise those who follow the law and help us grow the Subic economy,” she said. Among those identified as top revenue contributors at the Port of Subic were Micro Dragon Petroleum Inc., United Auctioneers Inc., Filoil Logistics Corp., PTT Philippines Corp., Petron Corp. and Murami Subic Trading Corp.
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‘Barangayan’ kicks off in Floridablanca, Pampanga By Joel P. Mapiles | Correspondent
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CABBAGE ROSE
Plantations of cabbage rose in Atok, Benguet, are becoming attractions for local and foreign tourists in this agricultural town, where farmers are getting ready for the high demand for flowers during Baguio City’s Panagbenga flower festival and Valentine’s Day. LAILA D. AUSTRIA
PHL’s biggest ‘green’ hotel to rise in Boracay
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ESORT-BORACAY will soon rise on the beachfront of Boracay Newcoast featuring 1,001 rooms and will become the biggest hotel in the Philippines in terms of room count. The project will sit on a 2-hectare property on the beachfront cove and support environmentally friendly operations and sustainable tourism. Hotel101 Resort-Boracay is a jointventure project of Hotel of Asia Inc., a subsidiary of DoubleDragon Properties Corp., a property company led by Mang Inasal Founder and DoubleDragon Chairman Edgar Sia II and Jollibee Founder and DoubleDragon Cochairman Tony Tan Caktiong, and Newcoast South Beach Inc. led by its chairman, Enrique Gonzalez. “Our group is proud to be working with DoubleDragon to launch the biggest green hotel in the Philippines. Boracay enjoys global popularity and the upgrading of the Caticlan airport provides favorable macros. We are one of the best beachfront properties within the best masterplanned development on the island, located on one of the best beaches in the world. As the maxim goes, it is location, location, location,” Gonzalez said. Sia said, “This new eco-friendly greenergized hotel project in Boracay puts forward
our grand vision to be a major player in the hotel and resorts industry in the country. It will certainly boost DoubleDragon’s recurring revenues through the years and will also significantly help generate economic benefits to the people of Boracay, as well as contribute to pump-prime further the world-class reputation of the island and the Philippines as a tourist destination.” Hotel101 Resort-Boracay will have top amenities, such as room suites with balcony, expansive retail and food-andbeverage offerings, pool and outdoor deck, a business center, meeting rooms and a function hall. The project will adopt sustainable best practices from design to implementation and adopt sustainable practices to reduce and reuse energy, waste and water. Specific areas of Hotel101 Resort-Boracay will also be powered by solar panels and will be equipped with a rainwater harvesting system. This new green eco-friendly project in Boracay will be the fourth development under the Hotel 101 brand after similar groundbreaking undertakings in Manila, Fort Taguig and Davao. Hotel 101 is a hotel brand of DoubleDragon, which aims to have a total of 5,000 hotel rooms in its portfolio by 2020.
Boracay Newcoast is a 150-hectare tourism estate of Megaworld’s subsidiary, Global-Estate Resorts Inc. As a masterplanned tourism estate development, Boracay Newcoast is envisioned to become the new side of Boracay as it hosts its own commercial, retail and boutique hotel districts, residential condominiums, residential villages, hotels and resorts, surrounded by its own golf course. The development is also as model of sustainability in the island as it incorporates green initiatives, such as the use of electric jeepneys, solar-powered streetlamps, flood-free drainage systems, implementation of its own waste-segregation program and having its own materialrecovery facility for waste recycling, and having its own sewage-treatment plant that converts used water for irrigation and fire reserve. Kevin Tan, executive director of Alliance Global and SVP of Megaworld added: “This new development by Hotel101 Resort-Boracay group will become a major provider of comfort and convenience for tourists visiting Boracay. Their ecofriendly hotel blends well with Boracay Newcoast’s sustainable-development model. This will further enhance the island’s proposition for the domestic and global tourist market.”
ITY OF SAN FERNANDO— The Pampanga provincial government’s “Barangayan 2018” kicked off on Wednesday, visiting the five villages of Floridablanca to bring the programs and services of the Capitol closer and attuned to the needs of the people. The Barangayan was led by Gov. Lilia Pineda and Second District Rep. Gloria Macapagal-Arroyo with the department heads of the Capitol together with the personnel of the Provincial Health Office, Provincial Disaster Risk Reduction and Management Office, Provincial Social Welfare and Development Office and General Services Office who converged their resources for the benefit of the target beneficiaries. The Barangayan team visited the Barangays of San Ramon, Palmayo, Carmencita, Bodega and Dampe in Floridablanca. Barangayan was realized to discuss the programs of the government with the people in the grassroots, hear their suggestions, identify their needs in their respective villages and inspect the ongoing projects. Part of the Barangayan is the conduct of a medical mission and distribution of food packs to identified poor households. A nother component of the Barangayan is the Nanay Community Workers and the “Narses sa Nayon,” who were tasked to assist the indigent people in need of medical attention. During the activity, Pineda announced the plan of the provincial government to construct new barangay halls in the province before her term ended. She told the people here that the first recipients of this project this year are the said villages of Floridablanca. “I want to leave a legacy to build identical barangay halls in all 505 barangays of Pampanga,” she said. Arroyo said the national government has allotted P30-million for road projects in the town. She said P100 million has been set aside for flood-control projects for Gumain River to lessen the incidence of floodings in the Second District. “We are fortunate President Duterte granted my requests for funding. This year many projects will be realized,” she said.
3 groups in Cebu ink partnership to help nurses work abroad By Charles R. Pepito | Correspondent This milestone ORLDWIDE International Sermarks the vices Inc. (Wise Immigration) joint efforts of is continuing its mission to help aspiring nurses to go to Canada and these parties in eventually create better opportunities for themselves and their families. strengthening cultural Just recently, Wise Immigration understanding signed a memorandum of understanding (MOU) with Niagara College of Canada and promoting and the Cebu Chapter of the Philippine Nurses Association. quality international “This milestone marks the joint efforts of these parties in strengthening cultural education to the rest understanding and promoting quality inof the world.” ternational education to the rest of the world,” Wise Immigration Operations —Oberes Manager Dinnes Oberes said.
