Businessmirror february 06, 2018

An effective compliance program is needed by all businesses!

abthai | DreamStime.com

C

media partner of the year

United nations

2015 environmental Media Award leadership award 2008

By Henry J. Schumacher

ompetitive business has become synonymous with ethical business. Yet, keeping up with the heavy and complex web of regulations has made compliance all the more burdensome.

Establishing an effecttive compliance program has, thus, become a quest for any company not only looking to escape the long stick of the law, but seeking to position itself as a competitive business Continued on A12 and ethical business partner.

BusinessMirror A broader look at today’s business

www.businessmirror.com.ph

Tuesday, February 6, 2018 Vol. 13 No. 118

n

BSP prepping markets for first rate hike since 2014

B

By Bianca Cuaresma

@BcuaresmaBM

angko Sentral ng Pilipinas’s (BSP) first policyrate adjustment since 2014 could happen this week, based on the apparent market “prepping” being done by the Central Bank through its recent statements, an international bank said.

Cahyadi: “…The domestic economy is robust and it can withstand a gradual adjustment in interest rates.”

Singapore-based DBS Bank economist Gundy Cahyadi said the latest pronouncements of BSP Governor Nestor A. Espenilla Jr. signal a potential rate hike.

“Interesting that the BSP governor is finally prepping the markets Continued on A2

The property sector’s multifaceted growth Manny B. Villar

W

THE ENTREPRENEUR

hen we look at the continuously changing horizon in Metro Manila and other areas that are undergoing urbanization, it’s easy to say the Philippines is enjoying a real-estate boom.

I think that we’re actually just playing catch-up because our neighbors like Thailand, Malaysia and Singapore are still ahead in terms of property development.

Continued on A10

Tourism plan needs P2.3-T funding from private sector

US-version Silk Road: Is PHL ready for Internet’s dark side? @brownindio

T

Part Two

WO years before the People’s Republic of China (PROC) announced the revival of the “Silk Road,” the world was introduced to its online version.

But the year that the PROC announced the launch of its “One Belt, One Road,” the online black market and the first modern Dark Net market Silk Road was shut down.

While PROC’s Silk Road is focused on trading in construction materials, automobile, power and iron and

By Ma. Stella F. Arnaldo

steel, among others, the online version traded in illegal drugs.

The online marketplace was shut down after the arrest of Ross Ulbricht whom the Federal Bureau of Investigation accused to be the founder of Silk Road.

A research in 2014 has said “the very existence of an online cryptomarket for illegal drugs is a criminal innovation: it provides drug dealers with a virtual location to advertise and sell their products to a worldwide market, to do so anonymously, and to a great extent out of reach of law enforcement.”

@akosistellaBM Special to the BusinessMirror

T

Ortiz-Luis told the BusinessMirror. “I don’t see the logic of tinkering with it [VAT exemptions] at this stage,” he added.

Last week Finance Secretary Carlos G. Dominguez III said the national government is amenable to reducing the VAT rate, as proposed by Sen. Risa N. Hontiveros, if all lines of exemptions are eliminated.

HE country needs over P2 trillion in private-sector investments in the country’s key tourism destinations to lift foreign-visitor arrivals to 12 million by 2022.

Under the Duterte administration’s National Tourism Development Plan of 2017-2022, a copy of which was obtained by the BusinessMirror, the private-sector investments are being eyed for the acquisition of transport units (P1.6 billion), the establishment of more accommodations (P2.05 trillion) and the acquisition of aircraft (P238.2 billion). There is an estimated 120,00 shortfall in the number of hotel rooms in the country.

Private-sector investments to improve tourism infrastructure, including accommodations and transportation, along with government’s infrastructure investments, are seen giving jobs to 6.5 million people, and benefiting 541,000 poor individuals by 2022.

This developed as the Department of Tourism (DOT) encouraged micro-, small- and mediumsized enterprises (MSMEs) engaged

Continued on A2

See “Tourism plan,” A12

FESTIVE WALK MALL OPENING SET Megaworld Senior Vice President Kevin Tan inspects the Festive Walk Mall in Iloilo Business Park, the company’s biggest mall development outside of Luzon. The P2.2-billion project is Megaworld’s first full-scale shopping mall outside of Luzon.

Continued on A2

Govt told: Don’t touch VAT exemptions illustration BY JIMBO ALBANO

By Elijah Felice E. Rosales

The arrest of cyber criminals in the past years signaled that Asia and the Philippines is no longer immune from the Dark Web, a dimension of the Internet where criminal activities thrive.

PESO exchange rates n US 51.6560

business news source of the year

P25.00 nationwide | 4 sections 24 pages | 7 days a week

BMReports

By Rizal Raoul S. Reyes

2016 ejap journalism awards

T

@alyasjah

he government will commit a “grave mistake” if it would remove all valueadded tax (VAT) exemptions, as this would make a number of industries less competitive, the Philippine Exporters Confederation (Philexport) said.

Philexport President Sergio R.

Ortiz-Luis said VAT-exempted industries will “suffer heavily” if they will be stripped of their tax privilege. Take the case of exports, he said, wherein “little changes” could have a big impact on the sector.

“My initial impression [is that the] rate [of] VAT was a product of a lot of discussions and studies in the past, even the exemptions. It has worked so well that [it] propelled the growth of Philippine economy,”

n japan 0.4692 n UK 72.8711 n HK 6.6056 n CHINA 8.2006 n singapore 39.1601 n australia 40.8444 n EU 64.2394 n SAUDI arabia 13.7746

Source: BSP (5 February 2018 )

BMReports BusinessMirror

A2 Tuesday, February 6, 2018

www.businessmirror.com.ph

US-version Silk Road: Is PHL ready for Internet’s dark side?

Continued from A1

“This market functioned successfully because it was part of the hidden or ‘Deep Web,’ where all communications are anonymized by The Onion Router [Tor] service,” wrote authors by Judith Aldridge of the University of Manchester-School of Law and David Décary-Hétu of the University of Montreal-School of Criminology.

Asian scenario

AS far as Asia is concerned, the scenario is not encouraging as the “Dark Side” is becoming a strong force.

“Asia hasn’t advanced as much as the West in adopting law-enforcement monitoring capabilities, so these Dark Markets [remain] a haven for illicit activities,” F5 Networks Inc. Principal Threat Research Evangelist Raymond Pompon said.

Pompon said dark markets thrive where law enforcement is weak. He cited Manila as a haven of a major cybercrime lord.

“Paul Le Roux is the perfect local example of the dangers of a Dark Market. The former developer of TrueCrypt became an underworld crime-boss in Manila. He made millions selling illegal prescriptions in the Dark Market, and ultimately ordered the grisly assassinations of six Filipinos, including his own

OFWs. . .

Continued from A12

Bello said they are closely monitoring the conflict since it might lead to the displacement of more OFWs in Qatar in the long run.

“The diplomatic [conflict in the] relations between Qatar and the Middle East countries is worsening.... In fact the leader of our OFW organization visited me last week and informed me about the incidents of stoppage of work and separation of work,” Bello added.

Likewise, the DOLE is now also keeping a close watch in Saudi, as it struggles to cope with the decline of oil price in the international market, which started since 2014.

Lagunzad said the oil-rich country is now also cutting down its funds for its“development” and generous subsidies for its citizens after it saw a significant decline in its revenues.

This resulted in a sluggish Saudi economy, which led many establishments to stop their operations, leading to the displacement of workers. To deal with its rising unemployment,

Credit card. . .

Continued from A12

It added the same penalties are to be imposed on card skimming/data theft that will affect 50 or more ATM-based accounts, credit cards or online bank accounts.

The bill said mere possession of a card skimming device or any similar gadget used for unauthorized harvest of account data—even if no actual theft takes place—is also punishable with imprisonment of six to 12 years and fines ranging from P300,000 to P500,000.

It will also increase security for OFW remittances totaling $33 billion each

real-estate agent,”Pompon said in reply to questions sent via e-mail.

Le Roux, a Zimbabwe national by birth, wore many hats in his colorful life. Online reports described Le Roux as a former computer programmer, former criminal cartel boss and informant to the US Drug Enforcement Administration.

He is credited with developing the Encryption for the Masses software, which was first released on December 18, 1998. Le Roux has claimed the product has the power to encrypt entire disks and given the option of plausible deniability (denying the existence of an encrypted volume). Moreover, Le Roux claimed the software had been written “from scratch.”

laundering and selling technology to pariah states—around the world. In the course of business, he’d arranged the murder of at least half a dozen people, according to Ratliff.

Ratliff travelled to the Philippines and Israel, linked up with sources deep within Le Roux’s former criminal empire and obtained exclusive documents revealing Le Roux’s background, his operations and his cooperation with US authorities.

Threats to IT

EVAN Ratliff wrote in his article “The Mastermind,” published in the Atavist Magazine, that Le Roux became famous online through engaging in the Internet pharmacy business, specifically selling prescription drugs to Americans.

Le Roux profited from the business, earning him hundreds of millions of dollars, Ratliff wrote.

He added that Le Roux invested his profits into a wide ranging criminal activities—cocaine dealing, arms dealing, gold and timber smuggling, money

POMPON’S F5 Networks colleague David Holmes said AlphaBay is another example of dark markets operating in emerging markets.

Holmes, F5 Networks Worldwide Security Evangelist, said AlphaBay emerged as the world’s largest dark net after authorities in the west shut down Silk Road.

AlphaBay dealt in weapons, stolen Uber credentials, narcotics and stolen identities using Bitcoin and Monero as currencies, Holmes said. The founder Alexandre Cazes, was reported to have absconded with the holdings of several criminals operating through AlphaBay. After his identity was leaked, Cazes was found dead in a jail cell in Bangkok last July. The official report cited the cause of death as “probably suicide.”

the Saudi government started the more aggressive enforcement of its “saudization program,” wherein Saudi nationals will have priority of being hired for certain positions.

“There are now 19 categories [under the saudization program]. And they are adding some more...an example of these are drivers, which is now being reserved for Saudi nationals,” Lagunzad said. “This is the reason some Filipinos lost their jobs [in KSA].”

The impact of the Saudi’s economic woes also led its government to implement new income-generating policies, which include taxing the dependents of migrant workers living in Saudi.

“Children and dependents of some OFWs are now paying about 4,000 riyals per annum.

So the tendency is for our OFWs to send home their dependents because this is a cost in Saudi,” Lagunzad said. “ These are part of the economic adjustment of the Saudi to face the reality that oil prices will tend to be about just $50 per barrel.”

Bello said he will be deploying a rapid response team headed by Overseas

Worker Welfare Administration Deputy Administrator Arnel Ignacio to the Middle East this month so they could continue to monitor the status of OFWs in Qatar, Saudi and Kuwait.

Aside from displacement, he said the team will also asses the incidents of OFWs of who are being abused by their employers in the said countries.

Depending on the report of the team, Bello said he may consider suspending the deployment of OFWs in some Middle East countries. “At the end of the day we have to be sure of the welfare of our OFWs. So if we find out our workers are being abused, the department will not hesitate to impose a suspension or a deployment ban.”

According to the latest data of the Philippine Overseas Employment Administration, majority, or a million, of the1.6 million land-based OFWs deployed abroad in 2016 went to the Middle East.

Saudi remains their top destination with 460,121 deployed OFWs. Qatar came in third with 141,304 OFWs.

year, as well as the growing e-commerce/ online-shopping sector, which accounted for P60 billion in revenues last year.

The bill acknowledges the advances in information technology on access devices have been exploited by criminals and criminal syndicates in perpetrating fraudulent activities that ultimately undermine the trust of the public in the banking industry.

Due to this deleterious effect on the economy, the bill indicated that the state would declare the commission of a crime using access devices as a form of economic sabotage and heinous crime and shall be punishable to the maximum level allowed by law. House Committee

on Banks and Financial Intermediaries Chairman Ben Evardone of Eastern Samar said the bill will protect holders of more than 80 million ATM/credit cards currently in circulation.

According to Evardone, there are 76 million debit and prepaid cards currently in circulation, in addition to 8.5 million credit cards. He said losses from ATM fraud have surged alarmingly, from P175 million in 2012 to more than P600 million in 2016— a 250-percent increase in just four years.

“Add to this the reported P500 million stolen through fraudulent credit-card transactions in 2016 alone and one starts to get the scary picture. This has to stop,” Evardone said.

‘The Mastermind’

“We are also seeing a rise in child pornography [such as the Peter Scully case] and counterfeit medication production in the Philippines,” Holmes said. “There is also a lot of Bitcoin activity being brokered though that area, as well.” The discovery of trade in illegal drugs and marijuana through social-media platforms is just the tip of the iceberg, he added.

Nonetheless, Holmes and Pompon said they are not yet seeing cybercrime and trading in the Dark Net overwhelm any burgeoning technology development. Still, they admit these can divert attention away from legitimate enterprises and potentially drive away foreign investment.

“An environment that supports a rising tide of cybercrime can also be drain on local tech talent if there are no legitimate ways for youngsters to apply their skills to make money,”Holmes said.

“This has already happened in high-tech, low-opportunity and low-enforcement places like Russia and Brazil.”

Bulletproof hosting

TO combat cybercrimes and the Dark Markets, the F5 Networks officials suggest countries with “lesser techcapabilities” to form partnerships with other nations that have more advanced cybercrime capability. Since cybercrime does not recognize boundaries, it is in

everyone’s interest to help each other out and seek help when it’s needed, according to Holmes. A major part of that component should include recruiting and training local cybercops and private sector cyber-defenders.

“This [requires] support from the government in the form of outreach, resources and appropriately written legislature,” Holmes says.

Holmes also do not want to see the growth of “bulletproof hosting” Internet service providers (ISPs) in the region. He expressed this concern because “there are ISPs that are more lenient and tolerant of illegal activities on their hosted infrastructures.”

“Bulletproof hosters often become ‘Botnet Command and Control’ networks,” Pompon said. “Not only does this stain a country’s reputation, it can lead to network traffic being shunned globally, which consequently can hurt legitimate Internet businesses.”

Bulletproof hosting refers to a service provided by some domain hosting or Web-hosting firms that permits their customer a huge degree of leniency in the kinds of material they may upload and distribute. As a result, the leniency has been exploited by spammers and providers of online gaming or illegal pornography. To be concluded

Govt told: Don’t touch VAT exemptions

Continued from a1

Hontiveros has recently filed Senate Bill (SB) 1671, or the “Bawas VAT” bill, which intends to trim the VAT rate to 10 percent from 12 percent, to provide relief to consumers hit by the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) law.

The TRAIN had several VAT exemptions removed, except on raw food, agricultural products, renewable energy, health and education, as well as for senior citizens, persons with disabilities, cooperatives and direct exporters.

This, for Ortiz-Luis, is not enough for the government to tinker with VAT. “There are issues [in the] TRAIN that should be addressed, but to touch VAT that was

a product of a long study and [is] very successful is something else.”

“If there’s a problem with the implementation with TRAIN, government must work on it, but don’t touch other items,” he added.

The Philexport chief explained exporters benefitted significantly from being exempted from VAT, and this contributed to the growth of the country’s economy. Thanks to the tax privilege, he said exporters have remained competitive in the past decade.

Senators are currently assessing Hontiveros’s measure to reduce the VAT rate and Dominguez’s counter offer to remove the exemptions.

The VAT rate was increased to 12 percent, from 10 percent in 2006.

Villar vows to go after rice cartels manipulating prices Continued from a12

possibility that some quarters are “creating something like [an artificial] shortage so people will panic and buy more than they need.”

Rice prices

Data from the Philippine Statistics Authority (PSA) showed that, as of the third week of January, the average farm-gate price of paddy rose by 7.81 percent to P19.81 per kg, from the previous year’s P17.79 per kg. The figure is also slightly higher than the P19.06 per kg recorded in the second week of January.

On a monthly basis, PSA data indicated that the latest quotation was 1.34 percent higher than the P18.92 per kg recorded in the third week of December.

The average farm-gate price recorded during the period is higher than the NFA’s support price. The food agency attached to the Office of the President buys paddy from farmers at P17 per kg, depending on quality.

In a report, the PSA also said the average retail prices of well-milled rice and regular milled rice posted increments for the eighth consecutive week since December.

“The average retail price of well-milled rice at P42.42 per kg went up from the previous week’s level by 0.07 percent. Relative to the same period last year, it was also higher by 2.22 percent,” the

PSA report read.

“At the retail trade, the average price of regular milled rice during the week at P38.45 per kg posted an uptick of 0.34 percent, from P38.32 per kg in the previous week. Compared to the same period a year ago, it also climbed by 3.58 percent,” it added.

Data from the PSA also showed that the wholesale price of wellmilled rice rose by 3.24 percent to P39.54 per kg, from last year’s quotation of P38.30 per kg.

The wholesale price of regular milled rice as of the third week of January was pegged at P36.40 per k g , 5. 51 percent h ig her than the P34.50 per kg recorded a year ago.

“The average wholesale price of regular milled rice at P36.40 per kg exhibited a price increase of 1.36 percent from the previous week’s level,” the PSA report read.

The NFA said earlier that the average farm-gate and retail price of rice usually goes up during the lean months, when the harvest of the staple declines significantly.

Farmers have already harvested their main crop. Harvest for the dry season crop would start in March.

The food agency cited the high buying price of commercial traders as the main reason behind its failure to increase its procurement of paddy from farmers last year.