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Oberes said through the MOU signing, Wise Immigration is offering free processing fee to every existing and new member of the PNA-Cebu Chapter under student visa and exclusive enrollee for Niagara College of Canada. Southeast Asia Manager for Niagara College, Eric Jin, attended the undertaking held at the PNA-Cebu Chapter office. Wise Immigration’s partnership with Niagara College of Canada started in 2013, while its partnership with PNA Cebu Chapter also started five years ago. PNA Cebu Chapter works to ensure quality and holistic nursing care for all,
fair health policies, the advancement of nursing knowledge through trainings and seminars and an ethical and competent nursing workforce. Wise Immigration has been sending nurses abroad, especially Canada, since 2012 under Quebec Skilled Worker Program and the student-visa program. Niagara College has become a leader in applied education, and a regional college with global reach. Founded in Welland in 1967, Niagara College now operates from specialized campuses in Welland and Niagara-on-the-Lake.
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Banking&Finance BusinessMirror
Editor: Jun B. Vallecera • Friday, February 2, 2018
A9
Resurgent inflation seen in January
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By Bianca Cuaresma
@BcuaresmaBM
rice pressures that moderated in the final three months last year were seen resurgent in January and likely to have persisted along this trajectory over the near term, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.
As a result, inflation, or the rate of change in prices, were to approximate the top end of the official target set by the monetary authorities for this year. It is for this reason that discussions at the upcoming rate-setting meeting of the Monetary Board of the BSP would take center stage, as the projected price path approaches the upper limit of the official inflation target. The January inflation data is scheduled for release next week and was plotted to have ranged from a low of 3.5 percent to as high as 4 percent during the month, the BSP said. “The increase in the prices of domestic petroleum products on account of higher global crude-oil prices along with higher food prices due to weather-related disturbances could contribute to the rise in
inflation for January 2018,” the BSP said. “In addition, higher excise taxes on fuel and sugar-sweetened beverages with the implementation of the TRAIN [Tax Reform for Acceleration and Inclusion] this month would lead to additional upward price pressures,” it quickly added. Just last year, inflation averaged below target at only 3.2 percent, with the December inflation steady at 3.3 percent. The target range this year remains at 2 percent to 4 percent. Also, inflation expectations in January could have been higher were it not for the offsetting factor of lower electricity rates in Meralco-serviced areas for the month, the BSP said. BSP Governor Nestor A. Espenilla Jr. acknowledged that there have been quite
a few “significant developments” since the December rate-setting meeting that have to be weighed carefully in the scheduled February review. Those he mentioned include rising prices ahead of the implementation of the tax-reform program known as the TRAIN. “The first-round price effects of TRAIN and other factors, such as oil prices, are evolving more or less as expected. We continue to see the upward inflationary effects as transitory. However, we are carefully assessing next-round effects and how inflation expectations could be affected,” Espenilla said. “These considerations will be at the center of the coming policy discussions. The ability to meet the inflation target comfortably and mitigating the upside risks is very important to the BSP,” he added. The governor gave assurance that the BSP is diligently updating data and evaluating various price surveys to gain insights on their overall impact on the inflation outlook. “This is an intensely data-driven exercise,” Espenilla said. The Monetary Board is schedule to meet on February 8, the first rate setting this year. Its monetary policy stance has remained unchanged since 2014.
‘RRR as signal tool no longer as useful’
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he usefulness of the banks’ deposit reserves as an important signaling tool has greatly diminished in recent years, the Bangko Sentral ng Pilipinas (BSP) reiterated this point in a statement issued on Thursday. BSP Governor Nestor A. Espenilla Jr. said the link between the banks’ reserve requirement ratio (RRR) and the monetary climate they try to create with it has since severed and has, in fact, been replaced by an entirely different set of policy tools. As a result, Espenilla said on Thursday deposit-reserve adjustments in the future should not be interpreted as a change in monetary policy stance because clearly they are not. Espenilla acknowledged that while the BSP in the past relied on RRR adjustments to foster a particular monetary climate in the recent past, such linkage is now a thing of the past. He said the BSP now has a better grasp in managing domestic liquidity conditions such that prices across the $305-billion economy respond accordingly and local output is more or less assured.