BSP prepping markets for first rate hike since 2014 Continued from A1

for a potential rate hike, in a bid to contain the potential secondround inflationary impact from the government’s tax reforms. We had been calling for higher rates in the Philippines since mid-2017, and we may finally see the Central Bank moving this week or in March,” Cahyadi noted.

Just last week, the Central Bank chief said the looming price pressures coming in early-2018, and how these will be contained, will be the center of the Monetary Board’s (MB) discussion on February 8— the first monetary-policy meeting of the BSP for the year.

“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,” Espenilla told reporters.

Following this statement, Cahyadi said the BSP may deliver a 25 basis-point rate hike soon —either this week or in the second MB meeting of the year in end-March. This will effectively bring the BSP’s main policy rate to 3.25 percent, from the current 3 percent.

The next monetary-policy meeting of the BSP after February 8 is on March 22.

In the last MB meeting for 2017, the BSP maintained its inflation forecasts unchanged, particularly at 3.4 percent for 2018 and 3.2 percent for 2019.

Inf lation projections, however, are expected to reflect upward adjustments, after the BSP said inflation for January alone is seen to near the ceiling of its 2-percent to 4-percent target range. The BSP said inf lation could have opened the year at a rate somewhere between 3.5 percent and 4 percent.

“As far as inf lation is concerned, we are also of the view that inflationary pressures are on an upward trend, partly due to higher taxes imposed this year,” Cahyadi said. “ But t he m a i n re a son we think that policy normalization is imminent is the fact that the domestic economy is robust and it can withstand a gradual adjustment in interest rates,” he added.

Last Friday the International Monetary Fund (IMF) told the BusinessMirror the BSP’s current monetar y-polic y stance, which has been in place since 2014, remain appropriate for the recent economic developments.

The global monetary authority, however, warned that the BSP should stand ready to tweak its monetary-policy settings should inflation get out of hand.

In a response to a query, IMF Resident Representative to the Ph i l ippi nes Yong zheng Ya ng said their current forecasts still yield a within-target inflation for the year.

This is despite the recent forecast of the BSP indicating inflation could fall within 3.5 percent to 4 percent in January, due to the rising price pressures in petroleum rates, as well as the first impact of the recently implemented tax-reform program.

“We still believe that the current monetary-policy stance is appropriate,” the IMF official said.

“Our current forecast is that inflation will stay within 2 percent to 4 percent for the year.

We have noticed the latest BSP update on the inf lation outlook and continue to think that the BSP should stand ready t o t i g ht e n mone t a r y p ol ic y shou ld inf lation pressures build,” he added.

The Nation BusinessMirror

www.businessmirror.com.ph

DOJ’s Aguirre tells PAO: Proceed with autopsy of Dengvaxia victims

By Joel R. San Juan @jrsanjuan1573

T

HE Public Attorney’s Office (PAO) may continue the conduct of autopsies on children who had supposedly died after getting the anti-dengue vaccine Dengvaxia, despite calls aired by medical experts to stop the procedure and leave the matter to forensic pathologists.

Justice Secretary Vitaliano N. Aguirre II, who earlier tapped the PAO, headed by lawyer Persida Acosta, to provide legal assistance to families of supposed victims of Dengvaxia vaccines, said he sees no basis just yet to order PAO to cease the ongoing autopsies.

“I have no order for PAO to stop the autopsies,” he said in a text message on Monday.

But Aguirre added he is ready to hear the reasons of the group of doctors, led by former Health Secretary Esperanza I. Cabral, in opposing PAO’s autopsies.

“I welcome the group of Secretary Cabral to give its written position to us why the autopsies should be stopped,” the justice chief suggested.

Esperanza’s group called, Doctors for Public Welfare, earlier appealed to the Department of Justice (DOJ) to enjoin the PAO forensic team, led by Dr. Erwin Erfe, from further conducting autopsies and instead “leave the matter of determining the cause of death to competent forensic pathologists.”

The group claimed that Erfe is not a qualified forensic pathologist and was actually “wrong in practically all of the 14” cases he examined based on the results of the forensic tests conducted by pathologists in University of the Philippines-Philippine General Hospital.

Esperanza claimed that only one of the 14 deaths examined so far “might be causally associated with the vaccine.”

But it was revealed in the House hearing on Monday that there were three cases of death in the 14 cases

that were found to be caused by severe dengue after getting Dengvaxia vaccine, subject to further tests.

The group also lamented how the reported findings of PAO in the media have been causing public panic and discouraging parents from availing their children of other immunization programs.

It can be recalled that the DOJ issued Department Order 792 last December tasking PAO to “extend free legal assistance in civil, criminal and administrative cases to all possible victims of Dengvaxia-related injuries, illnesses and deaths.”

In compliance with the DOJ’s directive, Acosta then tapped a team of PAO lawyers to gather statements and documentary evidence from parents and guardians of children who developed severe dengue after getting the Dengvaxia vaccine.

Several parents of the supposed victims of Dengvaxia have already sought assistance from PAO. Apart from PAO, the DOJ also ordered the National Bureau of Investigation to conduct a factfinding probe to determine possible liabilities of officials behind the P3.5-billion project that was approved by former Health Secretary Janette L. Garin during the Aquino administration.

The controversy on Dengvaxia broke following the advisory from French-based phar maceutica l company Sanofi Pasteur, saying new clinical analysis has found the vaccine is effective for people who have had dengue prior to immunization, but citing a risk of a “severe” case of dengue for people who have not.

As a result, 10 percent of the over 700,000 schoolchildren who received the shots are now believed to be at risk of developing severe case of the disease.

Health Secretary Francisco T. Duque III immediately ordered the suspension of the dengue vaccination program pending recommendation on further action from experts from the World Health Organization.

Editor: Vittorio V. Vitug • Tuesday, February 6, 2018 A3

Group criticizes BFAR’s ‘weak’ stance on PHL Rise exploration

T

By Jonathan L. Mayuga

@jonlmayuga

he Pambansang Lakas ng Kilusang Mamamalakaya ng Pilipinas (Pamalakaya) on Monday scored the head of the Bureau of Fisheries and Aquatic Resources (BFAR) of the Department of Agriculture for what the group described as “cowardly submissive position” on the Philippine Rise in connection with the joint marine research between the Philippines and China in the vast underwater territory.

The 13-million hectare underground plateau 250 kilometers off Aurora Province is the country’s newest territory by virtue of the United Nations Convention on the Law of the Sea, which declared the Philippine Rise as part of the Philippine continental shelf in 2012.

In a news statement, Pamalakaya singled out BFAR Director Eduardo Gongona’s “clumsy statement” during a discussion last week declaring that “it is okay for us to share resources with China” to supply its citizens our marine products.

“This wasn’t what we want to hear from the Bureau of Fisheries who is supposed to be on the frontline of defending Philippine Rise’s marine resources. After some time of keeping mum in the midst of the raging controversy regarding the Philippine Rise, the BFAR just finally came out, but with a cowardly submissive position,” said Fernando Hicap, Pamalakaya chairman.

To recall, the Philippine Rise has been designated as a “protected food supply exclusive zone” by the Philippine government in May 2017. Mining and oil exploration is banned in the territory as a protected area.

However, Pamalakaya said, the Philippine government and China have only reached an agreement for joint research, and not a sharing of resources.

“The BFAR has already offered the sharing of resources when the Philippine government and China have only achieved a joint research agreement in the first place. The country has yet to fully tap the resources in Philippine Rise, so why would we let other countries lead the exploration and exploitation,” Hicap said.

Environmental groups like Oceana Philippines, Save Philippine Seas, Greenpeace Southeast Asia and Marine Wildlife Watch of the Philippines are pushing for the crafting

of a management framework for the Philippine Rise and wants the Benham Bank, the shallowest portion of the underwater plateau, as “no-take zone” to preserve its integrity.

Scientists believe that the Philippine Rise could be the country’s last ecological frontier as far as its marine territory is concerned.

Only about 5 percent of the country’s corals remain healthy or intact and preserving the Philippine Rise ecological soundness gives hope in providing a variety of coral recruits for the natural or man-aided regeneration of completely damaged or destroyed coral areas in the country.

Opposite to the disputed South China Sea, the Philippine Rise, formerly known as Benham Rise, is a traditional ground of Filipino fishermen in Luzon. It is rich in biodiversity, including a 100-percent—or perfect—coral cover, and was reported to be thriving with marine life.

Initial exploration conducted

by Filipino scientists also revealed that the area is a spawning ground of commercially viable fish like the bluefin tuna.

Aside from China, the Duterte administration has approved research applications from several countries,

The BFAR has already offered the sharing of resources when the Philippine government and China have only achieved a joint research agreement in the first place. The country has yet to fully tap the resources in Philippine Rise, so why would we let other countries lead the exploration and exploitation.”—Hicap

DENR awards land patent, seized logs to Cagayan de Oro Army men

Marcos to Robredo: Sign joint motion to hasten vote recount

T

T

he Department of Environment and Natural Resources (DENR) has awarded to the Army in Cagayan de Oro a special patent covering over 4 hectares of land within Camp Evangelista.

The special patent was awarded by Environment Secretary Roy A. Cimatu to the 4th Infantry Division (ID) during its 48th founding anniversary commemoration on February 2, the DENR reported in a news statement.

The special patent for 43,547 square meters of public land was received by Lt. Gen. Rolao Joselito Bautista, who turned it over to 4th ID commander Maj. Gen. Ronald C. Villanueva.

At the same time, the DENR chief, a former Armed Forces of the Philippines (AFP) chief of staff himself, signed the deeds of donation covering 50,000 board feet of confiscated lumber to the 4th ID and the 103rd Infantry Brigade (IB) of the 1st ID based in Kampo Ranao, Marawi City.

The 4th ID got a total of 40,000 board feet, while the 103rd IB got the remaining 10,000 board feet.

The donations will be used for the repair and construction of facilities in the two military camps.

Cimatu, who once served as division commander of the 4th ID, meanwhile, gave DENR-Region 10, led by its Regional Director Arleigh J. Adorable, a pat on the back for its accomplishment and lauded the official for facilitating the award of the special patent to the 4th ID of the Army.

A special patent is awarded by the DENR on public land actually occupied and used for public schools, municipal halls, public plazas or parks and other government institutions.

The Caraga regional office of the DENR facilitated the donation of the lumber, composed mostly of lauan species. Jonathan L. Mayuga The DENR is in partnership with the AFP, particularly the Army, in its campaign against illegallogging activities, particularly in areas that are considered illegal-logging hot spots. There are currently 23 illegal-logging hot spots in the Philippines mostly in Mindanao. Jonathan L. Mayuga

such as Japan, the United States and South Korea.

Pamalakaya strongly opposed the conduct of such joint research in the Philippine Rise, saying it is a gross violation of the country’s patrimony and is tantamount to surrender of the country’s sovereign rights.

Mocking Gongona, Hicap said: “In case Director Gongona was just born yesterday, the objective of China in Philippine Rise is not to provide food for its citizens but to exploit its resources, especially the oil and gas reserves, for its greedy industrial activities, as well as it is part of Beijing’s territorial expansion to consolidate its power in the region.”

“The BFAR should be alarmed over China’s keen interest in Philippine Rise and immediately craft a policy prohibiting foreign vessels, not only China’s, to enter our exclusive continental shelf in order to preserve the resource-rich plateau for future use of the Filipino fisherfolk,” Hicap added.

Pamalakaya said the BFAR must reject the joint research with China, US, Japan and South Korea because such activity violates not only the country’s sovereign rights but also the right of the Filipino people explore their own fishing resources.

Engine check A driver checks the engine of his jeepney before embarking on a trip while parked along a street in Pasay City. The Inter-agency for Traffic continues to

implement its “Tanggal Bulok, Tanggal Usok” drive as part of government efforts to rid the city streets of old, dilapidated and smoke-belching public-utility vehicles. ALYSA SALEN

he camp of former Sen. Ferdinand R. Marcos Jr. has challenged Vice President Maria Leonor G. Robredo to sign a joint motion withdrawing all outstanding motions and proceed to a recount, and “clear the issue conclusively on the ballot images, undervotes and overvotes.”

In a news statement issued over the weekend, spokesman lawyer Vic Rodriguez said Marcos has instructed the drafting of the joint motion.

In so doing, Rodriguez said, “We could hasten the process and go straight to the ballots. The ballots are the best evidence and we should just proceed with the recount.”

Rodriguez added that the young Marcos believes that an issue as fundamental as the conduct of an elections should not be kept hanging for years on end. Unfortunately, he added, “in the vice-presidential race, it has been almost two years and we have yet to see a single ballot.”

Rodriguez said Marcos also believes he’s not only proposing the filing of the joint motion for himself, but for the rest of the Filipino people who deserve to know the truth.”

Promotion for 753 cops who fought in Marawi, repulsed NPA attack

M

embersoftheJointTaskGroup-PhilippineNationalPolice(JTG-PNP),who sawactioninMarawiCityattheheight of the terrorist-inspired rebellion last year, have been promoted to the next higher rank.

The 745 members of the group were among the 753 Police Commissioned Officers and Noncommissioned Officers promoted to

the next rank on Monday, according to PNP spokesman Chief Supt. John Bulalacao.

The “special” promotion was signed by PNP chief Director General Ronald M. dela Rosa.

Dela Rosa approved the meritorious promotions of the 745 members of JTG-PNP for their “invaluable and exemplary involvement” in the liberation of Marawi City from the hands

of the Islamic State and Maute group.

Aside from the members of the JTG-PNP, also covered by the special promotion were the eight members of the Binuangan Municipal Police Station in Misamis Oriental, who repulsed a recent attack by the New People’s Army.

“Eight police officers from Binuangan MPS displayed conspicuous courage and gal-

lantry in action and outstanding accomplishment involving risk of life, above and beyond the call of duty for successfully defending their station during the attack perpetrated by more or less two hundred members of New People’s Army on December 3, 2017,” the PNP Directorate for Personnel and Records Management said. Rene Acosta

Economy

A4 Tuesday, February 6, 2018 • Editors: Vittorio V. Vitug and Max V. de Leon

PHL’s mobile, fixed broadband download speeds continue to improve–Speedtest report

A

recent speed-test repor t showe d t h at t he country’s average download speed for mobile broadband has improved by as much as 80.77 percent to 13.45 megabits per second in December 2017, from 7.44 Mbps in July 2016, along with the fixed broad band which rose 92.03 percent to 15.19Mbps, from 7.91Mbps, during the same period.

According to the Speedtest Global Index Report of December 2017, the monthly average for both the mobile and fixed broadband has grown steadily in the Philippines since July 2016, owing to improved Internet services.

President Duterte has repeatedly called on industry players to shape up or face competition. Just recently, he has opened the telecommunications sector to a third player to boost competition and Internet service in the country.

Faster Inter net speed and availability are also expected to improve further with the implementation of the National Broadband Plan by the Department of Information and Communications Technology.

In the same report, Speedtest said the Philippines’s average download speed for mobile broadband climbed steadily, from 7.44 Mbps (July 2016), 7.7 Mbps (August 2016), 8.18 Mbps (September 2016), 8.56 Mbps (October 2016), 8.59 Mbps (November 2016), 9.53

Mbps (December 2016), 9.34 Mbps (January 2017), 10.07 Mbps (February 2017), 9.73 Mbps (March 2017), 9.71 Mbps (April 2017), 9.93 Mbps (May 2017), 10.32 Mbps (June 2017), 10.29 Mbps (July 2017), 10.47 Mbps (August 2017), 11.95 Mbps (September 2017), 12.31 Mbps (October 2017), 12.35 Mbps (November 2017) and 13.4 Mbps (December 2017).

For f i xe d broad ba nd , t he country’s monthly average also cont i nued to t rend upw a rd , from 7.91 Mbps (July 2016), 8.54 Mbps (August 2016), 8.76 Mbps (September 2016), 8.60 M b p s (O c t o b e r 2 016), 9. 3 5 Mbps (November 2016), 9.71 Mbps (December 2016), 10.16 M bps (Ja nu a r y 2017), 10.68 Mbps (Februar y 2017), 10.81 Mbps (March 2017), 10.84 Mbps (April 2017), 10.96 Mbps (May 2017), 11.66 Mbps (June 2017), 12.43 Mbps (July 2017), 13.29 Mbps (August 2017), 13.41 Mbps (September 2017), 13.13 Mbps (October 2017), 14.42 Mbps (November 2017) and 15.19 Mbps (December 2017).

Speedtest by Ookla is the global leader in Internet performance testing and consumer-initiated network diagnostics with over 10.2 billion speed tests clocked worldwide. Speedtest Intelligence is a trusted and vital research and analysis tool used by businesses, industry associations and government agencies.

BusinessMirror

www.businessmirror.com.ph

Senate OKs national energy efficiency bill on 3rd reading

T

By Butch Fernandez

@butchfBM

he Senate, voting 18-0 on Monday, approved on third and final reading a bill creating a “comprehensive framework for energy efficiency and conservation” to serve as an alternative approach to ensure “sustainable, stable and affordable” power supply.

Its principal author, Sen. Sherwin T. Gatchalian, said Senate Bill (SB) 1532, to be known as the Energy Efficiency and Conservation Act of 2018, was crafted to advance energy efficiency and conservation practices in the country.

In mov ing for its approval, Gatchalian said the proposed law “lays down the foundation for a comprehensive energy-efficiency and -conservation policy that would mandate the efficient and judicious use of energy resources, and promote the development and utilization of both new and alternative sources of energy-efficient technologies and systems.”