“RRR is one of the traditional monetarypolicy instruments available to BSP. We have heavily relied on it for a long time to run effective monetary policy in a situation of underdeveloped banking and financial markets and limited Central Bank open-market operations. This is no longer the case in the Philippines. Therefore, continued heavy reliance on RRR has become highly burdensome and distorts the financial system,” Espenilla said. The RRR is that portion of the banks’ funds that must be held in reserve in the vaults of the BSP and may not be used for lending. Their effective capture allows the BSP to calibrate the volume of money in general circulation. The RRR currently stands at 20 percent, considered one of the highest in the region and had been in place since May 2014. In its place, Espenilla said, in a new policy framework called the interest-rate corridor adopted in 2016 that allows the BSP to more effectively manage liquidity conditions in a more market-friendly manner. When it was first implemented, the BSP said the medium-term goal was to bring the
banks’ RRR to a more competitive level, ideally to single-digit ratios. “This is the logic behind the plan to gradually phase down the RRR to singledigit levels comparable to those prevailing in Asean countries of more or less similar development. This means that forthcoming reductions in RRR should not be mistaken as a change in monetary policy stance. Rather, it should be viewed as part of ambitious financial market reforms that the BSP is currently implementing,” Espenilla told reporters. Some of the stakeholders have expressed their apprehension over the anticipated cut in the banks’ deposit-reserve requirement given that such would quickly flood the system with incremental liquidity that could stoke inflation. “Shifts in the monetary policy stance of the BSP will be primarily signaled through changes in its policy rates in order to achieve its inflation targets. The liquidity impact of any RRR reduction will be neutralized through offsetting open-market operations and transactions with the national government,” Espenilla said. Bianca Cuaresma
Effective competition policy to provide consumers best value for money
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inance Secretary Carlos G. Dominguez III said an effective competition policy in a market economy would ensure that enterprises perform well and consumers get the best value for their money. Such a policy is also key in helping shape fair economies where transparency in costs and pricing are encouraged and consumers are empowered in choosing wisely, which leads to more efficient production systems, Dominguez said. He said that in an imperfect market, consumers are often vulnerable to predatory pricing because of monopolistic conditions or cartel behavior by supposedly competing businesses. Thus, governments would have to put in place an effective and strong competition policy that will ensure that fair competition leads to fair pricing. “Competition helps build the just economies we aspire for. These are economies where greater efficiency determines winners and losers. These are economies of empowered citizens and analytical consumers. These are economies driven by the passion to do better and to create more value for less cost,” Dominguez said in his speech read for him by Finance Undersecretary Bayani Agabin at the 2018 Manila Forum on Competition in Developing Countries held recently at the Makati Shangi-La Hotel. Dominguez said forums, such as this event organized by the Philippine Competition Commission with the support of multilateral development institutions are necessary so that best practices and experiences can be shared among stakehold-
ers on how competition can lead to more equitable economies. “We all work with unique business conditions and, very often, need to devise appropriate approaches in applying competition policy. We all work with different legal frameworks to achieve the same goal,” Dominguez said. “Over time, we will have to harmonize these frameworks so that we can all work with comparable sets of tools. Doing so will make competition policy clearer to our respective publics.” Dominguez also underscored the need to set benchmarks for competition policy that conform to global standards to prevent weak regulations and the proliferation of monopolies and cartels from
inflicting harm on consumers. “In an open market, governments cannot set prices. They have no basis for doing so. Only market forces, in an even playing field, can ensure consumers get the best value for their money. Only fair competition can ensure fair pricing,” he said. “Competition encourages increased transparency in costs and pricing. In that way, they help us build critical consumers who could choose analytically. Competition empowers consumers and, by doing so, encourages more efficient production systems. In turn, that increased efficiency helps build strong economies with enterprises accountable to their consumers,” Dominguez said.
Case clippings
By Justice S J Ranada Jr. ANNULMENT OF MARRIAGE–proof of psychological in capacity In a petition for annulment of marriage, claim that respondent is a pathological gambler, is irresponsible, and is unable to keep a job, is not proof that respondent is psychologically incapacitated to perform the essential marital obligations. It is not enough to prove failure to meet one’s responsibilities and duties as a married person; he or she must be shown to be incapable of doing so because of some psychological, not physical, illness. Singson v. Singson 08 Jan. 2018
GR 210766 Del Castillo,
PRIORITY BANKING Bank of Commerce launches priority-banking service, which offers more
convenience to clients. Bank of Commerce, an affiliate of San Miguel Corp., recently introduced a prioritybanking service to deliver more value and convenience to its high net-worth clients. The membership program, dubbed Priority Access, aims to extend the bank’s broad portfolio of banking products. With Priority Access, members will receive privileged and personalized banking services, such as support from designated relationship managers for all their banking needs and full access to branch officers at any Bank of Commerce branch. They are also entitled to a special Priority Access-labeled Mastercard platinum debit and/or platinum credit cards that let them enjoy exclusive perks tailor-fit for their lifestyle. The launch of the banking service bolsters the bank’s commitment to provide for the constantly changing needs of customers.
A10 Friday, February 2, 2018 • Editor: Angel R. Calso
Opinion BusinessMirror
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editorial
Fake news: A fake issue?
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atching the Senate hearing and probe on fake news was disappointing on many levels. The commentary from the pundits may have been worse. From the hearing we went from the ridiculous—“Bloggers should be required to obtain government licenses”—to the harsh reality that “a law to combat fake news is censorship”.
The only things we did learn were already self-evident. Governments spread propaganda sometimes in the form of fake news to further its image and agenda. The political “opposition” uses fake news, to attempt to sway public opinion against the government and its policies. Politicians on both sides are “victims” of fake news, and they do not like it. Press and media can be purveyors of fake news to push its own agenda. The bottom line of this “critical issue” appears to be that absolutely no one condones fake news, but everyone uses it as his or her personal tool. Then, there are the self-proclaimed experts on fake news, saying things like, “We have long needed to discuss the problem of fake news.” Unfortunately, people like this are late to the party—a few thousand years late. In the 13th century BC, Ramses the Great, pharaoh of Egypt, spread propaganda portraying the Battle of Kadesh as a stunning victory for the Egyptians. He depicted scenes of himself smiting his foes during the battle on the walls of nearly all his temples. Except, the written treaty between the Egyptians and the Hittites revealed that the battle was actually a stalemate. Or maybe that was the fake news. In the mid-1700s, during the height of the Jacobite rebellion in Great Britain, printers printed fake news, reporting that King George II was ill, in an attempt to destabilize the establishment. While “blogging” might be considered a modern development, the platform is electronic but the content is historic. Benjamin Franklin wrote fake news about murderous “scalping” Indians working with King George III in an effort to sway public opinion in favor of the American Revolution. The more things change, the more they remain the same. In a recent message, Pope Francis said that fake and sensationalized