He added: “We are helping shape the consciousness of our consumers, including the government,

through a change in the policy regime regulating energy consumption. The strategies detailed in this measure are all poised to provide not only savings for the government, but also more money in people’s pockets.”

Gatchalian, who chairs the Senate Committee on Energy, estimates that, if the country’s energy efficiency reaches half as the energy efficiency of Germany—considered as among the most energy-efficient countries in the world—the Philippines can achieve savings of around P1.6 trillion from a period of 2018 to 2030, or a P126.4 billion average annually.

“Reaching fully similar energy efficiency standards with that of Germany could result, on the oth-

₧1.6T The projected energy savings covering the 2018to-2030 period, or P126.4 billion annually, with the implementation of the Energy Efficiency and Conservation Act of 2018

er hand, to an estimated savings of P420 billion yearly or around P5.5 trillion on the same period,” he added.

The approved SB 1532 mandates the creation of a National Energy Efficiency and Conservation Plan defining national targets, details feasible strategies and imposes a regular monitoring and evaluation system, the lawmaker said, adding, “Alongside this will be the development and maintenance of a National Energy Efficiency and Conservation database, where relevant information about energy consumption, as well as the application of energy-efficient and renewable-energy technologies shall be centrally stored.”

Gatchalian said the remedial legislation would also institutionalize these energy-efficiency and

-conservation standards and strategies in local governance through the creation of a Local Energy Efficiency and Conservation Plan, and the inclusion of Guidelines on Energy Conserving Design on Buildings in the issuance of building permits.

“To further encourage complete compliance to the energy standards to be proposed,” he added, “the measure would include incentives, as well as technical assistance from government agencies.”

At the same time, the proposed law would create an Inter-Agency Energy Efficiency and Conservation Committee tasked to provide strategic directions in the implementation of the Government Energ y Management Program, a program aiming to reduce monthly consumption of electricity and petroleum products by the government.

“We sincerely thank our colleagues for their support. With its passage today, we are moving yet another step forward toward realizing efficient ways of utilizing energy in the country that are attuned to acceptable international standards,” Gatchalian said.

Upon its enactment into law, the senator added that the Department of Energy shall be the lead government agency tasked to ensure the proper implementation of the measure.

DOE starts IMO shift for WESM

By Lenie Lectura

@llectura

T

he Department of Energy (DOE) has issued a policy governing the establishment of an independent market operator (IMO) of the Wholesale Electricity Spot Market (WESM).

Under Department Circular No. DC2018-01-0002, otherwise known as “Adopting Policies for the Effective and Efficient Transition to the IMO for the WESM,” the DOE and the Energy Regulatory Commission (ERC) will ensure fair competition and promotion of public interest as envisioned in the Electric Power Industry Reform Act (Epira).

“WESM is an added option for the electricity sources of our consumers, especially [in] addressing the stability and efficiency of power supply,” Energy Secretary Alfonso G. Cusi said.

The policy on IMO outlines the mandates of the DOE and the ERC over the operator; its guiding principles; composition, including a board composed of at least five members; its functions; and WESM’s new governing and governance structure and the conditions for transition.

In particular, the issuance will provide guidelines on the

procedures for:

Establishing the merit order dispatch instructions for each time period;

Determining the market-clearing price for each time period;

Administering the market, including criteria for admission to and termination from the market, which includes security or performance bond requirements, voting rights of the participants, surveillance and assurance of compliance of the participants with the rules and the formation of the wholesale electricity spot market governing body;

Prescribing guidelines for the market operation in system emergencies; and

Amending the rules.

The circular on IMO, which was published on February 4, takes effect immediately.

“This policy on IMO will ensure full public accountability to safeguard, foremost, our energy consumers,” Cusi said.

The WESM is currently being operated by the Philippine Electricity Market Corp. (PEMC), a 15-man body led by the secretary of the DOE, and is composed of representatives from each sector of the electric-power industry, as well as

independent members.

The PEMC was incorporated in 2003 and was constituted as the autonomous group market operator to oversee market governance, and perform the functions of the market operator in the WESM. Under the Epira of 2001, PEMC is supposed to last for only one year and would transition to an IMO. So far, PEMC has existed for 12 years now.

In the meantime, PEMC is being led by a five-man transition committee composed of the following: former ERC Chairman Oscar Ala, as PEMC president; Francis Saturnino Juan, former ERC executive director; Rauf A. Tan, former ERC commissioner; Jose Mari T. Bigornia and concurrent chairman of the National Renewable Energy Board Jose M. Layug.

Cusi sits as PEMC chairman. Aside from Cusi, the PEMC board is being governed by Ronald Dylan P. Concepcion, Victor Emmanuel B. Santos, Emmanuel V. Rubio, Neeraj Bhat, Deon James, Rolando M. Cagampan, Octavius M. Mendoza, Allan L. Laniba, Noel V. Aboboto, Jesus L. Arranza and Peter L. Wallace.

A department circular gives the committee seven months from August 1 to complete its tasks while PEMC transforms into an IMO.

Kuwait ready to sign new OFW welfare pact, says DOLE’s Bello

By Samuel P. Medenilla @sam_medenilla

F

ollowing the decision of the Department of Labor and Employment (DOLE) to restrict the deployment of overseas Filipino workers (OFW) to Kuwait last month, the Kuwaiti government appears to be ready to sign a new bilateral agreement with the Philippine government to improve the welfare of Filipino workers within its territory.

Labor Secretary Silvestre H. Bello III said he was approached by the Kuwaiti ambassador to discuss the signing of the new bilateral agreement.

“The ambassador assured me that as soon as I will lift [the deployment restriction], I would go to Kuwait to sign the bilateral agreement,” Bello told reporters in an ambush interview.

On January 19 the DOLE suspended the processing of overseas employment certificates (OEC) for Filipinos bound for Kuwait pending the result of its investigation on the “suspicious” deaths of seven Filipinos in the said Arab country in previous months.

A day before the suspension, the issue was also raised by President Duterte during his speech at the launch of the Overseas Filipino Bank.

Bello said he will only lift the suspension if the report will show the welfare of the deceased OFWs were protected by the Kuwaiti government.

Bello added he already got an initial report on the said cases from their labor attache in Kuwait last Friday based on the findings of the Department of Foreign Affairs (DFA) and the Ministry of Interior of Kuwait (MIK).

However, Bello said he had ordered the Philippine Overseas Labor Office and the Institute of Labor Affairs Bureau to conduct another report on the matter to clarify the “contradicting” findings of the DFA and the MIK on the cause of death of the seven OFWs. “I also told him [labor attaché] to also include his findings and recommendations on the matter,” Bello added.

The labor chief said he expects the final report to be submitted to him this week.

“So anytime this week, we would be coming up with our decision on whether to make the suspension a ban or to lift it depending on the report. Of course in close coordination with the office of the President, who will have the final say,” Bello added.

www.businessmirror.com.ph

Banking&Finance BusinessMirror

Editor: Jun B. Vallecera • Tuesday, February 6, 2018 A5

DBS sees a rate hike happening in Q1

T

By Bianca Cuaresma @BcuaresmaBM

he monetary authorities are believed to have set the conditions making it possible for the Bangko Sentral ng Pilipinas (BSP) to hike the policy rates as early as this week, according to a foreign economist.

In a statement, Gundy Cahyadi, economist at DBS Bank, said the latest pronouncements from BSP Governor Nestor A. Espenilla Jr. indicate that the BSP is already prepping the markets for a rate hike.

Just last week, the governor said price pressures coming in early this year and how these will be contained form the core of discussions at the schedule monetary board meeting on February 8, the first rate-setting meeting of the BSP this year. “ 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,” Espenilla told reporters.

Given this development, Cahyadi said the BSP may deliver a 25 basis point rate hike either this week, or alternately at the second rate-setting meeting this year toward the end of March. Such would effectively bring the BSP’s main policy rate to 3.25 percent from the current 3 percent.

“Interesting that the BSP governor is finally prepping the markets for a potential rate hike, in a bid to contain the potential second-round inflationary impact from the government’s tax reforms. We have been calling for higher rates in the Philippines since mid-2017, and we may finally see the Central Bank moving this week or in March,” Cahyadi said.

The next rate-setting meeting of the BSP after the February 8 meeting will be

Security Bank earnings up 20% ₧10.3 billion in 2017

S

ecurity Bank Corp.’s net income grew 20 percent to a record-high P10.3 billion in 2017. This was driven by a 22-percent increase, or P3.5 billion, in net interest income to P19.4 billion and a 15-percent growth in noninterest income to P5.7 billion. Trading gains amounted to P2.4 billion, up 36 percent.

Service charges, fees and commission income was P2.2 billion, up 3 percent. Total revenues increased 20 percent to P25.1 billion.

For the fourth quarter of 2017, net income increased 49 percent to P2.9 billion, driven by a 16-percent growth in net interest income to P5 billion and gain on sale of securities of P1.3 billion.

Loans increased 28 percent to P369 billion. Wholesale loans grew 25 percent, of which corporate loan growth was 25 percent and middle market loan growth was 24 percent. Consumer loans continued with its trajectory, growing 49 percent. Consumer loans account for 16 percent of total loans, up from 13 percent in 2016. Deposits grew 19 percent, with low-cost deposits growing 18 percent. Net interest margin improved to 3.3 percent in the fourth quarter of 2017, from 3.2 percent of previous quarter and 3.1 percent a year ago.

Asset quality remained healthy with net nonperforming loan (NPL) ratio at 0.02 percent at year-end 2017, an improvement from 0.11 percent of third quarter 2017.

Provision for credit losses during the year was P656 million. NPL reserve cover increased to 239 percent at year-end 2017, from 220 percent of previous quarter.

The cost-to-income ratio was 49.8 percent. Operating expense growth, excluding provisions for credit and impairment losses, was 19 percent due to higher gross receipts taxes, a 14-percent growth in manpower cost, and a 48-percent increase in depreciation, amortization and software costs. Security Bank has been supporting the growth of its retail banking and core businesses with investments in manpower, digital platform, major information-technology upgrade and 13 new branches opened during the year. The bank has 303 branches and 713 automated teller machines at year-end 2017.

Total assets grew 9 percent to P756 billion. Shareholders’ capital was P105 billion, up 8 percent. Return on average shareholders’ equity was 10.2 percent. Return on average assets was 1.5 percent. Capital adequacy ratios were healthy, with common equity Tier 1 ratio at 15.5 percent and total capital adequacy ratio at 17.7 percent. The book value per share was P139.31 as of December 31, 2017, up 8 percent from year-ago level.

During the year, Security Bank paid cash dividends of P3 per common share, an increase from P2 per common share in 2016.

Yellen says prices ‘high’ for stocks, commercial real estate

O

utgoing Federal Reserve (the Fed) Chairman Janet Yellen said United State stocks and commercial realestate prices are elevated but stopped short of saying those markets are in a bubble.

“Well, I don’t want to say too high. But I do want to say high,” Yellen said on CBS’s Sunday Morning in an interview recorded last Friday as she prepared to leave the central bank. “Price-earnings ratios are near the high end of their historical ranges.”

Commercial real-estate prices are now “quite high relative to rents,” Yellen said. “Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.”

Yellen, 71, stepped down as the Fed chief last Saturday after one term, after President Donald J. Trump opted to replace her with Republican Jerome Powell, who’s been a Fed governor since 2012.

“I made it clear that I would be willing to serve, so yes, I do feel a sense of disappointment” about not being renominated, Yellen said. The only woman to serve as the head of the US central bank described her work at the Fed as “the core of my existence.” Yellen said she’s supportive of former investment banker Powell, 64, whom she termed

“thoughtful, balanced and dedicated to public service.”

The financial system is now “much better capitalized” and the banking system “more resilient” than they were entering the global financial crisis a decade ago, Yellen said.

“What we look at is, if stock prices or asset prices more generally were to fall, what would that mean for the economy as a whole?” Yellen said. “And I think our overall judgment is that, if there were to be a decline in asset valuations, it would not damage unduly the core of our financial system.”

Yellen’s final act at the Fed was to hit one of the largest US banks, Wells Fargo & Co., with an unusual ban on growth that follows the San Francisco-based lender’s pattern of consumer abuses and compliance lapses.

In the interview that aired last Sunday, she warned that it would be a “grave mistake” to roll back the regulations put on banks after the previous economic collapse.

The current US economic expansion is now approaching nine years and is the third longest in duration since 1945, according to the National Bureau of Economic Research.

Yellen said the economy can continue to grow. “Yes, it can keep going,” she said. “Recoveries don’t die of old age.”

on March 22.

At the final monetary-policy meeting in 2017, the BSP kept the forecast inflation unchanged at 3.4 percent for 2018 and 3.2 percent for 2019.

Inflation projections, however, are expected to reflect upward adjustments, after the BSP said inflation for Janaury alone is seen to near the ceiling of its 2-percent to 4-percent target range.

The BSP said inf lation could have opened the year at a rate somewhere between 3.5 percent to 4 percent.

“As far as inflation is concerned, we are also of the view that inflationary pressures are on an upward trend, partly due to higher taxes imposed this year,” Cahyadi said.

“But the main reason we think that policy normalization is imminent is the fact that the domestic economy is robust and it can withstand a gradual adjustment in interest rates,” he added.

There are those who argue, including Deputy BSP Governor Diwa C. Guinigundo, against such an adjustment so soon in the country’s monetary history when liquidity conditions are such that banks are able to meet the credit demand and without having to contend with price pressures.

Guinigundo had said there is a time for everything, especially in monetarypolicy crafting.

He argued that credit and liquidity are both buoyant and that these numbers are in keeping with the continued expansion of the economy.

He also said more recent macroprudential tools have been in place precisely to help guide the economy down the continued expansion path without having to compel the monetary authorities to take more drastic measures to address the impact of excess liquidity arising, for example, from the adoption of the higher excise tax on so-called sin products.

DBP commits funds for MSMEs

By Rizal Raoul S. Reyes

@brownindio

Contributor

S

tate-owned Development Bank of the Philippines (DBP) on Monday “renewed its pivot” to support developing the micro, small and medium enterprises (MSMEs) with the launching of two new programs aimed at providing greater credit access to small business owners and poultry owners, according to its top official.

DBP President and Executive Officer Cecilia Borromeo said the DBP Small Business Puhunan Loan (SBPL) and DBP Broiler Contract Growing Programs (BGCP) manifest the government financial institution’s commitment to enhance the capability of small entrepreneurs in the country and boost entrepreneurship.

“These two programs are designed to remove the barriers that impede the growth of MSMEs, such as lack of access to bank financing and slow loan processing,” Borromeo said in a spot interview at the sidelines of the event held in Makati City.

“Our hope is that through these initiatives, more entrepreneurs will be able to sustain their businesses and contribute to the growing economy,” Borromeo added.

Borromeo said the recent recognition given to DBP by The Asian Banker-Philippine Country Awards as SME Bank of the Year in 2017 serves as a motivation to give more focus this year. With assets reaching P597 billion in 2017, she said DBP

Case clippings

By Justice S J Ranada Jr. CORPORATIONS–suits after winding up period On the basis of Section 122 of the Corporation Code, a defunct corporation loses the right to sue and be sued in its name upon expiration of the three-year period provided. Jurisprudence, however, has carved out an exception to the rule; it has been ruled that an appointed receiver, an assignee or a trustee may institute suits or continue a pending action on behalf of the corporation, even after the winding up period.

Reyes v. Bancom 11 Jan. 2018

GR 190286 Sereno, C J

has a large headroom for granting loans to MSMEs. “We want to grant more loans to the MSMEs,” she pointed out.

She said DBP can sustain the growth in 2018. She added these programs could help spread the word that DBP is catering to the MSMEs. Also, Trade Undersecretary Zenaida Maglaya said the Department of Trade and Industry (DTI) will continue implementing its capacity-building programs through seminars on entrepreneurship, proper management of the business, product improvement, to help make products saleable and more attuned to the market and opening up the markets and boosting the One Town, One Product program.

“These programs will complement the latest initiatives of the DBP,” Maglaya said.

To ensure the small entrepreneurs are on the right track, Maglaya said the DTI’s mentoring program, called Mentor ME (Micro Entrepreneur), is a continuous process of guiding MSMEs and handled by successful micro entrepreneurs.

With its 800 Negosyo Centers around the country, Maglaya said the DTI can now inform their clients who want to avail themselves of the financial assistance offered by DBP to expand their business.

From its Pondo sa Pagbabago at Pagasenso, Maglaya said DTI can refer their clients to the DBP programs to expand their businesses.

With its limited branches, Borromeo said the DBP can reach out to its MSMEs clients in the far flung areas of the country by partnering with the rural banks, credit cooperatives and microfinance institutions. “We’re looking for all of these potential partners for the country, so we can reach out to more micro entrepreneurs,” she said.

Borromeo said DBP launched these programs because the bank was associated in the recent past with the big-ticket infrastructure projects.

“We believe that MSMEs should benefit from all of these infrastructure projects.

We should also pay equal attention to them.

We are taking this seriously to promote inclusive growth,” she said.

The SBPL offers a minimum loan of P300,000 up to a maximum of P1 million. Meanwhile, the BGCP will grant a loan amounting to 80 percent of the total project cost.

Five proven saving habits

R

esearch shows that Filipinos are bad savers. In fact, we are said to be the worst savers in Southeast Asia. Fortunately, it is never too late to start saving. Between earning, saving, investing and spending, saving might be the hardest to do. Nonetheless, it is not that hard if we have the correct mind-set to guide us each time temptation comes.

1. Need vs Want As classic as it may seem, identifying if something is a need or want is the easiest way to avoid temptation. The key to do this is through “conscious buying.” When you pick an item off a shelf, ask yourself, “Do I need this or do I want this?” If it’s a need, then go. If it’s a want, then no.

Once this simple trick becomes a habit, you will automatically see your savings increase over time.

2. Know the alternatives It is said that knowledge is power. For me, knowledge is also savings. Knowing the available alternative products and brands will allow you to find the cheapest option possible. Indeed, we all want convenience and we are willing to pay more as long as we get things quickly.

However, practicing the art of canvassing, especially for big-ticket items, will surely help us reap the rewards in the long term.

3. Quality over quantity We are in the era of disposables. Not only does it hurt the environment, it also hurts our wallets whenever we have to buy

Aimee Rose Chua

personal finance a new one just because the old is of poor quality. Buy things of good quality even if they are more expensive, especially if you always use them. Now, expensive doesn’t always mean good quality. Many products out there are overpriced because of marketing costs or the brand. The key is to know which ones are durable and which ones will fail after a couple of uses.

4. Buy in bulk, share the cost Shared economy is a concept that is becoming more popular in this generation.

We can use technology to our advantage when we share our assets with others for a price. Other than sharing assets, we can share our daily expenses with others. For instance, independent living is becoming a trend for millennials. The common thing to do now is to move out of the parent’s house and live in one’s own apartment or condominium. Living with our family provides us savings, as almost everything is bought in bulk. But if we live alone, it would be impractical to buy more than we need.

What we can do is look for friends who live nearby and share the cost with them.

Instead of buying two rolls of toilet paper in a convenience store, buy a pack with four rolls from the supermarket and split 50-50 with your friend. This is just an example. You get the point.

5. Remember your goal Saving without a purpose is like going on a diet without a target weight.

Either you starve yourself too much or you simply break your diet altogether.

To prevent this from happening, make sure you have a solid goal and revisit it whenever you are tempted to buy something unnecessary.

For instance, if you are saving for your education, always remember that if you buy something that you merely want but don’t need, you forego the chance to finish your studies. You are taking one step down, instead of one step toward your goal. Always weigh both sides, but I hope your goal always wins.

Saving is not that hard once proper habits are cultivated. In a world where temptation is everywhere, we always have a choice whether these should control us or we manage ourselves to achieve our financial goals.

Aimee Rose Chua is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 68th Registered Financial Planner program this March.

To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.

A4 Tuesday, February 6, 2018 • Editor: Lyn Resurreccion A6

The World BusinessMirror

www.businessmirror.com.ph

US moving to fortify its nuclear arsenal

W

ASHINGTON—A treaty committing the United States and Russia to keep their long-range nuclear arsenals at the lowest levels since early in the Cold War goes into full effect on Monday. When it was signed eight years ago, President Barack Obama expressed hope that it would be a small first step toward deeper reductions and, ultimately, a world without nuclear weapons.

Now, that optimism has been reversed. A new nuclear policy issued by the Trump administration last Friday, which vows to counter a rush by the Russians to modernize their forces even while staying within the treaty limits, is touching off a new kind of nuclear arms race.

This one is based less on numbers of weapons and more on novel tactics and technologies, meant to outwit and outmaneuver the other side.

The Pentagon envisions a new age in which nuclear weapons are back in a big way—its strategy bristles with plans for new low-yield nuclear weapons that advocates say are needed to match Russian advances and critics warn will be too tempting for a president to use.

The result is that the nucleararms limits that go into effect on

Monday now look more like the final stop after three decades of reductions than a way station to further cuts.

Yet, when President Donald J. Trump called on Congress to “modernize and rebuild our nuclear arsenal” in his State of the Union address last week, he did not mention his administration’s rationale: that President Vladimir Putin of Russia has accelerated a dangerous game that the US must match, even if the price tag soars above $1.2 trillion.

That is the latest estimate from the Congressional Budget Office, one that many experts think is low by a half-trillion dollars.

Trump barely mentioned Putin in the speech and said nothing about Russia’s nuclear buildup. His reluctance to talk about Russia and its leader during his campaign and first

A military aide with the “nuclear football”—the satchel that always travels with the US president for use in a nuclear attack—on a runway at Joint Base Andrews as President Donald J. Trump boards Marine One on January 18. Doug Mills/The New York Times

year in office—and his refusal to impose sanctions on Russia mandated

by Congress—has fueled suspicions about what lies behind his persistently friendly stance toward Putin.

In the State of the Union speech, the president focused far more on North Korea and on battling terrorism, even though his defense secretary, Jim Mattis, had announced just days ago that “great power competition—not terrorism—is now the primary focus of US national security.”

In contrast to the president’s address, the report issued last Friday,

Democrats, GOP: Memo doesn’t clear Trump in probe W ASHINGTON—President Donald J. Trump was wrong to assert that a GOP-produced classified memo on the Federal Bureau of Investigation surveillance powers cleared him in the Russia investigation, Democratic and Republican lawmakers said last Sunday. They expressed hope that special counsel Robert Mueller’s work would continue without interference.

Democrats could seek a vote on publicly releasing their rebuttal memo when the GOP-led House Intelligence Committee meets late on Monday afternoon. The committee rejected that move last week, with one Republican member saying revisions were needed so the memo would not endanger national security.

The Senate’s Democratic leader, Chuck Schumer of New York, urged Trump to back the public release and said that refusing to do so would show the president’s intent to undermine the Russia investigation.

The committee’s top Democrat, Rep. Adam Schiff of California branded the GOP memo “a political hit job.”

He questioned whether the chairman, Rep. Devin Nunes, Republican-California, had coordinated with the White House in drafting the document seized on by the president to vent his grievances against the nation’s premier law-enforcement agencies.

“The goal here is to undermine the FBI, discredit the FBI, discredit the Mueller investigation, do the president’s bidding,” Schiff said. “I think it’s very possible his staff worked with the White House.”

Nunes was asked during a January 29 committee meeting whether he had coordinated the memo with the White House.

“As far as I know, no,” he responded, then refused to answer when asked whether his staff members h ad com mu n ic ated

with the White House. He had previously apologized for sharing with the White House secret intelligence intercepts related to an investigation of Russian election interference before talking to committee members.

Trump’s Saturday tweet that the memo “totally vindicates ‘Trump’ in probe” even as “the Russian Witch Hunt goes on and on” found no echo from four committee Republicans who appeared on the Sunday talk shows.

Rep. Brad Wenstrup, Republican-Ohio, said, “I think this is a separate issue.” Rep. Chris Stewart, Republican-Utah, said, “No, it doesn’t end that.” Rep. Will Hurd, Republican-Texas, said, “I don’t,” when asked whether he agreed with Trump.

Rep. Trey Gowdy, RepublicanSouth Carolina, asked whether the memo affected the investigation, said, “No, not to me, it doesn‘t, and I was pretty integrally involved in the drafting of it.“ The Democratic response was more expected: “Of course, not at all,” Schiff said. Added Sen. Dick Durbin, Democrat-Illinois: “No, of course it does not.”

Lawmakers also said the memo should not impede Mueller.

“I think it would be a mistake for anyone to suggest that the special counsel shouldn’t complete his work. I support his work.

I want him to finish it. I hope he finishes it as quickly as possible,” Stewart said.

The memo released last Friday alleges misconduct on the part of the FBI and the Justice Department in obtaining a warrant under the Foreign Intelligence Surveillance Act to monitor former Trump campaign foreign policy adviser Carter Page and his ties to Russia.

Specifically, it takes aim at the FBI’s use of information from former British spy Christopher Steele, who compiled a dossier containing

allegations of ties between Trump, his associates and Russia.

The underlying materials that served as the basis for the warrant application were not made public in the GOP memo. Even as Democrats described it as inaccurate, some Republicans quickly cited the memo—released over the objections of the FBI and Justice Department—in their arguments that Mueller’s investigation is politically tainted.

The memo’s central allegation is that agents and prosecutors, in applying in October 2016 to monitor Page’s communications, failed to tell a judge that the opposition research that provided grounds for the FBI’s suspicion received funding from Hillary Clinton’s presidential campaign and the Democratic National Committee.

Page had stopped advising the campaign sometime around the end of that summer.

Steele’s research, according to the memo “formed an essential part” of the warrant application.

But it’s unclear how much or what information Steele collected made it into the application, or how much has been corroborated.

Republicans say a judge should have known that “political actors” were involved in allegations that led the Justice Department to believe Page might be an agent of a foreign power—an accusation he has consistently denied.

The memo confirms the FBI’s counterintelligence investigation into the Trump campaign began in July 2016, months before the sur veillance warrant was sought, and was “triggered” by information concerning campaign aide George Papadopoulos.

He pleaded guilty last year to lying to the FBI. The confirmation about Papadopoulos is “the most important fact disclosed in this otherwise shoddy memo,” Schiff said last Saturday. AP

known as the Nuclear Posture Review, focuses intensely on Russia. It describes Putin as forcing America’s hand to rebuild the nuclear force, as has a series of other documents produced by Trump’s National Security Council and his Pentagon.

The report contains a sharp warning about a new Russianmade autonomous nuclear torpedo that—while not in violation of the terms of the treaty, known as New Strategic Arms Reduction Treaties—appears designed to cross the Pacific undetected and release a deadly cloud of radioactivity that

would leave large parts of the West Coast uninhabitable.

It also explicitly rejects Obama’s commitment to make nuclear weapons a diminishing part of American defenses. The limit on warheads—1,500 deployable weapons—that goes into effect on Monday expires in 2021, and the nuclear review shows no enthusiasm about its chances for renewal.

The report describes future armscontrol agreements as “difficult to envision” in a world “that is characterized by nuclear-armed states seeking to change borders and overturn

existing norms,” and in particular by Russian violations of a series of other arms-limitation treaties.

“Past assumptions that our capability to produce nuclear weapons would not be necessary and that we could permit the required infrastructure to age into obsolescence have proven to be mistaken,” it argues. “It is now clear that the United States must have sufficient research, design, development and production capacity to support the sustainment and replacement of its nuclear forces.”

The new policy was applauded by establishment Republican defense experts, including some who have shuddered at Trump’s threats to use nuclear weapons against North Korea, but have worried that he was insufficiently focused on Russia’s nuclear modernization.

“Obama’s theory was that we will lead the way in reducing our reliance on nuclear weapons, and everyone else will do the same,” said Franklin C. Miller, a nuclear expert who served in the George W. Bush administration and was an informal consultant to Pentagon officials who drafted the new policy. “It didn’t work out that way. The Russians have been fielding systems while we haven’t, and our first new system won’t be ready until 2026 or 2027.”

“This is a very mainstream nuclear policy,” Miller said of the document, arguing that new low-yield atomic weapons would deter Putin and make nuclear war less likely, rather than offer new temptations to Trump. “Nothing in it deserves the criticism it has received.”

New York Times News Service

briefs Half of Iranians say ‘no’ to women’s veil

The office of Iran’s president last Sunday charged into the middle of one of the most contentious debates over the character of the Islamic Republic, suddenly releasing a three-year-old report showing that nearly half of Iranians wanted an end to the requirement that women cover their heads in public.

The report’s release comes as dozens of women in recent weeks have protested in public against being forced to wear the veil, a symbol of Iran’s revolution as much as it is deemed a religious requirement.

The decision to release the report—which found that 49.8 percent of Iranians, both women and men, consider the Islamic veil a private matter and think the government should have no say in it—appears to pit President Hassan Rouhani directly against Iran’s hard-line judiciary, which last Friday said that 29 people had been detained in connection with the protests. New York Times News Service

hitler book, supremacist flag found in italy suspect’s home

MILAN—A right-wing extremist suspected of shooting six Africans in central Italy was ”lucid and determined, aware of what he had done” and exhibited no remorse, an Italian lawenforcement official said last Sunday.

Luca Traini, 28, remained jailed as police investigated him on multiple counts of attempted murder with the aggravating circumstance of ”racial hatred” for the Saturday attacks in the Italian city of Macerata.

The five men and one woman wounded in the two-hour drive-by shooting spree are from Nigeria, Ghana, Gambia and Mali, according to RAI state television. AP

amtrak crash in s. carolina leaves 2 dead, over 100 hurt

CAYCE, South Carolina—An Amtrak passenger train slammed into a parked freight train in the early-morning darkness last Sunday after a thrown switch sent it hurtling down a side track, authorities said. Two Amtrak crew members were killed, and more than 100 people were injured.

It was the third deadly wreck involving Amtrak in less than two months.

The Silver Star, en route from New York to Miami with nearly 150 people aboard, was going an estimated 59 mph when it struck the empty CSX train around 2:45 a.m., Gov. Henry McMaster said. AP

cyprus president reelected

NICOSIA, Cyprus—Cyprus President Nicos Anastasiades vowed to push on with attempts to reunify the ethnically divided island nation and to improve the economic fortunes of its people after he was reelected by a wide margin last Sunday. Anastasiades defeated left-leaning independent challenger Stavros Malas in a runoff election. Anastasiades received 56 percent of the vote, compared to 44 percent for Malas, in the final returns.

Malas telephoned Anastasiades to concede defeat about an hour after polls closed, when half of the ballots had been counted and Malas trailed badly. AP

May under pressure as Conservatives at war over Brexit

L

ONDON—British Prime Minister Theresa May was under mounting pressure last Sunday to take sides in the Conservative Party’s civil war over Brexit, as a new round of talks between Britain and the European Union (EU) is set to begin.

Since becoming prime minister in 2016, May has walked a fine line between two feuding factions in her party: those who want a clean break, even if it means trade barriers with Europe, and those who want to keep Britain’s economy closely aligned to the 28-nation EU. EU negotiator Michel Barnier is due to meet British Brexit Secretary David Davis in London on Monday ahead of a new round of talks this week. The two sides have just months to negotiate future relations before Britain leaves in March 2019.

First, Britain must decide what

it wants. Tensions within May’s government are spiking ahead of meetings of senior ministers this week to hammer out a negotiating position.

Sunday’s newspapers teemed with allegations of plots against May by “hard Brexit” rivals, including Foreign Secretary Boris Johnson and Jacob Rees-Mogg, head of the proBrexit European Reform Group in the British Parliament.

The Sunday Times claimed proBrexit lawmakers are prepared to topple May if she tries to compromise and keep Britain in the EU’s tarifffree customs union.

They accuse Treasury Chief Philip Hammond, who favors a “soft Brexit,” of trying to block Britain’s EU exit.

Brexit-backing Conservative legislator Bernard Jenkin urged May to rein in Hammond, writing in the Sunday Telegraph that a

majority of British people “want a clean Brexit and an end to the present uncertainty.”

Euroskeptic politicians have also turned on civil servants for allegedly promoting a gloomy picture of the economic impact upon Britain for leaving the bloc.

After last week’s leak of government documents forecasting that Brexit will hurt the economy, ReesMogg accused civil servants of “fiddling the figures.”

May’s grip on power was weakened when she called an early election last year in hopes of increasing her majority and strengthening her hand in Brexit talks. Instead, voters left her atop a minority government that relies on support from a small Northern Ireland party to stay in power.

May insisted last week that she is “not a quitter” and intends to lead Britain through Brexit. AP

www.businessmirror.com.ph

The World BusinessMirror

Indonesia’s economy grew faster than estimated in Q4

I

ndonesia’s economy expanded more than economists forecast last quarter, helped by an aggressive run of monetary policy easing aimed at spurring growth in the Southeast Asian nation.

Gross domestic product rose 5.19 percent in the fourth quarter from a year earlier, the statistics bureau said in Jakarta on Monday.

The median estimate of 17 economists surveyed by Bloomberg was for growth of 5.1 percent. Compared with the previous quarter, GDP fell 1.7 percent compared with the 1.71-percent decline economists had forecast.

GDP rose 5.07 percent in 2017, matching estimates.

While the economy has been buoyed by stronger exports and a surge in investment, it’s being stifled by lackluster consumer spending and sluggish credit growth.

Retail sales grew just 2.6 percent last December compared to a year

earlier, a worry for policy-makers since spending by businesses and consumers makes up about half of GDP. Finance Minister Sri Mulyani Indrawati expects a pickup in growth this year as global trade strengthens. The central bank is forecasting growth of 5.1 percent to 5.5 percent this year.

Bank Indonesia has signaled the end of policy easing after 200 basis points of interest-rate relief over the past two years.

Governor Agus Martowardojo said last month that the benchmark rate of 4.25 percent is in line with efforts to maintain economic stability and boost the economic recovery.

With inflation and growth moving in line with Bank Indonesia’s forecasts, the central bank’s neutral rate bias probably remains intact, Tamara Henderson of Bloomberg Economics said. Bloomberg News

Study: British mothers pay part-time penalty as gender-pay gap persists

M

others in Britain are still paying a significant penalty for working part time, according to the Institute for Fiscal Studies (IFS).

In a report published on Monday, the London-based research firm said female employees get about 20-percent less per hour than their male counterparts and can expect to be earning a third less by the time their first child turns 20.

While the gap has fallen to 18 percent for the less well educated, from 28 percent in 1993, there has been no improvement at all for female graduates—who still earn 22 percent below their male peers.