news is a “very serious sin.” Interestingly, during the Middle Ages, there were conflicts between the Church and the European ruling class over control of certain states and territories. Conveniently, the Church produced a document in the 8th century known as “The Donation of Constantine.” Apparently, Emperor Constantine had transferred land and political control of these disputed territories to Pope Sylvester I in the fourth century because Sylvester allegedly cured him of leprosy. The Church would successfully use this document to assert control over various regions. In the 15th century this document was established as a complete forgery. Needless to say, the Church never gave the land back to its rightful owners. The use of fake news is unethical. But a thousand hours of Senate hearings is not going to make it go away. Governments that depend on and need fake news propaganda are eventually going to be found out and discredited. The political opposition will never gain power for the same reason. News outlets that push fake news will fall victim to their own techniques and lose all credibility, like the boy who cried wolf. It is inevitable. But the worst thing would be for the government to “protect the people” from fake news. Further, it is an issue that is actually unsolvable and, as such, may be a “fake issue.” No Filipino child’s hunger or health care improved as a result of the Senate hearing. And that is not fake news. Since 2005
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arlier this week, the Commission on Elections resolved to push through with the 2018 Barangay and Sangguniang Kabataan Elections in Mindanao, except in Marawi City where the polls will be postponed. The Comelec cited the prevailing conditions in Marawi City as the most critical consideration, seeing as how weeks of heavy fighting during the Maute occupation had all but decimated the city’s infrastructure, leaving practically no public structures that could be used for election purposes. The Comelec, however, emphasized that the suspension of the elections would be reassessed three months after the May elections, for the purpose of determining whether things have improved enough to allow the holding of elections in the Islamic City. Hopefully, by then, many of the displaced residents of Marawi would have returned home and started the process of rebuilding their communities. So, u n less Cong ress once again floats—and pursues—the postponement of the Barangay and Sangguniang Kabataan Elections, it would appear that there won’t be a third rescheduling of the village and youth polls. And all for the good; the
waters of democracy at the community level needed refreshing. In a sense, the Comelec, too, will be undergoing changes, as today marks a significant milestone in the institution’s leadership—the retirement of Acting Chairman Christian Robert Lim and Commissioner Arthur D. Lim. Both gentlemen contributed immensely, not just to the success of the 2013 and 2016 National and Local Elections but also to the growth and development of the institution they’re leaving behind. With Commissioner Arthur Lim’s helmsmanship, the Comelec’s Overseas Filipino Voting system saw the roll of registered overseas voters breach
The Comelec will be undergoing changes, as today marks a significant milestone in the institution’s leadership—the retirement of Acting Chairman Christian Robert Lim and Commissioner Arthur D. Lim. Both gentlemen contributed immensely, not just to the success of the 2013 and 2016 National and Local Elections but also to the growth and development of the institution they’re leaving behind. the 1 million mark. It was also during his tenure that the use of the automated election system overseas reached its greatest extent thus far. As a result, despite determined attempts to undermine its credibility, the overseas voting system proved to be one of the most credible components of the 2016 elections. And as for the other Lim, Acting Chairman Christian Robert Lim that is, well, it is practically impossible to even imagine both the 2013 and the 2016 automated elections without picturing him right in the thick of things. In both electoral exercises, his was the hand firmly on the steering wheel; his, the pragmatism that found solutions; and his,
Radio Veritas’s ‘Good Samaritan’ program extended to 2 hours
Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace
Online Editor Social Media Editor
Chairman of the Board & Ombudsman President VP-Finance VP Advertising Sales Advertising Sales Manager Group Circulation Manager VP HR and Admin
The two Lims
Rev. Fr. Antonio Cecilio T. Pascual
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SERVANT LEADER
adio Veritas strengthens its social-concerns program to help more poor in crisis by extending our public-affairs program, “Good Samaritan”, for two hours this 2018.
The extended program aims to provide more assistance to the underprivileged by tapping those people with generous hearts who are willing to share their blessings with their brethren. In 2017 the program had provided assistance to 2,084 persons. Meanwhile, the Good Samaritan Mission on Ground had successfully served a total of 548 clients on its medical mission. Through Good Samaritan, we accept requests for an on-air appeal of those who are in need and will find Good Samaritans to help them. These pleas will be aired
during the program and also announced in other programs of the station to reach those who are willing to help and support as a concrete faith response. Radio Veritas has been serving the people through Good Samaritan, airing Monday to Friday from 1 to 3 p.m. The program also features Church organizations and institutions providing help and support to different underprivileged sectors of our society, such as street children, drug dependents, battered women and the homeless, among others. As children of God, we must
Through “Good Samaritan,” we accept requests for an on-air appeal of those who are in need and will find Good Samaritans to help them. These pleas will be aired during the program and also announced in other programs of the station to reach those who are willing to help and support as a concrete faith response. Radio Veritas has been serving the people through Good Samaritan, airing Monday to Friday from 1 to 3 p.m.
always remember that our mission is to provide help to those who are in need. God is providing us blessings that are more than our expectation because He wants us to learn how to share. God is calling us to be his instrument that provides hope and joy to others. Good Samaritan is a term that originates from the parable told by Jesus in the Bible, Luke 10:25– 37, about a Samaritan (a man from
the judgment and tech-savvy depended on by two successive chairmen—Brillantes and Bautista. Not a small feat for someone so young. And yet, as significant as these contributions are, to my mind, they pale in comparison to the true legacy they leave behind. A leader always aspires to take his followers to great heights that they may not have believed themselves capable of achieving; but a good leader aims to ensure that his followers will be able to scale mountains they can’t even see the tops of yet. And that is exactly what the two Lims have achieved with their time in the Comelec. Commissioner Arthur Lim laid down foundations for taking overseas voting into its next logical evolutionary step: Internet voting; and Acting Chairman Christian Lim has empowered the institution—structurally, technologically, intellectually and morally— to the point where it now stands on the crux of one of the most difficult years it will face—the imminent Baranggay and Sangguniang Kabataan elections; the growing inevitability of a Charter change plebiscite within the year; and the start of preparations for the 2019 National and Local Elections, all happening in the next 11 months—with confidence. No leader can aspire for more; and no institution can wish for better.
a country called Samaria) who helps out a Jewish man who is ambushed by thieves and left to die. This was all the more a selfless act considering that the Jewish and Samaritan people in those times usually did not associate with each other. To all those who want to make an appeal or send help, you may visit Radio Veritas station at 162 West Avenue corner Edsa, Quezon City, or you may call the kapanalig hot line 925-7931 to 40 or e-mail at kapanalig@veritas846.ph. The official Facebook page www. facebook.com/ Veritasph is also available to assist those who are in need. Radio Veritas 846, the number one faith-based AM radio in the Philippines, is owned and operated by the Archdiocese of Manila. Established in 1969, the Ramon Magsaysay Awardrecipient Catholic radio station continues to be the leading social communications ministry for truth and evangelization in the country today.