The IFS said a key factor is that women make up the vast majority

of part-time workers, who miss out the wage increases enjoyed by people who work full time as they gain experience.

“It is remarkable that periods spent in part-time work lead to virtually no wage progression at all,” said Monica Costa Dias, an IFS associate director who helped write the report.

“It should be a priority for governments and others to understand the reasons for this.”

The question of equal pay is under the spotlight in the United Kingdom as firms near an April deadline to comply with new disclosure rules.

High profile cases of wage disparities—such as among staff at public broadcaster the BBC—have drawn criticism from politicians and public alike. Bloomberg News

Oil struggles to continue with bull run

O

il’s rally is unraveling on fears over a rise in US production after crude’s best January in more than a decade.

Futures in New York are extending declines for a second session as Baker Hughes data showed American explorers last week raised the number of rigs drilling for crude to the highest in almost six months. Short-sellers betting against West Texas Intermediate (WTI) oil increased their positions for a third week, according to figures from the US Commodity Futures Trading Commission.

Crude has remained above $60 a barrel this year, extending a rally driven by the extension of an output deal until the end of 2018 by the Organization of Petroleum Exporting Countries and its allies.

While oil’s best start to the year since 2006 was also helped by falling US inventories and a weaker greenback, Citigroup Inc. says the market is underestimating US output growth as a bigger

surge is forecast along with an increase capital spending. “With the higher US oil rig counts and higher oil production sustaining into February, the concerns in the market seem to be valid at this point,” Barnabas Gan, an economist at Oversea-Chinese Banking Corp., said by phone from Singapore. “As these worries resurface, prices are edging lower.”

WTI for March delivery dropped as much as 83 cents to $64.62 a barrel on the New York Mercantile Exchange and traded at $64.92 at 7:53 a.m. in London.

The US benchmark declined 35 cents to $65.45 last Friday. Total volume traded was about 51 percent above the 100day average.

Brent for April settlement lost as much as 89 cents to $67.69 a barrel on the London-based ICE Futures Europe exchange. Prices dropped 2.8 percent last week. The global benchmark crude traded at a premium of $3.50 to April WTI, the least since August. Bloomberg News

Editor: Lyn Resurreccion • Tuesday, February 6, 2018 A7

The Powell era at Fed seems sure to face some turbulence

Jerome Powell, President Donald J. Trump’s nominee for chairman of the Federal Reserve, sits in the audience before being called to testify during a Senate Banking, Housing and Urban Affairs Committee confirmation hearing on Capitol Hill in Washington on November 28, 2017. AP/Carolyn Kaster

W

ASHINGTON—When Jerome Powell is sworn in on Monday as the new chairman of the Federal Reserve (the Fed), the pride of the moment may be tempered by Powell’s recognition of the risks that lie ahead.

A ferocious sell-off on Wall Street last Friday—with stocks tumbling and bond yields rising after the January US jobs report suggested higher inflation ahead—served as a blunt reminder of the challenges Powell’s Fed will face.

At his Senate confirmation hearing, Powell stressed his intention to carry on the cautious approach to interest-rate hikes that his predecessor, Janet Yellen, pursued in four years as Fed chairman. Yellen was able to oversee a gradual rate policy because inflation posed no threat: It ran below even the Fed’s 2-percent annual target throughout her tenure.

The Powell era could be entirely different. The job market is tighter. Wages are up. Federal debt will likely rise. Tax cuts could accelerate growth.

All of which seems likely to drive up inflation, which is what spooked investors last Friday.

The main question is, by how much? For weeks, investors have been demanding higher bond yields.

Last Friday, after the government said average pay rose year-over-year in January at the fastest pace in more than eight years, the 10-year Treasury yield reached 2.84 percent, a four-year high.

The next phase of managing the economy may not be as easy.”

—Swonk The Powell-led Fed would be pleased to see inflation finally reach its 2-percent goal. The problem would be if it were to surge well above that level. The Fed would face intense pressure to accelerate its rate hikes to tighten credit and curb inflation.

That’s where the risks come in: If the Fed tightened credit too little, inflation might surge out of control.

If it tightened too much, a recession could result.

Steering a safe middle ground has proved tricky for the Fed throughout its history. It has sometimes miscalculated how fast to raise rates and triggered an economic downturn.

Last December the Fed predicted that it would raise its benchmark short-term rate three times in 2018, just as in 2017. Yet, some economists now foresee four increases.

And those rate hikes would coincide with the Fed’s continued paring of its bond holdings—action that puts upward pressure on rates for long-term consumer and business loans.

“The next phase of managing the economy may not be as easy,” said Diane Swonk, chief economist at Grant Thornton, who expects four-rate increases in 2018. “The Fed may have to raise rates more quickly because the economy is stronger.”

For now, the economy that Powell’s Fed will preside over shows strength and resilience. Unemployment is at a 17-year low. The economic expansion, already the third-longest in US history, appears to be improving after a long stretch of subpar growth.

On the surface, it might seem that all the Powell Fed needs to do now is serve as caretaker for a high-flying economy. But the Fed has always felt compelled to respond to threats before, not after, they arise, while there is time to prevent high inflation or an economic slowdown.

“Everything points to a more aggressive Fed under Powell,” said Mark Zandi, chief economist at Moody’s Analytics.

No less an authority than Alan Greenspan, who led the Fed for 18-and-a-half years until 2006, expressed worries last week that dangerous bubbles might be forming in the financial markets, in part because of high federal debt resulting from increased benefit spending as baby boomers retire and the $1.5 trillion in tax cuts now taking effect.

“We are dealing with a fiscally unstable long-term outlook in which inflation will take hold,” Greenspan said in an interview on Bloomberg Television.

Beijing becoming world’s busiest airport; 95.8M passengers in 2017

A

S the ranks of the Chinese middle class swell and more people take to the skies, passenger traffic at Beijing’s international airport rose to a new record of 95.8 million last year.

This increase at the world’s second-busiest air hub—at least the fifth straight year of gains—has allowed Beijing Capital International Airport to narrow the gap with top placed Hartsfield-Jackson Atlanta International Airport, whose passenger numbers fell in 2017.

China is forecast to overtake the US as the world’s biggest air-travel market as soon as 2022.

To cope with the surge in fliers, Beijing is building a $12.9-billion mega airport in a southern suburb that’s scheduled to open next year.

It would accommodate as many as 100 million passengers annually, with the existing and new airports likely sharing 170 million travelers a year by 2025, according to official estimates.

The new airport has been designated by authorities as the hub for members of the SkyTeam alliance, a global group of airlines that includes China Eastern Airlines Corp. and China Southern Airlines Co. The two state-owned Chinese

carriers will each be allowed to capture 40 percent of the airport’s passengers, gaining coveted time slots to Europe and the US in flag carrier Air China Ltd.’s backyard.

Beijing will also be joining a select list of major cities with two or even three international airports, including London, New York, Tokyo and Paris.

Unlike in Beijing, though, those airports usually take complementary roles, such as one serving international or intercontinental routes and the other focusing on domestic or regional flights. Bloomberg News

Beijing is one step closer to taking the crown for the world’s busiest airport. Bloomberg

The two most recent US recessions were caused by bursting asset bubbles. The pricking of the dot. com bubble led to a brief recession in 2001. And the collapse of the housing bubble ignited the 2007 to 2009 downturn, the worst since the Great Depression of the 1930s.

The current recovery began in June 2009. If it lasts until June 2019, it would tie the longest expansion on record—the one that lasted from March 1991 to March 2001.

Though the expansion has been marked by slow economic growth, that very trait might ensure its durability: Plodding growth has kept inflation low and prevented the economy from overheating.

“I don’t think a recession is on the horizon,” said Sung Won Sohn, an economics professor at California State University, Channel Islands.

“We have had one of the slowest periods of economic growth on record, and I think slow means it will go for a longer period.”

For that forecast to prove correct, the Powell Fed will need to manage its rate policy with exceeding care.

Friday’s jobs report showing wages rising 2.9 percent over the past 12 months—the biggest such jump since the recession ended in 2009—suggested that the Fed may be entering an era of higher inflation and a need for higher rates.

With Yellen’s departure, the seven-member Fed board will have only three members. President Donald J. Trump has nominated Marvin Goodfriend, an economics professor who has long urged the Fed to raise rates more quickly, for one vacancy. Goodfriend awaits Senate confirmation.

But the president hasn’t yet nominated anyone for the three other vacancies. Those selections will be critical in determining the Fed’s pace of rate hikes and in carrying out Trump’s desire to loosen bank regulations.

Powell’s responsibility will be to forge a consensus among the board members and the 12 regional Fed bank presidents who help set monetary policy.

Powell will be the first Fed leader in three decades without a PhD in economics. But David Jones, the author of several books on the Fed, said that Powell, with his background as an investment banker, reminded him of the longest-serving chairman, William McChesney Martin, who led the Fed from 1951 to 1970. Martin also lacked a doctorate in economics but had extensive knowledge of Wall Street.

“Powell, like Martin, understands markets, and I think he will be as plain-spoken as Martin,” Jones said, citing Martin’s famous summation of the Fed’s job: “To take away the punch bowl just when the party gets going.” AP

A8

The Regions

Tuesday, February 6, 2018 • Editor: Efleda P. Campos

BusinessMirror

www.businessmirror.com.ph

DENR biodiversity bureau crafting national ‘wetlands’ policy

By Jonathan L. Mayuga

T

@jonlmayuga

HE Department of Environment and Natural Resources (DENR) is stepping up the effort to craft a national wetlands policy in line with the thrust of Secretary Roy A. Cimatu to protect and conserve the country’s freshwater resources.

Director Theresa Mundita S. Lim of the DENR’s Biodiversity Management Bureau (BMB) told the BusinessMirror in an interview that the national wetlands policy in the form of a “National Action Plan for Inland Wetlands” aims to provide

a clear policy direction for the protection and conservation of wetlands vis-à-vis the various threats that undermine the country’s freshwater resources and unique ecosystems.

On February 2 the DENR’s BMB led the local celebration of the World

Wetlands Day (WWD) in two Quezon City barangays near the Tullahan River to underscore the importance of wetlands.

Tullahan River, once declared as “biologically dead,” stretches from the La Mesa Watershed in Quezon City and passes through Malabon and Navotas all the way to the Manila Bay. The DENR, through the BMB, took the WWD’s local celebration to Barangay Santa Lucia and Barangay San Bartolome, where the agency conducted an educational outreach activity with the “Wetlands for Sustainable Urban Future—Making Urban Cities Livable.”

In his statement on WWD, Cimatu said: “We at the DENR are reaching out to the two barangays near the Tullahan River because of its relevance to their livelihood. As one of the most polluted waterways in Metro Manila, the river deserves no less than to have reduced pollu-

tion for the benefit of the residents within the area.”

The Philippines is a signatory to the Convention on Wetlands of International Importance, or the Ramsar Convention.

The Ramsar Convention defines wetlands as areas of marsh, peat land or water, whether natural or artificial, permanent or temporary, with water that is static or flowing, fresh, brackish or salt, including areas of marine water the depth of which at low tide does not exceed 6 meters.”

The same definition is used in the Joint DENR-DA (Department of Agriculture) and PCSD (Palawan Council for Sustainable Development) Administrative Order (AO) 2004-01 and the Wildlife Act implementing rules and regulation.

The Philippines has many policies in the form of international treaties, national and local environmental laws, but there is no specific

law dedicated for the protection and conservation of wetlands and the National Policy on Wetlands being crafted in the form of a National Action Plan is being pushed by the DENR. “We are now reviewing an earlier draft of the action plan for wetlands, which we crafted in 2013,” Lim said.

The draft National Action Plan was supposed to be adopted or put in place in 2016, but the change in administration caught up with the process, she added.

Lim said the draft National Action Plan for inland wetlands was a pet project of the DENR-BMB during the time the DENR AO 2016-12, or the “Adopting the Philippine Biodiversity Strategy and Action Plan,” was being crafted.

But the draft policy for wetlands in the form of a separate DENR administrative order did not materialize, Lim added.

“Now with a clear policy direction and Secretary Cimatu’s thrusts to rehabilitate rivers, Manila Bay, and to ensure a supply of clean water, we are stepping up the review process,” she said.

The review, Lim added, is currently at the technical level of the DENR led by the BMB. Soon, however, she said other agencies with mandates over particular wetlands or wetland ecosystem, linked to the water sector, will be enjoined to broaden and deepen the discussions.

Lim added the National Action Plan will help ensure the protection and conservation of inland wetlands in the Philippines, which include lakes and rivers, and peats or marshes consistent with various environmental laws, such as the National Integrated Protected Areas System Act and the Clean Water Act.

Tacloban farmers receive ₧8.5-M farm machinery Mayon’s lava threat

worsens in Albay

By Elmer Recuerdo Correspondent

T

AC L OB A N C I T Y—Fa r m m ac h i ner y wor t h more t h a n P8 . 5 m i l l ion w a s handed over to farmer-beneficiaries as part of the city government’s comprehensive program on food sufficiency and improved farm production.

Bankrolled under the BottomUp Budgeting (BuB) program of the Department of Agriculture (DA), the farm equipment and organic farm inputs were distributed to 18 farmers’ associations in Tacloban.

A simple turnover ceremony was attended by officer in charge (OIC) City Agriculturist Victoria Collantes, City Livelihood Coordinator Eunice Alcantara, DA Regional Director for Research and Development Elvira Torres and BuB Action Officer Mayflor Realino.

The distributed farm equipment included 16 units of multitilling machine, 34 power sprayers, seven water pumps, 18 units shredding machine, f ive r ice planters, three rice reapers and four tractors with trailer.

Torres said the turned-over equipment was part of seven projects the city government proposed for funding under BuB amounting to P28.7 million. She added these initiatives of the local government would enable farmers in Tacloban City to have sufficient production and increase their

By Manly M. Ugalde Correspondent

L

BEACH WALK Oblivious of the rolling waves toward her direction, Suzanne June walks casually along the sandy shore of El Presidente Beach in Buguey, Cagayan, one weekend. The coastal town up north is said to be the Crab Capital of the Philippines. LEONARDO PERANTE II

income for inclusive growth.

Cesar Mamites, president of Barangay San Isidro Integrated Farmers Association, one of the beneficiaries of the farm equipment distribution, said, “This is a big help, as this will lessen our overhead cost, especially in planting rice.”

Meanwhile, Christopher de la

Cruz, president of the 150-member Association of Tagpuro Farmers United for Progress (Atrup), said the equipment would help increase their production as they would no longer have to depend on crude farm tools.

Collantes, meantime, reminded the beneficiaries to come up with

guidelines on the use of the farm equipments so these would be fully utilized. The OIC city Agriculturist added they would start on February 6 a training on the use of organic farm inputs (fertilizers) in the barangays to be conducted by technicians from the city agriculturist’s office.

EGAZPI CITY—The threat of hot lava flowing down the slopes of the restive Mayon Volcano continues unabated even as the volcano showed a lull in activity during the past week.

Lahar flow was earlier reported with a concentration of up to 3 kilometers (km) since the past week until it breached to a higher distance by an estimated 300 meters more.

Reduced Mayon activity gave clearance to the thousands evacuees to return home. There were more than 80,000 evacuees languishing in 72 evacuation centers in Albay.

Cedric Daep, Provincial Disaster Risk Reduction and Management Council head, clarified that only those within the 9-km extended danger zone were given the clearance to go home.

He added that while many evacuees are sneaking to return home, Mayon guards are posted 24 hours to ensure none of the evacuees are returning to the 8-km extended danger zone.

The Philippine Institute of Volcanology and Seismology (Philvocs) said Mayon has been ejecting an average of

1,583 metric tons of sulphur dioxide daily since its January 13 eruption, and about 2 millions cubic meters of lava.

Last week the 3-km lava flow concentration was raised to 4 km, then to 4.3 km last Friday on the Buyuan-Bonga gulley of Legazpi, while the lava flow via the Miisi gulley in Daraga town had reached the 3-km parameter.

With substantial lava deposits, uninterrupted rainfalls worsen the situation with the lava flow going beyond 4.3 km to include other channels and gullies, the Phivolcs official said. Last Saturday and Sunday rainfalls hit Albay again.

Records at the Phivolcs Volcano Monitoring and Eruption Prediction showed that during the December 29, 2009, Mayon eruption, lava flow reached beyond the 6-km permanent danger zone, a declared no man’s land.

Despite the lull in eruptions, the possibility of frequent hazardous eruptions remains and the possibility of raising to Alert Level 5 continues.

"We maintain our stand that the extended 8-km danger zone should be free from humans," the Mayon resident volcanologist said.

Jica honors Tesda for Yolanda project

T

HE Japan International Cooperation Agency (Jica) bestowed the “Jica President Award for the Project on Rehabilitation and Recovery from Typhoon Yolanda” to the Technical Education and Skills Development Authority (Tesda).

“Tesda, as one of Jica’s partners in the implementation of this project, is deeply honored to be chosen as one of the recipients of this award, along with other partners in our concerted efforts to rehabilitate those areas badly affected by Supertyphoon Yolanda in November 2013,” Tesda head

Secretary Guiling A. Mamondiong said.

He added Jic a helps t he socioeconomic agenda of the Philippines, which aims to uplift the lives of many Filipinos and the rest of the world through the official development assistance.

The recognition is given to “outstanding partners” of the Jica Overseas Offices that yielded positive results through their projects and has directly benefited the public.