Opinion BusinessMirror
www.businessmirror.com.ph
Friday, February 2, 2018 A11
TRAIN from a consumer Fake news once more with feeling advocate’s point of view Tito Genova Valiente
Dr. Jesus Lim Arranza Continued from A1
Taxing water?
It’s here and it’s happening now. The anxieties on how the TRAIN law would affect the lives of Filipinos have started to settle. And while I understand the importance of TR AIN for the government’s economic agenda, let me share some of my observations and suggestions on the new law. Soda drinkers are among those to feel the impact of the new excise tax on sugar-sweetened beverages under TR AIN. With the new ta x, consumers now have to pay P6 more for every liter of their favorite soda or other SSBs. However, accord ing to my cohost in our weekly radio program Dito sa Bayan ni Juan Sen. Juan Ponce Enrile, since the basis in computing for the rate of tax on SSB is volume and not on sugar content, it is, in effect, taxing water. And that being the case, is the new tax on SSB not curtailing one of our inherent rights to unfettered access to basic needs like water?
Depriving the elderly of a healthy lifestyle
Although it’s a lifestyle issue, some lawmakers believe that sugar intake is linked to being one of the causes of obesity, diabetes and heart disease. A compelling issue for our legislators to tax beverages that contain naturally derived caloric sweeteners like table sugar, if only to reduce the risk of such health issues. I am, however, perplexed why the noncaloric or sugar-free beverages are also being taxed under TR AIN. Why are the elderly—consumers who mostly drink noncaloric beverages for health reasons— being burdened for trying to live a healthy life with the new tax on their noncaloric or sugar-free beverages? Is it not inconsistent that, while the government is helping the elderly with their health concerns by exempting them from the value-added tax and providing them 20-percent discount on their medicine purchases, they are at the same time being deprived of their noncaloric or sugar-free beverages to keep them fit at their age, with the new tax on SSB? This is, perhaps, one provision of the TR AIN law our legislators should take a second look at, not only for its inconsistency with the purpose of the law, but, more important, for the risks it pose on the affected elderly. After all, are the elderly not
Soda drinkers are among those to feel the impact of the new excise tax on sugar-sweetened beverages under TRAIN. With the new tax, consumers now have to pay P6 more for every liter of their favorite soda or other SSBs. Since the basis in computing for the rate of tax on SSB is volume and not on sugar content, it is, in effect, taxing water. entitled to their right to equal protection of the law?
The fuel tax
Among the tax components that affect the entire Filipino nation every time it moves is the tax on fuel, especially diesel fuel. The new tax on diesel—the fuel oil used to run some power plants, sh ips, pu bl ic t r a n s p or t a nd more—is projected to raise billions of pesos in added revenues for the government. But there is a law that could help cushion the impact of TRAIN on consumers. The law requires all fuel companies to mix their diesel fuel with up to 5-percent biodiesel, the specifications of which are virtually tailored fit for biodiesel derived from coconut. However, if the Department of Energy (DOE) will officially allow fuel companies to use palm oil as a raw material for biodiesel, this could help reduce the cost of diesel fuel. Weeks ago, the price of coconut in the world market reached $1,500 per metric ton. While during the same period, the price of palm oil, also in the world market, was only $700. Therefore, should the DOE allow the use of palm oil as raw material for producing biodiesel, which, in turn, would be mixed with diesel, this could translate into lower pump prices of diesel fuel. And should this happen, both the consumers and coconut producers will be happy. Consumers will be glad as it will lower the cost of diesel fuel, while coconut producers will also be happy, because they can sell their coconut oil instead, in the more profitable world market. And, most important, by allowing the use of palm oil as raw material for producing biodiesel by the DOE, this could help prevent the clandestine use of palm oil in biodiesel and passing it as coconut-derived biodiesel. But, any way, the ba l l is now in the hands of the energ y department.
D
o we take it hook, line and sinker? That is a question that fishes do not ask. Indeed, the question came from an undersecretary tasked with communications under the present administration. The query was aimed at the presentation from Maria Ressa of Rappler. The systematic and researched facts and numbers, manually counted at certain points, tracked web sites from where false information were coming. The slides illustrated how the sites converged and share on characteristic—a link to pro-government persons. The presentation was impressive. It was a rare occurrence in public hearings where sound and fury are favored over the empirical and observable. Except for Sen. Grace Poe who constantly referred to it, there was no significant reaction and response from the gallery. I was anticipating an uproar from the crowd, but I guess I was in a different universe during those moments. I am not saying we cannot touch the presentation of Maria Ressa. Far from it. In fact, we should ask many questions about the sources used, the methodology mentioned. As with any empirical acts, they can be replicated. And replicate them, we must. In this land, the empirical can never strike back. The metaphorical the rhetorical, and the sentimental always win.
A
Rhetorically, the speech was more or less normal. It avoided the belligerence of Trump’s inaugural and the bombast of his rallies. Despite some rumbling about North Korea, there were no explicit threats to use nuclear weapons. Progress, you might say. Policy-wise, the speech was more ambitious—and thus more disappointing. Trump invited bipartisan support for a big infrastructure deal and a bargain
on immigration. He called for a national effort to combat opioid addiction. He expressed enthusiasm for job training, vocational schools and prison reform. Harmony was an unexpected theme: “I call upon all of us to set aside our differences, to seek out common ground and to summon the unity we need to deliver for the people.” These are reasonable (if debatable) policies and sentiments. In
dential election, a father of a child who was a recipient of the education grant rose. He spoke about how we have tried already the intelligent and the educated, it was about time to try the uneducated. I could not help myself then and immediately asked, without hiding my irritation, why was he sending his child to school? As in that meeting and in the Senate hearing, the elephant not in the room was not the assistant secretary who placed Mayon Volcano in the city of Naga and not in Albay. The elephants not in the room was education. As for the location of the volcano, there are two streets in Naga parallel to each other: Mayon and Isarog. Still, I do not claim moral ascendancy. Geography is basically amoral.