Through the recognition, Jica is hopeful the bilateral ties between the Philippines and Japan will be strengthened.

Five years ago, Tesda actively participated in the relief operations and rebuilding of some places destroyed by the supertyphoon.

Based on the report issued by Tesda-Region 8, a total of 18,616 Yolanda survivors completed their training programs from the agency.

Of these, 11,615 were assessed, 11,166 received certificates and up to 17,093 people were employed.

Jica also built two buildings for the Tesda Regional Office 8 and Balangiga National Agricultural School in Balangiga, Eastern Samar, equipped with training tools. Claudeth Mocon-Ciriaco

Bank, finance firm partner to aid Bulacan orphanage

S

ECURITY Bank employees recently joined Mitsubishi UFJ Financial Group’s (MUFG) Manila branch volunteers in visiting the Tahanan Mapagkalinga ni Madre Rita (TMMR) in Bulacan for a day of formative activities with the orphans.

Volunteers from the strategic partner banks, led by MUFG Manila Branch General Manager Tatsuto Ishida, conducted a seminar about proper hygiene practices. They also refurbished the

playground and cultivated the garden through a facility-rehabilitation project, creating a more conducive environment for the children.

Aside from the rehabilitation activities, MUFG employees led a financialliteracy camp for the children to learn the importance of smart saving habits that will guide them in securing the future.

TMMR is an orphanage that provides shelter to more than 30 children

who have been orphaned or abandoned.

“The fact that volunteers selflessly dedicated their time and resources to take care of people who are not directly related to them makes the work they do worth acknowledging. It is a heart-warming experience to witness the children feel the sincere malasakit [compassion] of the MUFG and SBC volunteers. This kind of dedication has a big impact on the kids,” Sister Elkin Lozada of TMMR said.

CABBAGE HARVEST Frost in the highlands has not dampened the harvest of vegetables in Atok, Benguet, where farmers carry loads of fresh cabbage for delivery to Baguio City and lowland markets.

LAILA AUSTRIA

www.businessmirror.com.ph

Global Eye BusinessMirror

Child abductions rise as South Sudan war incites desperation

By Sam Mednick Associated Press

A

KOBO, South Sudan—It’s been almost two years since Deng Machar’s three young children were abducted from his home and likely sold for cattle. Sitting in South Sudan’s opposition-held town of Akobo, the 35-year-old pointed to the dirt beneath his feet.

“They were playing right there,” Machar said. “It would be easier if they were dead because then I could forget.”

Machar said his 4-year-old daughter and 5-year-old son were likely sold for cattle after being seized by men from the rival Murle tribe. He doubts his 2-yearold son is still alive. Eleven children in all were abducted from this area that day and none has been seen since.

It is a little-acknowledged tragedy in South Sudan’s five-year civil war.

Child kidnappings between clans have increased as people become more desperate amid widespread hunger and a devastated economy, human-rights groups say.

“Child abductions and trafficking in South Sudan is a real issue that requires an urgent response by the government,” said Edmund Yakani, executive director of the nonprofit Community Empowerment for Progress Organization.

While tracking child kidnappings is challenging amid the conflict and mass displacement, he said his organization has confirmed abductions in several parts of the country. Those include 11 children seized last year in Abyei in the north, five taken between 2012 and 2014 in the Wau area in the west, and seven in 2016 and 2017 in the Yei area in the south, near the Ugandan border.

The United Nations says its child protection team confirmed abductions in the regions of Unity, Central Equatoria, Jonglei, Upper Nile and Western Equatoria last year, though it didn’t have a total number.

Although interclan fighting, cattle raiding and abductions are deep-seated throughout this East African country, Yakani called it a particular problem in Jonglei state, where the town of Akobo is located and where many in the Murle tribe base “their livelihood” on selling children.

During a recent trip to Akobo, near the Ethiopian border, The Associated Press spoke with Murle tribesmen who

acknowledged stealing and trafficking children for personal gain.

“The intention is to trade the children for cattle or use them personally,” said Thiro Akungurouth, a Murle youth leader who knows some of the abductors.

One child, no matter what his or her age, can sell for 20 cows, worth about $7,000, he said.

Children who aren’t sold are kept by families without kids, while girls are groomed for marriage, Akungurouth said. Stigma remains against childless families in South Sudan. Abducted girls often are married to their captors.

Authorities in Akobo said 37 children have been seized in the surrounding areas since 2016, more than in the first three years of the war combined. It was not clear how many children have been abducted across the country during the civil war.

One opposition governor blamed South Sudan’s government for the increase in kidnappings, saying it’s trying to create a wedge between the Murle and Nuer tribes to advance its military agenda.

“It’s happening more now because the government is instigating a rift and telling the youth to attack by distributing arms and ammunition,” Koang Rambang, the governor of Bieh state, which until last year was part of Jonglei, told the AP. He specifically faulted the country’s First Vice President Taban Deng Gai for “instigating more abductions,” citing 10 children who were seized in January while Gai toured the largely oppositionheld Jonglei.

South Sudan’s government denied it, saying Gai was in the region only to promote peace. The government also said it had given “directives to the concerned governors of those states to get rid of those activities,” said Maal Maker Thiong, who works in the office of the presidency.

But as the civil war drives the nation deeper into despair, children continue to be the worst affected.

Although South Sudan in 2015 signed onto the Convention on the Rights of the Child, which states that all parties should take appropriate measures “to prevent the abduction of, the sale of or traffic in children,” the country’s warring factions repeatedly have been accused of committing grave violations against children, including the forced recruitment of child soldiers.

IN this photo taken on January 20, children play in empty cardboard boxes during a food distribution by Oxfam outside Akobo town, one of the last rebel-held strongholds in South Sudan. Child abductions have risen during South Sudan’s civil war as desperate people try to make a living, and one child, no matter the age, is said to sell for 20 cows, worth about $7,000. AP

Editor: Angel R. Calso • Tuesday, February 6, 2018 A9

SpaceX’s hot new monster rocket ready for first test flight

This December 28, 2017, photo made available by SpaceX shows a Falcon Heavy rocket in Cape Canaveral, Florida. With more than 5 million pounds of liftoff thrust, the Falcon Heavy will be capable of lifting supersized satellites into orbit and sending spacecraft to the moon, Mars and beyond. SpaceX via AP

C

By Marcia Dunn | AP Aerospace Writer

APE CANAVERAL, Florida— SpaceX’s hot new monster rocket makes its launch debut this week, blasting off from the same pad that hoisted men to the moon a half-century ago.

The Falcon Heavy won’t surpass National Aeronautics and Space Administration’s (Nasa) Saturn V moon rocket, still all-time king of the launch circuit. It won’t even approach the liftoff might of Nasa’s space shuttles.

But when it departs on its first test flight—as early as Tuesday—the Heavy with its three boosters and 27 engines will be the most powerful working rocket out there today, by a factor of two. Picture SpaceX’s frequent-flyer Falcon 9 and its single booster and then times that by three; the Heavy’s three first-stage boosters are strapped side by side by side.

The Heavy represents serious business for the private space company founded 16 years ago by Elon Musk. With more than 5 million pounds of liftoff thrust—equivalent to 18 747s jetliners—the Heavy will be capable of lifting supersize satellites into orbit and sending spacecraft to the moon, Mars and beyond.

Using another airplane analogy, SpaceX boasts a Heavy could lift a 737 into orbit, passengers, luggage and all. The company already has some Heavy customers lined up, including the United States Air Force.

“I can’t wait to see it fly and to see

it fly again and again,” the Southwest Research Institute’s Alan Stern said. He’s the lead scientist for Nasa’s New Horizons spacecraft, which made an unprecedented flyby of Pluto and is now headed to an even smaller, icy world on the fringes of the solar system.

Cape Canaveral hasn’t seen this kind of rocket mania since the last space shuttle flight in 2011. Huge crowds are expected for the afternoon launch from Kennedy Space Center. Visitor center tickets for the best up-close viewing, called “Feel the Heat” and “Closest Package,” sold out quickly.

“When you’re talking about what would be the biggest and largest operational launch vehicle in the world, that adds another dimension of excitement,” said Phil Larson, an assistant dean at the University of Colorado at Boulder, who used to work for SpaceX and the Obama administration.

The Heavy is capable of delivering, in one fell swoop, 140,660 pounds (63,800 kilograms) of cargo to low-Earth orbit, nearly 60,000 pounds (26,700 kilograms) to highEarth orbit, 37,000 pounds (16,800 kilograms) to Mars or 7,700 pounds

(3,500 kilograms) to Pluto. But for this inaugural flight, the rocket will carry up Musk’s cherry-red Tesla Roadster. In addition to SpaceX, he runs the electric carmaker Tesla.

“Red car for a red planet,” Musk tweeted last December, when announcing the surprise cargo.

Fresh-off-the-drawing-board rockets typically carry steel or concrete blocks in place of true cargo.

“That seemed extremely boring,” Musk explained.

Nasa officials said the Falcon Heavy is just the latest evidence of the Kennedy Space Center’s transformation into a multi-user spaceport, a turnaround after decades of space shuttles taking center stage.

A variety of rockets will be needed—besides Nasa’s still-underconstruction Space Launch System megarocket — as astronauts venture out into the solar system, Kennedy’s director of center planning and development Tom Engler said. Blue Origin, led by Amazon’s Jeff Bezos, for instance, is developing a big, reusable orbital-class rocket named New Glenn after the first American to orbit the world, John Glenn.

Cocoa Beach Mayor Ben Malik, a banker by day, noted that jobs are making a big comeback, with so many private rocketeers and other aerospace businesses hitting town.

The area suffered thousands of layoffs when the 30-year space shuttle program ended.

“We are not only back, but the region is much more diversified,” Malik said. “We are becoming a hightech hub.”

Stern sees the Heavy opening the door to more exploration, both human and robotic, given its heft and cost savings. SpaceX’s launch failures of Falcon 1 and Falcon 9 showed the

company has “a very strong backbone.” While Falcon 1 was completely on the SpaceX tab, Falcon 9 benefited from the company’s contracts with Nasa for space-station shipments.

This persistence resulted in SpaceX becoming, in 2010, the first private company to launch a spacecraft into orbit and then safely guide it back to Earth, something only large governments had accomplished.

Two years later, SpaceX became the first commercial supplier of the International Space Station. Now the company is aiming for the first commercial crew launch.

At the heart of SpaceX’s cost savings is its rocket-recycling campaign.

Two of the Heavy’s first-stage boosters are repeats, having flown on Falcon 9s. The company will attempt to recover all three boosters; the two old boosters will aim for side-by-side vertical touchdowns at Cape Canaveral, while the new, beefed-up center core will attempt to land on a floating ocean platform.

Rocket makers typically discard their leftover boosters in the ocean.

Now those boosters often come back and land, at least when it’s SpaceX, complete with sonic booms just like the old shuttle days.

Unlike most rockets out there, the Falcon Heavy receives no government funding. The Mars-obsessed Musk has taken it upon himself and his California-based aerospace company to bankroll the hulking rocket.

At a sticker price of $90 million, the Heavy is a relative bargain. Nasa’s bigger and more powerful SLS is expected to exceed $1 billion a flight.

Musk upped the ante by putting his Tesla atop this first Heavy; he’s been warning for months the rocket might not make it higher than the launch tower.

If the flight succeeds, it will be the first true automobile hurled into space. It’s destined for a perpetual orbit around the sun that will swing out as far as Mars. The car’s soundtrack will be playing David Bowie’s “Space Oddity.”

“It is a catchy way to get attention,” Stern said while driving his blue Tesla Model S in Boulder, Colorado, last week. Musk is already looking ahead to an even bigger SpaceX rocket that would phase out both the Falcon 9 and Heavy.

Retired Nasa historian and Smithsonian curator Roger Launius cautioned SpaceX has “a long history of overpromising,” although eventually succeeding. The Heavy’s debut, for example, has been delayed for years. Musk has acknowledged the Heavy proved harder to build than anticipated.

“I’m in favor of more capacity to get off this planet, so I cheer when anyone has a successful new rocket,” Launius wrote in an e-mail.

He promised to be “properly congratulatory” if and when success comes.

China is a rare place where value investing isn’t a bad bet

By Sofia Horta e Costa Bloomberg News

T

he value trade is finally having its day in the sun—in China.

While chasing bargain stocks in overheating markets around the world has been a losing strategy, it’s a surprisingly successful play in Shanghai.

A gauge of the city’s big companies with the lowest valuations is up 12 percent this year, taking it to a record relative to the benchmark, as banks and property developers surge. It fluctuated on Monday even as a selloff in global equities intensified.

It’s not for the fainthearted. Mainland shares just had their worst week since 2016 and are about twice as volatile as those elsewhere in the world, with retail investors dominating what is still a largely speculative market,

according to Ken Wong at Eastspring Investments.

“The A-share market is not always rational, which makes it difficult if you’re looking to play a specific theme,” said Wong, a Hong Kong-based fund manager at Eastspring, which manages about $170 billion. “That’s an opportunity for us—there’s bound to be that diamond in the rough.”

The value versus growth split is another way to dissect the theme that’s dominated China’s $8-trillion equity market for more than a year: investors favoring cheap large-caps, often stodgy state-owned enterprises, over the smaller companies that are seen as having the most to lose from the nation’s deleveraging campaign.

To be sure, the Shanghai value index is heavily skewed toward financial firms, which make up about

two-thirds of its market cap and have soared this year. Among the biggest of its 60 members are Industrial Bank Co. and Agricultural Bank of China Ltd., which trade at discounts of at least 40 percent relative to the Shanghai Stock Exchange 180 Index, according to data based on projected earnings.

Stock pickers will continue to do well in China as long as concern over the country’s economy or its financial system don’t flare up again, according to investment risk-management firm Axioma Inc. Pension funds and insurers, which are more likely to use quantitative strategies, will also increasingly take part in the domestic market, Axioma says.

“Both large caps and value are attractive characteristics more aligned with the investment horizon of

institutional investors,” said Olivier d’Assier, Axioma’s head of research for Asia Pacific.

China is a rare bright spot in the world of value investing, where investors try to hunt out stocks that are too cheap relative to their earnings, assets or to the income stream they provide. Globally, waiting for the momentum trade to fizzle has proven painful, as evident in last year’s outperformance of pricey Internet and technology shares.

The divergence has been so acute that the MSCI All-Country World Value Index now trades at the lowest level since 2000 relative to its growth counterpart. Eastspring’s Wong says he’s taking advantage of the gap in China, eyeing cheap onshore shares of banks, energy firms and phone companies.

A partially demolished house stands next to an apartment building tower in Xi Cun, an old neighborhood slated for demolition and redevelopment in Guangzhou, China. China is poised for an acceleration of deals as confidence grows in the wake of last month’s Communist Party gathering and as the nation opens up to reforms. Bloomberg

A10 Tuesday, February 6, 2018 • Editor: Angel R. Calso

Opinion BusinessMirror

www.businessmirror.com.ph

editorial Parliament of the people?

T

ake a good look at the leadership struggles that occur in pursuit of the Speakership of the House and the Senate Presidency. It could give one a good glimpse of what might be in store for us under a parliamentary-federal form of government, and it doesn’t look pretty.

Proponents of Charter change have argued that it is better and more cost efficient to have a unicameral Congress under a parliamentary federal setup. Laws would be enacted a lot quicker without the billions needed to maintain two legislative bodies, which they claim practically duplicate each other’s functions anyway, never mind the concept of check and balance.

Forget about comparing the work of the current Congress with past Congresses or recent ones, or comparing the work of the House of Representatives with the Senate.

Let us just ask ourselves this: Is it the system that drags down the lawmaking process or is it the quality of people working the legislature or said process or system?

Just for the sake of argument, let us accept the reasons in favor of a parliamentary federal system, where we will have a unicameral Congress from which the future leader of this country—the Prime Minister—would be elected.

The Prime Minister would not be directly elected by the people. He or she would be elected by colleagues from the winning or the majority party sitting in Congress. Which parties and which politicians would be in contention for this future government? Well, practically the same ones we have jockeying for the leaderships and the choice committees in both Houses of Congress today.

Take a look at the kind of horse-trading going on now in the quest to be Speaker or Senate President. In past Congresses, there have been allegations of treachery, turncoatism, various forms of vote-buying in the Senate and the House.

Imagine the scenario if what is at stake is the leadership of not just Congress or Parliament but the leadership of the country, that of becoming Prime Minister.

What more if the members of parliament are not just jockeying for choice committees but for choice departments. Remember, members of parliament are the ones who become ministers of various government departments. They are not just lawmakers but implementers of the administration’s programs and development projects. Politicians wise in the ways of pork-barrel commissions must be salivating even now at the prospects. (On a side note, former Rep. Neri Colmenares said there is a “pork-barrel provision” on page 1 of the draft Constitution of subcommittee 1 of the House of Representatives Committee on Constitutional Amendment).

A parliamentary-federal form of government is essentially a political party system of government. But what political parties are we talking about in this country?

Do they even exist outside of elections? The answer quite clearly could be gleaned from the alliances formed between the political parties in the previous elections.

Once the elections are over and it is time to come up with power-sharing schemes, the alliances and coalitions made between parties begin to disintegrate. In the Senate Presidency and House Speakership bids, for instance, party lines become blurred or take a backseat in favor of deal-making or deal-breaking.

One of the major benefits of a parliamentary form of government is the discipline political parties can impose on their members, to follow the official party line or ideology. But are there really party ideologies to begin with in the Philippines? Are the politicians discipline-able?

Granting we can provide measures through legislation to make (or at least try to make) the political party system in this country stronger with the enactment of a law mandating political party reform, could we legislate a change of people populating these parties?

For anyone arguing in favor of Charter change, there is a counterargument for character change: that it might not be the system of government after all, but the politicians populating the system that are the problems.

Then it would be a wise but sad expectation that the future Prime Minister in a parliamentary-federal Philippines would be elected not because of his or her proven integrity, track record of performance or the specific skills needed to run the government machinery, but entirely something else.

Then it would be wiser for us to try to improve our political party system first under the current presidential setup and help ensure that those Filipinos wishing to serve the public with integrity and competence will have equal chances of winning under our electoral system.

Our people deserve better than a parliamentary government that promises good governance through fly-by-night political alliances that would surely disappear under the harsh light of post-election realities.

Since 2005

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

T. Anthony C. Cabangon

Editor in Chief

Jun B. Vallecera

Managing Editor Associate Editor News Editor

Max V. de Leon Jennifer A. Ng Vittorio V. Vitug

Senior Editors

Lorenzo M. Lomibao Jr., Gerard S. Ramos Lyn B. Resurreccion, Efleda P. Campos Dennis D. Estopace

Online Editor Social Media Editor

Ruben M. Cruz Jr. Angel R. Calso

Creative Director Chief Photographer

Eduardo A. Davad Nonilon G. Reyes

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

Judge Pedro T. Santiago (Ret.) Benjamin V. Ramos Adebelo D. Gasmin Marvin Nisperos Estigoy Aldwin Maralit Tolosa Rolando M. Manangan Loida S. Virtudazo

BusinessMirror is published daily by the Philippine Business Daily Mirror Publishing, Inc., with offices on the 3rd floor of Dominga Building III 2113 Chino Roces Avenue corner De La Rosa Street, Makati City, Philippines.

Tel. Nos. (Editorial) 817-9467; 813-0725. Fax line: 813-7025.

(Advertising Sales) 893-2019; 817-1351, 817-2807.

(Circulation) 893-1662; 814-0134 to 36. E-mail: news@businessmirror.com.ph.

www.businessmirror.com.ph

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

The property sector’s multifaceted growth Manny B. Villar

THE Entrepreneur Continued from A1

N

evertheless, the domestic property sector has not been far behind in terms of diversification, as developers, particularly the big players, have spread their wings to other areas. The emergence of the business-process outsourcing (BPO) industry, for example, created office-building development as a major segment of the property sector.

Modern lifestyle, coupled with mobility problems, gave rise to the live-work-play concept, which involves the construction of mixeduse projects that allow people to live, work, engage in recreational activities or even pursue educational careers in one place, eliminating the need for time-wasting travel in the congested roadways.

The diversified nature of today’s property sector also cushions the impact of adverse developments in some areas, allowing the industry to sustain overall growth.

The property sector does not always move in a straight line—up or down—but like a wave. Lucky breaks or compensating factors emerge that allow the industry to recover from a decline.

For instance, demand for office space from the BPO industry, which has been a major driver for the economy in the past few years, declined last year, but the slack was taken up by new demand from the gaming industry.

On the other hand, the perennial demand in the residential segment, where there is a backlog of several million units, should keep both horizontal and vertical homebuilders busy.

A study by property consultant Colliers Philippines cites other factors that boost the real-estate industry. The firm said consumption, manufacturing, exports and infrastructure, which fueled the economy’s 6.7-percent growth in 2017, support the property

sector’s upward trajectory.

Colliers said personal consumption, which grew by 5.8 percent last year, is expected to pick up in 2018 due to the implementation of the first package of the comprehensive tax-reform program, which would increase employees’ purchasing power.

Consumption is also buoyed by low inflation (the government is targeting 2 percent to 4 percent for this year), which means stable interest rates, and overseas Filipino workers remittances, which reached $28.2 billion in January to November 2017, up 5.1 percent year-on-year.

Again, President Duterte’s drive to bring development to the countryside will also benefit the property sector. According to Colliers, about 70 percent of the additional revenues (close to P90 billion) that will be generated by the first package of the tax-reform program will go to the “Build, Build, Build” infrastructure program, including the concretization of more than 14,000 kilometers of national roads and about 30,200 kilometers of local gravel roads. The government will also provide road access to nearly 8,000 isolated barangays and sitios, which would further unlock land values in the countryside.

Eight of the 10 projects that will be implemented using the additional tax revenues are in the provinces, supporting the government’s decentralization

The Fed does/doesn’t matter John Mangun

OUTSIDE THE BOX

T

he US Federal Reserve (the Fed) met this past week in the last hurrah for its now former head Janet Yellen. During her four-year stint as Fed chairman, just about nothing positive was accomplished to meet the Fed’s complete mandates of “maximizing employment, stabilizing prices and moderating long-term interest rates.”

The fact that US joblessness has fallen has also to do with people leaving the work force and thereby “reducing” unemployment. Prices and inflation have certainly been “stabilized,” but that is somewhat of a failure since the Fed has been saying for years that it was trying to increase inflation. But that goes along with the “moderating long-term interest rates” as it is hard not to accomplish that goal as the Fed has kept its benchmark interest rates at nearly the lowest in the past 5,000 years.

All of this means very little to you and is only of importance to those of

us that think all of that is important, which in the bigger picture, is not.

What I mean is that for the ordinary citizen, the Fed has reduced itself to being an afterthought as to what affects the lives of normal people.

However, Fed policies under Yellen have meant a great deal to the owners of listed New York Stock Exchange shares and to the companies that issue those shares. From a Dow Jones Industrial Average index reading of 16,000, the market is now up to near 26,000, or a gain of about 60 percent since Yellen assumed Fed command.

All the nonsense talk about how the top 1 percent of the world’s rich holds more wealth than everyone else combined is based on the value of their shareholding going higher.

Of course, that paper wealth has skyrocketed, but the implication that it has come at the expense of the “poor” is ignorant reasoning. Certainly, paper wealth is one measure of wealth, but like my sainted mother used to say, “You can only wear one pair of shoes at a time.”

The poor are not going to be any wealthier if the global stock markets go down 90 percent, thereby reducing the “wealth” of the rich.

Fed policy has increased the value of the stock market through low interest rates and that may be coming to an end. Based on the statements by new Fed Chairman Jerome Powell, US interest rates are going higher. The US stock market fell, not because of the super duper blue blood moon but because of the fear he might actually do what he says.

Depending on which analysis you look at, 60 percent to 80 percent of the increase in US stock-market prices is a result of companies buying back their own shares. With low interest-rate borrowing, companies

push, which should benefit developers with office, residential and retail projects in those areas.

While these projects have yet to be fully implemented, we see the major players in the property industry already launching their respective projects to take advantage of the opportunities in their industry.

As one of the major integrated property developers in the country, Vista Land is allotting P175 billion for capital expenditure in the next three years, not only for its core realestate business, but also for leasing, retail, hospitality and education ventures.

About 60 percent of the capital expenditure budget will finance the company’s real-estate expansion, while the rest will go to the leasing and retail businesses. Of the total amount, we plan to spend P50 billion this year.

As I said during a news briefing last December, we are very bullish in growth prospects in 2018 as we take advantage of the various collaborations among our companies, in addition to the sustained sound Philippine macroeconomic fundamentals.

I’m reluctant to use the term boom to describe the real-estate industry’s performance. For me, a more accurate term would be robust growth, which the industry continues to enjoy today.

For comments, e-mail mbv.secretariat@gmail. com or visit www.mannyvillar.com.ph.

borrow and buy their own shares, thereby inflating the price. A Fed interest-rate increase would matter because no longer would companies be able to afford to borrow and then buy their shares. That would potentially be a stock market killer, or it could create share price stagnation.

A Fed interest-rate increase would not matter much—assuming the Bangko Sentral ng Pilipinas (BSP) also raises interest rates—to the local stock market. While a big deal is made out of some local companies buying back their stock to pump/ support share price, it is a tiny factor in the overall scheme of things.

The local composite index being up 25 percent in 2017 did not come on the back of corporate borrowing and buying.

If the Fed raises rates, that is fine.

If the BSP raises rates to taper down inflation, that is also fine. But any drop of the local market because of fears about the Fed is only a knee-jerk reaction and may turn into a trap.

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

www.businessmirror.com.ph

Opinion

The Marcos trilogy

Gordon should unmask big pharma lackey in FDA

BusinessMirror

Ernesto M. Hilario

Cecilio T. Arillo

database

ABOUT TOWN

HE uncompromising vision of former President Ferdinand E. Marcos for the country’s economic development still carries particular resonance until today, more than 28 years after his death. His principles, philosophies and achievements are still at the core of our identity as a nation.

enate Blue Ribbon Committee Chairman Sen. Richard J. Gordon should take a close look at reports that the Food and Drugs Administration (FDA) may have caught the “mole” within the agency being used by big pharmaceutical interests to advance their agenda and short-circuit the regulatory process.

T

With his policies and projects withstanding the test of time, the results in facts and figures can no longer be altered and have become the empirical evidence for validation. History, then, will be the final judge of his legacy.

Trilogy, in The Marcos Legacy, the latest book authored by this writer and published by Amazon and the Brown Madonna Press this week, occupies the 17th and final chapter of the book. It was written by Marcos himself before he died in Hawaii in 1989.

These are his words, immortal and imperishable: The first part studies the total transformation of the Philippine Society from 1972 to 1985 by the Marcos administration; the second part is the loss of momentum of transformation and the Philippine crisis under former President Corazon C. Aquino administration from 1986 to 1988; and the third is about the revival and the salvation of Philippine society.

Martial law—uniqueness

The severest critics of Philippine martial law—and their number is dimi nishing—must grant two things about it: its compelling necessity and its uniqueness.

To recapitulate: The compelling necessity arose out of the seven grave threats to the existence of the Republic. These were the communist rebellion, the rightist conspiracy, the secessionist movement in the South, the rampant corruption on all levels of society, the criminal and criminal-political syndicates (including the private armies), the deteriorating economy, and the increasing social injustice. I have already explained in detail the necessity of the decision.

Our martial law is unique in that it is based on the supremacy of the civilian authority over the military and on complete submission to the decision of the Supreme Court and, most important of all, the will of the people. It is unique in that it does not seek to maintain the “status quo” but has instead brought about radical reforms.

The 1973 Philippine Constitution

I have always adhered to the idea that all revolutions, no matter what kind—whether Jacobin or democratic, violent or peaceful, bloody or constitutional—depend for their success on the initial and eventual support of the people. Accordingly, I took steps immediately to formalize the acceptance of martial law in the New Society through the adoption of a new Constitution and a referendum, which would manifest in unquestioned manner the desire of the citizens.

Upon the approval of a new Constitution by the constitutional convention, I organized the “barangays,” or village councils or citizen assemblies, in the barrios.

I directed the new Constitution to be submitted to the barangays, or citizen assemblies, in a formal plebiscite from January 10 to 15, 1973. The barangays voted almost unanimously to ratify the Constitution, and continue with martial law and the reforms of the New Society.

I wanted to emphasize that the revolution that I was leading was a constitutional revolution.

It was constitutional because it did not depart from the strictures or limitations of the old and new Constitutions.

I know that some old-society

Our martial law is unique in that it is based on the supremacy of the civilian authority over the military and on complete submission to the decision of the Supreme Court and, most important of all, the will of the people.

It is unique in that it does not seek to maintain the “status quo” but has instead brought about radical reforms. politicians thought their “eloquent” and “brilliant” opposition had precipitated my action. This was understandable, for they could not have imagined that a danger greater than their oratory was pressing upon the Republic.

Civil order-enforcement of an obedience to law

The truth was that martial law had peculiar ramifications in the Muslim areas. At that moment a threepronged rebellion and conspiracy was in progress that included the leftists, the rightist conspirators and the Muslim secessionist.

The dangers from the leftist rebellion and the rightist conspiracy were checked in Luzon. But in Mindanao as early as 1971 (or even before) other plans were in operation. As early as the summer of 1972, while Luzon was in near anarchy, Mindanao was beleaguered by the activities of some 16,000 secessionists.

Strengthened by foreign material and moral support, encouraged by the seeming impotence of government in Luzon, the secessionist rebels planned an all-out attack to overwhelm government military installation in the Muslim provinces of Sulu, Zamboanga del Norte, Lanao del Sur, Lanao del Norte and Cotabato, and from there take over all of Mindanao and Sulu.

What bearing do these have on my decision for a quick ratification of the Constitution? The answer is that, the secessionist rebels had somehow convinced their financial supporters abroad (openly identified in the international press) that there was a civil war in the Philippines.

They argued that the condition was ideal for establishing a government separate from that of the Republic of the Philippines, allied, if necessary with a neighboring country. This step would be followed by a demand from the United Nations Security Council for the right of self-determination, following the formula that successfully set up Bangladesh as a state independent of Pakistan.

The plan was almost a political masterpiece. My options were few.

The hostile reaction of the American press to the declaration of martial law destroyed for us any immediate expectation of United States aid at a time when we badly needed it. The assaults in Mindanao were calculated to divide our forces between Luzon and Mindanao.

The political plan, along with its clever, if crude, military strategy, might very well have worked had I vacillated about the risks of immediately ratifying the Constitution. The danger of a supposedly separate and independent shadow government set up in one or another municipality in Mindanao was apparent and would at once place in doubt our sovereignty in the area.

To reach the writer, e-mail cecilio.arillo@ gmail.com.

S

Media circles covering the health sector are abuzz with talk that FDA authorities may have caught “red-handed” a key official of the agency. The said official apparently made a costly mistake, which may have uncovered that official’s link to big pharmaceutical interests, including one that is in hot water right now.

Based on accounts that have reached media circles, the said official reportedly received a USB—a portable file container for computers.

The source of the file was a representative of an international pharmaceutical giant.

What made the delivery of the

USB to the said FDA official suspicious is the fact that transactions of that sort have already been officially banned by current FDA Director General Nela Charade Puno.

According to media sources covering the health sector, Puno previously issued a memorandum order to all officials of the FDA clearly prohibiting FDA officials and employees from directly transacting with any party, including those applying for certificates of product registration.

Any transaction, based on the Puno order, has to be coursed through the FDA Action Center, which she created. Per that order, it

Tuesday, February 6, 2018 A11

is the Center, which shall receive any and all documents from outside parties. The Center encodes the receipt of such documents and then refers them to the appropriate office within the agency.

We recall that the FDA was applauded by the pharmaceutical industry because of this move. This system has apparently “leveled the playing field.” This took away the undue advantage that big business interests had over smaller players.

It appears some unscrupulous interests had key FDA personnel on “retainer.” This system, in turn, made sure that they got preferential treatment, including some shortcuts and “concessions.”

It may interest Gordon to find out whether or not reports are true that the mysterious “USB,” which this official “illegally” received came from a big pharmaceutical firm that the Blue Ribbon Committee may have a major interest in.

Gordon might also be surprised to discover the role played by this mysterious FDA official in a current controversy his committee is investigating, including the dengue vaccine brouhaha.

We believe the FDA has a good reason as to why it instituted the

system where all transactions are coursed through its Action Center.

When regulatory processes are unduly influenced by business interests, the health and safety of ordinary Filipinos are put at serious risk.

In the light of President Duterte’s campaign against corruption in the government, it would be best for this FDA official to either go on leave or resign before the said official is publicly unmasked.

We are sure Duterte will not entertain second thoughts kicking that big business lackey at the FDA out once the President gets wind of this brewing scandal.

This FDA official had the gall to defy the policy set by his agency.

This official has ignored Duterte’s warning against engaging in corrupt practices. We wonder what reward this official has gotten from private sector clients that the said official would risk career and reputation just to serve their interest.

The fate of that risk-taking FDA official is now in the hands of Gordon’s Senate Blue Ribbon Committee.

The public awaits the unmasking with great interest.

E-mail: ernhil@yahoo.com.

What happens when China eclipses the US in Asia

By Tobin Harshaw & Daniel Moss

elsewhere—as I said before, I think that’s driven by much larger trends —but the damage Trump has done to A Q&A with Hugh White, a former top Australian official who feels Beijing has America’s leadership credibility ceralready filled the US leadership void. tainly accelerates the process. Who can take the US seriously as the guarantor of regional or global order under ontrary to what you might read or hear, President his leadership? And who can be sure Donald J. Trump alone hasn’t surrendered United States that whoever takes his place will be strategic leadership in Asia to China. What he has done is much better? accelerate long-term trends that have severely diminished AmeriDM: China is Asia’s largest econca’s position in the Western Pacific, an area where the US had held omy, but global supply chains of USsway largely unchallenged since World War II. headquartered multinationals crisscross the region. Won’t this underpin at That era of primacy is close to an least some leadership role for America? would never be tempted to risk a conend. In fact, the US strategic position HW: Of course, America will refrontation, if they come to believe that is eroding so quickly that even sharing main a major economic player globthe other side would blink first. That the region with China isn’t really a valid ally, and in Asia, for as far ahead as seems to be what Beijing now assumes, option any longer, argues Hugh White, we can see. But that will not guarantee which is why it has been so assertive a professor at the Australian National any leading strategic or political role in recent years. Beijing believes that University in Canberra. America’s alin the region. Its position will be like America will blink first to avert a crilies in Southeast Asia and Australia that of the Europeans, who trade and sis because its interest in Asia is, in the say they don’t want to choose between invest massively in Asia without any long run, less important than China’s. the United States and China, but unAnd I think they are probably right. real strategic presence there. derneath those platitudes, nobody in Of course, that will mean that Tobin Harshaw (TH): In a Bloomthe region wants to make an enemy of America will have to engage economiberg View op-ed last month, Hal Beijing. All the more so because offically within the terms set by a regional Brands of the Center for Strategic and cials increasingly doubt the US will be strategic order led by others—presumInternational Studies warned that there in the end, according to White. ably by China. That won’t be ideal for your outlook on US abdication in the White put these thoughts to paper America, but it would be better than Pacific was over-dire and dangerous and pixel with a much-debated essay the alternative, if the alternative is to in that it could become a self-fulfilling in the Australian publication Quarterly confront China in a bitter all-out conprophecy. What’s your response?