Why a free market for news could be undesirable Ser Percival K. Peña-Reyes
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EAGLE WATCH
n interesting quote by Presidential Spokesperson Harry L. Roque Jr. has made the rounds of the Internet recently. According to him, if there were no fake news, people would not really get to know what true news is. Roque suggests that there should just be a “free marketplace of ideas”—that is to say, a free or unregulated market for news, where society simply allows fake news to compete with true news. A quick review of basic economics should be helpful in clarifying the implications of this suggestion. By definition, a market is an institution through which buyers and sellers interact and exchange goods and services. A market does not necessarily refer to a tangible area where buyers and sellers could be seen transacting. In fact, it can represent an intangible domain where goods and services are traded, much like the online platforms through which news is quickly delivered nowadays. For as long as there are large enough numbers of contending players on both sides (producers and consumers), and there is free competition among them, Adam Smith postulated that the natural forces of supply and demand will comprise an “invisible hand” that automatically yields the right allocation of resources and the goods
Trump seeks unity, all too late s he is sometimes able, President Donald J. Trump summoned his dignity, suppressed his grievances and read scripted words uneventfully for 80 minutes in his first State of the Union address. It amounted to an elegy for what might’ve been.
annotations
As the hearing progressed, the questioning became even more vague and obscure. We can go back to the video of the said event and review the transcript to discover how questions were never answered fully. The person responding would react partly to a question and would veer into the touchy-feely regions. As the hearing regressed, some people talked about moral ascendancy. This was an area no one has an expertise in. In fact, someone could have challenged those in the gallery to stay if he or she felt or he or she did possess moral ascendancy Years ago, I was managing a developmental non-governmental organization into education and microfinance. In one of the general assemblies held in the thick of a presi-
fact, if Trump had acted on them faithfully—as he promised to do in a speech to Congress last year—his presidency might now look very different. By reaching out to the opposition, as most new presidents do, he might have disrupted some of Washington’s stale orthodoxies. By making infrastructure a legislative priority, he might have built some bipartisan goodwill while laying the groundwork for growth. By being less inflammatory on immigration, he might have secured a compromise of the kind he now envisions. Instead, Trump burned much of his first year trying to dismantle the Affordable Care Act,
and services they produce. Nevertheless, economists recognize that the market has its own share of flaws. There is such a thing as market failure, a situation where unregulated market transactions result in waste. As economic theory goes, there are four sources of market failure: imperfect competition, public goods, externalities and asymmetric information. The last source, asymmetric information, is of particular relevance to this discussion, as it directly applies to what Roque has plainly suggested. Asymmetric information refers to a situation where one of the parties to a transaction (either the seller or the buyer) has information relevant to the transaction that the other party does not have. Adverse selection is a situation where asymmetric information results in highquality goods or high-quality consumers being squeezed out of trans-
Trump burned much of his first year trying to dismantle the Affordable Care Act, then advanced a cynical tax cut. In between, he spent his time attending to self-made crises and tweeting acrimoniously. About the only aspect of his presidency that had a veneer of bipartisanship were his insults. then advanced a cynical tax cut. In between, he spent his time attending to self-made crises and tweeting acrimoniously. About the only aspect of his presidency
actions because they are unable to demonstrate their true quality. The classic example of a market for used cars highlights the market failure associated with adverse selection. In this example, there are uninformed consumers who cannot tell low-quality cars (lemons) from high-quality cars (peaches). The car owners are the ones who actually know whether they have lemons or peaches. Because people behave opportunistically, owners of lemons will leap at the chance of unloading their cars at any price they could get, while owners of peaches, who expect to sell their cars at higher prices, will have difficulty selling their goods. At the same time, buyers who are interested in peaches will find it hard to buy them because they cannot tell a lemon from a peach, and so they are not willing to offer a price enticing enough to make a transaction. So, while there are buyers who value peachy cars more than they are valued by their current sellers, no transaction will occur. The market, which is normally good at moving goods from consumers who place lower values on goods to consumers with higher values, does not work properly. The adverse selection problem could even lead to a market collapse. The same prediction could apply to the free market for news, where fake news and genuine news are allowed to mix. To suggest that people can easily spot fake news from genuine news is a terribly flawed assumption. If no one ensures the
Ser Percival K. Peña-Reyes is a faculty member of the Ateneo de Manila Economics Department.
that had a veneer of bipartisanship were his insults. The consequences were predictable. Despite a strong economy, Trump’s approval rating is the worst on record at the oneyear mark. Even Democrats who might be inclined to work with a Republican president offering to spend billions on public works may now hesitate. And while an immigration compromise is possible, the debate is as bitter and polarized as ever —made all the more so by the kind of fearmongering the president voiced in this very speech. Now, with bridges burned and capital spent, Trump will face his most daunting tests yet. With
elections looming, Congress has diminished room for compromise. With tensions simmering overseas, a crisis may soon materialize. No one knows where the special counsel’s investigation will lead, but Trump’s attempts to derail it portend only disaster. It’s not unreasonable to fear the ways in which this president—with his agenda stalled and his associates under fire— will occupy his time. “I would consider it a great achievement if we could make our country united,” Trump said in advance of the speech. Indeed it would be. Alas, for the 45th president, this realization seems to have dawned all too late. Bloomberg View
authenticity of news, then, as theory would predict, genuine news will be crowded out, and society will end up having only fake news. The end result could likely be a market collapse, too. As another example, suppose that in the market for milk, real milk and fake milk are allowed to be sold together. Suppose that fake milk is lethal because it has been tainted with melamine, which is a toxic substance. In the absence of authorities who check for the safety of the milk, fake milk circulates within the economy as easily as real milk does, and uninformed consumers who buy the fake milk realize their mistake only when it is too late. Would it not sound utterly silly to proclaim that without poisoned milk, people would not fully appreciate what real milk is, so there should just be a free market for milk? Perhaps, what society really wants is a properly working market, not merely a free or unregulated one. In a properly working market for news, news providers are given the freedom to compete in the production of genuine news, and it is the primary responsibility of the government to police the fake news. After all, when there is market failure, there could also be a chance for the state and market to cooperate. Hopefully, such cooperation will lead to the betterment of society.
2nd Front Page BusinessMirror
A12 Friday, February 2, 2018
TRAIN drags down growth of PHL manufacturing sector
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By Bianca Cuaresma
@BcuaresmaBM
fter a stellar performance in 2017, the country’s manufacturing sector showed signs of slowing down at the beginning of the year based on the purchasing managers’ index (PMI) report for January, attributed mainly to the impact of the newly implemented Tax Reform for Acceleration and Inclusion (TRAIN) Act. Global research firm IHS Markit released on Thursday the overall Nikkei PMI of the Philippines for January, showing a significant drop to an index of 51.7 during the month from 54.2 last December. “While the Philippines’s manufacturing economy ended last year on a high, it started 2018 on a more modest note, as demand was partially hurt by the new excise taxes, according to the Nikkei Philippines Manufacturing PMI,” IHS Markit Principal Economist Bernard Aw said. The PMI is a composite index, calculated as a weighted average
of five indiv idual subcomponents. Readings above 50 signal an improvement in business conditions, while readings below 50 show deterioration. The components include new orders—which weigh the most at 30 percent of the index; output—at 25 percent of the index; employment—at 20 percent; suppliers’ delivery times—15 percent; and stocks of purchases—comprising the other 10 percent. The report ref lected slower growth in both output and new orders during the month, as well
51.7
The country’s purchasing managers’ index for January, way below the 54.2 recorded last December
as the weakest rise in employment growth since early-2017. “Weaker client demand and a persistent lack of capacity pressure weighed on hiring. Furthermore, inflationary pressures intensified, with higher costs having an adverse impact on purchasing activity,” the report read. “Buying levels increased at a markedly slower pace, which partially led to a smaller build in input inventories, while postproduction stocks fell for the first time in four months,” it added. Despite the bleaker picture, business confidence in the country’s manufacturing sector remained elevated for the near term, indicating a possible pick up of activity in the coming months.
“…other survey indicators suggest that firms are likely to look past the near-term slowdown toward stronger growth in the year ahead. The future output index remained elevated, with a majority of panel-respondents anticipating higher production over the next 12 months,” Aw said. The report also noted that the modest improvement in the January PMI was a contrast to the solid expansions in recent months. The latest reading was the third lowest in the survey history. Aw expressed concern that the higher price pressures could potentially pose a downside risk to growth of the sector. “Survey data showed input costs increasing sharply and at one of the fastest rates in the survey history, pushing Filipino manufacturers to raise selling prices at a record pace,” Aw said. “Given the strong relationship between PMI’s gauge of input prices and official consumer inflation data, we could see stronger consumer price pressures in early-2018,” he added. The TRAIN Act, the first tranche of the Duterte administration’s taxreform program, was implemented on January 1.
Peso. . .
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“We are very far from any foreign-exchange crisis given our large GIR [gross international reserves] buffer and secondary buffers, as well as investment-grade rating that guarantees ready market access for any official and commercial financing requirement,” he added. Concerns about the weakening of the peso have been raised, as it is likely to aggravate the rising prices of imported products, such as oil, thereby accelerating inflationary pressures on top of the implementation of the taxreform program. IHS Markit Principal Economist Bernard Aw also said a weak exchange rate, coupled with new taxes and higher global commodity prices, will push manufacturing costs and elevate consumer price pressures in the country in early-2018. Philippine Exporters Confederation President Sergio R. Ortiz-Luis agreed that the drop in peso’s value is not a cause for concern. “There is not much of an effect really to exports. Everything is just an exaggeration of what should be considered as normal to the markets,” Ortiz-Luis said. “Actually, the effect of the dollar and peso exchange is much exaggerated because if it is really undervalued, like in the 1980s and 1990s, when the government was struggling to save the peso, the effect on the economy is to the negative side. However, more or less, when we allow the peso to seek its level, I don’t think it has a strong impact to our exports, even to the economy,” he added. Ortiz-Luis noted that the government has an infrastructure program that provides a strong backbone to the economy, and this is enough for the Philippine currency to stabilize throughout the rest of President Duterte’s term. “The reality is, incidents, such as the rise in fuel prices, are functions and decisions made by our sources in the Middle East. There are times that our peso weakens, there are times that is gains strength, but overall, it is performing within a manageable level,” he added. With Elijah Felice E. Rosales
MULLING ROUGE A photo of the lunar trifecta, or more commonly known as the super blue blood moon, which graced the Philippine skies on January 31, was taken through the camera of BusinessMirror’s photographer attached to a 90-millimeter refracting telescope by a resident astronomer of the Pagasa Astronomical Observatory. This rare phenomenon is a combination of the supermoon, where the moon is closest to the Earth; the blue moon, which is the second full moon of the month; and the blood moon, where the moon turns red in color because of a lunar eclipse. The next lunar trifecta will happen in 2037. STEPHANIE TUMAMPOS (BUSINESSMIRROR) AND LORDNICO P. MENDOZA (PAGASA OBSERVATORY)
www.businessmirror.com.ph
HOUSE TO APPROVE BILL MANDATING SETUP OF NEW HOUSING AGENCY By Jovee Marie N. dela Cruz @joveemarie
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Legislative-Executive Development Advisor y Council priority measure seeking to address the basic housing needs and requirements of the Filipino family through the creation of a new housing department has been approved on second reading in the House of Representatives. Voting through viva voce, lawmakers approved the passage of the House Bill (HB) 6775, or An Act Creating the Department of Human Settles and Urban Development (DHUD), late Wednesday. House Committee on Housing and Urban Development Chairman Rep. Alfredo B. Benitez of the Third District of Negros Occidental said the bill would address the worsening housing problem in the country. The lower chamber is expected to approve the bill next week. The measure aims to establish an efficient, effective, comprehensive and integrated national and local housing and urban development program. It also seeks to rationalize, and coordinate the functions and powers of the National Home Mortgage Finance Corp. (NHMFC), Home Guaranty Corp.(HGC), Home Development Mutual Fund (HDMF) and the National Housing Authority (NHA). The bill calls for the establishment of the DHUD by merging the Housing Urban Developm e n t Co o rd i n a t i n g Co u n c i l and the Housing and Land Use Regulatory Board. According to Benitez, the current Republic Act 7279, or the Urban Development Housing Act, has apparently overlooked the enormous demands in the housing sector. “Neither did Executive Order 9, which created a coordinating body for shelter agencies of the government, address the housing backlog that stood at 3 million in 1992,” he said. The measure said the department shall be headed by a secretary and assisted by four undersecretaries and four assistant secretaries to be appointed by the President.