Essay. “Without America” envisions a test for regional leadership in which HW: I can understand his concern, Situation Room scene, where a fictiChina enjoys many asymmetric adbut I think it is misplaced. The sugtious United States president decides vantages. A contest like that would gestion that the arguments I have that, even with America’s superior most likely be much more damaging presented may hasten America’s withconventional military, the risk of a to America economically than acceptdrawal from Asia overlooks the masconfrontation with China just isn’t ing the rules in Asia as set by China. sive tectonic forces that are driving worth it. Even if the US prevailed, all TH: Former Australian Prime Minthis process. As China’s power grows, China would need to do would be to ister Paul Keating, who hails from the costs to America of resisting Chiinflict a couple of glancing blows and the Labor Party you served, said that na’s ambitions for regional leadership it would, politically, have triumphed.

Australia’s longtime alliance with the grow too. But America’s reasons to For context, White is no raging US has taken on a “reverential, sacraremain the primary power in Asia left-wing academic. He has worked for mental quality.” What do you think have not become more compelling.

Bob Hawke, a former Australian prime he meant by that, and do you agree?

The trend, therefore, is clear: We will minister, and Kim Beazley, Hawke’s deHW: Australia’s alliance with reach the point at which the costs of fense minister. Both politicians were America dates back to 1951 or before, resisting China’s ambitions outweigh among the most pro-American figures and for most of that time there have the benefits. The failure of Obama’s in the Australian Labor Party. Beazley been hot debates about whether, or “Pivot to Asia,” and the instincts of subsequently served as Australian amhow far, Australia can or should dethe current administration, suggest bassador to Washington from 2010 pend on America for its security. But that point is very close, if not already to 2016. White’s opinions have not since the mid-1990s, that debate has upon us. What people like me say, gone unchallenged—among others, largely disappeared among major politor what countries like Australia do, frequent Bloomberg View contributor ical parties, public officials and policy makes very little difference.

Hal Brands took a few shots. To give analysts. It has become unquestioned, And as these trends unfold, it seems him a chance to clarify his predictions and unquestionable, across the politiincumbent on an Australian observer and present them to a broader global cal spectrum that the alliance can and to analyze them as dispassionately as audience, we spent a few days recently will remain the foundation of Auspossible, because Australia’s future interviewing him over e-mail. Here is tralia’s foreign and defense policies place in Asia depends on how well we a lightly edited transcript: indefinitely. Indeed, the alliance has understand them and how effectively Daniel Moss (DM): Given China’s come to be seen as inherent in Auswe respond. huge stake in the world economy and tralia’s national identity; we simply DM: A year on from Xi Jinping’s the combined role that China and the cannot imagine ourselves without it.

2017 Davos speech, how much has US play, why would either side get That is what Keating is referring to China seized the moral and intelthemselves into a situation, where here, and he is quite right. The irony lectual high ground in the world’s there becomes a face-off where one is that Australians are clinging harder political economy? must blink? and harder to American protection HW: I’m not sure that China has Hugh White (HW): Clearly China as America’s future willingness and really won any of the moral and inteland America face an economic equivacapacity to provide the protection is lectual high ground, because its claims lent of mutually assured destruction. becoming less and less certain. to it are so transparently self-serving.

For each side the economic conseTH: If we feel that the US has But clearly, under Trump, America quences of a rupture are so immense thrown in the towel in the Pacific, what has lost that high ground. That is not as to be almost unthinkable. But that does that mean for Australia in security the sole or primary cause of Ameridoesn’t mean that one side or the other terms? Does it do more to solidify itself ca’s dwindling leadership in Asia or Bloomberg View

C

militarily with greater anti-access/area denial capabilities, or should it look to cut security deals with China and other Pacific nations?

HW: Australia has never had to make its way in Asia without the support of a global preponderant ally— first Britain, then America. So we do not really know what to do as US power and leadership in Asia fades, and no new global power steps forth to take its place as our protector. Certainly we will have to build a whole new set of relations in Asia—both with the great powers of China, India and Japan, and with our fellow middle powers like Indonesia and Vietnam.

But we will also, I think, have to build our independent military capacity in a way we have never done before.

And yes, as an island continent surrounded by island neighbors, our highest priority in doing that will be A2/ AD. Luckily for us, the operational and technological trends work in our favor there, but we will still need to spend at least twice as much on defense at as we do now if we want the military weight of an effective middle power over the decades ahead.

TH: Going one step further, it has been suggested that Australia look into becoming a military nuclear power, either by developing its own weapons, by teaming up with the UK on submarines, or asking the US to deploy weapons on its soil. Do any of these ideas make sense?

HW: It is a big question. Personally, I am appalled by the thought of Australia deciding to acquire nuclear weapons. But if, as seems likely, America ceases to play a major strategic role in Asia over the next few decades, then we can no longer rely on America’s extended nuclear deterrence to shield us from the nuclear weapons of others. So we may well face a choice between living under the shadow of China’s and India’s nuclear forces—and, perhaps, those of others in Asia, as well—and creating a minimum deterrent force of our own, perhaps in partnership with Britain.

DM: Does “Indo-Pacific”—a phrase now favored by Trump and others— have an economic underpinning the way “Asia Pacific” does, which is partly what makes the latter such an attractive term?

HW: I don’t think the Indo-Pacific has much substance either economically or strategically. Despite its immense potential, India is still far behind China, both in the size of its economy and in its global and regional interconnectedness. It therefore does little to pull the economic center of gravity westward, as the Indo-Pacific concept presupposes. Likewise, strategically, the Indo-Pacific concept presupposes that India’s power can play a real role in limiting China’s influence in East Asia. So far, that seems to be just wishful thinking.

2nd Front Page BusinessMirror

A12 Tuesday, February 6, 2018

Villar vows to go after rice cartels manipulating prices

S

By Butch Fernandez @butchfBM & Jasper Emmanuel Y. Arcalas @jearcalas

en. Cynthia A. Villar vowed on Monday to go after smugglers and cartel members foisting speculations about a looming rice-supply shortage to jack up prices, despite ample rice stocks.

Villar, who chairs the Senate Committee on Agriculture and Food, said she intends to file a resolution this week to pave the way for an inquiry into the country’s rice situation and track down speculators.

The senator played down reports that the actual price of commercial rice rose by P2 to P3 per kilogram (kg), saying the production shortfall is only 5 percent of total demand.

“And we have determined something like 500,000 metric tons [MT], which the National Food Authority [NFA] is allowed to import.

So, I don’t see where the problem is coming from,” Villar said.

She surmised that market speculations were likely created by “rice smugglers and rice cartels.”

“You know, we have many rice smugglers, as well as rice cartels.

That is why, when there are rumors [about impending rice-supply shortage], you will think that they are spreading these speculations to create artificial demand,” Villar said. “Because, when people worry about shortage, they stock up; and when you stock up, it creates demand that impairs the law of supply and demand.”

She added this is the reason she is wary when hearing news about an impending supply shortage and tends to ask: “Is there a group behind it that wants to

Tourism plan. . . in tourism-related business to actively pursue foreign businesses to invest in the country.

About 300 delegates participated in the first Invest Tourism Philippines forum, titled “The Next Big Thing in Asia,” hosted by the DOT last week at the Diamond Hotel.

The forum sought to empower MSMEs with insights of local investors, businessmen and rep-

m a n ipu l ate pr ices wh ic h i s the reason these stor ies are coming out?”

Villar admitted that even as she is getting tired conducting

₧19.81 per kg

The average farm-gate price of paddy as of the third week of January, according to the PSA inquiries on rice-supply shortage, she will file a resolution within the week authorizing the Senate Committee on Agriculture and Food to look into the matter.

This, even as Villar voiced frustration that, despite enactment of a law declaring large-scale agricultural smuggling as a non-bailable offense classified as economic sabotage, no one has been charged.

Villar said she has asked the Philippine Rice Research Insti-

tute to teach farmers to “produce more through better seeds and mechanization in order to supply rice at low prices and put an end to smuggling.”

She also debunked reports about a rice shortage in Marikina, saying the NFA is mandated to make sure that there is a buffer stock of rice supply “and they can do it in two to three days.”

“They can import every year and buy from local farmers at a definite price. That is why I am surprised at the reports. The NFA’s mandate is very clear, so why are we hearing these reports? If the NFA is doing its job, this should not happen,” Villar said even as she did not rule out the Continued on A2

www.businessmirror.com.ph

HOUSE OKAYS MEASURE DECLARING CREDIT-CARD FRAUD AS HEINOUS CRIME

By Jovee Marie N. dela Cruz @joveemari

T

he House of Representatives on Monday approved on third and final reading a measure declaring hacking of bank systems and stealing 50 or more ATM or credit-card details as economic sabotage.

Voting 224-0, lawmakers passed House Bill (HB) 6710, which aims to strengthen public trust on the electronic financial and trade and sectors.

HB 6710 will be transmitted to the Senate for its own deliberations.

The bill seeks to further avert losses in the financial and trade sector due to illegal use of electronic access devices.

The measure is the unified version of separate bills filed by House Committee on Banks and Financial Intermediaries Chairman Ben P. Evardone of the Lone District of Eastern Samar and Rep. Ramon H. Durano VI of the

Fifth District of Cebu.

HB 6710 refers to hacking as the unauthorized access into or interference in a computer system/service or information and communications system; or any access in order to corrupt, alter, steal or destroy using a computer or other similar information and communications devices, without the knowledge and consent of the owner of the computer or information and communications system, including the introduction of computer viruses and the like, resulting in the corruption, destruction, alteration, theft or loss of electronic, data messages or electronic documents.

Under the bill, unauthorized access through hacking or planting of a virus in a bank’s computer system resulting in corruption or theft of data is defined as economic sabotage, a non-bailable criminal offense carrying penalties of life in jail and fines of P1 million to P5 million.

See “Credit card,” A2

More OFWs losing jobs due to Middle East tension

By Samuel P. Medenilla

H

GO FISH Sen. Cynthia A. Villar (right), chairman of the Senate Committee on Agriculture and Food, led the distribution of 5,000 bangus and 1,000 tilapia fingerlings to fishermen during the livelihood and cleanup caravan in Barangay Gasangan in Baseco compound in Tondo, Manila, on February 5. Villar was joined by Metropolitan Manila Development Authority Chairman Danilo D. Lim (center) and Emee Casbadilla of the Bureau of Fisheries and Aquatic Resources-Region 4A. ROY DOMINGO Continued from A1

resentatives of various government agencies.

Among the topics discussed were tec hnolog ic a l adva nces in hotel services and innovation advocated by MSMEs, such as A irbnbs, inns, homestays, bout ique hotels and ot her tourist services.

Tourism Undersecretary for Tour ism Reg u l at ion, Coord i-

nation and Resource Generation Alma Rita Jimenez noted the impact of global travel and tou r ism i n encou rag i ng for eign investors to do business in the Philippines.

“You’ll have the confidence that when you put your resources in our shores, and that you can park your funds with us for a long term because it will give you steady and stable returns,” she said.

Dr. Aekapol Chong vilaivan from the Asian Development

Bank gave an overview of the Philippine economy, dubbing the countr y a “rising star in Asia.” The Philippines recorded a 6.7-percent growth in its GDP last year. GDP is sum of goods and services produced by the local economy.

Chongvilaivan said tourism should serve as a major economic engine, emphasizing the government’s fiscal management and infrastructure development as it seeks to resolve unemployment.

@sam_medenilla

undreds of Fi lipino workers abroad are now being displaced because of the political and economic turmoil in the Middle East, according to the Department of Labor and Employment (DOLE).

In a news conference on Monday, labor executives reported over 600 overseas Filipino workers (OFWs) have already lost their jobs in Qatar due to its ongoing diplomatic conflict with other Middle East and African countries.

“We looked at the companies where these Filipinos worked and, apparently, a lot of them are owned by Saudi companies.

So this might be, on face value, a divestment of Saudi from Qatar,” Labor Undersecretary Ciriaco A. Lagunzad III said.

Labor Secretary Silvestre H. Plenary sessions participated in by representatives from government and private sectors addressed issues confronting the tourism industry, and encouraged multilateral partnership and community involvement to achieve collective growth.

It was also stressed that MSMEs need to invest in information and communications technology-based innovations to enhance connectivity, and to monitor customer feedbacks, as well as enhance product

Bello III said they will extend aid to the affected OFWs. “For those who would like to stay [in Qatar], we would help them find new work. But for those who already wanted to go home, we would repatriate them and offer them our reintegration program.”

Last year, several Arab countries, including the Kingdom of Saudi Arabia (KSA), United Arab Emirates (UAE) and Egypt severed their ties with Qatar due to its alleged links to terrorism. Qatar denied the allegations.

This prompted the DOLE to temporarily suspend the processing of overseas employment certificates—a mandatory document for Filipinos to work abroad—for Filipinos bound for Qatar.

Lagunzad was part of the team sent by Bello to the Middle East in December 2017 to assess the impact of the conflict to OFWs. See “OFWs,” A2

endorsement and branding.

The panel also tackled the processes by which MSMEs could tap financial assistance, and brought up hindrances in getting loans to expand their businesses due to the large collaterals needed by the banks.

The participants also tackled the facilities and programs that gave local businesses access to information and business mentors, partnerships and communitywide development.

An effective compliance program is needed by all businesses!

Continued from A1

T he renewed focus on anticorruption laws and compliance regulations has put an even greater emphasis on the importance of building and maintaining an effective corporate compliance program. There is no one specific structure or program example that can be defined as the perfect program. In other words, no onesize-fits-all compliance program out there can attend to the specific needs of your organization, any one program would have to correspond to your company’s risk areas, size, resources, industry segment, business locations, etc.

That said, a checklist of the main areas needed to be addressed by your compliance program can be roughly categorized into seven main components: ■ Risk assessment;

■ Policies and Code of Conduct; ■ Exception requests to manage gifts and entertainment; ■ Due diligence; ■ Training; ■ Hot line and case management, and ■ Reporting and monitoring.

The extent of complexity of the underlying procedures of each component should be, as stressed above, measured and applied to match the needs and risks faced by your company. GAN Integrity—www. ganintegrity.com—has developed an e-guide that can help you.

Successful compliance programs rest on a foundation of successful risk assessments. No amount of policy, procedure, internal control or tone at the top will accomplish much, if those tools are addressing the wrong risks in the wrong way. Yet, performing risk assessments can

prove to be a difficult art to master, not only because they encompass a dizzying range of risks— from anti-bribery, whistle-blower retaliation to data privacy, and much more, but also since no standard risk-assessment template can be applied to assess all of the risks your company contends with. Organizations face risks that are unique to their structure within their industry and in relation to their business partners and the geography in which they operate.

To get started, you need to decide which function will perform the compliance risk assessment.

Then you will have to gather all the correct and necessary information.

An effective compliance risk assessment requires the compliance officer to think expansively about the types of information necessary to give a correct measurement of

the risk in question—and what parts of the organization can help to provide it. For instance, when assessing the risks around proper due diligence of third parties, the compliance function may need to enlist the procurement or accounting departments. Assessing the impact of your training program might depend much more on your cooperation with the HR department.

Once company risks have been identified, they must be measured.

Fundamentally, a risk assessment measures how well the internal controls at an organization work to blunt the likelihood that the identified risk will happen. Conclude your findings with a summary or a written report that outlines the most likely compliance failures.

Mainly, how internal controls are insufficient (poor accounting controls; outdated investigation

procedures; unclear document retention policies; and so forth), and which areas require stronger internal control mechanisms. Ideally, the report would also include action items to be implemented. An automated platform would allow you to continuously update your risk assessment. Fortunately, we are cooperating with a Singapore company, Straits Interactive, which provides an effective software platform for data privacy and corporate governance. That software also makes risk analysis possible and provides recommendations which security gaps need to be addressed.

There is no doubt that, as your organization expands and changes—as does the environment in which it operates—more risks will emerge in the future, whether they come from business operations, third parties, government regulation or external forces. Thus,

keeping your risk assessment up to date will prove vital to ensuring continuous compliance.

As noted, compliance programs are not a one-size-fits-all affair. It is essential to understand the critical components of a program and then tailor each aspect to the specific needs of the business. Technology is the backbone of any successful program, allowing compliance teams to focus on the company as a whole, as opposed to tracking data manually. When the team can elevate to a more strategic position, compliance can be viewed less as a crisis intervention team and more as a critical business partner.

Comments are welcome; assistance can be provided both regarding the e-guide of GAN Integrity and the software solution of Straits Interactive—e-mail me at Schumacher@ eitsc.com.