The bill added functions of the Housing and Land Use Regulatory Board shall be transferred to the Human Settlements Adjudication Commission (HSAC) that will be created under this Act. It also said the NHA, HGC, NHMFC, HDMF, Social Housing Finance Corp. and HSAC are hereby attached to the housing department for policy and program coordination, monitoring and evaluation. All these agencies shall continue to function according to existing laws and their respective charters. Under HB 6775, the agency will not only provide for housing but will also “focus on building communities and habitats in both rural and urban areas.” The lawmaker said the department shall act as the primary national government entity responsible for the management of housing, human settlement and urban development. “It will not only deal with the physical element of housing but likewise provide the necessary link to community services and components, such as education, health, culture, welfare, recreation, food and nutrition,” Benitez said. He added the agency shall be the sole and main planning and policy-making, regulatory, program coordination and performance-monitoring entity for all housing, human settlement and urban-development concerns, primarily focusing on the access to and the affordability of basic human needs. Benitez said the new department shall develop and adopt a national strategy to immediately address the provision of adequate and affordable housing to all Filipinos, and shall ensure alignment of all the policies, programs and projects of all its attached agencies to facilitate the achievement of this objective. Earlier, the solon said the housing needs of Filipinos could balloon to 6.8 million before President Duterte’s term ends in 2022. He added there will be an estimated 774,441 housing needs in 2018; 788,773 in 2019; 803,405 in 2020; 818,363 in 2021 and 833,619 in 2022.
PHL counting on expats to lure more tourists T he Philippines is turning to its 10 million citizens living abroad and friendlier ties with China to help boost tourism in a country that lags Southeast Asian neighbors in visitors. The “Bring Home a Friend” program encourages Filipinos to invite foreigners to visit the country and stand a chance to win prizes, such as gift certificates worth P200,000 ($3,900), a Toyota Vios car and a P7-million condominium in Manila. The initiative, which began last October, will help the government meet its target of 7.4 million arrivals in 2018 from a record 6.6 million last year, Tourism Secretary Wanda Teo, said in an interview. Only about 6 million tourists visited the Philippines in 2016, com-
Govt. . .
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traditional partners, Terrado said the DTI is turning its head at nontraditional partners for possible investment opportunities. She said “it is important to
pared with 26.8 million for Malaysia and 32.6 million for Thailand, according to the United Nations World Tourism Organization. Rickety infrastructure and safety concerns—particularly in the south of the country, where a longstanding insurgency persists— have discouraged tourists. Among the favored spots for visitors are the white-sand beaches of Boracay and diving sites like El Nido. Chinese travelers are also discovering the Philippines as relations warm under President Duterte’s so-called pivot to the mainland. China became the nation’s biggest tourist market after South Korea last year, surpassing the US, Teo, 65, said in Manila on January 24. They’re going not just for the beaches but also for its casinos, as
gamblers try their luck in Manila. The United Arab Emirates, India and Canada are emerging tourism markets, said the minister, who was a former flight attendant and travel-agency operator. The tourism department is also considering boosting the nation’s
attraction as a sports and culinary destination, she added. The government aims to generate P473 billion in revenue from foreign visitors and P2.13 trillion from local tourists this year, Teo said. By 2022, the target is 12 million tourists. The industry accounted
have a diversified portfolio for a growing country like us.” However, this does not mean the country is already turning away from its traditional partners, like the European Union, Japan and the United States. “We are also positioning our-
selves as a strong partner to our traditional markets,” the trade official clarified. “Traditional markets will be there, but the goal is to diversify our investments portfolio this year,” she added. She cited the $1.25 billion worth of investment
commitments from India during the President’s visit there, mostly going to renewable energy, as an example of why the country should expand its ties. “We expect that [nontraditional partners investing in our country this year] because the way
for 8.6 percent of GDP in 2016, according to the statistics agency. Tourists aren’t being deterred by Duterte’s war on drugs that has killed thousands and eight months of martial law he imposed in Mindanao, Teo said. Nor are they fazed by natural calamities, with the coneshaped Mayon Volcano in south Luzon, for example, drawing more tourists since it started acting up in January, she added. Poor infrastructure and weak promotion are the real challenges, said Teo, who had more than two decades of experience in the travel sector. “You have to invest in tourism,” she added. “More airports will be built. More ports will also be built. The return isn’t immediate but it will come.” Bloomberg News
we work with attracting investments is, first of all, we would like to prospect. We want to prospect around, and our prospects that have become hot come from both traditional markets and nontraditional markets, such as India,” she said.